Euro Car Guy

BMW X6 – Please, don't hate me. I can explain...

2008-08-09T11:22:00.001-07:00

It was that time of year again and I was looking for a car big enough to carry everything in our house. For a two-week holiday with a young child, we had to bring a stroller, a travel bed, a changing mat, 850 diapers, all his clothes because he completely soils a shirt after wearing it about 3 minutes, his favorite teddy which is about 8 feet tall, etc. Long story short, the X6 was just large enough for it all.

The X6 xDrive3.5i, that is, and the name pretty much provides you with all the drive train details right there. An all-wheel drive, 3.0 liter, twin-turbo engine churning out 300 hp and 400 Nm (300 pounds feet) of torque married to a six-speed automatic with manual-shift mode. I was worried about fuel economy but I had read that the in-line six was easier on the front suspension and made the X6 more nimble than the heavier V8 engine. And considering it's massive weight, 2,220 kg, this Hulk-like coupe is remarkably agile, further proof of the always exemplary engineering efforts of the lab coat gentlemen (and gentlewomen?) at BMW.

Now, let me stop right here and address the issue of its styling styling and of some of the reviews the X6 has already gotten. When you first look at the X6, where the X seems to stand for excess, you're not sure where this vehicle is coming from. Is it a sedan/coupe inflated to SUV proportions? Or is it an X5 sculpted to look less like an SUV and more like a cartoonish, mean-eyed machine? Even a generally positive review in the FT.com referred to it as a 'beast'. And many others have commented on it's looks, often derisively, or have questioned whether the X6 has any practical value. Having spent two weeks with the X6, it's sleek-monster looks grew on me from an initial reaction of “Uh?”. And the power and comfort were, well, typical BMW. Not to cheat your out of my invaluable opinion, but I really don't have any convictions about the X6 styling one way or the other. And maybe that tepid response says something all by itself. Tell you what. I'll report. You decide.

What the X6 does have is mucho techno machismo. It has one of the most advanced rear differentials in the automotive world where the DPC (something called the Dynamic Performance control) continuously regulates the steam pumped to the rear to maximize handling and traction. And I was able to test all this over the San Bernardino Pass in Switzerland where we scrambled up and down the hairpin switchbacks with the ease of a marathoner doing a lap around the block. The permanent 4x4 helps the X6 handle surprisingly close to a 5 series, to the point where you have to stop and pop yourself out of the cabin to make sure you are still driving an SUV.

This vee-hickle (putting on my Southern accent, that comes solely from listening to Johnny Cash, which means I sound like a weirdo Canadian who moved to Tennessee two weeks ago and is trying excessively hard to fit in), has all the engineering acrobatics and technical precision we've come to expect from a BMW. The breaks are phenomenal and make the Mack truck-like X6 feel like a bicycle for the few seconds it takes to bring it to a halt from a high speed. Anti-lock and stability and traction control, woven with steering and suspension control, well, keep things under control. The system, I believe, is all run by a Hal 9000 computer/control freak which exerts a Catholic-school nun sternness just to make sure us humans are kept in check, you know. Control being the key word here in case you missed it. Dave? Dave? What do you think you're doing, Dave? Why don't you just let me do the driving, Dave? Wouldn't it be so much easier that way? Daisy...Daisy...But hey, that's just me. I'm kind of old fashioned that way. If I want to spin out of a curve and go flying off a cliff that is my prerogative, isn't it?

And, on a side note, I finally got gist of the head up display. It projects dashboard information such as speed or navigation instructions onto the lower end of the windshield. At first, you see this as a driving hazard distracting you from looking at the road. But once you get used to it, you realize that it takes less time for you to focus your eyes on the display and then shift your sight back to the road than it does to look further down and closer to you to read the speedometer on the dash. Good, I got it. A feature that's very helpful in saving you a split-second in reaction time which does, in fact, qualify as a safety measure when you're driving at break-neck speeds which BMW models often demand.

Interior finish on the X6 is BMW standard – that is, sporty, refined, conservative, reserved. The X6 seats only four (on sultry leather) which truly makes it a luxurious sport-ute without much utility to it. The sloping hatch gives it a cozier, womb-like rear seating experience, as in an elevated sedan, which the X6 essentially is, resulting in considerably less trunk space than the X5. But it has a horse-high seating position -- about 84 centimeters from the ground to the driver's hip (the X5 is about 51 cm).

Having recently driven the Jaguar XF, I realized how stilted and restrained interiors are not only on BMWs but on German cars in general. The Jag made me feel like I was sitting in Alistair Cooke's study from Masterpiece Theatre. By contrast, German cars give you the impression that you're sitting in your boss' company car. Hardly democratic but not exclusively chic either. Audi's are known for having slightly livelier interior designs than the competition, but for me, I put that down mostly to the red lighting in the display panels. With BMW's, interiors are all pretty much the same, which, I believe, is intentional. You're buying the brand, a BMW, and certain things are standard. Like designer clothing -- only the sizes vary.

As for economy, well, the X6 does have a drinking problem. BMW's own on-board computer was telling me my mileage was 15.4 liters per 100 km and I wasn't being much of a lead foot. I took it easy, hell, I was paying for the gasoline myself.

But would I recommend it? Yes, of course. BMW has been doing great lately, with a slew of products that come in as close to what they promise as possible. Though, I'm not sure how this car will find its buyers. It's really an X5 for those jaded, self-absorbed, insular rich folks who will say,” Oh, everyone has an X5!” If you are looking to get one, by all means, do so. It's BMW at its technological and mechanical finest. But what does this SUV do for you except seriously injure your pocketbook that you can't get by getting a more discreet 5 series (or even a 7)? That you have to answer for yourself. I reported. Now, you can decide.

The Chevrolet HHR LT – An American in Zurich

2008-07-28T11:15:00.000-07:00

The first thing you inevitably ask about the Chevrolet HHR is: What does the HHR stand for? Well, it stands for Heritage High-Roof. What is that supposed to mean? I'm not sure because it doesn't really have such a high roof. But the heritage part is easy to explain. It's one of 'em olden times car, ya see.

The HHR reminded me of my days on the road back in the prehistoric 90s. You remember the days before e-mail? By the way, when was the last time you wrote a letter by hand? I'm guessing somewhere around 1996. For me, being the romantic that I am, I wrote letters up until 1998. I've checked it and that is true.

Where was I? Digressing again.

Yes, I was reminiscing about my days driving across America for an adventure travel company that I worked for and how the HHR reminded me of driving American cars, specifically Chevrolet's, around the US and Canada.

The HHR does capture the iconic Chevy feel. GM has fundamentally hit its mark here. You can see yourself riding this car into Yellowstone or Grand Canyon National Park and camping out for the weekend. It's got the boogie to make mountain driving comfortable and the cabin space that allows you to move things around.

It's odd how particular Chevrolet's can feel and it was surprising to me how much I missed it. It made me shed a WD40 tear as I recalled my 1984 Chevy Blazer which I once took with a friend across country from Montreal to Vancouver by way of St. Louis and Denver and LA. We camped or just slept in the car most of the way but it was, by far, the most expensive cross-country trip I have ever had with a rebuilt carb somewhere west of Denver and then a new transmission before we could even exit Colorado on the I-70. The garage gave us a banana-yellow 1977 VW Passat and the thing ran like a charm as we barreled to Las Vegas and back, trying to win the money we were spending getting this crappy Chevy to the Pacific. (That's how I was thinking at the time. Nostalgia has softened my recollection of that truck). The experience was a rational eye opener. You don't get burned like that if you buy German. I learned my lesson. Which is why I drive a Peugeot now.

The HHR is one of the most audacious of the retro design cars. That automotive fashion niche that began about 10 years ago with the New Beetle and was quickly followed by the Chrysler PT Cruiser which was actually designed by the same gentleman, Bryan Nesbitt, who brings us this latest bought of nostalgia which I find myself quite willing to indulge.

To its credit, the HHR does give you the full retro feel. The design is actually inspired primarily by the cult 1949 Chevy Suburban. The HHR and PT Cruiser are often referred to, perhaps simplistically and derisively, as 'gangster' cars because they recall the automobiles from old mob movies. As if only gangsters drove cars back then. The problem with the HHR is that the side windows are too small and too high up the door to easily level your Tommy Gun out and shoot at the cops giving chase. For those of you not into the drive-by thing, just wait until you have to lean out the window to pull a parking stub out of a machine or pay at a toll booth.

Those side windows coupled with a small windscreen and a not terribly high roof line give the cabin a cavernous feel. But it's not all bad. It is actually pretty spacious and when you're looking at it from the outside you're wondering where all the inside room is coming from because the HHR is only 4,47 meters long, which places this car in the compact wagon class.

The car is practical and handles well – responsibly, solidly and with little roll even if it does have a slightly elevated center of gravity. The 2.4 liter, 4 cylinder engine, with 170 hp and 220 Nm of torque, married to a 4 speed automatic transmission gives it a decent amount of pull, although the HHR never does feel light. Fuel economy is a better than expected 9 liters/100km (12.0 city/7.3 highway) and I did, in fact, notice how well the fuel gage held up. It's driving dynamics are comfortably American. There wasn't as much volleying on the highway as you would expect from a fairly lumbering wagon and its smooth acceleration doesn't provide much excitement but feels adequate and balanced.

The HHR also has a connection to Switzerland. Chevy is, sort of, a Swiss brand. Louis Chevrolet, was born in La Chaux-de-Fonds in the Jura region of Switzerland and emigrated to the US where he later founded the Chevrolet Car Company of Michigan. There is your history lesson for the day.

About 200,000 have already been sold in the US since it's launch there in 2005 but only about 3,000 to 4,000 will be making their way to Europe. But it was a treat to get a little Americana here. Sort of like finding a good bar & grill restaurant with great steaks and spare ribs. And if you want to be different then driving an American car in Europe certainly is that. Back in the US, for those of you looking for good economy with enough space while making a little statement of style -- that is, that you enjoy your driving the good old fashion American way -- the HHR delivers that.

Failure to Act Part I: I hear a creaking. Do you hear a creaking?

2008-07-10T14:02:00.000-07:00

A few years ago, I was interviewing a Detroit-based automotive analyst and asked him where he thought the threshold was for gas prices to change the behavior of US consumers. He said it was 3 dollars a gallon. He was wrong. It's 4 dollars a gallon. And it's doing a number on consumer behavior right now. (Gasoline prices average 5 dollars a gallon in California.)

The current oil crisis (what is it today? 146 dollars a barrel?) is certainly the main catalyst of the sweeping changes we are seeing in the US automotive market today and threatening the very solvency of the Detroit 3 car makers. But it is just that – a catalyst. There are many other pieces that have been in place for years that have led to this crisis for the US auto giants and much of that can be blamed on the short-sighted greed of the automakers themselves, the health-care crisis in America that is beyond their control, the voraciousness of consumers who simply want big cars, and the inertia of the political leadership of the country who for decades understood that US dependence on cheap foreign oil was the soft underbelly of the economy but still failed to do anything about it.

Will oil prices fall back again to manageable levels like they have after previous shocks? And didn't we weather those just fine in the end? Maybe. But there are two main differences today.

First, the world's known oil resources have been pretty much mapped out, so we know what we have left, more or less. Any new reserves that have yet to be found will be minimal because technology has allowed us to find all major deposits which we've tapped into already. Also, demand is growing in rapidly developing mega-population economies like China and India (1.3 billion/1 billion people respectively who would like nothing better than to be able to shop like a Texan at Wal-Mart or any Westerner at a large box or department store).

Second, even if this is simply a spike similar to previous ones (and that would be good news for the global economy, though, not for the atmosphere) with all the change in thinking about the environment, global warming, dependency on foreign oil, the sedentary nature of a lifestyle dependent on automotive transport, etc., it's still bad news for automakers. Consumers seem to have made a cosmic shift in their thinking and are looking for ways to insulate themselves from any future price shocks. It is likely they'll forgo gambling on buying large vehicles and downsize their consumption of fuel by buying more efficient automobiles.

So where does this leave GM? The automotive behemoth that for a while came to define American industry. Well, are you hearing that sound? That thick, creaking metallic sound? It sounds like a hundred tons of steel collapsing on itself. It sounds like an industrial colossus crashing to its knees. It's GM. It's going down first.

Some facts to consider:

Many Wall Street analysts seriously consider GM at risk of bankruptcy
Ford recently reported SUV sales down 55 percent from last year
Ford F-150, the nation's best selling vehicle for 26 consecutive years (yearly sales reaching 950,000 units at one point) is now down 40 percent in sales.
The world economy needs about 85 million barrels of oil a day – more than 20 of those go to the US alone

General Motors has come inevitably to the only fate it made possible for itself with its decisions to focus on pick up trucks and SUVs back in the roaring 90s. And all the Detroit 3 campaigned against tougher CAFE standards that would have forced them to make more efficient cars and, hence, be more competitive with the Japanese and Korean brands today. As things stand now, if you increase economy standards federally, you're just giving the Asian automakers even more of a sales boost than they're already getting from the oil markets.

Also, I've always thought that CAFE (Corporate Average Fuel Economy), the federal mileage standards that insanely apply only to passenger cars and not trucks or SUVs, was a silly way to regulate emissions. Directly regulating emission of CO2 and N-O-x gases makes much more sense. Even if it may seem to be essentially the same thing, it isn't. Certainly for new diesel technologies coming on the market now that can trap noxious gases which are strictly limited by current rules in California and several other Northeastern states. But those CAFE standards did help increase fuel economy in American cars which went from 13.8 miles per gallon in 1975 to 27.5 in 1989 and help stabilize US consumption of oil. The SUV and pick-up craze of the 90s wiped out any progress that change brought in reducing consumption and the number of barrels of oil needed to keep the US economy afloat has increased steadily since 1990.

In all fairness, as an automotive writer, and disregarding environmental concerns for a moment, some of the SUVs and pick up trucks that GM, Ford and Chrysler put out were great vehicles that offered a lot of value and practicality and were fun to drive too. This is not to criticize every vehicle they put out, even though quality standards and technology failed to keep up with Asia and European cars. It's just to say, they laid their gamble on the SUV craze and forgot to remember that fads and fashions all come to an end.

GM in particular is in real trouble. They're too big and have too much weight to carry with their responsibilities towards their retirees (health benefits and generous pensions). They just cannot downsize easily because they need to stay big to fund those liabilities. But in this regard it is not their fault. The health-care crisis is one of those things that keeps going on and keeps getting ignore because of ideological blindness in the American political culture which refuses to address the issue. So much for Can-Do Americanism. It's old news now that GM spends more on health-care per vehicle it builds than on the steel it needs for it. That's insane. And no relief is coming any time soon, no matter who wins the presidential election.

The current shift to smaller cars in the marketplace due to higher gas prices can be the proverbial straw to break the camel's back. This change in the market should not come as a surprise to anyone, but it's pretty shocking how quickly it's moving now. And it's a boom solely for the Asian brands since European's will have trouble selling cars profitably in the US market for some time given the strength of the Euro.

But there is also a lesson here for those CNBC and Wall Street Journal folks who are just so in love with American capitalism. What the hell went wrong with the American auto industry? And why are the European automakers not in distress? Don't they have even higher labor costs and more regulation and taxation to deal with? And don't they sell smaller cars with less margins?

The lesson is simple: quality products. Often American capitalism is about sales and marketing and flash and image and branding and all that other crap. The people getting so high on watching their investment portfolios temporarily flourish ("the business of America is business") on some company selling a cool business plan instead of bona-fide business model tend to forget that longevity in the marketplace requires making something of quality that people want to buy. And those socialistic Europeans are so weighed down by their welfare state and over taxed, over-regulated economy they cannot conceivably compete with American industry, can they? Well, the European automakers are just not as threatened by the Asian brands. They have competitive quality, better technology and more style and performance.

I actually believe, in a Darwinian sense, that tighter regulations and more taxation make businesses more competitive, not less. It's like someone on a strict diet and exercise regime. It puts them in better shape. It may be too late to save GM but to help free the country's economy from its dependence on imported oil more taxes, more regulation and government-funded research into sustainable sources of energy is the only way to go.

Four Bucks a Gallon! We're in the game now, Buddy Boy!

2008-06-09T15:58:00.000-07:00

Well, it's finally here. Gasoline in the US is now 4 dollars a gallon. Although pump prices always spike this time of year as the summer driving season begins, there is also that small matter of oil going for like 650 bucks a barrel or so. So, the safe bet is to get used to it. It's not likely to get better soon. Most evidence actually points to it getting far worse.

US consumers have had inexpensive gasoline for a long time. Prices in Europe right now are above 8 dollars a gallon. But, of course, the market here has always been adjusted to high fuel costs and the current crisis probably doesn't represent a paradigm shift like it does in the United States. In Europe, anything above a 2 liter engine is considered big.

The US market has begun adjusting in a fairly radical way. The Ford F-150, the defining vehicle of the American automotive industry, is no longer the country's biggest seller. That honor now goes to the Toyota Camry, followed by the Honda Accord – two well-built, extremely reliable mid-sized sedans. The Detroit 3 have been avoiding taking that hint for far too long. The consequences are crashing down upon them now.

But there is also something exciting going on here. The energy of the moment is palpable. Alongside that sense of apprehension at not knowing exactly what is coming also comes an anticipation for it. There is the possibility of improvement here.

Looking back at the last year or so, I realize how much less driving I've been doing, despite my occupation. Even when I test a vehicle I don't rack up the miles like I used to and try to get things done quicker and less painfully for the environment. As for my own car, I often leave it parked and walk or take public transportation. When I do take it, it's for short commutes to go shopping or visit friends who live outside the city.

This isn't something that I've done with any amount of deliberateness. I just did it without thinking much about. And not only do I not miss hoping into the car 8 times a day, I've come to realize that, with some Zen-like effect, the walking coupled with the psychological reward for my non-polluting ways has reduced my stress levels somewhat.

It's like this dream I once had. I'm in a parlor with a group of eccentric people. Three of them are sitting at a table playing cards. One of them, an older gentlemen, asks me to sit and play. I don't know what the game is and I'm not even sure what the stakes are but a sense of excitement takes hold of me and I can't wait to play. I feel like whatever happens, things will never be the same again. But somehow, I'm not worried at all. It's going to be a wild ride but it's going to be fine in the end.

The Beginning of the End - Is the automotive age, as we have known it, over?

2008-05-12T07:25:00.000-07:00

I hope not to be one who readily assumes a grievous tone as they portend of a dire future only to drop whatever the current subject may be on a dime for a new paradigm every time the headlines change. Remember how in the 70s we were running out of oil? Now, as the planet warms, we can't run out of it fast enough. But with oil at 122 dollars a barrel and rising and our dwindling oil supplies having the potential to send the global economy into a tailspin, it's obvious that game-changing events are quickly closing upon us.

The current crisis does not necessarily spell the end of the automotive age as we know it, not yet, but it just may be the beginning of the end. And one has to say, finally! As much as I enjoy the rush of a gasoline powered acceleration, you have to ask yourself why, with all the technological advances we've had since 1885 (and from first flight to the moon within 66 of those years), is humanity still stuck with this primitive propulsion system we've had for over 120 years? Namely, the internal combustion engine.

Even before the food crisis, we had ample science telling us the agricultural math just didn't add up for growing bio-fuels such as ethanol or bio-diesel. We couldn't possible make anything beyond a single-digit percentage dent in our use of fossil fuels. The EU has a proposal to have bio-fuels make up 10 percent of supplies by 2020 but the European Environment Agency has asked the EU to suspend the plan fearing it may cause unintended consequences in food supplies and won't do much to address the rising emissions which are the cause of global warming. Bio-fuels emit less CO2 than carbon-based fuels, but their use alone, with all their limitations and our ever growing total emissions, wouldn't have much of an impact on global warming.

So what are the alternatives? Hydrogen? Battery-Electric? A giant windmill on the roof of your car? Well, actually, all of those technologies are electric propulsion. Hydrogen-powered cars convert the energy into electricity to drive the car and batteries simply store electricity from an outside source. Even the windmill would have to deliver power to a battery unless you were into funky transmission systems. So, the only question is how we produce the electricity that will power those cars. Solar and wind are as environmentally friendly as we can get and the only drawback seems to be our own unwillingness to invest in these technologies.

The main limitation in this regard is the ability of batteries to store enough energy to power a car for 500 kilometers or so and have re-charging be as quick and convenient as gassing up a car is today. But improvements in battery technology are coming along, however slowly. Tesla Motors, the California start-up making an electric roadster claims the car can run up to 400km on a single charge. You will have to give up the rush of a rumbling engine for the low-key, baritone droning sound of and electric acceleration with tons of torque. And you'll be giving up the horsepower and the romance that comes with it. But so what? I mean, riding a horse is fun but I'm not going to be using one to get to work.

The good news is that you don't have to give up the concept of an automobile. We can still live in a world that affords you the comfort, convenience, mobility and enjoyment of your own set of wheels. It will just be powered with technology from the 21^st century instead of the 19^th.

Would Top Gear succeed or flop in America?

2008-04-21T13:51:00.001-07:00

(from left to right: Top Gear hosts Jeremy Clarkson, Richard Hamm and James May)

There have been some minor rumblings about bringing the BBC's Top Gear to US television. As Jay Leno confirmed in a recent Sunday Times piece, NBC has bought the US rights to Top Gear and has asked him to host the American version of the show. Leno turned them down (wisely, I believe) and in his column he explains why he thinks a direct translation would not work. I agree. At least, not on network television.

There are many challenges to a US adaptation of the show, the main one being that the BBC's independence from advertising allows it's hosts, in particular, the lethally-tongued Jeremy Clarkson, to bread and fry any car they don't like. In fact, that is the main appeal of the BBC show and part of a trait that is perhaps uniquely British – reveling in the language of clever insult and sardonic savaging.

For the show to survive on network/commercial television it would have to get most of its sponsorship from the automakers themselves, who are one of the largest buyers of prime-time TV advertising anyway. Leno says it himself in his column, that you couldn't criticize the cars anywhere near how they do so on Top Gear because the car makers would pull their advertising and the network would pressure the hosts to tone it down and hence, the formula is no longer. Leno should know something about all the sensibilities required for working in TV; his Tonight Show has been the leading late-night talk show for about 15 years.

But even if NBC were to take the show to cable, like the Discovery Channel, owned by NBC Universal, you still have the fundamental problem of whether there is really any sizable audience for such a show. A cable channel would not be dependent on ad sales and would require a much smaller audience for the show to be a hit, but they would still need to have broad appeal. Why wouldn't there be? Because, there is no equivalent car culture in the US as there is in the UK or Germany, which has about half a dozen popular car shows on TV too Some of those German shows air on private networks that run on advertising dollars. Those advertisers include automakers and, hence, the reviews are relatively sedate. (Besides Germans love their domestic makes and never really dog them. Fortunately, German cars happen to be pretty good anyway.)

Top Gear gets about 8 million viewers in the UK, a country of 65 million people. That would be comparable to something like 30 million viewers in the US, numbers only American Idol achieves on network TV. In Germany and the UK, these shows have broad appeal, primarily to a male audience, yes, but to the general male audience. The same kind of viewer who watches football matches and F1 races on Sunday. Just about every adult male is a potential viewer. There is no comparable generalized male demographic in the US. Even NASCAR is a particular kind of sport and not nearly as mainstream as football, basketball or baseball. In Europe, football (soccer) and F1 are the big sports. And other motor sports such as WRC are huge too.

Also, Jeremy Clarkson is a contradiction of a television personality. He can be an acerbic jerk or a witty cynic with a hidden humanity; often, all in one sentence. This, I believe, is too...just too 'much' for a mainstream American audience. In the US you are either 'edgy', in which case, you have no broad appeal, or a milquetoast host, like Leno himself, who's mass appeal comes partly from the fact that he's not the type to cut anyone down mercilessly, let alone the product of a major sponsor.

Also, a show where a host talks wittily about cars would come off as odd and peripheral to critics. Americans tend to see cars as utilitarian and only a very small percentage are buffs of any kind. In a success-obsessed culture, critics unfamiliar with what is to them an alien sub-culture would ask of a talented host like Clarkson (or Hamm or May), why is this guy's talent being wasted on some low-brow car show? The Top Gear hosts are smart, witty gents. 'Smart' and 'cars' don't mix so easily in a American culture subdivided and pigeonholed into niches.

And where are the fun and affordable cars to talk about? If you're only covering high-end brands like BMW or Lexus or Mercedes, that can alienate your average viewer who has no reasonable chance of ever owning one. Conversely, many of the models that have any mythology attached to them, that bear any character, are actually pick-up trucks, since that is what the domestic automakers have been focused on for the last 15 years. But with oil at 117 dollars a barrel do you really want a host to be waxing poetically on all the fun she/he had driving across country in their old '93 Chevy Z71, which gets about 13 miles per gallon?

It's tempting for auto enthusiasts to want a show like Top Gear to come to the US and expect it to work. The US is just as much a car culture as the UK, right? Just as much, yes, but very different. Americans drive a lot because they have to; which may explain why as consumers they prefer large, comfortable vehicles to small, nimble performers. They also see premium brands more a measure of wealth than as vehicles with superior driving dynamics. Many observers have noted that cars in the US are a commodity and often taken as an appliance by consumers. Some automotive writers have made that point to explain the popularity of Toyota models which may be unexciting to journalists but are extremely reliable and therefore a favorite for consumers. The percentage of time commuters in the US are spending in their cars is ever rising, much of it stuck in unbearable traffic. And maybe those drivers don't want to go home and watch a show that is just about driving.

Mad Max Mosley - "I'm not a Nazi but I play one in grainy sex videos"

2008-04-20T14:53:00.000-07:00

In a recent interview with The Sunday Telegraph, Fomula One boss Max Mosley “has defended his right to pursue an 'eccentric' private life” and continues to resist demands that he resign before the end of his term as head of Formula One next year.

Mosley, president of the Federation Internationale de l’Automobile (FIA), the body that oversees Formula One, was caught on video role-playing a Nazi (and alternately a concentration camp prisoner) in an S&M dungeon with 5 prostitutes. You can find the video on YouTube, where you actually hear him shouting in German, which he learned as a teenager.

It all sounds bad enough, but Mosley is also the son of a notorious Nazi-sympathizer. So his insistence that this is just some private 'eccentricity' is of no comfort to his critics (nor to this humble blogger). Mosley's father was the infamous Sir Oswald Mosley, head of the British Union of Fascists, who's second wedding was held at the Berlin residence of Joseph Goebbels (Hi, honey, no need to make supper, we're going over to the Goebbels' tonight) and was attended by Hitler himself.

But hey, there have been more twisted, Nazi-themed sexual fetishisms haven't there? Like this.

Now, I've always thought that one day someone ought to write the definitive book on the psycho-sexual subtexts of Nazism - you know, given all that leather and the barking of orders and stuff. First on the list to be interviewed would be Paul Verhoeven, director of Robocop, Basic Instinct and other exceptionally subtle films with very little sexual and violent content. Just check out the Wehrmacht and SS-style uniforms in his Starship Troopers (Verhoeven lived under German occupation as a child in Holland) and you'll have a laugh, especially seeing Doogie Howser dressed as a proto-Nazi. Extreme satire or fetishism? Maybe both.

BMW M3 Coupe – The mechanical bull dialed back to 1

2008-04-08T16:12:00.000-07:00

You know, one of the biggest disappointments of my life has been that I was not old enough to have experienced the Country & Western fad of the late seventies. Of course, I was barely ten when the seventies ended and I grew up in Quebec. Nonetheless, some of you may recall movies like Smokey and the Bandit and Urban Cowboy (and other cinematic and TV fare that made the profession of truckin' look fun), the excessive exposure of Dolly Parton's breasts and, of course, the mechanical bull, which I never got to ride. I think just about every sit-com in the late 70s had an episode where one of the main characters had to ride one. Actually, the last time I saw this lame comedic tactic employed was on an episode of Sex and the City. Although, I believe I may have hallucinated that so, please, do correct me if I'm wrong. And I would have to have been on some serious drugs to be watching Sex and the City.

But I know what it feels like to ride one. The mechanical bull in question here is the BMW M3 coupe, which looks like a huffing and puffing steer at the running of the bulls in Pamplona and rides like you would imagine a Japanese animatronic version of one to. It straddles and grips the road like a beast of burden and measuredly puts kilometers behind you very, very quickly. To its credit, it is direct in its approach to driving – it is all engine and wheels. The original M3 more than 20 years ago came with a 2.3 liter four-cylinder engine with 200hp. Today it has 8 cylinders, 3999cc that pumps out 420hp at an incredible 8300rpm. It's all that revving that makes the car a true rocket. And by rocket I don't mean to employ that word, being the cliché that it is, in a positive sense. After all, a rocket is just an engine and fuel with a singular purpose and nothing else. Where is the personality?

No, this is no wild bull but a robotic one that has been dialed back down to 1. It's all safe. It's made for people with more money than driving skills and for 125,000 Swiss Francs (80,000 euros or 120,000 USD) you're buying the M-brand as much as you're buying an M3 itself and this cars feels like it was designed to 'be' the brand.

It's not that I object to these super cars on moral reasons but aesthetic ones. Power doesn't necessarily make something fun to drive. I'd love to see an automaker one day come out with a version of a car that has less horsepower than it's predecessor but more of the crazy factor. An automobile that matches and balances the engine's performance to the limits of the suspension and chassis but one that twists and spasms and surprises you. I've come to believe that some of these premium brands really get stumped about what to do next with each successive model. Hey, what should we do for the new M3? I dunno. Let's add some more horses. That'll impress them.

All that power comes with a cost. As in, about a quarter tank of gas just to get from Zurich to Basel (about 70 km). Every time I touched the pedal, I would warp-speed into another dimension and instantaneously find myself in the next town 20 kilometers ahead. If I had floored it for more than a second I would have shot up to Brussels instead. (And I'm getting a little tired of BMW's iDrive navigation telling me what to do. I half expect it now to scold me with its female Hal-like voice,”What do you think you're doing, Dave?” every time I make a false turn. “Dave? You weren't supposed to turn there, Dave. Dave? I didn't tell you to turn there, now, did I?...Daisy, daisy...” I guess, it's my fault for still not figuring out how to turn the damn thing off.)

Anyway, having said all that, I have to say, there is no way you cannot like this car. It's pure BMW precision. The 6-speed manual transmission puts you in control and lets you have your bursts of power and decompression thrills. Push the engine past 8,000 rpms and it barely seems rattled. You can try to kill yourself by taking a 40km/h turn at 120 and this car will chuckle at you. If I sounded disappointed before, well, the reason is that driving BMWs spoil you. I was looking for spunk and soul and that's a gratuitous complaint with BMW which can make such perfect performers like this. Yes, sometimes you want to dislike the brand. You hate those pretentious drivers who scurry around in them with smug self-satisfaction. And yet, when I was driving the Z4, which is my absolute favorite convertible ever, and I was getting those looks from people, all I could think was, hey, you would love driving this car too.

The M3 can only be seriously compared to competition like the Mercedes C-Class AMG or the Audi S4/RS6. I will be soon reviewing the RS6 and will post on that. In general, Audis drive like quieter, slightly sounder VWs. And Mercedes' are always mature, responsible, solid, fast and comfortable. But the M3 owns this segment and easily leads in the driving pleasure factor.

With these kind of cars you have to judge them for what they are, for what they are intended to do and how they rank along with their competition. That means acknowledging that M-series models are still the benchmark that no other automaker has really yet to meet as a whole. But it also means being harsh on a car this expensive and with a brand that promises so much. BMW has set the bar real high with the M3 and that is a compliment in itself.

The Ugly Bavarian (or A Little Criticism of Criticism)

2008-03-20T14:51:00.000-07:00

Can you see a difference?

Dan Neil at the LA Times thinks the BMW 1 series is ugly.

I have to say I agree with his judgment on its looks, even if I've only once sat in the car and had to be placed in treatment for a bout of claustrophobia, so, I can't say anything about the way it drives.

Now, I envy Neil. He has my number-two dream job (I won't reveal my first, which involves...ah, forget it). Meaning, I would be doing exactly what I'm doing right now, except getting paid enough to purchase consumer goods and services such as food, shelter and clothing. And I'm a huge admirer of Dan Neil's talents, which I've written about before. Although, reading that post now, it kinda verges on the sycophantically creepy. Rest assured, though, I'm not the type to go all Glenn Close and boil anyone's bunny.

But I do feel the need to advise Neil on something he wrote in his review of the 1-series.

“I search the stars in vain for a reason the designers gave this car a notch-back design -- so that there is a discernible trunk in the back -- when it so plainly aches for a fastback. “

The answer is simple, Dan. There is a fastback version in Europe. But when you say fastback in the United States of America, someone will inevitably provide its bastardized translation: hatchback. Subsequently, as soon as American consumers hear the word hatchback they, each and every one of 300 million people, immediately think of their uncle Lou's 1984 Dodge Omni and flee accordingly in the opposite direction, howling madly and flailing their arms in the air in hysteria.

There.

And since when can't the LA Times afford to spring for a photographer instead of lifting its photos of the car from the BMW press site (the German plates sort of give it away) like some second-rate car blog (not this one!) too afraid to break copyright rules? This does not bode well for my career in automotive criticism (gotta get back to that novel) if a huge paper like the Times is that cost-conscious with its auto section even with a story by a Pulitzer-Prize winning writer.

Times change, people change, currency rates fluctuate

2008-03-13T14:47:00.000-07:00

The currency markets are at it again. The dollar took another dip today and it takes an amazing 1.54 US dollars to buy yourself a euro these days.

But the strength of the euro is hurting European car makers in the global market. VW is looking to hedge their currency exposure by building a plant in the US. They're still searching for a site somewhere in the business-friendly (read: union hostile) Southern states.

But Dieter Zetsche thinks it's good exercise.

From the FT:

Dieter Zetsche, chief executive of Daimler, likens European carmakers’ battles with the strong euro to a session in the gym.

“The currency situation is a permanent training course for us. We always have to keep going and improving and that is keeping us fit.”

But the German car makers are all making more money now, except for BMW, than they were in 2002 when there was a dollar/euro parity.

Maybe he has a point. The currency pressures and competitiveness make them improve their productivity and creativity in delivering desirable products to the marketplace.

--

And building a US plant is not a simple solution as the FT story explains.

Part of the reason lies in the fact that production accounts for only a small proportion of a carmaker’s dollar exposure.
BMW estimates it is worth about 10-15 per cent of its exposure whereas purchasing accounts for 60-80 per cent. And here matters are much trickier.
The crisis in the US car industry has led to severe problems for suppliers and the German luxury carmakers have found difficulties in building up a reliable supply base that can provide them with the same quality of components as back home.
“There is a big problem with suppliers over there – many of them are almost dead. That makes a new factory less likely,” says Mr Zetsche.

Geneva, Geneva - It's better to look good than to feel good

2008-03-13T14:19:00.001-07:00

This is what the Geneva show is really all about.

Gawking at the cars is for the motor heads.

Journalists who cover this yearly event and the people in the industry who work it know what I'm talking about. The Geneva show is essentially a massive marketing campaign which the automakers conduct in collusion with one another. It's about roiling in the glamor of motoring and the auto industry and getting a bunch of free press for all the new car launches.

For journalists it's always a fun gig to cover but I have to say the blatant gender inequality on display at Geneva (and at the Paris/Frankfurt shows too) makes even this macho Italian uncomfortable.

Already, the European industry suffers from a dearth of female executives, which is something I've written about before. And automotive journalism too is still predominantly a man's game. So you have the executives there, a collection of middle-aged white guys, in their 3,000 euro suits talking shop with the journalists, a collection of slightly younger, much more poorly dressed white guys and then all these would be models standing around looking pretty...and pretty tired too from all the hours of posing and forced smiles. It is really striking. The women are basically props and the message it sends is very clear.

I've always thought it would be a good joke if one day a female executive unveils a new car launch accompanied by a set of buffed up, stupid good-looking male models with fake tans and steroid tweaked muscles. Just to make a point, really.

I'm a guy and the girls are cute but, man, come on, this is ridiculous.

Peugeot 308 2.0 HDi - I'm getting old, buy me a diesel

2008-03-03T12:21:00.000-08:00

I remember once seeing the actor Brian Dennehy being interviewed on a late-night talk show about 10 years ago. The host happened to mention the name of the latest, hip rock band that was raging against the world at the time and asked Dennehy (then about 60 years old) if he had even heard of them. Dennehy just brushed him off with a wave of the hand and said dismissively, ”I'm old. I don't have to know.”

Such is the advantage of getting older. You get to not care. And don't underestimate the luxury of that in our technology-driven, changes-by-the-minute, hipness obsessed culture. There is also the lesson here of life coming in cycles. Remember how you would make fun of your teachers in school for wearing clothes that were out of date? Well, one day, that will be you. It might be you already. This world is cruel and it will inevitably make you uncool. Your only response can be to not give a crap. Because, in truth, not giving a crap is one of life's most liberating pleasures.

Which brings us to the modern diesel engine. When I test a car I have to push it to certain limits to get a feel for its engineering. Meaning, I floor the pedal and shift gears at the rpm of maximum horsepower; which for diesels is usually somewhere around 4000 and for gasoline engines in the region of 6000. But while driving the new Peugeot 308 HDi (2.o liter with 140 hp and 320 Nm) I just didn't bother.

I happen to like this engine which Peugeot developed together with Ford and is found in the Ford S-Max and other models I've tested before. This diesel is so easy that no matter which gear you're in you can call upon a massive reserve of pulling power with a stomp of the accelerator. I found this comfortable. I found it comforting. I liked just being able to enjoy the drive and not having to bother to shift all the time or worry whether I'm in the right gear or not. You could driver this car in 4^th gear all day long and it wouldn't matter. So, I did. Don't feel like changing gears? Don't. Not a problem. We are not in a rush. We are not looking to look cool anymore. We've got other worries to occupy our time. As I drove, whilst at the same time driving myself insane with those mundane pre-occupations of daily life, like getting the laundry out, cooking the baby's food, handing in that story on time, doing my banking, calling my mother, picking up that thing for my sister, etc. etc., I really didn't need to give a hoot what gear I was in. I'm Dennehying.

The 308 feels a little lumpier and more languid than its predecessor which itself was not as nimble as the 306. But this growth is a contagion affecting much of the cars in this segment including the segment-leading VW Golf. The 308 drives like a sedan - which isn't to say it's necessarily a bad thing. Remember, none of us are getting any younger and to have a car that's large and comfortable while still pretending to be a sporty(-like) hatch...well, that's the definition of the compromises we make while aging.

But I have no idea how Peugeot ever hope to make a GTi version of this car. They probably won't, since the 307 GTi never came to be. Peugeot sources tell me they are very reticent to be seen doing anything that smacks of me-too-ism with regard to VW. Hence they don't offer 4 wheel drive or a GTi version. Smart move. Maybe next they can eliminate air conditioning. But hey, they have a glass roof where you can drive under the sky all day without having to brave the elements.

Market-wise, I think the 308 is a very competitive model, particularly with this diesel engine. It still offers better looks than the Golf, although it's really just a pumped up 207 with a design that better suits the smaller dimensions of that model. In this most competitive segment, which is also the largest in the European market, you have to change your standards of judgment as the cars become larger and aiming for comfort and space over performance. These really are no longer the 'hot-hatches' of the past. Not this 308 and not all the others like the Astra, Focus, Megane, etc. That label belongs solely to the segments below now - the Polo, the 207, Clio, and all. For what the 308 promises - comfort, room, the sedate stylishness in the delicate lines of its sloping design, lots of soft power under the hood with some precise steering (electric) and some remaining echoes of Peugeot's previous magnetic handling - it delivers in a very typical, modern, corporate-competent manner. It's a car even Brian Dennehy would like a ride in.

The Zeitgeist is Green (or is it blue?)

2008-02-19T00:16:00.000-08:00

It does seem as if we've reached a point of critical mass on the issue of CO2 emissions and that there really is going to be some movement here on the part of the automakers. They've simply made too much of an issue of it themselves to back off now.

Automakers are going green - even branding themselves as such. VW has Bluemotion - it's name for its clean diesel technology - Mercedes has Bluetec and both are marketing these new diesel sub-brands to highlight their fuel-efficiency and emissions reducing credibility. I guess neither of them bothered to check what the other was going to call their technology. In any case, green is blue for both of them.

But not for BMW.

BMW: We may need a 'green' brand
Separate brand would preserve performance image
The new U.S. fuel economy standards are squeezing BMW so tightly that it might create a fourth brand to sell ecologically friendly cars.

BMW must find a way to satisfy growing pressure for vehicles with lower emissions and better fuel economy, says Stefan Krause, BMW AG's board member for sales and marketing.

But it must do so without distorting the images of its existing three brands, BMW, Rolls-Royce and Mini.
...
"We cannot take the blue out of BMW and change it to green," said Krause. "Maybe we could add a fourth brand."
...
Despite talk of starting a green brand, BMW executives are unsure how badly their customers want fuel-sipping vehicles. "People go to cocktail parties and talk about being green and then drive home in their M6s," Krause said.

It seems that Krause is not aware that, according to his chief competitors at Mercedes and Audi, blue is green. They've made it easy for him.

But a fourth brand? What does this mean? Does Krause really think they have to start a whole new brand just to market their more efficient cars?

Maybe he should speak to his marketing people and they can teach him the meaning of brand image and what a loss-leader means. Yes, people may say they want a green car yet still opt for speeding guzzler but the technology of the brand is what attracts them anyway, and that includes green technology. You don't need another brand. Being green is good for your brand. Period.

Will the Nano sell in Europe?

2008-02-19T00:00:00.000-08:00

Tata has announced that it will bring the Nano to Europe in 4 years. A good guess is the price tag will be somewhat higher than the 1,800 euros of the model launched in India earlier this year. Tata Motors would have to bring the car up to European safety and emissions standards and that in itself will add considerably to the price of the car. Of course, when you are starting from such a low base-line, it will likely still be the cheapest new car on the block.

The question is will it sell? Or maybe, there are several questions. Like, if there is a market for ultra-cheap cars, will this invite competition? Or is the Nano just plain too small for Europeans?

Many parts of Europe can be densely populated, yes, but mostly in the wealthier markets in Western Europe where such a cheap car is not necessarily a draw. And in Eastern Europe, where micro-models such as the Chevy Matiz find a market, will the Nano have competition that offers more room and better quality? After all, there are very few places in the world where drivers have to share road space as much they do in India.

If Tata really wants to enter the European market and succeed, do they really want to be known only for making the absolute cheapest car? Is that the wisest strategy? If you have a cost advantage in manufacturing there are plenty of ways to exploit that without defining your brand so lowly. Maybe they should aim a little higher and look at how the Korean brands Kia and Hyundai have quickly mimicked the success of Japanese automakers in the West. There is a model there to follow.

To blog or not to blog

2008-02-05T08:52:00.000-08:00

Before I began Euro Car Guy I had some ambivalence about blogging. I didn't want this blog to be a bloviator's forum. And as someone who cherishes language, I wanted to do some real writing - thoughtful, insightful, analytical and with every argument tamed by mitigating factors. Of course, I always fail at this but that doesn't mean my objective should not remain to try to meet the highest of standards. While my opinions can be sharp, I like to think they stand in contrast to conventional thinking or try to get at an essential truth or logic often lost in the wave of news details. The critique of blogging is that it is usually philistine and unprofessional. Yes, the writing has to come fast to meet the demands of the medium but I don't do my thinking as expediently. Hence, most of my blog posts run so long that they are more essay writing than anything else.

The ambivalence I had came from that general critique, and for me it drove a skepticism, bordering on condescension, of blogging. But then I thought about film. And about literature, which I studied in university. I've been a lover of both my entire life and could never understand the snobbery one sometimes encounters amongst literary types with regard to cinema. Conversely, I've always recoiled at the contempt some Hollywood players express for literature, both literally and in the work that they do.

So, I had to come to the conclusion that it is not the form but the content. It's easy to be a bad blogger, just as it's easy to write a bad book or make a poor film. It's incredibly difficult to author a good book or create a quality film. And there is nothing that makes a filmmaker any less of an artist than a writer or vice-versa. Being good at anything is tough and rare and ought to be acknowledged and praised wherever it is found. Blogging is just a new form of writing, or, better yet, a new medium for writing, and it has established for itself a legitimate space as part of the media landscape. Many blogs serve as a means for people to sift through the tonnage of news and content that is out there through a trusted, human voice. Creating a quality blog is part of the business of journalism now. In fact, blogging seems to be a natural morphing of commentary/analysis and news meant to meet the demands of the Internet.

Blogging got its bad name from mainstream journalists who resent its peanut gallery tactics. This is especially the case in the US where political blogging came to fill a vacuum left by the traditional media when it failed to critically question the Bush administration on many issues, but mainly in its decision to take the country to war in Iraq. People were angry and angry not only at the news but at the journalists. Oddly enough, the internet and technology was supposed to fragment the media and it has. But it has not fragmented the media structure. There has actually been tremendous consolidation taking place in American media in parallel with the rise of the Internet since the late 90s with a handful of massive conglomerates owning most of the newspapers and broadcast news outlets.

Blogs invited the derision of traditional journalist who see them as self-appointed op-ed columnists who don't have to verify sources or meet any standards of journalism. But they also serve as a check on bad journalism which relies too heavily on conventional thinking and reflexive ways of doing things. But now, most major newspapers and magazines have incorporated blogging into their online operations which I find makes their presence on the Internet more organic, as the voices of those publications interact with readers and create a more heightened sense of accuracy and accountability. They also serve as a great stop over for a quick fix of info on a select topic.

Blogging is a great, self-correcting form of writing because it is constantly evolving, assimilating new information and adapting to it and developing analysis along that ever improving collection of data and input. You don't even have to call it blogging if you don't like the term. But I don't mind it now. I'm a blogger.

Say again, BMW?

2008-02-05T08:34:00.000-08:00

January sales in the US just dropped dramatically for BMW. BMW says it has to do with inventory and a sales surge in December and that they expect sales for this year to grow slightly. One has to be skeptical about that even though those factors they mentioned may have had an impact. The US is experiencing a credit crunch right now and how many people do you know buy a BMW and pay the full amount in cash?

Story below.

Toyota's sales are also down slightly in the US for the fourth quarter which they blamed on the subprime crisis. Meaning, US consumers simply can no longer borrow to spend at anywhere near the rates they've been doing so over the last several years. Spells recession? Maybe, maybe not, but it sure sounds like it.

I think all automakers, but especially the German brands, are going to have to re-assess their position in the US market. And just when VW has chosen to make its long-overdue push in the US, this crisis hits. Hey, the world waits for no one.

--

BMW U.S. vehicle sales drop 22 percent in January
FRANKFURT (Reuters) -- German carmaker BMW said group vehicle sales fell 22 percent to 16,935 in the United States in January but said it expected retail sales there to rise slightly in 2008 compared to last year. "Sales were impacted by lower than normal inventory levels due to a very strong retail performance in December and high demand for all-wheel drive models," BMW of North America said in a statement on Monday.

BMW brand sales were down 26.7 percent to 14,475 vehicles, compared to 19,761 vehicles sold during January 2007, BMW said.
--

The Big (False) Hope for German Carmakers

2008-01-30T12:53:00.000-08:00

Yet another German automaker announces it wants to increase sales in the US market. After VW and Audi each vowed to grow sales aggressively in North America, now BMW is saying,"me too."

From Reuters:

Report: BMW eyes U.S. sales of 400,000 cars per year

Reuters
January 28, 12:00 CET

FRANKFURT (Reuters) -- German premium carmaker BMW aims to increase its sales in the United States to 400,000 units per year in the medium term from 336,000, the German auto motor und sport magazine reported.

"Today Europe is still our main market with a share of around 60 percent followed by North America with 24 percent and Asia with 11 percent," the magazine quoted BMW's head of sales and marketing, Stefan Krause, as saying.

"Looking at countries, the United States with 336,000 units overtook Germany as our main market already a few years ago. And it is there that we see the absolutely strongest growth worldwide," Krause said.

Well, that's a lot of expectation to deal with and I'm not sure the German automakers are reading each others' press releases. If every automaker is going to grow their sales in the US like they say they are, then Americans are going to be buying a lot more cars in the near future than they are today.

Yes, the US market is the world's biggest and is certainly still one of the most dynamic markets where consumers will flock to buy a product that strikes their fancy. But it's also a very mature one and quite saturated already. And the country's economy is teetering on the edge of a precipice called "the R-word" which can stick a pin in all those balloons carrying your rising German brand sales numbers.

I'll leave the last word on this to my colleague Guido Reinking, editor of Automobil Woche in Germany who thinks that German automakers are in denial about the looming US recession.

Is it blissful ignorance, whistling past the graveyard or willful self-deception?

There must be some explanation for the lack of concern, the serenity even, with which German automakers and suppliers view the looming economic crisis in the United States.

It should be clear to all executives involved in the United States that their lofty sales goals border on the nonsensical.
...
But at the Detroit auto show this month, executives for BMW, Mercedes-Benz and Volkswagen were still voicing their projections that the United States could continue absorbing more of their cars each year than in the previous year.

That is yesterday's equation. For the foreseeable future, the sales trajectory will flatten or even turn down. America's economic crisis this time is not likely to bypass the upper classes, those ready buyers of premium German cars, even if they're usually more independent of economic cycles.

As usual, the middle class will be hit hard. Do German executives need to be reminded that the middle class provides the lion's share of demand for VW in the United States as well as the lower-priced models from Mercedes-Benz and BMW?

No, there's no longer much doubt that a U.S. recession is on the way.

GM vs.Toyota - Update

2008-01-24T14:52:00.000-08:00

So, today the news is about the battle of the giants - GM versus Toyota...and Automotive News versus the Financial Times, apparently too.

The FT called GM the global sales leader in a story they posted earlier today at around 2pm (I'm assuming the dateline is London). At 12pm EST Automotive News called it for Toyota (disclosure: Euro Car Guy freelances for Automotive News Europe, sister publication to AN).

Oddly enough, the FT also posted a simultaneous story by the same two reporters which said the two automakers were 'neck and neck'.

GM reported global sales for 2007 of 9,369,524 cars. While Toyota reported 9.37 million. So, okay, let's just call it a tie lest we have to ask Toyota for the exact number of cars, which I'm not even sure is possible.

But Automotive News called the race for Toyota since it discounted the Wuling brand of China sales that GM included in its total.

From Automotive News today:

It was widely reported this week that the two automakers finished in a dead heat for the No. 1 spot. Here is why: GM includes in its total 516,435 vehicles of the Wuling brand in China.

But GM owns only 34 percent of the Chinese company that produces Wuling vehicles, SAIC-GM-Wuling Automobile Co.

Shanghai Automotive Industry Corp., a major automaker in China, owns 50.1 percent of SAIC-GM-Wuling Automobile Co.

Automotive News follows industry practice by including sales of only majority-owned subsidiaries in an automaker's global total. For instance, sales of Mazda Motor Corp. are not included in Ford Motor Co.'s total because Ford owns 33.4 percent of Mazda.

So Automotive News subtracts Wuling-brand sales from GM's reported total, arriving at 8,885,599.

I guess that settles it.

Biggest is not always best

2008-01-24T07:51:00.000-08:00

Why do automakers always want to be the biggest? For that matter, why do all corporations want to be the biggest in their sector?

Maybe it's because journalists like to report on who is the biggest instead of who is the best. After all, you don't see regular headlines about how BMW consistently makes the best premium sedans in the world.

The latest is the horse race story for top global automaker between neck-and-neck GM and Toyota. (A game VW would like to get into as well.)

But what does that really mean? Not much. It's pure vanity. Toyota is extremely successful, profitable and with loads of cash (estimates run at around 50 billion) to invest in future production.

GM has been on the verge of bankruptcy for the last couple of years. The two situations could not be more different. So you have to ask the question: What does remaining the worlds largest automaker really mean for GM?

But call me a romantic...I still would prefer to be the automaker who has the most exciting and quality vehicles rather than be the biggest seller or the richest guy on the block.

Ford of Europe helps keep Ford going

2008-01-24T07:46:00.000-08:00

Ford of Europe and PAG are in the black and mitigating Ford's losses. Ford has reported a loss of 2.7 billion US for 2007.

From the FT:

Ford’s Asia-Pacific, European, and South American operations were all profitable last year, but the core North American operation lost $3.5bn before taxes, compared with a loss of $6bn in 2006.

You can read the entire FT story here.

VW engine and transmission plant in North America - Update on rumor

2008-01-24T00:30:00.000-08:00

Volkswagen has announced it will also build an engine and transmission plant in North America to feed a new assembly plant it hopes to build there and have operational by the year 2010.

VW plans engine, transmission plants
North American plants will feed U.S. assembly operation

Rick Kranz
Automotive News Europe
January 23, 2008 - 1:28 pm ET
DETROIT -- Volkswagen will have engine and transmission assembly plants in North America to support a new vehicle assembly plant the automaker is expected to build in North Carolina.

The assembly plant could be operational in 2010.

" We'll make an announcement within six months" about the location of the plant, Stefan Jacoby, CEO of Volkswagen Group of America Inc., told the Automotive News World Congress today. After that announcement, the first vehicles could appear in " a little bit more than three years," he said.

Jacoby said the engine and transmission plants do not have to be near the assembly plant, saying Mexico and Canada are options. But " if we don't localize the plants" in North America, he said, " we can't be competitive."

This makes perfect sense, as I've written in earlier posts. They need to localize content in order to get the most value out of a local plant and hedge their currency exposure and drivetrains usually account for about a third of the cost of building a vehicle. A plant in Canada or Mexico can keep labor and health care costs in check as well. The problem is that the two-plant strategy requires huge investments and makes it a riskier proposition for VW to turn things around in the market there.

VW says it wants to sell about 800,000 vehicles a year in North America by 2018. For that, a local plant is necessary so that they aren't selling more cars just to lose more money. But if they don't turn their brand position around, or if their local products become plagued with quality issues, then they run the risk of losing...and losing big time.

VW has recognized the need to reposition the brand and has vowed to do so through redesigning their models and offering a wider product line, focusing on technology, a new advertising strategy and expanding the dealer network.

Jacoby also wants to relaunch the Phaeton.

"It was a mistake to end Phaeton sales in the United States. We are thinking of relaunching the Phaeton, which is difficult in this market. I think Volkswagen is so good at brands that we can offer models in the volume segment and also in the luxury segment. It is a state-of-the-art car, and I think this car will fit very well in this market."

--

And Jacoby has denied the rumor that Volkswagen has already bought some land in North Carolina for the location of their future plant there.

From Automotive News:

[CEO of Volkswagen Group of America Inc., Stefan] Jacoby refused to confirm an Automotive News story that the automaker purchased or had an option to purchase land in Rocky Mount, N.C., east of Raleigh and Durham.

Said Jacoby: " There has been a lot of speculation on this front, including the silly rumor that I've been traveling the Carolina countryside with a bunch of Germans purchasing land. That is not true."

VW on the warpath: Part II

2008-01-24T00:00:00.000-08:00

After I wrote my earlier post on VW's ambitious plan to sell 10 million units and overtake Toyota as the world's largest automaker by the end of the next decade, I had some second thoughts about it and felt that maybe my judgment had been rather harsh.

But what do you call it when you have second thoughts about your second thoughts? Can you really begin a sentence by saying, "On third thought..."? Probably not.

After reading what many other, more experienced experts and observers of the industry have said about the plan (i.e. that it is, indeed, too ambitious) I will stick by my initial analysis. Notwithstanding that, though, Volkswagen does need to increase their sales in North America and for that they need a plant in the region. This was something I addressed in an earlier post on Volvo, which itself does not need a plant there, and despite its musings about it, and will probably not go ahead on that.

[There's been a rumor - and this is a blog so I can report a rumor - that VW has already bought the land for the plant somewhere in North Carolina. I will follow up on this and if it comes to anything, will post about it.]

VW is in a bind in the US market - it doesn't have enough of the right products for US consumers and is losing money on selling them cars made in Wolfsburg. But their main problem, I would argue, is the brand. They simply are not well positioned in the marketplace and that is not entirely of their own doing.

Let me explain.

Think of it this way, if you're the only volume European automaker in the US market (no Fiat, no Peugeot, no Opel, no Renault, etc.) shouldn't you have a natural advantage? Shouldn't you be able to go to the American consumer (and let's not forget the Canadians too) and give them the following argument?

"You can buy a crappy domestic make. Or you can buy a boring, although reliable Japanese make. Or you can buy European luxury, for a steep premium. But only VW can offer you European quality, style and performance for a reasonable price. There is no one else who can do that except us. So please, buy this GTI."

You would think than any automaker in such an advantageous position in the market would be able to exploit that and be successful. You would think that performance and style oriented consumers would flock to the product like those techies who stampede for the latest iPhone or iPod from Apple. Then why hasn't VW been able to do that?

It's really a matter of the brand image. VW has not being able to forge for itself the brand identity that it should have as a slightly upmarket, technologically advanced automaker. Historically, Volkswagen came into the US market as a cheap car maker with the Beetle and it has never been able to shake that image. Their problem now is that consumers see VW as just another average brand but with higher prices. Which is why VW has cornered themselves into a niche market they can't break out of, with Yuppie customers mostly along the coasts of the country being the core of their customer base. (VW does well along west coast of the continent from Vancouver down to LA.)

Part of this problem is also the stubbornness of US consumers, who refuse to look at a Volkswagen as a great value purchase - essentially getting an Audi at a solid discount. VW has some great products like the Passat, which often tops the ratings list as the best in its class at Consumer Reports. But just ask anyone looking for a car in the US or Canada if they would consider a VW and I'm sure more often than not they will say that they're too expensive. This is because their brand image has not caught up to where the actual products are in the marketplace.

But ultimately responsibility lies with the car maker and it is up to VW to make a value proposition that will appeal to the North American driver. They have not done that.

And what would that proposition look like? I'm not an expert in marketing but it would involve promoting the technology they have, such as direct-injection gasoline engines, high-powered diesels and their dual clutch DSG transmission. It would tell consumers, in a very direct way, you only get this technology at this price with VW. It would mean hyping the excitement factor of the GTI in their advertising strategies. It would mean taking a leap of faith with American consumers and offer the GTI in a five door configuration. Truly, fun for the whole family. Create an ad where Dad or Mom take the kids shopping, loading up the hatch with groceries, dropping the kids off at soccer practice and then roaring away in what is now a sports car. You see so many drivers doing just that every day in Germany. Yes, Americans don't see a hatchback that small as a family car but it's an image your selling not that specific model to a family of four. You let them know, hey, with the GTI you get a sports car you can go shopping or take the kids to school with too.

VW can deliver the right products (i.e. great cars to drive) to the North American market with the technology and expertise that they have (something that is definitely part of their game plan now). And they will build a plant there and reduce the cost of delivering products to the market so that they can sell cars profitably there. But they also have to change and take upmarket the VW brand identity - and to do that they're going to have to ask the consumer to take a chance and meet them halfway.

The Tata Nano - cheaper than a bread box

2008-01-15T14:31:00.001-08:00

This car is made to be affordable for the Indian market. At 100,000 rupees (2,500 US dollars, or 1,750 euros) it will be one of the cheapest new cars available in the world today, which is the reason this release has gotten so much attention.

But I doubt the car will make it to too many other markets in the developing world as so many have speculated. It seems designed specifically for the type of traffic you have in India, which requires small vehicles to navigate roads crowded with everything from large transport trucks to farm animals. Driving conditions in India, from what I understand of it, are insane by our Western standards. But for most other developing countries in Asia, Africa and South America, where the market demands cheap cars, people probably would like a little more room than that and will stick to importing used cars from more developed countries. In most of those places, you don't have the crowding conditions you have on Indian roads.

As for the car coming to Europe, which seems a real possibility given Tata's alliance with Fiat, they'd have to make substantial investments in further development just to meet safety standards here. But even at that, the car would still come cheap given the low baseline of its current selling price. But I'm guessing Tata's strategy for Europe is smarter and more ambitious than that. They will probably aim on bringing more competitive and profitable models to Europe once they consolidate the purchase of Jaguar and Land Rover. Maybe they will badge them as Tata or they'll be sold as Fiats, but I'm sure they don't want to be in the same situation as the Chinese automakers who are looking to bring cheap products here but are Keystone copping their way through the process of bringing the cars up to Western standards. They will want to make cars of acceptable quality for the volume market and maintain and build their palette of brands from Tata at the low end to Jaguar and Land Rover at the high end.

Either that, or they can Keystone cop it too.

Volvo also considering North American production

2008-01-14T15:07:00.000-08:00

First, it was VW which began throwing the idea of another plant in North America around as part of their extremely ambitious target of overtaking Toyota as the world's biggest selling automaker within a decade. Now Volvo too is considering a plant in the region.

Volvo CEO [Fredrik Arp] said the brand will not compete head-on against premium brands BMW, Audi and Mercedes-Benz. Arp said Volvo will continue to emphasize its Scandinavian heritage, mostly in its design, as well as safety and environmental credentials.

Said Arp: " Over the past three-four years, we have lost very significant money because of the dollar decline."

The key here is where Arp says "over the past 3 or 4 years". Yes and in another 3 or 4 years when you actually have the plant up and running, the euro is suddenly back down to 85 cents US and you're scratching your head wondering why you just dropped a billion dollars in order to mitigate your currency exposure.

Maybe I'm making too much of the currency issue, but I used to cover the currency markets and I understand well how wildly currencies fluctuate over the span of just a few years and how volatile a market it is. Which is why they're more often called currency speculators rather than currency traders.

For Volvo, who's global volume is about 450,000 cars, a North American plant probably does not make much sense. Their brand is, as acknowledged by their own CEO, not in the same league as BMW and Audi and so they're not quite sure where they stand in the marketplace. They are actually competing in a vaguely defined niche segment with a hard to pin down customer base. They're like Subaru; you see them around, you know they're good cars but only the most austere and practical minded people buy them.

VW is a different case.

Although their ambition to sell 10 million cars globally is admirable, in the same way that those groups of insane people who dive into freezing waters each New Year's Day just to make the local news are, VW does need to improve their sales dramatically in the North American market in order to justify their presence there. VW says that a plant there would have to have at least a 250,000 unit capacity and that makes perfect sense. They should increase their sales in the US by about that much just to get back to where they once were. A plant won't necessarily mitigate their currency loses right away and it won't guarantee that they will achieve their goal with their "Up!" plan for global domination (in the car sales sense, not in the German...oh, never mind). But they need one and they know it.

A word or two on CO2 - Why reducing emissions in the US won't be easy

2008-01-07T06:05:00.000-08:00

This blog has, in earlier postings, written about the differences between the US and European car markets. Euro Car Guy has recently, for example, praised Ford of Europe's product line up and touted it as a successful brand strategy on the part of the US automaker's European operations. That is not to say that all of Ford (or even Opel's, GM Europe's main brand here, much improved product offering, which we haven't yet covered) don't have products that are easily outdone by the competition, but this blog is focused on the industry, with a special interest in marketing and brand performance, rather than coming from a pure consumer's point of view alone. And Ford of Europe has a successful product strategy in place as opposed to its domestic operations in the US. So hence, the praise, and the main reason that is, on both sides of the Atlantic, is consumer tastes and expectations.

To be curt, European consumers demand (and have always done so) small, efficient and sporty/performance oriented cars in ways that US consumers simply do not. US automakers spent the 90s chasing the booming SUV market, investing little in passenger car development, which has now left them at a loss vis-a-vis the competition in these gloomier days of 100 dollar a barrel oil and the dire prognosis of global warming. But, as you've probably heard many people say, you sell cars in the US by cubic feet. And it seems US consumers still value size and that doesn't bode well for any efforts to reduce emissions in the United States (and Canada too).

I don't like to tout myself as any sort of expert, which I definitely am not, but I do have a particularly unique experience having lived and traveled widely on both sides of the Atlantic and I like to think I know as much as anyone about the cultural differences between the US and the major Western European countries. I spend 5 years in the 1990s on the road in the US and Canada, working as a camping adventure guide doing cross country tours for European backpackers. I have also lived for the last 10 years in Switzerland, while traveling around the continent in several capacities, from work to please to family.

So why is a pressing issue like global warming going to be a tough problem to tackle in the US? Besides the simplistic and inaccurate assumption of a regulation averse America vs. rule-happy Europe, there are a couple of main reasons why that is which I will cover here:

1. Topography and Sense of Space

Anyone who's ever crossed the Atlantic has seen plainly how far more densely populated Western Europe is compared to the US. America's got space, lots of it, and that is what those European backbackers came to see when touring the United States. This is particularly the case in the American West, and much more so in the Canadian West, where you could fit most of Switzerland just in our two main National Parks – Banff and Jasper.

Western Europe is even more densely populated that the US Atlantic Seaboard, where you have about 80 million Americans living in the region roughly from DC up to Boston. The entire EU, which includes much of Eastern Europe now, has a population of about 450 million and a land mass smaller than the lower 48 states with a population of about 300 million.

European towns and cities all predate the age of the automobile and most even the age of the railway. They are more densely developed and closer to each other. We don't have to get into too many details here to say that such a population concentration gives you an efficiency with public transport such as buses, trams and trains that you simply cannot replicate in the US, no matter how much track you lay or how much you invest in mass transit in major American cities. The rest of America is not like Manhattan whereas much of urban Europe is.

And Americans are not only used to having large amounts of space - they demand it. It's thought of almost as a right. Average living space in the US is much larger than in Europe, and much of the world for that matter, and American's have become accustomed to a luxury that would be difficult to give up were it possible to do so but, in fact, isn't even so.

Notwithstanding American attitudes towards space, the US has simply built much of its housing and communities in the age of the automobile and you're just not going to force people to live closer to each other and share more space. So, with urban sprawl, distant suburbs and exurbs even further out, and small towns with lush spaces, Americans need to cover longer distances for work and travel and other commutes than Europeans do. (It is similar in Canada, Euro Car Guy's native land, although our cities are smaller and have better mass transit and much of the population is concentrated around them and less dispersed than the US)

And along with those massive swaths of land comes a North American recreational culture centered around automotive mobility. This is represented by the RV and recreational sub-culture in the US is based on large vehicles (pick up trucks) that can haul trailers or boats. It also includes off road and all terrain vehicles whose use has sky rocketed in recent years. There is no real such equivalent in Europe, where there are few national parks or public recreation areas and travel outside of cities consists mostly of visits to the countryside or stays in small towns for such things as local festivals or simply enjoying the local culture.

America's dispersement of living space and recreational culture is is why the Ford F-150 continues to be the country's largest selling vehicle, selling about 900,000 units a year. I could drive a fully outfitted Chevy Silverado with a V8 engine in Zurich and still consumer less gasoline and pump less CO2 into the atmosphere than someone driving a Prius in suburban California simply because I would have smaller distances to cover and could make use of a top notch public transport system.

If Europeans, per capita, consume about 50 percent the energy that Americans do, it's not because they are more frugal or more virtuous. It's mostly because the place is made that way.

2. Climate

Air conditioning and heating require massive amounts of energy and the North American climate is far more extreme than the mild, temperate climate of most of Western Europe. Temperatures vary greatly, from the cold in Canada to the suffocating heat in Florida. The eastern third of the continent is very humid, which is why you always have a fat, sweaty, evil sheriff's in those melodramas about civil rights in the American South. The mid-West and mountain states are more exposed to the elements given the plains, the deserts and the mountains which provide for hot days and very cold nights.

3. Social Philosophy

You simply cannot solve a problem like global warming by asking individuals to do their part or by even having policies that encourage people to drive more efficient vehicles. You need to mandate emissions cuts and restrict the use of fossil fuels but either regulation or severe taxation. This will be a tough sell in a country where politicians like to sell hopeful solutions that require little sacrifice but are utterly ineffective.

As an auto journalist, I know, that there is still no easier and more comfortable way to get around than in your own private car. You can go to any address you like, at your own pace, listening to the music you like and taking whatever route you please. And Europeans love their cars as much as Americans do. But if you base your CO2 emissions reduction strategy on the premise that Americans will have to drive smaller cars it just might not be enough and getting them to do it in the first place might prove impossible.

There is a strong ideological strain in American society where people value their individual prerogatives to buy and consumer and not lead lives with restrictions or too much social accomodation. "Hey, our forefathers left Europe for a better life in America where they could, literally, live large. Living small, with constant compromises, that's for crowded old Europe." There's a psychological dimension to it where there is no rational response for.

I hate to sound so simplistic or crass but I don't think the US is willing to legislate the kind of stringent regulations necessary to reduce emissions enough to affect the outcome of global warming. As I mentioned earlier, some politician will always try to sell the easy solution, which will inevitably be that alternative energy sources and propulsion systems will negate the need to tighten our fossil fuel burning belts. And that becomes self-fulfilling.

The solution has to be in technology. And the good news is that there are plenty of alternatives around. From solar, to geo-thermal, to hydrogen. We just have to pick one.

New Ford Mondeo 2.3l

2007-12-14T06:27:00.000-08:00

We are all familiar by now with the problems that afflict Ford (as well as GM and Chrysler). There's a whole 'Things to Fix' list of it, from uncompetitive vehicles in their passenger car line-up to skyrocketing health-care costs. The former is of their own doing, due to Ford's lack of investment in smaller vehicles in order to favor development of SUVs whose sales exploded in the 90s. The latter, is really something that's out of their hands.

But that is the Detroit Ford. Ford of Europe is another story. It is another universe - product-wise and everything else-wise. Ford's European subsidiary is profitable and helping to save the entire company. Even Ford's thoroughly revamped US product range which they've begun rolling out, with the hope that a whole new lineup by 2010 will turn its fortunes around, is greatly influenced by its designs from Cologne.

To bear the reality of the matter, Ford of Europe is essentially a German car maker. It's based in Cologne, Germany and its engineering and design is all done their by local staff, with most of its manufacturing still there. (They do have a substantial amount of parts made in other European countries and there's a major plant in Ghent, Belgium where the S-Max, among others, is built. More on that in the story quoted below.) And Ford has begun to behave like a German brand lately. The company has released a slew of new products clearly meant to challenge VW both in Germany and Europe-wide, taking aim at the most prestigious of the European volume brands.

They've been on an impressive streak with each new product a major improvement over its previous incarnation and raising the quality and design quotient of the brand. It began with the new Ford Focus which spawned a Focus ST edition that is one of the fastest and most exciting drives around and a formidable challenger to the pre-eminence of the Golf GTI. And then came the C-Max, the S-Max, and the new Mondeo this year. The S-Max is the crown jewel of their lineup and I would take a fully outfitted S-Max over a BMW X3 any time.

Last summer I reviewed the Ford S-Max and it blindsided me. You would never expect a minivan to look so sleek and drive that good. It is one of the best cars I've tested in years. It's one of those rare models that delivers exactly what it promises while adding some surprises as well. The car feels as supple as the Focus ST on the road. The S-Max is exceeding Ford's sales targets and is turning into one of the models that eats into the premium segments around it. Meaning, I'm seeing many well-to-do drivers zooming around in an S-Max whom I suspect could have opted for a BMW 3 series or an Audi A4 but choose Ford's superb people mover for its room and comfort instead.

Ford boosts output at Genk

Michael Knauer
Automotive News Europe
December 18, 2007 - 12:01 am ET

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COLOGNE - Ford of Europe is boosting production at its plant in Genk, Belgium, to meet strong demand for the sporty S-Max large minivan, named European Car of the Year for 2007, and the Mondeo sedan and wagon.

Production at the plant, which also assembles the large Galaxy minivan, will rise to 1,280 vehicles a day next April from 1,230 now by adding a "mini-night shift" in the paint department, a spokesman said.

The plant, which employs 5,700 workers, is expected to produce 275,000 vehicles this year, up 40,000 units over 2006. Ford spent 715 million euros, or about $1.03 billion at current rates, to upgrade and expand the plant in 2006.

I've recently tested the new Ford Mondeo powered by a mid-range 2.3 liter engine coupled to a 6-speed automatic transmission. Ford has brought out this engine to bridge the power gap between its 2.0 liter/145hp base-level option and the 2.5T/220hp power plant that powers the afore mentioned ST as well. And as I tested the car it also became clear that this particular drive train is tuned for maximum comfort and efficiency and to help Ford reduce the average CO2 rate of its fleet.

The new Mondeo is far better looking than its predecessor, featuring one of the best examples of Ford's 'kinetic design' concept. A Ford of Switzerland technician remarked to me that the car looks great in all option ranges, with the look remaining consistent with each package and not just looking it's best with the fully optioned outfit, which he conceded was a fault the company had with past models. And that is something that you would have noticed on the past Focus and Mondeo, that the grills and wheels that gave the car it's sporty look only came with extra cash.

The Mondeo at first feels a little underwhelming but you soon begin to feel how it's a well put together package of engineering, from suspension to the drive train. And only when you floor the gas pedal do you realize you're sitting on 4-banger and not a sixer. For the rest of it, it drives like a much larger engine.

On a proverbial leisurely drive sailing along the 120km/h limited autobahn just east of Zurich, the Mondeo 4 cylinder (2.3 liter with 160 hp) coupled to Ford's 6-speed Durashift transmission felt like a refined, updated version of the Mondeo's old 3 liter engine. This drivetrain combo runs smooth, keeps its cool and refuses to be roused. It's quite and subtle and provides just enough power to keep you sitting satisfied if not smugly so. It's perfectly fitting to the premium-like design and outfitting of the Mondeo.

Ford has announced this drive train will also be featured in the S-Max, which I would have thought too small an increase in power over the 140hp 2.0 liter had I not tested it in the Mondeo. It won't make the S-Max move like the 2.5 liter/220hp engine (also in the ST) but it certainly makes the case for itself as a distinct middle option.

Now, can Ford re-invent itself as the equivalent of VW in terms of quality, design and driving dynamics? Overall, maybe they're not there yet, but from case to case, it can and has and may even exceed VW in certain segments already. Where is VW's answer to the S-Max? The Tiguan? Yet another small SUV trying to beat Toyota's RAV4. Well, the S-Max is way ahead of them. Although the small SUV segment is growing quickly in Europe, my guess is the MPV/Crossover/Minivan is just a more convenient configuration. The S-Max is perfect evidence of that. If you can make a vehicle look and drive like the S-Max does while offering that kind of space and convenience, you've just made SUVs redundant for all except those who really go off road - which means everyone.

The blue oval stealing customers from BMW? Who'da thunk it.

The Peugeot 403: Columbo's Car

2007-12-10T00:14:00.000-08:00

I've been wanting to write this column for years but haven't because of the inevitable consequence of being considered odd...or eccentric...or just plain crazy. But I'm going to write this anyway, all you avatars of hipness be damned.

Let it be stated it for the record: I love Columbo.

Before the audaciously boring litany of CSI's; Las Vegas, Miami, NY, Poughkeepsie, before the current slate of idiot-savant detectives such as Monk or that guy who wiggles wildly on Law & Order: Criminal Intent (is there another kind of intent when committing crimes?), before Law & Order: Parking Lot Surveillance, there was a scruffy, Italian-American police lieutenant in a beat-up old French car named Columbo.

Columbo is a short, gruff (I already used the word scruffy), cigar-smoking, tattered trench coat wearing LAPD Homicide detective. He is the eternal underdog; seemingly dumb, unpolished and forgetful. In one episode he actually gets mistaken for a hobo when locating a witness at a homeless shelter and he's often taken for a weirdo onlooker meandering around a crime scene. But Columbo possesses a Sisyphusian doggedness and a well-disguised meticulousness and he comes to bag his prey by sheer attrition. There's always 'one more thing' to ask about.

Columbo was played by Peter Falk, who was not Italian at all, instead a mix of Eastern European. But as Columbo he aptly embodied the Italian saying that goes: “I'm not a fool. But I play the fool. Because in playing the fool, I make you the fool.”

And Columbo drove a Peugeot - a 1959/1960 Peugeot 403. And if I were in charge of marketing at the French car maker I'd definitely find a way to have an ad spot where Peter Falk finally gets a new 207 or 307 CC. My hunch has always been that Columbo drives a Peugeot in homage to the character of detective Alfred Fichet, the commissioner in Les Diaboliques, a French murder-thriller from 1955 directed by Henri-Georges Clouzot. Fichet goes about unraveling the ingenious plot in that film in much the same unassuming/underhanded way as Columbo does, and I am one of those who believes the character of Columbo was inspired by that film. Although, the creators of the series have said Columbo is based on the Crime and Punishment character Porfiry Petrovich and G. K. Chesterton's Father Brown.

And there is quite a serendipitous tale to be told here. The novel upon which Les Diaboliques was based was picked up by Clouzot about 30 minutes before Alfred Hitchcock telephoned with his interest in buying the rights to the book. The novelists, Pierre Boileau and Thomas Narcejac, were so determined to write something else for Hitchcock that they subsequently wrote the novel D'entre les Morts, which Hitch made into Vertigo. Vertigo became a classic and a film many consider (this writer included) to be one of the best films ever made. Vertigo has gone on to have resonance in countless other films and TV series, including the work of other great directors like Martin Scorsese and David Lynch. In fact, a reference to Vertigo also appears in the very first Columbo film, Prescription: Murder, which was broadcast in early 1968. In that first Columbo series creators Richard Levinson and William Link featured a similar plot device with the killer enlisting his mistress pose as his wife in order to help him murder the latter. (Monk, a series about San Francisco sleuth Adrian Monk mourning his lost love just like Scottie does in Vertigo, also featured an episode, in obvious homage to that first Columbo, where a man boards a plane with his mistress posing as his wife whom he has just murdered. Believe me, six degrees of Vertigo never ends.)

The genius of the series was in the combination of its elements, what Hollywood would refer rotely to as the formula. It was the strength and uniqueness of the lead character up against a flamboyant or likeable killer and done in an inversion of the detective genre. Instead of being a whodunit, it was a 'howcatchem'. The series would begin with extensive scenes showing the killer plotting, committing and covering up the crime. Columbo usually only appeared some 15 minutes or more into the film and the mystery became entirely about how Columbo would figure it out and how he would be able to prove it. The dynamic that held the viewer's attention was always the game of cat and mouse played between the killer and Columbo. Each episode featured guest appearances by well-know actors as the villain, villains which were either sympathetic or fiendishly charming, and there were no supporting or recurring roles except that of Columbo. The Lieutenant always worked alone.

The first Columbo TV movie aired in February 1968 and featured Gene Barry as the ice-suave, murderous psychiatrist, Dr. Ray Fleming. But the show did not get picked up again until 1971 when it became a regular staple of NBC's Mystery Movie series. There was another pilot film in April of 1971, featuring Lee Grant as the killer, which was so popular that the series began its regular run in September of that year. That so-called first episode, Murder by the Book, featured Jack Cassidy as the murderous 'special guest star' (remember that phrase?!) and was directed by a young Steven Spielberg. You can spot the influence of Psycho both in the score and in Spielberg's camera work but the highlight has to be Cassidy. Jack Cassidy, father of 70s TV heartthrobs David and Shaun Cassidy, is simply delectable malice. Cassidy would go on to play a Columbo killer twice more before his untimely death in 1976 (falling asleep with a lit cigarette). Tragic and sad but the actor could do more with a cigarette in his hand on the small screen in 1971 than most 20-million dollar payday movie stars with 50 million in special effects behind them can do on the big screen today.

For me, there are two Columbo's that I will always watch (along with the Cassidy ones) no matter how often they come on here in Switzerland (the French and Italian language Swiss channels seem to adore him) and both are from the 3^rd season which aired in 1973-74. One is what I consider to be the best Columbo and the other is my utter sentimental favorite.

The former is entitled A Friend in Deed with Richard Kiley as our ingenious murderer. Kiley happens to be the Deputy Commissioner of the LAPD who takes the opportunity to pull a little Strangers on a Train bit with his neighbor to rid himself of his wife ('Husband kills wife' is a common Columbo plot but, in all fairness, the most common type of murder. A fact Hitchcock himself always loved to point out.) Kiley is one of those actors who could recite the phone book and still hold a spell on me. He had a commanding presence few actors are ever able to attain. You can tell he's from a generation that had proper training and that worked as much theatrically as in the movies or TV. He was a song and dance man too and won two Tony Awards for Best Actor in a musical. Watching this episode recently, he reminded me so much of Frank Langella that you can consider Langella the contemporary version of Kiley. Langella is another great actor you've probably never heard of who can steal a whole movie with two brief scenes (see Good Night and Good Luck). You can also see him excell in the recent Starting Out in the Evening.

It's pure delight watching Kiley go up against Columbo, a man he, at first, looks upon as a threat-less, disheveled underling but who gradually starts getting under his skin with his inquiry until Kiley realizes how much he's underestimated the man in a shocking final moment. The duel taking place on screen seems to be as much between the actors themselves as the characters they are playing which only makes it doubly entertaining to watch; like the celestial confrontation in the coffee shop scene in Heat with Al Pacino and Robert DeNiro. The way Columbo tricks Kiley into incriminating himself is a classic of detective story endings. Kiley plants stolen jewels in a thief's run-down, skid-row apartment to frame him as the killer and then gets a warrant to search the place where a team of police find them. Then Kiley stares down Columbo with a glacial look and informs him,”You just lost your badge, my friend,” whereupon Columbo retorts, “This isn't his [the thief's] apartment. This is my apartment. I just signed the lease this morning. These are my clothes. That's a picture of my brother-in-law.” Columbo had changed the address in the thief's file on a copy only the Deputy Commissioner had seen. It was a set-up dressed with a bow-tie.

But my ever favorite Columbo episode has to be the one with Johnny Cash, also from 1974. Cash is a surprisingly good actor and we even get to hear him sing a few tunes too. We see him perform what is, to me, the absolute saddest song in the universe – Sunday Morning Coming Down. It's one of those songs that gave country music it's reputation for morbid sentiment. When Cash sings about his downtrodden, lonely, hungover self walking past a playground on his way to church wearing his 'cleanest, dirty shirt', it's corny and moving at the same time. The song also includes the line, “And the beer I had for breakfast wasn't bad so I had one more for desert,” which brings to mind a similar line from the Doors' Roadhouse Blues ("I woke up this morning and I got myself a beer") and I could never work out who poached it from whom. It was actually Chris Kristofferson who wrote Sunday Morning for Cash and both it and Roadhouse Blues came out in 1970. (Care for six degrees of beer-in-the-morning references?)

Anyway, Cash plays an ex-con and gospel singer more interesting in touching souls (the young, female kind) than saving them and he tosses himself out of his own airplane leaving his wife and his latest teenage love disciple to crash and die. Columbo really plays up the doofus detective angle in this one and Cash falls for it readily – his Southern pedigree never knowing what to make of this shabby, ethnic man from the big city. It's worth watching just to hear Cash, with his Arkansas drawl, pronounce 'Colum-beau'. Fun stuff.

Have I digressed? Yes, about that car.

The Peugeot 403 that Columbo drives is a 1959/1960 Grande Luxe Cabriolet (convertible). The car is quite a rarity and Peugeot only build about 500 of the two-door convertible version. In one episode Columbo actually states that there are only 3 in US and he was right, as there were only 2 in the country at the time. When the show was revived in 1989 for a second run producers actually had to borrow the original car which had been bought by collectors since there were no others around.

The 403 cabriolet was designed by Italian coach builder Pininfarina and had a 1.5 liter engine with 58 horsepower. The car featured such options as dual tone horns, an electric clock, padded dashboards and windshield washers (hey, those can be handy). But it did not come with a radio. Peugeot said at the time, "We don't make radios." And you could just imagine how that, with a French accent, sounds to an American.

There's a web site dedicated to Columbo which even features a whole page on the 403. If you want to know more about the car you can follow that link and let me go to sleep! I really just wanted to write about Columbo.

And one more thing...I'm not nuts.

VW on the warpath

2007-11-12T14:07:00.000-08:00

VW is looking to challenge Toyota to become one of the world's biggest automakers.

Report: VW aims to produce more than 10 million cars a year by 2018

November 12, 2007 --

FRANKFURT (Reuters) -- Volkswagen aims to increase production to more than 10 million cars per year by 2018 from around 6 million now, the German current affairs weekly Der Spiegel reported on Saturday.

A spokesman at Europe's biggest carmaker declined to confirm any such output target for that time horizon but reiterated VW CEO Martin Winterkorn's stated target of an increase to 8 million vehicles by 2010.

Winterkorn is due to unveil a 10-year strategic plan at a meeting of Volkswagen's supervisory board on November 16, the spokesman said, confirming that part of the magazine's report.

There is a lot of ambition here, including it's aim to take sales in the North American market to a million (including Audi) and grow the Audi brand into the largest premium marque globally.

I love it when automakers get all macho and spew pronouncements like this based on pure bravado and the press runs to speculate about it. VW is the biggest automaker in Europe and it should stay home and count its blessings.

The key to that kind of global growth, to 10 million cars a year, is to become a major player in the North American market. Maybe VW could in fact achieve it's stated sales goals of a million units in the US alone. The one problem being that more than doubling sales will more than double their losses. The strong euro is killing them and there is nothing VW or anyone else can do about it.

As a business journalist, I always laugh when these automakers say that they hedge on currency. This is pure obfuscation. The only thing that "hedge" means is that they invest in euros which only mitigates their loses and not to any great degree, I suspect. What it also does is keep driving up the value of the euro which only contributes to the problem.

The only way to truly hedge is to make the cars where you sell them and that would mean a manufacturing plant in the US or Canada or a second plant in Mexico. This would require massive investments which VW is not really capable of making right now. And even at that, so many of your costs remain in your home currency and the more you try to move those costs locally, such as fully localizing your supplier base, the more investments that entails.

Also, it would be too risky.

As I have written before, the US is the big enchilada of car markets which also makes it the riskiest. It's not like starting a subsidiary in Iceland just to see how it goes. It's a huge market that would require massive investments. But it is also a very mature market which means you can't bank on people running to your showrooms to buy your shiny new import. There is plenty of competition around and VW is not seen as a prestige brand in the US . It is seen only as an expensive one. This is brand value/cost issue that they need to solve before they go anywhere.

There is this whole subculture in the US, to the point that it has become a cliche, of car enthusiasts alternatively panting in heat at European models while whining about why they can't have them in the US. If there were some way to exploit this, I would really. Maybe I should start importing Focus STs. But I'm pretty sure I'm not going to find too many takers for a 30,000 dollar Focus. But I shouldn't be so hard on those folks because many other journalists and analysts make the same silly, reflexive, "Yes, why not?", assumptions when they hear such stories.

You (VW or any other takers) can't imitate Toyota because you do not have:

a) their Terminator-style, single-mindedness corporate culture to just keep making and selling the ultimate bland, box-store aesthetic appliances otherwise known as cars

b) the Japanese government behind you whose policy is to keep the currency as low as possible to drive exports which is the backbone of their entire economy

VW shouldn't expect anything near 10 million units by 2018. It can increase sales if it delivers the right products to each market. Certainly they have green technologies that they can exploit and growth in Eastern Europe, Russia, China and Asia as a whole hold a lot of promise and opportunity.

But 10 million? Don't kid yourself.

Green is blue for Mercedes-Benz

2007-11-01T15:53:00.000-07:00

After a messy divorce from Chrysler, Mercedes-Benz is giving itself a makeover and getting back out there in the market. What does that mean? It means the car maker has been through therapy and realized it was all the ex's fault. They are the bright, shinny beautiful people...or at least the ones that build the bright, shinny, beautiful cars.

They've also divorced the brand's well recognized 'star' symbol from the words 'Mercedes-Benz'. From now on, the star will preside on its own in the top corner of each ad as per Mercedes' new mantra,”The Star always shines from above."

The company has also begun a new ad campaign that attempts to make green sexy...and blue. The company has launched a series of ads in Germany (the rest of Europe will follow in the coming months) to highlight its new BLUETEC diesel technology; the cleanest diesel-engines to date.

BLUETEC comes with a particulate filter and also reduces NOX emissions to become the first modern European diesel passenger car to meet California's strict emissions standards, the most stringent in the world. But the ads will focus on the brand image itself with more of an emotional rather than a rational appeal. Finally, Mercedes-Benz has learned how to butter its bread. Brandishing its posh image while making sure the product delivers on luxury and technology.

Check out the two ads posted below.

The redesign of the brand look was done by the premium car maker along with their agency Claus Koch Identity GmbH, the BLUETEC campaign was done with Mercedes-Benz's lead agency Jung Von Matt GmbH.

Daimler goes back to basics - unveils new brand design for MB

2007-10-21T14:40:00.000-07:00

The rest of that title should read: after a long detour through nowhere.

DaimlerChrysler is no more. It's just Daimler now, thank you. Like a divorcee asking you to refer to her by her maiden name again, all the while saying to herself,"What was I thinking marrying that creep? I'm glad I dumped that albatross."

Why is it that in business bigger is always considered better? Why couldn't Mercedes-Benz be happy with making some of the world's best, most luxurious cars? Why did they feel the need to sell more cars than their competitors? Even is those cars were Chryslers and Dodges? You know, if I was as successful a writer as Mercedes-Benz is at building cars, I'd be happy with myself. I wouldn't want anything more. I wouldn't, say, go off and try to be an actor too. Or a composer. I'd stick to what I do best and enjoy the rewards. I'd take pride in the work that I did. I'd knock off a full day's work and go have a beer with my friends (if I had any). And I'd like to think that if at some point I were to be struck by the fancy to indulge some other pipe dream simply out of hubris, the better part of me would refrain the less better part of me from doing it.

DaimlerChrysler never made any sense to me. The brands never really complimented each other in any way. No consumer 'graduates' from a Dodge to a Mercedes-Benz the way a 20 year old buys a Scion and then move on to a Toyota at 30 and, once he loses his hair, his self-worth, his creative ambitions and takes that corporate schlep job he always swore he wouldn't, at 40 buys a Lexus as his pitiful reward. (Am I sounding cynical these days? Better have my therapist give my medications a second look). There was no logic in the collection of brands. BMW and Mini? Wise from the get-go and great execution. Do I like Minis? They're overpriced, ugly, small and impractical. I'd take a 207 any day. But the brand has an identity and it compliments BMW. The only reason for the D/C merger was blind ambition.

And all Chrysler did for them was drag down the image of Mercedes. It really hurt their brand and a lot of the reliability issues they had a few years back were likely due, in part, to a cynical consumer view that the company was cutting corners on development because it was a corporate giant just looking to make tons of money.

There are automaker, like BMW, who, after the debacle with Rover, played it smart with Mini to great success. There are others, like Peugeot, who like to grow organically and shy away from mergers or large, risky adventures. There is VW Group, whose collection of brands makes perfect sense, if they don't always manage it well or exploit their brands properly or position their products the right way. Audi is a case in point of an automaker doing the hard work, over decades, of focusing on quality and performance, and building a brand. In this case, a premium brand that can compete with the likes of Mercedes and BMW.

Mercedes-Benz is now revamping its brand design. It is changing the look of its marketing and ad material and it's corporate logo, the silver star with "Mercedes-Benz" in writing below will now become just the star alone. It will sit in the top right corner of the ads, as if to say, the badge speaks for itself. (You can view one of the new ads at the top of this post.) This is smart. This is what they should be focused on. Reminding people that they make great cars. That should be enough.

Euro Car Guy in Istanbul

2007-10-10T05:52:00.000-07:00

This was my first trip to this city and I must say I was impressed. I went in with a certain apprehension that is warranted when visiting a metropolis but found a place that really did have that magic you hoped would be there. The place is vibrant, culturally and economically, and I understand why the conference I was at chose it as a location.

I found Istanbul is far more Westernized than I had imagined. Locals and frequent visitors told me that the place had changed tremendously over the last couple of decades. There was a time when women wore burkas and you wouldn't see many of them driving. This is not Istanbul today. Although some neighborhoods are more conservative than others, the city is welcoming and its various districts are each hotbeds of art, history or culture of one sort or another.

Unfortunately, I was in town covering a logistics conference arranged by an industry group that represents car transporters and so I did not have near enough time to see what I wanted to see of this city. For that, you would need weeks, giving this ancient megacity with its population estimated to be between 11 and 17 million people.

Still, I did the obligatory dash across the Bosporus which is so cluttered with cargo shipping, cruise ships, fishing vessels and ferries that it is obvious this place is a major global cross-road.

Oh, yes, the conference. Well, logistics may not be the sexiest beat in the auto journalism business but it is more interesting than you may think. The East is booming with Russia and Turkey emerging as large markets for automakers and are at the same time making a play to become producers as well. Turkey is already the site of a few key factories for automakers and produces about 1.4 million vehicles per year, half of which are exported. One of the most significant plants is the Ford facility there which builds the Transit van for all of Europe.

And logistics is a good way to look at where the business is going, literally. There are issues of infrastructure which are challenging car transporters across the continent but that strain on the system is a testament to how Europe (and beyond) is booming. Driving the streets of Istanbul you see the well being that economic growth and political stability (not only in Turkey but in Eastern Europe as well) is creating. Certainly with the new cars, Renaults, Fords, VW, etc. that Turkish consumers are flocking to buy, there is good news here for European automakers.

Carmakers busy in Frankfurt trying to turn green into green

2007-09-18T04:18:00.000-07:00

...um...I know, euros aren't green, they come in different colors, just like my own great Canadian currency, but I'm sure you are all familiar with that expression.

Yes, the question is, with the theme this year at the IAA in Frankfurt being "Green is Good", will it translate into profitability for automakers or just added costs that consumers will not be willing to absorb?

It has been building to this for several months now as more and more automotive coverage, and news in general, is devoted to addressing the issue of global warming. The threat of climate change has penetrated the popular consciousness over the last year or so in a way that it had never done before. And that's good.

After all, with more than 100 years of the internal combustion engine, inside of which humans went from first flight to the moon in just 66 years, isn't it about time that we move onto something more advanced, more efficient? Imagine for a moment an alien race out there watching our development. They must be thinking, what's with these humans? They get a new cellphone every six months but still need to burn oil coming out of the ground to get around?

Also, are 20 to 30 percent reductions in greenhouse gas emissions per vehicle enough to stave off global warming when we are actually producing more cars worldwide and India and China
are rising industrial powerhouses hungry for energy and producing ever increasing CO2 emissions?

Not according to scientists.

There have been indications (real numbers and not just hype) that consumers in Germany are beginning to buy more eco-friendly cars. Automakers also make more money on diesels than they do on petrol cars, about 8,000 euros more, according to one recent study. As automakers incorporate these new fuel-saving technologies across their platforms and model range their own costs will come down and more and more of these features will become standard and expected by consumers. We can rest assured they will profit from it. We are wealthy societies and we can afford to add 5 percent or so to the cost of the cars we buy. I'm not sure about consumers in India, China and the rest of the world.

Emissions will keep rising until something drastic is done about it or something drastic happens.

SUVs growing in Europe

2007-09-03T14:39:00.000-07:00

In the US, the trend began with pickups becoming more than a utility vehicle. They actually were cool to drive and by the 80s consumers in the US were buying king cab pickups to drive the kids to school.

Then Ford struck gold with the Ranger. Actually, with a variation on the small pickup. From the Ranger Ford developed the Explorer, an unstable death trap that came with under-inflated tires that could blow-out on you at anytime and flip the vehicle since it was essentially an extended cab slapped onto the Ranger pickup chassis that Ford deemed required no further engineering. There were lawsuits, Firestone and Ford had a mudslinging match, etc. etc. This is all old news. But what came of it was good news: an SUV boom that single handedly saved the US auto industry in 1990s. Good news for Detroit, that is. Not so much for those pesky environmentalists...and, um, yes, the environment too.

But SUV sales have begun to slump in the US due to higher gas prices and a more elevated environmental consciousness amongst consumers. What is still a growing segment are crossovers, SUV-style vehicles built on passenger car chassis (the kind that don't so easily rollover and kill you.)

Well, now we have what you can call a trans-Atlantic crossover.

In Europe, what used to be called the MPV segment began with the Renault Scenic in 1998. The Scenic is actually a crossover so you can credit the Europeans for that (specifically, the French. More specifically, Renault). But the MPV segment has evolved into more SUV-style crossover with such models as the BMW X3 and the Toyota RAV4. And now a whole fleet of competing models from European automakers have arrived to match the Asian competition, which remains ahead in the growing SUV segment in Europe. There will be the VW Tiguan, the Citroen Crosser and the Peugeot 4007 to name just a few.

Most of these cars will run on small, 2.0 to 2.5 liter engines, usually diesels, which pack the yanking capacity you need in such vehicles and won't increase CO2 levels too much. Just a little bit. Don't worry about it. Everything's fine. Really. We're trending in the right direction. You can buy carbons offsets to make yourself feel better. Because, that's all they really do, according to this LA Times article.

So there you have it. Who said trans-Atlantic relations were not going well. Finally, we can all agree that we want to save the environment by driving small/smaller SUVs. Global warming? Case solved!

Ford makes bringing European models to North America a high priority

2007-08-23T16:24:00.000-07:00

It's no surprise that Ford CEO Alan Mulally wants to help save Ford's domestic operations in their home market by bringing in more products developed in Europe. After all, Ford (along with GM) has to bear the criticism ad nauseum that they don't have competitive products in the marketplace when they definitely do so here in Europe. So what's the solution? Just ship 'em over.

I have my doubts about how easy it is to do this as I've explained in a previous post here. But I do understand the frustration of what Mulally has to deal with especially when he said that he'd rather lose money selling good cars than lose money selling bad ones.

Ford officials speaking to the NY Times are pretty clear about this direction.

“There is very clearly now a priority around leveraging the products we have globally,” Mr. Kuzak said this week.

Derrick M. Kuzak is in charge of global product development and creating more global platforms for models to be sold in various markets as either identical or slightly varied makes perfect sense. They should have done so years ago.

The question remains, though, will this bring Ford back into profitability and will Ford be able to deal with the institutionalized structural costs such as pensions and health-care benefits which they have to bear and that drive their costs up so dearly?

Also, how do you sell those models to US consumers who still seem pathologically hooked on large vehicles and are utterly unwilling to pay higher prices to drive what they consider to be small cars?

Sales of large SUVs are down but crossovers are a growing trend. 3 dollars a gallon isn't driving everyone to trade in their pick ups for a Yaris. Analyst consistently said for years that 3 dollar gallon was some sort of magic number that would change the buying habits of the American consumer but it hasn't. So what is it this time? 4 dollars? 5?

Ford needs American products to satisfy the US market. If they can manage to build those cars inside a system of cost-effective global platforms, then they will succeed.

Somehow it must seem to Mulally that it's a lot harder to build cars than to build airplanes.

For the love of the game - Car people should run car companies

2007-08-20T14:11:00.000-07:00

Most German automakers are run by engineers. Executives make their way up the corporate ladder by first building cars and then learning the business of selling them. In other European countries, the tradition varies, but most automakers are run by people who have lived and breathed the car business their whole careers. These are people who have a passion for the products the make. They don't just see them as a means to make money. There is a lot of pride (and even more vanity) that goes into the models built by some of the world's most identifiable brands and each automaker tries to build the best-performing, most-stylish and desirable car they can in order to out-do their competitors and not just narrow-mindedly outsell them.

US automakers are not all that different, although there has been more flexibility in bringing in CEOs and other top management from the general corporate world whereas in most European automakers top management is cultivated within the company. Take the newly independent Chrysler. Recently freed from its marriage to the foreign charmer from Stuttgart, Chrysler is ready to date a guy who means business - and that would be the guy who runs Cerberus Capital Management.

This article here at Portfolio magazine is a must-read for anyone trying to guess as to what Cerberus will do with Chrysler. It's an extensive and informative piece that includes a profile of the man at the helm of the firm and leaves plenty of hints as to his intentions for Chrysler. Here's one: In Greek mythology Cerberus was a three-headed hound who guarded the gate to Hades, making sure that once the spirits of the dead entered, they could not escape.

It's pretty clear from this article that Cerberus means business in returning Chrysler to profitability. Whether that means they'll strip it down, increase it's value and sell is an open question. What seems more clear is that they have little romance in them for rekindling the glory of an American brand. They want to build cost-effective cars that they can sell at a profit - period. Just look at who they've appointed CEO. Not Wolfgang Bernhard, a car guy to the bone. But Bob Nardelli, hard-nosed former CEO of Home Depot, of all companies, known for his talent in wielding a scalpel.

The problem here is that auto companies that come to be run by business purists will not fare well. You need a little passion, even a little nuttiness, to make cars that consumers want to buy.
Purchasing a car is one of the least rational decisions consumers ever make. So much of the decision process is tied up with the image of the car and the self-image of the buyer and the coolness and desirability of the model. We'd all be driving Toyotas if that weren't true. They people making the cars not only have to understand this in an intellectual way but also feel it themselves in an emotional sense. If you look at automobiles as if they are just another commodity then you are missing the point about the car business and what it takes to sell cars.

Ford's CEO Mullaly doesn't make any business sense when he muses about bringing Ford's products from Europe to North America. GM bringing the Opel/Vauxhall Astra to the US badged as a Saturn will lose them a tone of money. But, as Mullaly said, I'd rather lose money selling good cars than lose money selling bad ones. That's the crux of it. You have to want to make great vehicles because eventually auto journalists and consumers will catch on and then one day one of your models will catch fire. This is something no actuary can ever predict but it happens when a designer or carmaker or irrational CEO decide to take a wild concept car to production.

I've been working on several stories recently which involves surveying dealers who's brands are about to be or might be sold. Jaguar, Volvo, etc. They all tell me they want the new buyers to be an established automotive company or group. They want someone who understands the car business and can maintain the appeal and mystique of the brand.

New Infiniti EX will also be sold in Europe

2007-08-16T14:06:00.000-07:00

The Infiniti EX, a new crossover SUV introduced at the 2007 Pebble Beach Concours d'Elegance, an auto show in Pebble Beach, California, will also be sold in Europe next year.

The model will go on sale when the Infiniti brand, the luxury arm of Japanese automaker Nissan, is launched in Europe in the fall of 2008. The brand will start out with a lineup of four models which will also include the G Saloon, G Coupe and a successor to the FX, a large SUV sold in the United States.

The European premiere of the EX will take place at the Geneva auto show in March 2008. The SUV will feature standard all-wheel drive and an around-view monitor which uses cameras mounted on each side of the vehicle to reduce blind spots while parking. Nissan said the model will compete against medium-sized luxury SUVs like the BMW X3.

Infiniti is currently building a dealer network in Europe prior to its launch. In an interview with German industry publication Automobilwoche, Infiniti Europe chief Jim Wright said the brand plans to have between 12 and 14 dealers in Germany, all based in large cities. Wright also said each Western European dealer will be selling about 500 cars a year by 2013.

Various items on a slow mid-August day

2007-08-16T11:43:00.000-07:00

August is usually slow in the auto business. Although, there is still much going on this month and even more to discuss. Such as how will Germans take the the split-up of their favorite company.

Yes, DaimlerChrysler is the most beloved company in Germany, according to a survey conducted by PricewaterhouseCoopers (PwC). Of course, 4 other German automakers were also in the top ten.

And conspicuously missing from another survey in the German market is BMW from the top most preferred cars by German company heads. The survey conducted by the business magazine Impulse found German bosses most favored cars (for purchase as company vehicles, of course) were the Audi A8, Audi A6, Porsche 911 and the Porsche Cayenne.

And VW is facing the possibility of a strike at their plant in Mexico. Union officials say they will call a strike on Saturday if they are not satisfied with wage talks by then. I guess that means that they are looking for much more than a 2.5 percent wage increase that VW has put on the table.

The plant makes the Bora and New Beetle models which are sold in Europe. Which means the 7 people who will buy those cars here this year may face a delay in delivery. But seriously, a strike does not bode well for VW in the one place which is mitigating their losses due to the currency rates. VW is taking a lashing on the strong Euro (which is currently trading somewhere in the region of 1.37 to the US dollar) which is why it does not seem terribly interested in upping its sales in North America. They lose enough money just selling 400,000 units per year.

The plant in Puebla, Mexico is what hedges their currency risk by building cars inside their market in North America with lower labor costs (paid in Pesos not Euros) than they would incur in Europe. A strike their would really hurt their bottom line in the US even further. They have to expect to raise wages there anyway and just hope for better days in the currency markets sometime soon.

What they also want to avert is a disruption in their sales and distribution to key markets in Latin America and around the world. I'm betting VW does what it will have to do to avoid the strike.

Is Germany conflicted?

2007-08-10T06:38:00.000-07:00

Unlike in the United States, where the market share of the Big 3 continues to crumble and last month fell below 50 percent for the first time, German drivers remain loyal to domestic brands. Of the top 10 vehicles sold in Germany – all are domestic models.

But according to a recent customer satisfaction survey in Germany, customers are happiest with Japanese brands, naming Honda, Toyota and Subaru the top three respectively.

In the JD Power and Associates 2007 Customer Satisfaction Index (CSI) Study, which is considered the industry leader in surveying customer satisfaction, only BMW made it into the top 5, coming in at number 4, just ahead of Mazda, another Japanese brand, which tied with Volvo for 5^th place.

Last year it was Toyota that lead the survey but Honda inched ahead in 2007, scoring 848 points of out 1,000, only one ahead of Toyota. (see side bar for full rankings)

Both Opel and Volkswagen scored below the industry average of 806 points, coming in at 798 points each.

The model that scored the highest customer satisfaction rating was the Toyota Prius, a hybrid gasoline-electric that has enjoyed much positive attention as a fuel-efficient vehicle.

But the survey may be of little concern for VW, who's Golf model is still Germany's top selling car, with over 100,000 sold in the first six months of this year.

The survey covered over 20,000 vehicle owners in Germany after an average of 2 years of ownership.

That Japanese brands come ahead of even luxury marques BMW and Mercedes, which came in 7th, is a matter of customer expectations, said Christoph Stuermer, Senior Market Analyst at Global Insight Germany, who follows trends in the German market closely.

“Someone buying a [VW] Golf expects a zero-fault car. As soon as there is a problem, they get marked down in the ratings,” he said. Stuermer explained how German consumers make higher demands in terms of service and quality with respect to their domestic brands.

“The higher your market share, the more you will trend towards a statistical average,” he said.

It's a matter of psychology too. People who buy cars like the Toyota Prius want to justify their purchase for buying something outside the mainstream. So they give the car a higher rating and are happier with their purchase, said Stuermer.

It's also a reflection of the growth of Toyota and Honda in the German market, he said.

The survey shows how poor French and Italian makes still rate in the market. Renault, Citroen and Peugeot came in 21st, 22nd and 23rd, respectively. Fiat was number 19. Chevrolet scored last with 759 points.

Top ten selling passenger cars in the German market for the first six months of 2007.

1 VW Golf 101 233

2 BMW 3 series 55 693

3 VW Passat 55 146

4 Audi A4/S4 44 522

5 Opel Astra 41 891

6 Opel Corsa 39 185

7 VW Touran 38 367

8 VW Polo 37 917

9 Mercedes C-Class 33 963

10 Audi A3/S3 33 683

(Source: German government)

Brands in terms of customer satisfaction: Source JD Power & Associates

Top scores out of a possible 1,000 points

Honda 848

Toyota 847

Subaru 836

BMW 832

Mazda 831

Volvo 831

Audi 827

Mercedes-Benz 817

Škoda 816

Industry Average 806

MINI 805

Mitsubishi 803

Opel 798

Volkswagen 798

Hyundai 795

Ford 793

Nissan 792

Alfa Romeo 790

Fiat 790

Seat 790

Renault 789

Citroën 786

Peugeot 783

Kia 782

Suzuki 778

Chrysler 763

smart 762

Chevrolet 759

The Crash Test Dummies

2007-08-08T15:09:00.000-07:00

Over the last couple of years there's been a narrative building in the automotive world about how Chinese cars are coming West. Yet Chinese cars keep failing crash tests. The latest is Chery, who's Amulet model, sold in Russia, has failed a test meant to replicate the EuroNCAP offset collision test conducted on behalf of a respected automotive magazine there.

The Wall Street Journal Online has the story here. You can view the video here, care of Autosavant.

You know, there seems to be a pattern here. Faulty toys with lead in the paint being recalled (yes, they've even had to recall Big Bird...my beloved Big Bird from Sesame Street), contaminated fish and a series of failed crash test for Chinese-made cars. The pattern tells us that Chinese manufacturing is not ready for prime-time and able to meet the product safety standards of Europe and North America.

Building a car is not quite rocket science - not quite. But if you want to build a car with all the safety features modern technology makes available, including collision-safety properties as part of the whole design, then you are, in fact, coming close to rocket science. It took established automakers about a century of engineering experience before getting to build the generally very safe cars that they do today. That is why I'm not terribly impressed by classic cars. They just don't have the engineering advances that make today's cars so much better in their handling and safety. Chinese manufacturers who want to get into the very lucrative business of making our cars have a long way to go and a lot to learn. It's one thing to impress shoppers with a DVD player that costs 30 euros or dollars. But if Western consumers develop a negative perception of Chinese made goods, then they're going to have a tough time selling anything more sophisticated than that.

Toyota, profits and soulmobiles

2007-08-06T06:04:00.001-07:00

I was once watching a cooking show on TV5, the global French language network, and there was Gerard Depardieu in his country kitchen being interviewed about his love of food (I concur, although my preferred cuisine is Italian). When asked about fast food, a look of disgust came over his face. “It has no soul,” he said. Food has to be made with love, affection, craft and an appreciation for tradition, to paraphrase what he said.

Craftsmanship and an artisan's expertise is essential. It is what I look for in any product that I buy, be it food or shoes or automobiles. I may be obsessive about this point but professionalism and being good at what you do is what I admire most in people. Not success, not power, not money – but simply being good at your job. The cab driver who has the whole city mapped out in his mind's eye, the chef who doesn't need to measure anything to get the recipe perfect, the system administrator that e-mails you back in 3 minutes with a simple,”Fixed it.”

Critics of globalization accuse corporations of putting profits before people. I accuse them of putting profits before product. Which brings us to Toyota's latest earnings.

I've written this before but it can be stated again: Toyota is the most successful corporation in history and the latest news continues to confirm this. Toyota's second quarter results brought it a record profit of 4.13 billion dollars (US). Sales rose 16 percent globally. The company is valued at 214 billion (U.S.), more than 11 times that of GM. This year Toyota will surpass GM in total sales to be the largest automaker in the world.

You can't argue with that success. But I will.

I wrote above how I accuse companies of putting profits over product. Am I accusing Toyota of making bad cars? No. Do they make boring, soul-less cars? Yes. But isn't it great for consumers that they make the best quality cars that rarely break down? Yes. So what's the problem? I didn't say there was a problem. Am I asking and answering my own questions like Donald Rumsfeld? Yes. Is it annoying? Yes.

Here's my theory on Toyota: They deliberately make boring cars. Why? Predictability in their infamous production system.

Take the Toyota Camry, which has more or less been the best-selling passenger car in the US market for the last 10 years. Toyota sells about 400,000 of them a year. It's consistent. They know they will sell about that many in 2008, in 2009 etc. Regardless of where they are in the model cycle because the model doesn't change that much. The styling is always pretty much the same. The customer never knows where you are in the cycle. They don't say,”Well, it's 5 years old and due for a face-lift. I'll wait until the new model comes out next year or go buy a Chevy instead.”

Knowing how many cars you will sell is knowing exactly how many cars to build and that kind of predictability gives you great advantages in your manufacturing process and ability to control costs.

Most other automakers have to deal with the unruly aspects of production and sales. You just came out with a new model, and it's hot and trendy; great news. So you ramp up production, start paying overtime and your factory is running at near capacity, which is good. But the overtime pay isn't. Then 3 years into the model, it's not so hot anymore. You have to draw down production, lay people off, creating problems with the unions, and run a production plant at far less than capacity which creates costs. Then you update the model with a whole new design, which requires a big investment,. You have to ramp up production again, re-hire, etc. This all creates costs and costs that are less than definable.

Toyota doesn't want to build the next Mini or the next 500. They don't care about those successful models because they know how many Auris or Aygo or Yaris they will build for Europe and how many Camry's or Tundra's they will need for the US market. That's what they need to be profitable.

Toyota focuses on quality which gets you the customers who see an automobile most like a reliable appliance. Toyota, as a company, is geared towards satisfying those types of consumers because their appeal is rational – we build quality cars – and rationality will give you predictability. If you build cool, trendy cars, then the trend will end and you won't be cool some day 5 years down the line. Then what? You're on a treadmill always trying to come up with a cool product that will draw consumers who buy a car just because they like the way it looks.

So is that a criticism of Toyota? Certainly not from a business perspective. But the driver in me wants a car to have character. I like automakers whose engineers create a car that really thrills the driver while also delivering on quality and practicality. A car that isn't just about process – delivering quality and comfort. A car that has it's own identity and not one created by marketers. A car that someone cared to make.

Buy an IVECO truck and impress your friends

2007-08-01T05:39:00.002-07:00

Fiat made an announcement recently that demonstrates how the once-beleaguered Italian car maker has turned its fortunes around. The carmaker is returning to America.

(Itching for the new Fiat 500 in America? Well, you could be driving this!)

Want to buy a Fiat in the US? Well, unless you are abjectly obsessed with the utilitarian design of IVECO commercial trucks and already have schemed a plan to pimp one up, don't start googling for your new local Fiat dealer just yet.

Fiat CEO Sergio Marchionne said last week that the Italian automotive group, which also owns Iveco, a maker of commercial vehicles in Europe, will bring Iveco to the United States .

"My expectation is that we will have something done within six to nine months," Marchionne told analysts during a conference call, as reported by Reuters.

Fiat is doing well across much of its model range in Europe. And like PSA Group, which owns the Peugeot and Citroen brands, it always hints at a return to the North American market and then backs away or puts it off into a future that never comes to pass.

The reason they say they'd like to return to the US is because, in a global economy, you feel the need to be in the world's largest market, which is the United States.

The reason they never actually return to the US is the same. In a global economy, they can grow sales and expand into all the emerging markets in Eastern Europe and Asia where they can incrementally invest and produce sales and profits. The US is the big enchilada, but a risky one – tough to sell small cars in, especially with residual impressions by consumers of the poor quality of French and Italian cars. It would require a huge investment to go nationwide with a dealer network. That's why they go small – like just selling commercial trucks.

Automotive Criticism (Part II): My two favorite car critics

2007-07-31T06:41:00.000-07:00

I was once talking to a GM spokesperson when I casually brought up the name Jeremy Clarkson. I didn't mean to, it just happened to come out when I mentioned something I had seen on Top Gear. I must have sent his blood pressure soaring as a crossroads pattern of veins began to emerge on his forehead and his face turned flush with rage. I found myself thinking where would I be able to find the nearest defribilator. I was lucky this man was under 50 lest I be charged with involuntary manslaughter for provoking a stroke.

He spouted contemptuously about Clarkson. That Clarkson just hates Vauxhall and automatically dismisses and mocks any car they put on the market. He did have a point. Clarkson can be, and usually is, vicious towards cars he doesn't like and he hardly ever tries to be objective. Even if a car has its good qualities, he'll just nominally mention them and then move onto trash it anyway.

For those of you who don't know him, Clarkson is the automotive critic for the the Times (The Times of London, as it is called elsewhere) and hosts a widely popular BBC show called Top Gear that is shown around the world on various BBC channels.

Now, I have to make a distinction here between the the Clarkson on TV and the writer for the Times. The guy on TV can be more than a little obnoxious and you have to have a sensibility for a particular brand of British humor to understand him. He wears tight blue jeans like your still-trying-to-be young uncle, needs a haircut and looks particularly shabby for a man his age. Clarkson has also appeared on a BBC show called Grumpy Old Men, which actually explains everything.

But, for me, not being properly groomed for TV is not one of the things I would criticize about Clarkson. If he were on American television, by now he'd have to have had more plastic surgery than Joan Rivers just to keep his job. And he'd have to tone down his act. Basically, he would have to reinvent himself as Ryan Seacrest to keep working. So, I admire him and the BBC for letting him be who is he is, all critics be damned. Still, there are many Brits who think of him as a colossal jerk and he does do his part to encourage them.

What I am critical of Clarkson for, both the writer and the Top Gear host, is how he engages in outdated national stereotypes whilst reviewing cars. In fact, there's a whole page on the Times' website which features a list of reviews based on his thoughts about the countries that build the model. You can see it here.

For Clarkson, French cars are always flashy but awful, German cars reflect Germans - sensible, reserved, etc. Engaging in these stereotypical notions is unfair to both the countries and their automakers and in the year 2007 it's really time to move past them. Maybe the underlying anti-Americanism (Clarkson can really rag on those big, clunky American imports) and Euro-skepticism sells in the UK but Top Gear has an international audience and it would be an improvement if he dropped it.

What I really respect about Clarkson is the writer you see in the Times. One cannot deny his humor, talent for language and the authenticity of his voice. It defines the notions of trade craft and professionalism. This guy can write. Most of his reviews begin with a few hundred words on whatever theme or topic have come to mind. The first half of his articles are not car reviews at all but ruminations on life. He then picks up a theme and transitions into the car review and whether it really fits or not doesn't matter because his writing is so strong.

Click here to check out Clarkson's work.

But the one critic I do enjoy reading most, without reservations, is another writer who's whirling prose and apt metaphors never seem forced or ring false. That would be Dan Neil of the LA Times.

Neil has the talent of Clarkson but with a more quaint, reserved style. As an American, he lacks the brashness of Clarkson's sardonic humor. He's more good natured but I don't think GM would agree. They once pulled half their ads off the LA Times because of him and were forced back because of complaints by local dealers dependent on the ad spending.

(Note to GM: If you don't want negative reviews, don't make bad cars. You put out such poor product for many years, as your own most candid executive Bob Lutz will readily admit. If it soured both critics and consumers alike, maybe even to the point where they wouldn't give you credit when you built a decent car, it's of your own doing.)

I was once talking to James Cobb, editor of the NY Times automobile section where Neil worked for many years, and he remarked how Neil had honed his skills while working there. He was taking credit, but credit the NY Times, or any paper that gave such a writer a chance to evolve, deserved. No matter how much raw talent you have, you don't just wake up one morning and start writing like Dan Neil. Neil has the distinction of being the first and only automotive writer to win a Pulitzer Prize (in 2004) for criticism. That is an exceptional achievement. To write so well, particularly on what is essentially consumer advice, that your work overwhelms Pulitzer committee judges with its literary merits when they're measuring your work up against the best of theater and art criticism ...well, you have to be pretty spectacular to garner that kind of recognition.

Neil is probably more telegenic than Clarkson, judging by the video reviews posted on the LA Times Highway 1 section. It would be great to see a North American version of a show like Top Gear that is as much about pun-filled metaphors as it is about a passion for driving. I'd love to see Neil host such a show – just as long as he doesn't wear tight jeans.

More than a business: Automotive criticism in an automotive culture - Part I

2007-07-26T10:55:00.001-07:00

I am an automotive journalist. I cover the industry for a living. When I mention this to people they immediately assume that I am some sort of car enthusiast or expert. If they ask me for advice on what kind of car to buy, I am happy to oblige, though I usually just say, “Buy a Toyota and you will be happy. Or at least you will not be on a bus one day cursing me while your car is in the shop. “

Here's the distinction: I do not adore cars so much as I like to drive. Driving is relaxing for me. A nice roll across the Swiss countryside, where I live, helps jump-start my creativity as much of my writing begins while I'm behind the wheel. Music always accompanies me on these journeys – Miles Davis, Mogwai, or whatever best reflects and suffuses the mood I am in.

What I do like is a car that is well-engineered and fun to drive. I like the way the better Peugeots handle and I like a car that is stylish and practical and that drives outside of its class. That's what I like about European marques, you don't have to go to a luxury brand to get a great driving experience.

And this is why I like new cars. Pretty, shiny new vehicles fresh from the manufacturer and into press fleets with only a few thousand kilometers on the odometer at most. Cars engineered with all the advances made over the last hundred years or so that make them lighter, safer and more nimble on the road than anything in years past. Many of the people I meet who are enthusiasts of one degree or another often start to talk to me about classic cars. 68 Mustangs or 61 Ferraris and hope that I have something insightful to add. I don't. Show me a classic car and all I'll say is,”No airbags? Deathtrap.”

I also happen to believe that there is something rather unique about the car industry. There is some glamor to it. Not as much as the entertainment or fashion business but it carries more desirability weight than say, working in IT or being one of those pathetic suppliers the car makers enjoy jerking around like the office cad with the frumpy girl in accounting who's hooked on him.

Cars very much define the cultures we live in. The car makers know this, which is why the try so hard to make that one, perfect, I-gotta-have-it car. That the Ford F-150 is the biggest selling vehicle in the US says something about American culture and that the VW Golf serves as its counterpart in Europe also speaks to how people live here. Perhaps no other industry, including Hollywood, defines our modern, industrialized, and now post-industrialized, technology driven societies as much as the automobile industry does. The automobile symbolizes the fulfillment of the capitalist promise – it is our freedom and mobility. A car is iconic. It is this cultural aspect that fascinates me most.

To be continued...

The Hummer and the Prius: Sinner and Saint

2007-07-25T14:41:00.000-07:00

If for some reason my only choice were between driving a Prius or a Hummer, perhaps because the only two dealerships in this imaginary parallel universe that I'd be in were owned by Leonardo DiCaprio and Cooter from the Dukes of Hazard respectively, I guess I'd have to go with the Prius. I just don't need that much space and I'm sure DiCaprio would give me a great deal since he'd not be in the business for the money anyway. Although I can imagine bargaining with Cooter would probably be a lot more fun.

What brought this thought to mind was this story in the Washington Post about a man who's new Hummer was vandalized by some enraged enviro-car-critics. American puritanism comes in many forms and sometimes there's just no room for mitigation or subtlety.

As in...what if the Hummer owner in Oregon only drives about 50 km a week while the conscientious and status-conscious Hollywood celebrity is doing 300kms a week buzzing around LA in her hybrid. Who is the nasty person then?

Or what if I live in Germany and commute to work on the autobahn where my Golf diesel actually gets better mileage than a Prius because hybrids lose much of their advantage on highways? Does DiCaprio not think I'm cool now?

Lately, I've been doing much less driving and walking or taking my bike or hitching a ride with Zurich's excellent transport system which is rated one of the best in the world. I'm trying to do my part while also getting more exercise.

But what am I really contributing? I'm just one person.

Global warming is a challenge that requires a collective solution. Governments must come up with policies that reduce emissions and they can only do so by imposing mandatory restrictions.

The problem is that, often, in the US such debates are often framed in terms of individual responsibility vs. individual freedoms. But the problem isn't one guy driving a Hummer but millions driving excessively large SUVs and using electricity from coal-burning power plants, etc. etc. The point is not to take away that man's right to drive a Hummer but it is to greatly reduce the number of large vehicles on the road.

Americans consume roughly twice the energy per capita than Europeans do. Is that because they are gluttons and Europeans are virtuously restrained? No. It's because of policies such as heavy taxes on fuel that encourage conservation in Europe. Americans are loath to accept European levels of taxation but that resistance is part of the problem.

Only mandatory caps on emissions can help halt climate change. After those regulations are in place, your only obligation is to follow the rules. You can still buy whatever car you please. It just may cost you a lot more to drive something large. And that's the way it should be.

Just-in-Time...Just not during an earthquake

2007-07-23T04:29:00.000-07:00

Toyota may very well be the most successful corporation in history and much has been written about its vaunted production system and its fundamental philosophy of constant learning and improvement. It's one of those few instances where reality matches the hype. Yes, we read much about how well Toyota does all the things any business should but with a massive amount of cash reserves (some 50 billion US dollars, last time I checked) and its ever growing output along with having some of the best quality ratings of any automaker, they deserve the praise.

But nothing is perfect and neither is their "just-in-time" concept for the delivery of parts. Having large storage spaces with reserves of parts for your manufacturing process is inefficient and expensive and efficiency comes from a constant flow of parts into the production process. But when that flow gets interrupted you're in trouble as this article from the Wall Street Journals points out [subscription required to read in full].

Apparently, the earthquake that hit Japan last week knocked out production at Riken Corp. which makes piston rings for Toyota, Honda, Nissan and most other Japanese car makers. The piston rings cost 1.50 US. Toyota has announced that there will be delivery delays on about 55,000 vehicles due to the disruption.

But Toyota has said it won't be changing its just-in-time production system.

"We've been implementing this strategy for decades … and we'll keep on with it," Toyota Motor Corp. President Katsuaki Watanabe said in another article in the WSJ on Monday.

The lesson is for automakers to not be so dependent on any one supplier. But, I guess, that's the whole point of "just-in-time"; in order to keep costs low you must keep the system as simple as possible. The more you spread that risk, the higher your costs must go, and it does seem that such events are rare so the benefits outweigh the risks involved. When was the last time anything like this happened? It seems to be a anomalous event.

Still, it does look silly to have car production in much of Japan thrown into disarray because of a missing one dollar and fifty cent piston ring.

S-Max USA? No way

2007-07-18T07:01:00.000-07:00

As promised in an earlier post whereupon I reviewed the Ford S-Max and asked why the North American consumer doesn’t get a choice like this at their local Ford dealer – or a Focus ST or a new Mondeo for that matter. Here is an answer that I hope can satisfy all those disaffected, turbo-charged enthusiasts who congregate at sites such as focusfanatics.com (Which I take to be Focus fans' answer to vwvortex.com.)

So here's why:

It's simple. It is an issue of price/cost. It would just be too expensive for North American buyers to purchase a vehicle manufactured in Europe from a non-luxury brand like Ford. This is particularly the case right now with exchange rates being what they are. As of this writing the Euro is trading at about 1.37 to the US dollar. This is why VW is selling only about 400,000 cars in the US each year and losing money. They're bleeding through the nose on the Passat and Golf/Rabbit built in Wolfsburg. The Jetta, made in Mexico, is probably mitigating their losses.

Base price in Germany for an S-Max is 27,000 Euros - which is about 37,000 US dollars at current exchange rates. On a Ford that size, sticker-shock in the US would have kicked in about 15,000 bucks before that.

Cost sensitivity is a big issue because corporations are very sensitive about losing billions of dollars. We see this in how the Detroit 3 respond to proposals to increase CAFE (fuel economy standards). They all oppose them because they believe it will add costs to the vehicles they produce.

They already build fuel-efficient cars in Europe. They already have the technology. Yes, they do. But they know that the US consumer is not willing to pay for this. Right now, the only advantage the Detroit 3 enjoy over their Asian competitors is the price advantage they offer – especially with their incentives. Their brand values aren't what they would like them to be.

Ford of Europe is essentially a German carmaker. They are designed, engineered and built mostly at the Ford plant in Cologne, Germany (and other production facilities in Ghent, Belgium and a drive-train plant in the UK, etc.).

And here's where the Ford Focus example comes into play (Focus Fanatics, pay attention now).

Many car critics think the Focus ST is a great vehicle. I wasn't complete impressed since I found it to be a drinker and the enormous power coming through the front-wheel drive seemed unbalanced. But it was still a pretty good competitor to the Golf GTI.

The car sells for about 22,000 Euros, which would put you in the region of 30,000 US dollars. Now, assuming Ford even had the new Focus, which it does not, a customer walks into his local dealership in Florida or Oregon or Alberta or Nova Scotia and begins to wonder why he would have to pay more than double the base-price of a Focus for the souped-up ST version.

You see? They can't just put a Focus ST in a North American showroom and be able to justify the price difference without an explanation that mangles the value of their brand.

Namely, that the Focus ST is a German car and is not the same as the North American Focus. That it's a superior vehicle. As German as Mercedes or BMW. Sound good? Yes, it does. So that's why you have to pay so much to have it. Which would lead the prospective buyer to state,”But it's a Ford!” To which the salesman would reply,”Yes, but a European Ford.” To which the customer would say,”So you're saying that this European Focus is a better car than that other Focus over there?” To which as an employee of a Ford dealer he would be forced to answer no. To which the customer would retort,”Then why do I have to pay twice as much money for the European one?” At this point the salesman's ears would begin to spout smoke and he would break down to reveal himself to be a Detroit-engineered robot. See the contradiction?

Now, one can ask the obvious,”Why doesn't Ford move production over to North America where costs are less and produce vehicles that consumers will like and that will up their brand value?”

This is what Mulally, Ford's CEO, seems to be musing about.

It's not such an easy path to reaping the profits of building great vehicles cheaply. If it were, Audi would have had a plant in North America long ago to be more competitive with BMW and Mercedes. PSA Group, Renault and FIAT would have already bought up old GM and Ford plants and re-entered the market to sell cars that do well in Europe.

The expertise, the suppliers, the infrastructure, materials, personnel, etc. is not something you can Fed-Ex across the Atlantic. You would need great amounts of money to make such investments which Ford and GM and those new owners of Chrysler really don't have.

Also, they'd have to look at low-cost production in Canada or Mexico to escape the rampant escalation of health-care costs for workers in the US. They'd have to re-tool factories and negotiate new agreements with the unions to do so and so on and so on.

Fundamentally, the reason the S-Max is a great car is because of the expenses incurred in building it. You want cheap? It won't be any good.

The two markets, Europe and North America, are very different too. North American consumers expect larger cars for much less money and aren't as demanding as Europeans in terms of styling and performance from a volume brand.

But having explained that, again, the ultimate question still stands - why can't the Detroit 3 build great, desirable cars in their domestic market? In a competitive economy there are no excuses; if your competitor makes a better product and can deliver more value for the price, which many of the Japanese automakers do, then you're finished. You can explain it, as I just have above, but at the end of the day you lose.

Honda is listening

2007-07-18T06:47:00.000-07:00

Maybe Honda executives were reading my posts because now comes this announcement from their CEO saying that they are looking to establish a production plant on the continent since they cannot meet demand for their vehicles.

Honda has a plant in the UK at Swindon that is not in the euro-zone.

Honda CEO Takeo Fukui said that the carmaker had hoped the UK would join the euro. "But because that isn't happening, we may need to come up with other options to supply Europe," he said at a press conference there, according to the Reuters article.

I guess, they realize the demand is there and are looking for options to produce vehicles here to sell in larger volumes. Maybe they will follow everyone else and build a plant in Central Europe but I wouldn't be surprised if they choose a location in Western Europe.

Honda is here...

2007-07-10T16:30:00.000-07:00

I just wanted to follow up on my previous post about Honda and add this story from Yahoo news [in German].

It seems Honda has just knocked Toyota off it's mantle in a customer satisfaction survey from JD Power and Associates in Germany, where Toyota had been topping the charts there for several years in a row.

And as promised, here are Honda sales numbers, to make my point. My point being that Honda doesn't seem too concerned with its low profile as a brand here in Europe.

Honda sales in Europe, which includes the EU 27 plus Norway, Switzerland and Turkey were 299,546 for 2006. For North America, the number is 1,724,445.

By contrast, Toyota sold 2,798,393 vehicles in North America in 2006 and 1,001,825 in Europe.

[Data compiled by Automotive News Europe from JATO Dynamics and JD Power Automotive Forecasting]

Yes, Honda are growing their sales steadily here but they're starting from a very low baseline. Just look at that difference between North America and Europe - it's almost 1,5 million units. It's more than that for Toyota but they've past the million mark in Europe which definitely makes them a major player as a brand now.

In beating out Toyota, the master of customer satisfaction, in a JD Power survey, in everyone-is-a-car-critic Germany no less, only serves to advance my point that Honda should make more of an effort to boost their sales in Europe. There is no reason why the should have any trouble doing so.

Vacation S-Maximus

2007-07-09T03:01:00.000-07:00

Do forgive my absence, but I was on holiday in Ticino [the Italian part of Switzerland] for the last two weeks.

So...upon my return I would like to offer a brief review of the Ford S-Max which Ford of Switzerland kindly provided to me for a test run.

First of all, this being our first holiday with the baby, now almost 4 months old, I thought I would need a car bigger than my ever shrinking 307. Only when you have them do you realize that kids actually require more luggage than adults. As they get older, you may find yourself one day hooking a trailer to your car just to haul their toys around.

Anyway, given my pathological fear of packing - I always forget at least one important thing and instead bring a bunch of crap I don't need - and my chronic inability to gauge spatial configurations (I couldn't pack a can of soup into a Hummer), I panicked and went out and got the biggest car I could - just throw everything in the back and drive.

Yes, the time has come for me to play 'Familien Vater' and I finally got myself into an MPV. As the infamous auto journalist Jeremy Clarkson once wrote, "I have never really understood the attraction of MPVs. To me they are the first sign that the driver has given up on life."

After my little excursion with the S-Max, I will respectfully disagree. Clarkson himself picked the Mazda5 and the C-Max as two of the top five MPVs when he was absolutely forced to make a call. And I too I liked the C-Max and found the S-Max to be more than a larger version of it. It's actually a great drive.

The 2.0 liter diesel engine was quite powerful and responsive and had lots of pull in the Alps where you need it even though the S-Max is larger than some mobile homes. At least, that's how it feels on the inside. From the outside, it actually looks sleek and even, dare I say, sporty, with Ford's new 'kinetic' design at its best here.

Ford developed this 2.0 liter diesel with PSA and the 6 speed transmission gets the most out it. It was amazingly economical, given the size of the S-Max and how it was carrying half of our personal belongings across one of the major mountain ranges in the world. I haven't done the exact calculus but on 1/3 of a 60 liter tank it took us effortlessly from Zurich to Ascona which is about a 300 km drive.

I loved the leather interior and the 3 adult seats in the rear. There are an optional 2 extra seats in the trunk space but I reserved that for our baby carriage and luggage.

I can't say anything bad about the car except that driving around with a wife and baby in a packed minivan didn't make me look the part of the really cool guy I truly am.

The car may seem pricey, and at 54,000 Swiss francs plus for this fully optioned version, you are well into C-Class, A4 and 3 series territory. But, it's worth it. Ford has made a great car here and with an excellent drive-train and chassis combination that is extremely practical and economical. This car really makes the case for what diesels can do that petrol engines can't.

The only question this Canadian has for Ford is:

Why can't you, for the life of you, come even close to building a vehicle, any car, this good in North America?

That's a question, that the auto analyst in me can answer quit easily. But that is the subject for a subsequent post so stay tuned...

Japan once again the number one carmaker

2007-07-02T03:22:00.000-07:00

Japan seems to be continuing its recovery from a long recession that plagued the world's second largest economy for much of the 90s and 2000s. Its auto industry is a large part of that recovery and, driven by rising demand for Japanese models in North America, and particularly Toyotas, the country now manufacturers more vehicles than any other in the world.

The rankings from Automotive News:

Changes at the top

Production in Japan passed U.S. output in 2006. China moved past Germany into 3rd place.
	2006	% change
1. Japan	11,484,233	6.30%
2. U.S.	11,351,289	-5.50%
3. China	7,271,814	26.30%
4. Germany	5,818,171	1.10%
5. S. Korea	3,839,589	3.80%
Includes passenger cars; light, medium and heavy commercial vehicles; buses, minivehicles
Source: Automotive News Data Center

I guess it's time for another unwarranted dire assessment of the auto industry in Germany since they now have fallen to 4th place after China.

There's a particular brand of European pessimism which I find both at times charming and at others exasperating. First, this should be taken as good news, since it demonstrates that when production moves to low-cost countries or local markets that doesn't mean those jobs are gone for good back home.

If the automaker is successful globally, there will be plenty to do back at home base in terms of R&D and an increase in core production models which are often kept at their main domestic plants.

One of the things I've learned in covering the global industry is that automakers will always need the resources they began with in the home countries. The expertise, technology from top-tier suppliers and their ability to coordinated elaborate production schemes are not something that travels easily and looking for lower labor costs in other markets can and does result in extra costs in finding local talent, bringing in the expertise, both in-house and that of your suppliers, in logistics and so on and so on. Soon enough you learn that you get some and more for those high wages you pay at home.

Germany is still an industrial powerhouse in its own right and it continues to have superior technology and quality in its automotive industry. And even when some of that production moves a few hundred kilometers to the East into countries like Hungary, Slovakia or the Czech Republic, that's just part and parcel of the new Europe. Taken as a whole, the EU as a single economy would be number 1 in total production not too mention having the majority of the most desired brands in the world.

Honda, where are you?

2007-06-29T05:59:00.000-07:00

Where is the Honda brand in Europe?

Honda is doing very well in the North American market, winning JD Power studies and it's luxury brand Integra is a healthy competitor to Lexus, BMW, Infiniti and so on. But in Europe, Honda is very much below the radar as a brand. In the European auto press you see very few stories on Honda. The cars are here, they do get reviewed but Honda seems to spend little on advertising and it has a very small share of the market compared to how well it does in North America. In Canada, my home country, it's even the number one selling brand.

Why is this? Honda, wake up. Or are you happy just selling motorbikes or boat motors here?

Even Nissan has just this year established a headquarters here in Switzerland for its luxury brand Infiniti which it has introduced into the European market.

I will check the sales figures later and post them for you but they're not going to be great. With fellow Japanese automaker Toyota growing steadily in Europe, Honda doesn't seem to want to follow that lead. Maybe Toyota is benefiting from this as the only Japanese automaker to have more than 5 percent of the European market. If I were Toyota, I'd be happy about this ability to corner the market on quality Japanese cars. But I can't figure out Honda.

Anyone have any ideas, please, do let me know.

Women in the industry

2007-06-28T09:13:00.000-07:00

The paper I work for, Automotive News Europe, has a brief story today on women in the European auto industry. [Subscription required]

Having covered the industry for over 3 years, I know well about the dearth of female executives. The only female directors or executives that I have interviewed have been the ones that represent dealer groups or dealer councils in Europe. I don't think I've interviewed a single female executive at an automaker in all of that time.

Sure, there are plenty of women in the press departments and who work as assistants to the executives but the industry really should make an effort to recruit more female engineers and find female business leaders to groom for executive positions.

There may be cultural factors that lead to women being less attracted by the motor industry than men. But automakers can and should overcome this by developing recruitment and education programs that specifically seek out and train women for a career in the automotive sector.

And one need not have to justify this by any other reasoning other than it is the right thing to do. Period. Maybe gender diversity in the top ranks and in the board rooms will lead automakers to champion a broader economic and social agenda and be better global corporate citizens. Maybe female consumers will be more likely to buy a brand headed by a female executive. The only other reason besides the moral one of gender equality is the practical one of untapped talent that is out there.

A few years back Volvo got some press when a team of women engineers created a car 'for women'. I don't like this notion of women designing cars for female consumers. It seems patronizing. More women should just simply be designing cars, making cars, marketing cars and leading car companies. Do some models have more female drivers than male? Yes. And if an automaker thinks they can have a competitive advantage by having that model designed or marketed by a female staff, then great. But don't segregate the process so readily.

There is a whole pool of untapped talent out there when so few women work in the industry. I believe the companies that get in there early and recruit those women will have a great advantage simply because they have greater access to talent than their competitors. Those new female executives will help provide better notions of what the market and individual consumers, both female and male, want because the companies that hire them will be more reflective the market they seek to sell to.

A Blog on the European Auto Industry

2007-06-25T09:56:00.000-07:00

Welcome to Euro Car Guy; a blog on the European car industry.

This blog will be run by Alex Ricciuti (...and that would be me), a freelance writer who reports on the auto industry for Automotive News Europe.

This site will feature daily analysis on the news in the European automobile sector. There will be news summaries along with commentary I hope to be insightful on the various stories that emerge during the news cycle.

The analysis will be mostly product and market based; that is, to comment on how the automakers are meeting the challenges of the market and the demands of consumers with their products.

This site will also feature, from time to time, product reviews, when new vehicles are made available to me from the automakers.

What this site won't be is one for pure car enthusiasts. But when your carmaker dumps your favorite model or changes it for the worse - feel free to come here and vent to them and maybe I will post an analysis explaining to you how automakers don't want to make cars as much as they want to make money.

Until tomorrow...Ciao!