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Archive for December, 2008

2008’s most satisfying cars

December 23rd, 2008

Consumer Reports has just released their list of 2008’s most satisfying cars, and the results aren’t what I would have guessed! 

Topping the list (for the 5th year in a row so I guess that’s not TOO surprising!) is the:

Toyota Prius

2008-prius-hybrid-8

Ninety three percent of owners said they’d buy or lease another one.

A very close second was:

Chevrolet Corvette Z06

2008z06corvette

Yes, more people would buy their Prius again than would buy their Z06 again. Still, 92 percent of owners wouldn’t think twice about plunking down the cash for this American gem of a car that can beat a 911 Carerra and a Jaguar XK8 to 60. 

And coming in third…

MINI Cooper Clubman

minicooperclubman_1_440

Hey, it’s kinda like a Suburban. Only smaller. And German. 

At the other end of the list is some sobering news: 20 of the 23 least satisfying vehicles were American. 

At the very bottom is the Jeep Commander, preceded by the Chevy Equinox, the Chevy Colorado, and the GMC Canyon

Thank goodness Chevy still makes the Corvette!

What car do you drive, and would you buy it again?

-tgriffith

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When to pull the trigger

December 21st, 2008

horseIn response to talk of bankruptcy as a better solution than a bailout, jgoods says you don’t shoot the horse you are riding.

He and I agree on the bottom line: the auto industry needs a complete overhaul. We both want to see the U.S. companies become competitive, and even lead, in the world of automotive innovation.

We agree that they’ve simply followed the easy money when Americans were in love with city dwelling monster trucks. In fact, I wrote a blog about that here. It’s true that the American public simply got what they were demanding and probably should accept some guilt.

However, it’s the responsibility of a corporation to plan for the possibility of future scenarios, rather than just hope a lot that things stay the same forever. That’s where the Detroit 3 have failed miserably.

The UAW hasn’t helped. The union has bogged down the industry with high labor costs and forced the Big 3 into paying unfathomable sums of money for health care and retirement benefits. While being good for the employees, it came at the cost of stagnant innovation and sub-par quality. That’s not good business.

It’s time to accept that the U.S. auto industry isn’t confined anymore to the United States. Those foreign transplants, Toyota, Honda and all the others, will have a significant impact on the shape of the industry here. We have to think bigger than our borders and accept the fact that organized unions can’t control everyone.

The U.S. automakers do need our support. And now that they’re being humbled and forced to play on the same field as the rest of the world, they’ll probably earn it. But that doesn’t mean all 3 companies have to survive by being bailed out.

Remember that horse? If he’s got broken a leg and won’t take you where you want to go, it’s time to shoot him. Even if you can’t imagine traveling without him.

Do you think all three U.S. auto companies can be succesful in the future?

-tgriffith

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Not a Band-Aid, a Transfusion

December 20th, 2008

Tgriffith makes three worthwhile points: 1. Mr. Bush did a complete flip-flop on the bankruptcy idea. In fact, he’s done several during the last two months. 2. The problem now is that the industry has only 90 days to “get viable.” 3. Bush in fact has kicked the reorganization can down the road to Obama.

Mrs. Henry Paulson Giving Transfusion to Happy GM Employee

Mrs. Henry Paulson Giving Transfusion to Happy GM Employee

But none of these points tells the real story. The whole mess started months ago and the real question is whether we are going to punish the companies and the UAW or help them get back on their feet. Do we want a “viable” (whatever the hell that means) U.S. auto industry or to watch them not only bleed to death but infect the rest of the economy through their demise—like the old Typhoid Mary story. Most every respected economist agrees that the standard Ch. 11 bankruptcy would be lengthy, very risky, with unknown and costly consequences, possibly triggering a Depression.
 
So what the bailout does, finally, is “manage” the bankruptcy and consequent reorganization, giving the companies a chance to do their restructuring without filing for bankruptcy or going through a protracted and messy liquidation. And that’s the only right way to do it. All those free-traders and defenders of instant bankruptcy and the foreign transplants want is to see their ideology triumph, kill the union, and permit the transplants to set wages and terms for the whole industry.
 
We are in the economic mess we’re in because of such people and the willingness of Chrysler and GM Boards to do nothing while their companies took the road of easy profit instead of thinking about where their businesses would be in 10 years. Yet I’m not willing to lay the entire blame on them for building dopey cars and not leading their market to reform itself. You tell me how to sell small fuel-efficient cars to the masses when gas is cheap.
 
Sure, it was easier to sell trucks and SUVs. Sure, the UAW got greedy. So did Wall Street and the banks. Their myopic greed (plus the administration’s total lack of oversight and blind commitment to laissez-faire policies) produced the current horrendous crisis that finally brought the auto companies to their knees. The companies need support, new blood and, most of all, time. I hope they have enough, and I hope the Obama team will help them, not spit on them.
 
You don’t shoot the horse you are riding.
 
Here’s your chance to vote on the bailout: Was it a necessary evil? Or just evil?
 
—jgoods

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Is the bailout just a band aid?

December 19th, 2008

Wow, how about the pump-fake that ol’ Mr. Bush pulled on us all, huh?

On Thursday the White House was playing up the possibility of an ‘orderly bankruptcy’ for the Detroit automakers. Bush even said,

Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring.

Then the influence and pressure of the Big 3 and the UAW kicked in, who called the idea “unworkable and dangerous.”

bandaidNever mind the fact the majority of the Americans were against a bailout, as was Congress who voted not to bail out the automakers. Even the president was considering bankruptcy as the best option to allow a complete reorganization of the auto industry. 

Then something happened and Bush abruptly threw to the other side of the field. Maybe his decision was partly the influence of Chrysler’s desperate ploy of playing up their upcoming month-long plant closure; portraying themselves as victims because people weren’t buying their cars anymore. (If they were any other business they’d react by decreasing the size of their business, not whining to the government that they’re out of money.) 

President Bush’s $17 billion bailout does come with considerable restraints though, the biggest of which being the question of viability. According to the White House, “A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.”

If, by March 31, 2009, any of the companies are not deemed viable, the loans will be called and bankruptcy will likely result. Can GM or Chrysler achieve a “positive net present value” by spring and avoid having to give back the government’s money? I have my doubts.

This bailout seems like President Bush’s way of saying, “Hey, good luck President Obama. The automakers didn’t collapse on my watch, so now it’s your turn!”

Even though he believed it was the better option, I don’t think President Bush wanted to oversee a federally orchestrated bankruptcy process this late in his administration. The bailout option was easier and provided a nice band aid that would last until the next president could make the final decision. 

Do you think at least one of the Big 3 will still end up in bankruptcy come spring?

-tgriffith

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Detroit Gets a Christmas Present . . . Sort of

December 19th, 2008

Can you believe it? George W. Bush has saved the car industry. All those cheerleaders for instant bankruptcy, like Sen. Richard Shelby (R. Tenn.), can now go back to their drawing boards, along with the automakers.

Chrysler Line Worker Gets Paulson TARP Blood

Chrysler Line Worker Gets TARP Blood from Paulson

Chrysler and GM got a transfusion of $13.4 billion in loans to tide them over to March, with the prospect of $4 billion more to come in February if necessary. The deal is pretty much the same as the earlier bailout bill Congress offered that last week went down to defeat. It essentially buys the industry time to come up with a viable (much debate on the meaning of that term) plan for reorganization.

A couple of interesting add-ons to note: the administration, according to the Washington Post, “has set as a target that the companies convince holders of up to two-thirds of their outstanding debt to accept stock in exchange, and that half of the payments into a union benefit fund be made in company stock.”

The idea is to get all major stakeholders to take a haircut, sharing both the present pain and the risks to come.

Cerberus Capital, the buyout firm that owns Chrysler, agreed “to hand over [its] equity in the company’s automotive operations to labor and creditors as part of its loan agreement with the U.S. government.” GM boss Rick Wagoner acknowledged that the road ahead would be tough but also called the federal loans a blueprint for the company’s second 100 years.

So who is going to oversee all this? There is talk that Secretary Hank Paulson will function as the new car czar. Hmm. This is the guy who opposed helping the automakers in the first place and refused for months to take any money out of the TARP funds—which they have done, finally, to support this bailout.

And for the moment, Mr. Bush seems to have given over his talk yesterday of an “orderly bankruptcy,” though that may well be down the road for the industry in any case. The President said he didn’t want to drop this financial bomb on the President-Elect in his first day in office. But it looks like Mr. Obama will have to defuse it anyway.

Can you think of a worse person than Hank Paulson to oversee the bailout?
—jgoods

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Toyota is now selling on eBay! Sort of

December 19th, 2008

I wrote yesterday about my desire to buy a car directly from the manufacturer, and skip the entire dealer fiasco. 

ebay_motorsI won’t repeat my argument for that here, but instead point out a very interesting fact I recently learned: Toyota is selling cars on eBay. So are GM and Chrysler.

You might ask yourself, “How can this be? I thought there were laws outlawing the practice of an automaker selling directly to the public!” Well, you’re right. Don’t get too excited just yet.

An article here says:

Toyota will be listing its pre-owned inventory on eBay, in a move that will put it on the famous auction site with rivals such as General Motors and Chrysler.

On first read, one might assume that Toyota is listing and selling these cars, which is exciting! 

Upon further review, though, I found this blog that goes into a little more detail, basically saying that Toyota’s inventory of cars is searchable, but still must be purchased through a dealer. 

At the very least Toyota, GM and Chrysler seem to understand the importance of offering their inventory for sale online. But on a quick search of eBay, all I found were ads by dealers begging for a test drive. 

So my high hopes of simplifying the car-buying process are dashed and I’ve decided that by posting on eBay, automakers are just trying to generate more leads for struggling dealers. I should’ve known.

Do you think the car buying process should be simplified? 

-tgriffith

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Government Bails Out for the Holidays

December 18th, 2008

Let’s see: So far the administration has committed some $350 billion to the banks, and credit has loosened not at all. The auto bailout bill went down, principally because some GOP senators moved to bust the UAW. Bernie Madoff got away with some $50 billion from private investors, including a number of charities, because the regulators weren’t watching. Mr. Bush is still stalling on his promise to help Chrysler and GM.

ford-plant1Meanwhile, Rome is burning. In announcing its longer-than-usual holiday shutdown (at least a month, maybe more), Chrysler said that buyers’ inability to secure loans was responsible for 20-25% of its lost sales. GM is closing 20 North American factories temporarily; Ford is shutting down 10. Demand is plummeting for all cars, including Honda and Toyota.

Merry Christmas to all, and to all a good-night.

The NY Times reports today that the administration is still in serious negotiations with Chrysler and GM and cites difficulties in getting access to the $700 billion in TARP funds while blaming Congress for the delay in providing auto bailout money. Bush says he will make a decision “relatively soon.” Talks reportedly center on the prepackaged bankruptcy concept, with all parties making concessions.

Well, that would be a Christmas gift of sorts to everybody. We’ll let you know when and if it happens.

Are you as angry about the bailout delays as we are?
—jgoods

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Will you buy directly from Ford someday?

December 18th, 2008

I’d like to be able to buy a Fusion from Ford like I buy an iPod from Apple.

Of course, no one can order a new car direct from the manufacturer. Unlike the electronics industry, a myriad of state laws prevent auto manufacturers from selling directly to the public. 

These laws, enacted in all 50 states, are designed to protect dealers and ensure they are the only avenue for consumers to purchase new cars. In fact, state laws even prevent auto manufacturers from getting rid of brands without paying an extraordinary amount of money to the dealers selling that brand. 

oldsFor example, when GM dumped Oldsmobile in 2004, it cost them about a billion dollars to pay off Oldsmobile dealers because GM had effectively broken their agreement. (Apparently an automaker is bound to keep a brand forever just because a dealer network exists.) It’s tantamount to state-sanctioned organized crime and needs to end.

I would sure be happy if state laws protected the consumer rather than the dealership… but dealers are strong political groups and have heavy influence in state governments. As a result, they’re guaranteed to be the exclusive channel of distribution for new cars AND are protected against corporate brand reduction. 

The only thing that can change them is for people to stop buying cars (unless there’s a law against that somewhere too).

I posted a blog here recently discussing the closure of thousands of dealers across the country as a result of just that. Vehicle sales are so far down that dealers are falling left and right, so now is a prime opportunity for the business to finally evolve. Next we need individual states to step up and revise their dealership franchise laws, allowing a consumer to order a vehicle directly from the company that makes it.    

As unlikely as that is, if it did ever happen, dealers would exist for the consumers who want a vehicle immediately and don’t mind choosing from in-stock inventory. But the option to order a new Fusion online directly from Ford, in the perfect combination of color, options and accessories, would be there. All while avoiding the dreaded dealer markup. 

Automakers would win because they wouldn’t be bound to a bloated, inefficient network of dealers. Consumers would win because they’d have the freedom of choice. And believe it or not, dealers would win because over time their business would become respected, legitimate and honest.

We want to know: Would you rather buy a car from a dealer or directly from the maker?

-tgriffith

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Ouch! Unhappy Holiday News from Chrysler

December 17th, 2008

chrysler-logo2The Chrysler Media site just posted an announcement that the company will “idle” all manufacturing operations at the end of the day Friday, 12/19, and that “impacted employees” won’t return to work before Monday, 1/19/09. The company claims it has lost 20 to 25% of its sales volume as a result of the credit crisis. Wonder whether this news could have any impact on the bailout announcement expected Friday. Stay tuned!
 
 

Car Industry News, Car Politics, Domestic Cars

Sneak Peek at the International Car of the Year Nominees!

December 17th, 2008

The International Car of the Year Awards aren’t like other car awards. Rather than judging a car on its performance, comfort, quality and value, the ICOTY awards judge on emotion. They represent how cars make us feel, rather than how fast they get to 60 mph.

The award will be presented at the North American International Auto Show in January.

With that background in mind, here are the nominees along with my prediction of which car will win!

Ford Flex

flexpngThe Flex has two main innovations that will give it a shot at winning, the first being a built-in refrigerator that is surely a hit with parents on road trips. The second is Ford’s EasyFuel capless refueling system, which reduces the risk of gas theft and decreases the release of fuel vapors. Too bad it won’t win, though; the Flex’s exterior design is apt to produce emotions, just not the kind that make us feel good.

 

 

Nissan GT-R

gt-rThe $80K Nissan, with a twin-turbocharged V6 that corrals 473 horses and the ability to scream to 60 mph in three and a half seconds, could blow the doors off some Porsches. It has everything going for it, including a dashboard monitor to display steering angle and G-forces. This car will make your heart pound and your palms sweat… but it’s not something the average car consumer can identify with. That’s why it won’t win.  


Dodge Challenger

challengerThis reincarnated icon of the past is being brought back to life and will be accessible to nearly anyone with the desire to drive a symbol of American muscle. Yes, that muscle has weakened in past years, but that’s not the point. The Challenger invokes pure emotion in the millions of Americans who remember Dodge’s heyday. This isn’t just a car; it’s a car that builds hope in America’s automakers. And that’s the point of the ICOTY awards and why my money is on the Challenger to win.

Which car would you vote for to win the International Car of the Year Award: the Flex, GT-R or Challenger?  

-tgriffith

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