29 June 2007

Happy Long Weekend

Long weekend coming up for those of the Canadian persuasion (ie. me), so no updates from me until Tuesday. Hopefully FB can do something up in the meantime.

Happy Canadia Day!

Infiniti Dealers Really Need To Just Shut Up And Sell Their Own Product

Was in an Infiniti dealership today, to get some information on the G35 sedan. It's a vehicle I've had my eye on for a bit now, and I wanted some comprehensive stuff on packages, features, and most importantly, pricing. It's all going fine at first. I appear to have a salesman who knows his vehicle very well, is very polite and courteous, and seems to have a grasp of the competition out there.

And then he started going kooky.

The first issue was that he wouldn't shut up about the most recent Motor Trend mag comparo that gave a victory to the G37 coupe over the BMW 330i coupe (mostly because the BMW was too expensive and needs an oil cooler badly). Umm excuse me, I'm not looking at a G37 coupe- I'm looking at the G35 sedan remember?

The second issue was that he kept bringing up residuals on the G35. The residual on a 2007 G35 Sport on a 48 month lease with no money down works out to be about 21k CDN. His argument was that most G35 sedans from 2003 (4 years ago) retail for around 28k CDN, making the G35 residual a great thing. But... he's wrong. A 4 year old G35 in good condition with about 100,000 kilometers runs, wait for it, about 21-22k. And he wouldn't shut up about this, heaping scorn upon BMW in particular for having such high residual values. I mean, who would want a vehicle that has a lot of value when you want to sell it.... right? Please note my sarcasm there.

Third, he tells me that the 2007 G35 uses the same VQ as the Altima et al. I even gave him a chance to backtrack on this, and he insisted (okay, so this is more me being a know it all bastard, but I digress).

And then this happens.

Him: So one of the other vehicles you're looking at is the Lexus IS?
Me: Yeah, it seems to be the Lexus most closely aligned with what the G35 is.
Him: Oh yes, but it's quite a bit more expensive.
Me: I understand that.
Him: It's also smaller.
Me: I understand that.
Him: Did you know that the IS250 is based on the Toyota Corolla, and the IS350 is based on the Toyota Camry? Why pay a premium for that?
Me: Huh?

He kept insisting this. In a way, I can understand the Camry thing- after all, the ES is on the Camry platform. But the IS? A rear wheel drive car? And bringing the Corolla into the picture? For the exact same vehicle but with a smaller engine?

At this point, I realized I was working with an idiot, and mentioned that I wouldn't want a luxury sedan so closely associated with the 350Z. And he flipped out, saying that the Z was on a completely different platform from the G35. And then I threw the Altima and Maxima out there just for shits and giggles to get him really riled up.

Needless to say, the domestic manufacturers are not alone in employing idiotic sales people.

Let's see...what else isn't bolted down?

Yesterday, GM announced that it had agreed to sell its Allison Transmission unit to private equity firms Carlyle Group and Onex Corp. for about $5.6 billion. Wall Street cheered the announcement, sending GM shares up to $38.19, nearly $20 per share higher than the shares were at their low point in 2005 during the worst of GM's bankruptcy fears. It seems that GM has managed to get a better price for Allison than Wall Street was expecting.

Allison Transmission, which makes transmissions for commercial trucks, buses, and military vehicles, as well as dual-mode hybrid transmissions for the upcoming light duty hybrid pickups and SUVs and for the popular Duramax/Allison combination in 2500 and 3500-series trucks, is headquartered in Indianapolis, Indiana. The sale announced yesterday excludes a plant in Baltimore that makes conventional and dual-mode hybrid transmissions used in GM's light duty trucks.

The Allison money will help offset the expected $7 billion cost that GM will incur to fund the UAW-Delphi bankruptcy settlement, which (if approved by union membership) will pay union workers upfront payments as well as ongoing supplemental wages for a period of time, in return for a reduced hourly rate in the future. There is also speculation that GM might use the Allison money to help fund a potential union-managed trust fund to pay for workers' health care coverage, similar to the agreement that Goodyear came to with its union membership last year.

Unfortunately for GM, the Allison unit was "highly profitable," and now it has killed another cash cow. The sale of 51% of its GMAC financing arm to Cerberus (the same company that bought Chrysler) marked the sale of another major contributor to GM's black ink in North America.

Other than these two, more "non-core" assets that GM has sold off in the past two years include stakes in Fuji Heavy Industries Ltd. (Subaru), Isuzu Motors Ltd. and Suzuki Motor Corp.

It's a shame that GM has to continue selling assets, but this is a necessary move for them to add to their cash balance and ensure that they can still meet their operating cash needs and keep the company running. But this is not the end of GM selling everything but the proverbial kitchen sink. They're also in talks to sell the (also profitable) medium-duty truck business. No announcement has been made, but the word is that Navistar is the front runner to acquire that business. Medium duty trucks are sold as the Chevrolet Kodiak/GMC Top Kick conventional cab trucks, and the T- and W-series cab over engine trucks, which are rebadged Isuzus, and are generally labeled as 4500-8500 series trucks (versus 1500-3500 series for the light duty ones).

Shedding assets of non-core businesses as GM and Ford have been doing is OK from the standpoint of allowing management to concentrate on core operations, and monetizing an asset, but it also eliminates a layer of safety net should core operations falter. There have been several quarters over the past few years that GMAC results helped to prop up GM's regular results. Now, they'll only be able to help 49% as much as they had before. After this year, there will be no return from Allison, and likely no return from the medium duty unit if it's sold off.

28 June 2007

Death Wish? Buy a Brilliance BS6

Last week, photos and video started circulating online of the horrific crash test results of the Chinese Brilliance BS6 sedan. The car was tested using the well-recognized Euro-NCAP (New Car Assessment Program) offset frontal crash test at 40 miles per hour by ADAC, a German auto club.

In cars that ace these tests, the passenger compartment stays almost completely intact with no intrusion of the floor into the driver's footwell or the instrument panel into the driver's face. The best cars often still have functioning driver's doors, yet sacrifice so much of their front end absorbing the crash energy that the occupants get out of the car relatively unscathed.

Instead, the poorly-named Brilliance BS6 saw the pedals intrude into the driver's space by 18 inches, and the dashboard by 7 inches. The driver's door wouldn't open without the technicians using a huge crowbar, and the rocker panel bent almost 90 degrees, stopped only when it hit the floor. The base of the windshield moved to the same vertical plane as the top of the windshield was before the crash, and the driver was left sharing space with steering wheels, windshields, and the front end of the car. He or she would have almost certainly been killed instantly.

ADAC also tested another BS6 for side impact protection (this is also in the video linked above). In this test, the side impact cart intruded past the width of the door into the passenger compartment (over 12 inches) and whipped the driver's head so severely that he would have almost certainly been killed.

Naturally, the car earned the minimum rating, one star, on a five-star scale.

If you're keeping score at home, Chinese vehicles undergoing western crash tests have both failed miserably (the earlier being the Landwind SUV, which fared so poorly it was withdrawn from the European market).

So far, the Luxembourg-based distributor for the BS6, HSO Motors, has sold 350 of the €19,000 cars, and has said that dealers should offer to repurchase the cars from owners who are concerned about its crashworthiness. However, one dealer quoted in Automotive News said, "For price-conscious customers who are careful drivers, this safety issue does not have priority." He also said that he would continue selling the car.

Great - so if you're sure you won't be in an accident, you're OK in a Brilliance. But I always thought that most accidents sort of happened, you know, accidentally. I've been in two of them in 16 years of driving, and I didn't plan them ahead of time. I really didn't expect them to happen, frankly. Sometimes, they're unavoidable.

For its part, the manufacturer doesn't believe that the poor crash test results will hurt sales. The company also accused the German media of "viciously playing up" the ADAC test results. Brilliance also said that they agreed to cooperate with ADAC on the BS6's safety, and expect the car to earn three stars within a year. Brilliance also would like to find a partner to help it crack the US market, and said in April that it would like to sell cars in the US, including the BS6, no later than early 2008.

Personally, I don't plan to set foot in a Chinese car that will be moving (I'd feel reasonably safe in one in a static display at an auto show) until I'm convinced that the safety of these vehicles has improved to modern standards. I'd take a good used car - or a new Renault/Dacia Logan/Nissan Aprio - any day over a Chinese car with questionable occupant protection capabilities. But, if you have a death wish, you can always buy one of these and drive into an offset barrier at 40 miles per hour. You won't be around to tell us about it.

25 June 2007

Further Idiocy From Ford

Courtesy of Bloomberg -

Ford Motor Co. thinks it finally has a chance to crack the small-car market, and not a moment too soon.

This fall Ford will begin selling the second generation of the Focus, a compact that hasn't fared well against some of the stiffest competition in the auto world. The new model, available with an optional interactive speech-recognition system developed with Microsoft Corp. and called Sync, will have to offer young shoppers a clear advantage over a Honda or Toyota, aside from a discounted price.

I swear, my head is about to explode Scanners style if I have to read any more shit like this from retarded automakers.

'A chance to crack the small-car market' ??? How idiotic is that statement? Ford CRACKED the small-car market back in 2000 with the original Ford Focus. It was class leading, it looked great for the time, it hit all the right buttons, it was a quantum leap over the Escort/Contour that it replaced in the lineup. It was an honest to goodness valid and in a lot of cases, BETTER alternative to the Civic, Corolla, Sentra, et al. And they shit the bed by not updating it significantly for almost EIGHT YEARS. Absolutely shit the bed. No ifs, ands, or buts. And now they're touting this new Focus as some sort of 'chance' vehicle for them.

The best part about all this? It's still not an all new Ford Focus! It's still riding the same platform, while the Mazda 3 gets all the latest goodies.


Is the smart Too Smart for the US?

The smart [the all-lowercase name is almost as irritating as Saturn's all-uppercase names, and will not be repeated throughout the rest of this post], a diminutive "city car" produced by Daimler, is going to make its official US sales debut in the first quarter of 2008, to be sold by United Auto Group, a large dealership chain owned by Roger Penske. There has been a lot of hype surrounding the US availability of this car; the official website at http://www.smartusa.com/ even is so kind as to provide a way for interested owners to "reserve" a 2008 Smart for just $99.

Although the reservation fee is refundable at any time, and the company claims that the fee and reservation system are there to "gauge interest" in the car, it sounds to me that it's arrogant at best, and a scam at worst. How does committing $99 - in what is not even really a commitment, because you can get your money back, and they don't have to sell you a car if they don't have enough - really gauging interest? Plus, the "deposit" is less than 1% of the $12,000 base price of a Smart. So basically, Smart expects buyers to pay $99 for the privilege of being contacted if a Smart car is available for purchase.

As of early June, UAG announced that they had over 20,000 Smart "Insiders" who paid $99 to be on the sort of wait list...so Smart is now holding almost $2 million for basically doing nothing. I'd like someone to give me $2 million for a little while. I won't even touch the principal, and if I invested it in a mutual fund that earned 10% per year, I'd be making six figures without lifting a finger. Sweet.

Smart expects to produce about 16,000 ForTwos for sale in the US for the 2008 model year, and I can see them meeting or even exceeding that goal, but is this really a car that's going to succeed beyond core urban centers like New York, San Francisco, Chicago, or Miami? Everything I've read about them has said that they're surprisingly roomy inside for two passengers, but lack luggage space, and give off a vibe of feeling a little too close to the road and surrounding traffic, without much sheet metal between you and them.

For a quick run to the grocery store, or for simple urban parking, they seem like a neat idea, if perhaps just a novelty. They'll get pretty good gas mileage (over 40 miles per gallon, even without the benefit of hybrids or diesels) and crash tests have been successful in them because of their innovative engineering. But how many Americans, who pretty consistently are in love with 1) large vehicles, and 2) fuel economy, as long as it requires no sacrifices in vehicle size, comfort, or engine power will be willing to pay $12,000 for an 8.8 foot long, 1600-pound "city car," when most Americans live in large suburbs and do not have to worry about urban parking or maneuverability? I think the Smart requires too many sacrifices - namely, interior space, engine power, and perceived occupant protection - to be a huge success in the US.

Mr. Lutz, Your Tin Foil Hat Is Ready

From The Detroit News

"This whole thing has nothing to do with energy policy, CO2 or the environment," General Motors Corp. Vice Chairman Bob Lutz told The Detroit News on Friday. "This is purely punitive; the 'big business haters' finally giving us our due for decades of 'colluding with oil companies' and 'forcing the U.S. public to buy big SUVs.'

"Make no mistake: these people hate us and want to inflict pain."

So it's come to this. the Vice Chairman of GM is complaining about black helicopters in the sky and a grand conspiracy against the domestic automakers, all because the government, who are looking after their own asses and ensuring that gas prices stay low and the trees all don't die, have decided to make CAFE have a bit more teeth.

Now, forget the arguments about CAFE, and whether it's a good thing or a bad thing for a minute.

CAFE has been around for a long time. And domestic manufacturers openly flouted the loopholes built into CAFE by spending most of their advertising and new product development dollars on trucks and SUVs, both classes of vehicles not affected by CAFE. They did this ON PURPOSE. There was no ignorance involved. They gave up markets with less margins where imports were making headway in order to take the easy road lined with SUV gold. And now that the farmer has figured out that he let the wolf take care of the chicken coop, they're pleading innocence and naivety. If it wasn't so funny, it would be disgusting.

The big problem in all of this is that the domestic manufacturers are now caught in their own endgame. No one takes them seriously anymore as purveyors of vehicles with good fuel economy, but they'll now be forced to market them. Just as the imports start taking aim at their lucrative truck market, and just as the money tree in their own backyard has started turning up rotten fruit. With less R&D money than the competition to develop new car platforms, and the competition going after the truck jugular, what next?

The obvious answer? Appeal to patriotism.

Chrysler Vice President Jason Vines, in an appearance on Mitch Albom's radio show Friday, lamented that America seems to be the only country where the government doesn't care about and protect its domestic auto industry. He said it was time to "give a damn" about an industry that creates jobs and wealth for hundreds of thousands of people.
Good sir- the government has given a 'damn' too many times in the past already. You dug your graves. Now pull yourselves out of them.

Ford : Home Of The Original Styling Cue

See that Lexus up there? In the US, it was sold as the Lexus IS300, the Lexus answer to the BMW 3 Series. In Japan it was sold as the Toyota Altezza. Sales started in 1998. It had some issues- namely, it didn't have that big of an engine, and the interior really wasn't all that Lexussy. It was a case of Lexus trying to be BMW a bit too hard. It even had an inline 6. What it DID have going for it was its looks- it's a handsome car from all angles, and even managed to look good in wagon form- a rarity. Notice those tail lamps? The IS300/Altezza started a trend in 98- 'Altezza' lights, which are basically clear casings with lots of chrome bits showing through. A more common sighting of Altezza lights would be Nissan, which cribbed the idea to an extreme in 2002 with the Altima (now in extra large versions with the current gen).

Well driving around this morning, it struck me just how hard the American makes are trying to make the rear ends of their vehicles look like Altezzas. It's quite funny actually. Especially in light of all the brouhaha they make about 'traditional American style' being the key area where they can trump the Japanese. The entire Saturn lineup is starting to look like Nissans from behind now... but the biggest offender is Ford. Who are methodically turning the front of their cars into Mach 3 razor blade replacement cartridges, and the rear of their cars into 1998 Toyota Altezzas. From the Fusion (which started it) to the yet to be released Focus, all the new Ford coming out are cribbing this styling element. Without grace or style I might add. Even moreso than the Altima, which was a shameless offender in previous gen guise in terms of a 'tacked on look' to the tails, the current Ford products look like 2 different designers had a go at the car- one at the front and one at the back.

Bear witness:

All of them with ultra glitzy rear ends for no other purpose than to copy the Japanese. Who would have thought the day would come where American style would be influenced by the Japanese? Well, it's here.