Check Your Mirrors

Odds and Ends about Cars and the Car Business

By Brendan Moore

06.17.2009

lutz-listening

BOB LUTZ says it could be decades before GM overcomes it’s “reputational deficit”. He says that GM has overcome it’s fuel economy and quality deficits, but it may takes several generations of models before the consumers trust the brand as much as other brands. Lutz recently joked about GM products of the 1970s, ’80s and ’90s as “brilliantly executed mediocrity.” He stated that his biggest hope is that his tenure as product development chief is “the whole organization understands there’s no such thing as good enough when it comes to product.” This is probably correct – I can’t tell you how many conversations I’ve had about GM with regular citizens that quickly veer off into their story of a Pontiac or Buick that was manufactured in Hell, and never would run right, no matter what the Mr. Goodwrench boys did. They’re not interested in GM’s new product; they’re still suffering from the stings of previous ownership of a 1986 Pontiac 6000 LE.

QATAR, the oil-rich country in the Mid East, will decide in the next three weeks whether they want to invest in Porsche, says their prime minister. “We are still discussing the stake. According to the legal agreement between the two parties, neither of them is allowed to disclose any information about it before it is sealed,” the Gulf Times quoted Sheikh Hamad bin Jassem al-Thani as saying. Porsche racked up a $12.5 billion USD debt in their failed effort to take over Volkswagen. VW essentially told Porsche to get lost because Porsche already had too much debt when they started the takeover process. Qatar’s proposed stake in Porsche is assumed to be around 25%. For those of you that are unaware of the Arab States’ reach into the German auto manufacturer sector, Abu Dhabi’s investment entity, bought a 9.1% stake in Daimler in March, which makes it the largest shareholder. The second-largest shareholder is Kuwait.

ford-corporate-logo-smallFORD rolled out its new 2010 Taurus to journalists this week; Autosavant was in the first wave of organizations invited to the event, and I had extensive seat time in both the new Taurus and the new Taurus SHO. You can read all about it next Monday, June 22, and, all about the SHO the day after. I will say this, though – the new Taurus is a massive improvement over the last-generation car, and, the SHO is a delight. The Eco Boost engines really shine in these cars, and the rest of the Taurus ain’t too shabby, either.

SAAB will be taken over by Koenigsegg, and in some good news for the new owner, a bankruptcy court in Sweden has announced a decision a mere 34 hours later, that would wipe out 75% of Saab’s debt. This works out to $1.36 billion USD, and almost all of it is owed to GM, their parent company. Koenigsegg, the tiny supercar producer, must be feeling like everything is going their way; first, the Saab acquisition by the tiny company, and now, the debt relief from the courts. You have to wonder just what Saab will be and just what they will be producing five, ten years from now.

HONDA is going to come in at two-thirds of their Insight sales target for the year, Bloomberg is reporting. Honda executives cite the weak economy and cheap gasoline as the reasons for missing their sales target. Japan’s second-largest automaker has forecast global sales of 200,000 units for the Insight in it’s first year, which went on sale first in Japan in February and in late March in the United States. Honda expects to sell half of that in North America, but the current reality is that the demand in the US is lower than projected, and demand in Japan is much higher than forecast. As a corollary to Bloomberg’s report, a spokesman in Tokyo said there had been no change in Honda’s sales forecast.

2009-dacia-sandero

EUROPE had a bad month in auto sales last month, but three brands are showing gains as the overall market goes down. Hyundai, Dacia and VW all posted increases last month due to their low-priced models. European governments are offering scrappage schemes to spur auto sales, and consumers are overwhelmingly choosing low-priced small cars for their new vehicle after they turn in their eligible old vehicle. In contrast, luxury brands like Mercedes-Benz, Lexus and BMW, and, semi-premium brands such as Alfa Romeo and Volvo experienced another very bad month because they did not get the sales benefit from the scrappage schemes in many European countries. It’s all going to the low-end cars. The most frightening example of this contrast between the high-end and low-end segments would be this: Lexus sales dropped by a little over half in Europe, now making it a player with a tiny sliver of the European market. That is, 0.1 percent. Dacia, Renault’s Romanian subsidiary, has been laughed at for years for their inexpensive offerings. Their share of the European market is now 2%, as a result of their sales doubling last month. That’s right, a 100% increase. Dacia’s 2% market share now matches Nissan’s 2% market share.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. When times are good, Mercedes can sell whatever they make, and when times are bad and there’s a cash for clunkers plan, it makes perfect sense that people would buy cheap cars. Even if you get the money through the plan, the economy is still in the tank. That doesn( change.

  2. Lutz: GM Corporate Media’s nightmare, auto journalist’s dream.

  3. I would argue that Lutz has a substantially larger reputational deficit. In this case he may be right, but who gives a damn what he thinks anymore?

  4. Porsche thought they had everything figured out and now they’re begging for money. Maybe it’s time to buy some Porsche stock.

  5. It will be interesting to see where they are sold. And how they’re sold.

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