5 October 2007

Maybach Hasn't Played Out As Expected

The recently renamed Daimler AG's ultra-expensive, ultra-luxurious division, Maybach, was launched with great fanfare in 2002 as a competitor to Rolls-Royce and Bentley. In the late 1990s, DaimlerChrysler decided to resurrect the prewar Maybach name for its new corporate flagships, the 57 and 62 (which refers to the length of the automobiles in decimeters).

Well, fast forward a few years, and the brand's cars have NOT been selling well in the US. The company sold 146 cars in 2006, 152 cars in 2005, 244 cars in 2004, 166 cars in 2003. So far in 2007, it has sold 80 cars through August 31, so that means that in the car's entire existence in the US, it has sold only 788 cars. It makes me feel even more "fortunate" to occasionally spot the one near where I work (I work near a wealthy area, but don't live in one), since I've been seeing it since 2003 or 2004. Contrasting these actual sales results were DaimlerChrysler's sales projections of 600 units per year. The dealer body was established based on the projection of 600 units annually, but Ernst Lieb, CEO of Mercedes-Benz USA said that 29 of the original 70 US dealers have given up their franchises. Daimler has negotiated compensation packages with the dealers, which - in at least one case - are about 25 cents on the dollar. That means that each dealer will get back about $125,000 of the approximate $500,000 upfront cost to set up a franchise.

So, what went wrong with the Maybach? They're certainly comfortable, with every imaginable luxury, including some unimaginable ones like an intercom system to allow vehicle occupants to speak with people outside of the car and rear seats in the 62 that can recline completely flat. The cars are powerful, with engines producing at least 550 horsepower. Well, my guess is that although people in the know can tell what a Maybach is, the cars have the misfortune of looking like unattractive Chinese knockoffs of Mercedes S-class sedans. When the Maybach made its debut, it looked more unique relative to the S-class, but with the introduction of the current W221 S-class sedan, it adopted some of the Maybach 57's more attractive styling features and is overall a much nicer looking automobile, and can be purchased for less than half the price of a Maybach.

Meanwhile, the guy who bought a Rolls-Royce Phantom (and there were 336 sold in 2006 and 382 sold in 2005 in the US - more than double the Maybach's sales), for better or worse, never sees himself, or a facsimile of himself, anywhere else in the automotive world.

Frankly, I'm surprised that Mercedes-Benz has bothered to keep pushing the Maybach line. Extremely low sales volumes probably don't make the car a profitable venture, and the fact that they continue to soldier on with the Maybach brand probably is some combination of German arrogance (the Volkswagen Phaeton is an excellent case study of that trait) and a lack of understanding of sunk costs ("we can't abandon Maybach after all of the money we've spent on it.")

Regardless of the reason, if I had more money than I knew what to do with, I would not be spending it on a Maybach. I'd probably go for a $186,000 S65 AMG (with basically the same engine that the Maybach has, wrapped in a more attractive body shell and what is still a really nice interior, and perhaps a Ferrari F430 - or even a $75,000 Corvette Z06 - as a sporty second car with the savings.

If I were Dieter Zetsche, I'd drop Maybach as a standalone brand, reach financial settlements with my remaining dealers, and introduce an ultra-luxurious derivative of the S-class and CL-class Mercedes-Benz cars called "Maybach" that captured the essence of the brand (high performance, ultimate luxury, and owner customization) without the need to support an extra brand.

2 October 2007

Ethanol Boom Slowing Down

Ethanol has often been in the news for the past year or two as a much-hyped alternative to gasoline for fueling our motor vehicle fleet. Ethanol's supporters point out that E85 fuel (85% ethanol/15% gasoline) reduces US dependence on imported petroleum, burns more cleanly, and can actually increase vehicle performance. Opponents of ethanol point out that production - which comes mostly from corn in the US - takes food from the global food supply, requires almost as much energy to produce as the finished product provides, and reduces fuel economy. Also, only a small percentage of the service stations in the US have E85 pumps, making it difficult to find in most regions even for folks interested in using the fuel in their flex fuel-capable vehicle. For more information on the E85 experience in daily life, refer to The E85 Road Test, published here in June 2007.

Along with a big marketing push from GM and the US government in support of E85, in many parts of the country, ethanol was blended with gasoline to create E10 (10% ethanol/90% gasoline) as a clean air alternative to the old gasoline/MTBE blend that was found to contaminate ground water and outlawed in the past year. Excitement and hype about corn-based ethanol compelled US farmers to plant more acres of corn for the 2007 growing season than at any time since World War II. And, why wouldn't they? Corn prices are through the roof, and it can be a very profitable crop at current prices.

Until yesterday, when the Wall Street Journal wrote about falling ethanol prices, I had no idea that ethanol prices had dropped so much. They are down over 30% over the past few weeks alone. While availability of the fuel continues to be a problem, the low price certainly makes it an even more compelling alternative to gasoline. Heck, as long as ethanol was, say, less than $2 per gallon, and regular gas is over $2.50, it's almost cheaper to use than gasoline (considering the approximate 25% fuel economy penalty that ethanol has compared to gasoline). According to the article, the price of ethanol has dropped to about $1.50 per gallon, from over $2.50 per gallon a year ago.

I'd certainly use it, and the energy security (i.e. no imported oil) aspects of E85 make it even more appealing. For the equation to calculate the breakeven price of using E85, refer to the link above for the E85 Road Test article.

My guess is this is just a supply and demand imbalance. When ethanol was added to most gasoline instead of MTBE, plus all the hype and hoopla over E85 from GM and others, everyone wanted a piece of the action. Now that things are coming back down to earth, all the farmers who planted record amounts of corn, and all the refineries who went online in an attempt to capture the boom, have created more supply than there is demand for, at least in the current environment.

If you drive a flex fuel-capable vehicle, and you're interested in saving money on your fuel bill, you might want to check out http://www.e85refueling.com/ to see if there is an E85 station near you. Happy motoring!

1 October 2007

Someone Needs To Take Dodge Out To The Woodshed (MF Drives The Dodge Avenger)

My personal opinion on reviewing cars and judging their worthiness has always been that one has to view things in relative terms. For example, the interior trim in my Nissan Altima is quite nice for a midsize mainstream sedan, but would be very much out of place in a luxury vehicle- but because it IS a midsize mainstream sedan, it gets top marks. And for an opposite example, the interior in a Cadillac STS is amazing for an entry level luxury car, but not so much for a top of the range luxury car. Stuff like that.

So it's been interesting (to me at least) to gauge my own reactions to recent Chrysler products. Take for example the Dodge Nitro, the Jeep Patriot and the Jeep Compass (no really, take them)- they all have more or less the exact same interior, but to me, the only interior of the threesome that matches the intent of the vehicle is the Jeep Patriot- because the Rubbermaid hard plastic stuff screams utility to me- and the Patriot seems better suited to that than the overstyled overcompensating Nitro and the girly Compass.

A more relevant comparison for the purposes of this review would be the Chrysler Sebring vs. the Dodge Avenger. Basically the same car. Basically following the same old crappy marketing efforts that I thought had been eradicated from Detroit many moons ago. The Sebring? More feminine 'classy' styling, and a more 'upscale' interior. The Avenger? More butch 'aggressive' styling, and a, umm, less 'upscale' interior. It's actually somewhat amusing to see Chrysler pigeon-holing their buyers like this, but I digress.

What I'm actually trying to say is- the Dodge Avenger is less of an affront to the car buying public than the Chrysler Sebring, but not by much.

Where to begin? Well, first, the model I drove was a rental car special- a 4 cylinder equipped automatic SXT with the bare minimum in terms of interior goodies. No U-Connect, no chilled/heated beverage holders, no navi, no MyGig entertainment system, no steering wheel controls. On the outside, I was bedazzled by some of the most brilliantly orange peeled red paint I've ever seen, paired with a set of nice alloy wheels. Of particular hideous note- the designers at Chrysler must have a vendetta against C-pillars, if the C-pillar of the Sebring and the Avenger are any indication. Otherwise, I actually LIKE the exterior shape- yes, it's a mix of Caliber and Charger, but at least it's distinctive in a field which includes the Toyota Camry, Chevy Malibu and Honda Accord.

Inside, we arrive at the issue I hinted at in my Compass/Patriot/Nitro example earlier- materials that are obviously sub-standard in the Sebring become less sub-standard in the Avenger. Don't get me wrong, they still suck, but at least they fit in more with the image of the vehicle. Yes, it's all hard plastic. Yes, it gets uncomfortable at times when your knee rests against the center console or your elbow sits too long on the elbow rest. However, panel gaps are pretty tight, and there wasn't a squeak or a rattle anywhere. So it looks like Fisher-Price, but at least it was built by adults. Seat comfort is non-existent due to flat spongy surfaces. The stereo sounds like crap. The transmission lever is ringed by some of the fakest plastic chrome you'll ever see. But for some reason, it's not as offensive as you might think.

And the drive? Well, it's a mix of good and bad. First the good- the 2.4 liter four banger is, believe it or not- VERY smooth. It's actually a willing partner all the way up to the redline, and it sounds great. The transmission would be better served with another cog, but otherwise, it performs smoothly, although it is hesitant to shift down when more power is needed. And that's about it for the good. The rest is horrific. Spongy brakes? Check. Floaty suspension reminiscent of my dad's old 1985 Buick LeSabre coupe? Check. Incredibly overboosted steering? Yup, you got it. The best thing I can say about the drive is that it's not as bad as a base Buick Allure/LaCrosse. And if that's not damning this vehicle with the faintest praise imaginable, I don't know what is.

In the end, the place where I got my Avenger is also the place where it is best suited- the rental agency. On its own, one can make some arguments that it is a feasible vehicle. If you compare it to ANYTHING other than the Chrysler Sebring, it falls flat. Yes, it has a silky smooth I4, but apart from that, it is severely outgunned by everything in the segment. Even a Kia. I am absolutely floored that the designers at Chrysler and Dodge thought that THESE vehicles would be the ones to compete with the market leaders. Their OWN vehicles from last generation are in many ways better than these rolling piles of crap- seriously- stick this engine in a last gen Sebring, and I'd probably like the resulting vehicle more than these messes. The very fact that these have made it into the hands of the buying public is a testament to just how messed up the American automobile industry (particularly Chrysler) is.

The only way I could recommend this vehicle to someone is if they got it for about 6-7k off of list price. Which with the way Chrysler is going, may be in the cards somewhat soon.