The Lost Generation

What is the biggest problem for the domestic auto industry? It is not union wages or the costs of medical care benefits. The new union contract is supposed to trim those costs. Quality is no longer a deal-breaker either. Even Consumer Reports is beginning to say that Detroit cars are good.

So what is it? If you listen to Detroit executives, the problem is that customers are living in the past. They do not know that the home team has corrected its mistakes and now builds some first-rate cars and trucks.

These executives may be correct in thinking the customers are not aware of the progress that Detroit has made. I have a different opinion, however. Today's American consumers just do not care.

People are happy with their Toyotas, Hondas and BMWs. A few newspaper stories about some Toyota quality problems will not send them running into Chevy or Ford showrooms.

In the 1990s, the domestic industry's edge in sport utility vehicles helped it find buyers who would not consider a domestic make for a passenger car. It was not rare to see a driveway with a Mercedes, BMW or other foreign sedan paired up with a Jeep or Chevy sport utility vehicle. Over the past decade, however, foreign manufacturers made a big push into the light truck business and began pleasing customers in that segment of the market.

In short, the foreigners, especially companies like Toyota and Honda, have an enormous amount of goodwill credit.

General Motors is the best example of a U.S. manufacturer building better vehicles. Its new cars and trucks--some already on the market--have handsome designs, new engines, six-speed transmissions, fine interiors, tight body fits and good quality.

Take the Saturn Aura, the best ever sedan, by far, for that division. Saturn launched the Aura a year ago, but sales have been sluggish--only 4,425 units sold this October. The new Chevy Malibu, a close cousin of the Aura, is the most attractive-looking GM car I have seen in decades. GM is starting Malibu production at a second North American plant, but it will take at least a few months to see whether this family sedan will be a sales winner. Either way, GM is making a big bet on this car.

That is only part of GM's new product offensive. Saturn, the company starved for new models until recently, also has a brand-new VUE crossover sport utility and will soon import a new small car, the Astra, from Europe. This spring, Saturn launched the Outlook, a big crossover SUV, and both the GMC and Buick divisions have versions of this sport utility.

Next spring, Pontiac gets the G8, a large rear-wheel-drive sedan, from its Australian affiliate. Cadillac just launched the new CTS sedan, and it recently won the prestigious Car of the Year award from Motor Trend magazine. Next fall, the Chevrolet division gets a new big crossover, the Traverse. Meanwhile, the big GM trucks that started coming out last year are doing well, and that includes such pickups as Chevrolet Silverado and GM Sierra; the Chevy Tahoe and Suburban SUVs; the GMC Yukon SUV; and the Cadillac Escalade SUV.

That is an enormous product portfolio of new stuff, so much that I predict that GM's market share will start growing instead of falling. The problem is that I do not expect much growth. I think that GM may get back 25% to 26% of the market in 2008 vs, 23.5% earlier this year.

Keep in mind that manufacturers such as Toyota, Honda and Nissan build many of their models in the U.S., and even companies like Mercedes, BMW and Hyundai have local assembly plants. On the other hand, a number of Detroit's vehicles come from Canada (such as the popular Chevy Impala, Chrysler 300 and Ford Edge), or Mexico (Chevy HHR, Ford Fusion and Chrysler PT Cruiser). Patriotism is less of a motivator for U.S. auto buyers than it was 20 years ago.

John K. Teahen Jr., a columnist at Automotive News, writes in a recent edition: "Any auto sales executive will tell you that winning back a defector is just about the toughest sales job in the world."

Teahen also writes, "To regain market share, the Detroit 3 must beat the foreign cars on desirability. And that won't be easy." I say it is almost impossible to win back many of today's drivers. With striking designs, Detroit may lure in a few customers, especially from the lesser foreign brands such as Subaru, Mitsubishi or Mazda. Even so, I predict that many of the customers who felt wronged or betrayed by their Detroit cars will not return.

The industry's long-term hope is to win over the new generations coming up all the time. They do not hate Detroit cars. It is slow going to capture customers that way, but good cars will triumph over the long term.

By 2009, GM may be able to hold market share in the 26% range. Ford can gain a little ground--when it has the right vehicles. I'm less optimistic about Chrysler, which seems determined to reduce its market share.

It took Detroit decades of selling poorly designed vehicles in order to get into its current predicament. With all of the excellent cars and trucks on the market today--from foreign and domestic manufacturers--it will take a good while for Detroit to rectify the situation.

Source: Forbes, 12/04/07

Truck rated safe, with asterisk

When the Insurance Institute for Highway Safety announced the latest list of what it considers the safest vehicles last week, there was a surprising newcomer: a pickup truck.

This is the first time a pickup has been on the list since the institute began giving out the Top Safety Pick designation two years ago. The institute had not tested pickups for side-impact protection until recently because it said it did not have the time. Now, pickups are undergoing the complete round of tests.

The newcomer is the Toyota Tundra, which beat its domestic competitors from Ford, Nissan and Dodge. The Chevrolet Silverado and a close relative, the GMC Sierra, were not among the vehicles tested.

To be named a Top Safety Pick, a vehicle must receive a score of good — the highest rating — in the institute’s front, side and rear-impact tests. By combining these tests — which the institute says cover the most common collisions — into a single award, the institute says it believes it is easier for consumers to identify vehicles that offer the best overall protection.

Starting last year, the institute added a crash-prevention feature, electronic stability control, to its criteria. Stability control, a computerized system designed to keep vehicles from skidding out of control, must be either standard equipment or available as an option. Studies have shown that a stability system significantly reduces single-vehicle crashes caused by a loss of driver control. The institute estimated that if all vehicles were equipped with such systems, as many as 10,000 fatal crashes could be avoided each year.

The Tundra got the top pick designation even though its stability control system doesn’t work when four-wheel-drive is engaged. That has drawn criticism from Consumer Reports.

“It’s troubling to me that the one time you would really need E.S.C. — in the snow — that there is no E.S.C. available,” said David Champion, senior director of auto testing for Consumer Reports.

Of course, stability control can still be valuable when a vehicle is in two-wheel drive on dry pavement, especially in a pickup with a high center of gravity, Mr. Champion said. If a driver loses control, a stability system can help prevent a slide and keep the truck from rolling over.

Mr. Champion noted that pickups like the Silverado and Dodge Ram had stability control systems that continued to work in four-wheel drive.

Toyota said its stability control would not work in four-wheel drive because the company chose a particularly rugged design that does not incorporate a center differential. In most four-wheel-drive vehicles, the differentials deliver power to all the wheels. Toyota said that a heavy-duty truck like the Tundra wouldn’t benefit from having a center differential because that’s just one more weak part that can break.

The insurance institute was unaware that Toyota’s system did not work when four-wheel drive was engaged, a spokesman, Russ Rader, said. But “the Tundra has electronic stability control and it gets the award.”

The Tundra is one of 11 new winners for 2008, joining 23 previous Top Safety Picks. Other winners for 2008 include the Audi A3 and Honda Accord in the midsize-car category and the Subaru Impreza in the small-car category, but only those models that are equipped with optional stability control. With the addition of the Honda Odyssey minivan and the Honda Element to the list, Honda and its luxury division, Acura, now have a total of 7 of the 34 Top Safety Picks. Ford and its Volvo subsidiary have eight vehicles on the list.

Several midsize S.U.V.’s have been added, including the BMW X3 and X5 and the Toyota Highlander. Also named were Hyundai Veracruz models built after August 2007, when changes were made to the head restraints, and Saturn Vue models that will be built after December because of changes being made to a side- curtain air bag that didn’t deploy properly. Information on when a car was built can be found on the frame of the driver’s door.

Another 23 vehicles would have made the Top Safety Pick list if they had better seat and head restraint designs. Those 23 earned good ratings in front and side crash tests, but not in the rear impact test, which evaluates seats and head restraints for whiplash protection.

The institute tested three other full-size pickup trucks: the Nissan Titan, Ford F-150 and Dodge Ram. The Titan and Ram have stability control as an option; the F-150 does not. None of these, however, qualified as a top pick because none received a rating of good for rear impact, meaning their head restraints did not provide what the institute considered good protection in a rear-end collision. Other full-size pickups will be tested in 2008, the institute said.

The institute said that front and side impacts were the most common fatal crashes, killing nearly 25,000 of the 31,000 vehicle occupants who died in 2005, the latest numbers available. Rear-end crashes are usually not fatal, but they result in a large proportion of injuries. About 60 percent of insurance injury claims in 2002 reported minor neck sprains and strains, a common complaint of people involved in rear crashes.

Source: New York Times, 11/18/07

Carma Chameleon: Nissan Developing Color-Changing Auto Paint

Nissan's set out to make life difficult for the police, developing auto paint that changes color when tickled with an electrical current.

The James Bond-like innovation uses polymers limned with dyed iron oxides, which become visible when hit up with a carefully-measured charge. Turned off, the car reverts to being plain white.

Nissan hopes to have something ready to sell by 2010. Wings, rocket engines and underwater turbines are still in the design phase, but cheaper Nissans already have a system that spews oil and smoke out from behind the vehicle to deter pursuers: the ignition.

Source: Wired, 11/09/07

Return of the Minivan: Move Over, Crossdressing Crossovers

Though many will swear by the virtues of their crossover vehicles, this month's "Car and Driver" magazine makes the case that you'd be happier with a minivan. In side-by-side comparos, it gives four (plus one repeated) reasons the much-derided minivan is a superior vehicle:

1. Value: Compare the Hyundai Entourage with the Veracruz, and you get more space and more goodies for the dollar.

2. Space: Okay, the Nissan Armada is actually a full-sized SUV. Even so, the Quest SL has more room for both passengers and cargo.

3. Flexibility: The Dodge Grand Caravan SXT has Stow 'n Go second and third-row seats, which disappear into the floor. Your minivan becomes a true cargo truck. You won't find this option on GMC's Acadia.

4. Ingress/Egress: Ever fastened a baby into the back of Toyota's Highlander? Or herded passengers in during a downour? The Sienna LE makes this worlds easier, thanks to its wide door and optional power slide.

5. Space (again): Okay, let them hammer this point home. Though Honda's Odyssey EX-L and Pilot share the very same platform and eight-passenger capacity, the Odyssey has far more usable space.

Source: Wired, 10/26/07

Candid Talk for Women (Men Allowed, Too)

When it comes to cars, women have their game faces on, thanks to a great equalizer, the Internet. They are tuning in to Web sites like Edmunds.com/women, Roadandtravel.com, AskPatty.com and Motherproof.com for advice, consumer reviews and a little humor.

With virtual clipboards in hand, women say, they can shop without being humiliated by insensitive salesmen. Is this model safe, fuel efficient and reliable? Check. Affordable and easy to maintain? Check. Cool to drive? Check.

Linda Michaelsen of Bradenton, Fla., recently went to AskPatty for advice on crossover sport-utility vehicles. Within 24 hours, she said, she had advice on mileage and seating capacity, the name of a recommended model and a list of “women friendly” car dealers in her area so that she could buy from “someone who doesn’t make me feel like I’m stupid,” she said.

While the sites differ, they share a vision of consumers in need — many of them. Jody DeVere, president of AskPatty (a name chosen to represent “everywoman”), says American women buy about eight million new cars and trucks a year.

The sites are part reader service, part trusted friend. Ms. DeVere recently listed her favorite children’s car books. Edmunds asked “What Should We Do About Grandma’s Driving?” while Road & Travel Magazine’s site reported on a promotional event for Infiniti with pedicures and cooking demonstrations.

At Motherproof, the founder, Kristin Varela, and six “mom reviewers” are on a quest for the “quintessential mom-mobile.”

“We’re searching for vehicles that will make our daily lives of grocery shopping and preschool pickup just a little easier,” the site declares. Recent examples included the Mini Cooper, the Mazda CX-7 and the Honda Odyssey.

Whether or not they do their own buying, women wield influence over 85 percent of vehicle purchases, said Joanne Helperin, an editor at Edmunds, citing research done for General Motors and others. Women come to the Internet for advice, she said, because it is easy to get there at all hours and “women are multitaskers who are horrendously busy.”

“We focus on the things we think are most important to women,” Ms. Helperin said, like safety, reliability and comfort.

Deborah Wahl Meyer, the chief marketing officer at Chrysler, says that the Internet is a “wonderful opportunity for us” but that it’s still a challenge to attract women to a culture centered on an engine. “Typically that’s a language that we’re not interested in,” she added.

She said that Chrysler’s goal was to provide information that was “more approachable.” So Dodge.com has a “mom hostess” with tips on how to navigate the site and learn more about the 2008 Grand Caravan. (Dodge is also making 30 Caravans available in six markets this fall to 300 mothers who are blogging about their test-drives.)

After fits and starts, the auto industry is catching on to the power of the purse, said Courtney Caldwell, the founder and editor of Road & Travel Magazine.

In the 1970s, she recalled, she was a single mother with a lot of knowledge about cars. But when it came time to buy, salesmen would offer “a discount for a date,” she said, “which I found pretty offensive.” She started Road & Travel Magazine in 1989 “to empower and educate women on how to buy a car, deal with condescending salesmen, how to ask the right questions, how to avoid rip-offs and scams, and how to negotiate.”

In 2000, Ms. Caldwell converted to an electronic format. Today her site has a staff of six and income from automobile advertising and car-of-the-year-style events. A free monthly newsletter is sent by e-mail to more than a million readers. Five percent live outside the United States, including some in Saudi Arabia, where women are not allowed to drive.

AskPatty arrived on the scene about a year ago with advice on car purchases, maintenance and related topics. The site, already profitable, generates revenue from advertising and training courses at dealerships and marketing programs to help them reach women.

Ms. DeVere says she strives for a balance between making practical suggestions and emotional connections, and between content for young women — hence her list of books for backseat riders — and “women like my mom, who’s 84 and concerned about car buying.”

A stable of 50 auto industry professionals field questions from readers, and a sister site, carblabber.com, invites women to write car reviews, as does Edmunds.

AskPatty has even plunged into Second Life, the virtual world, where it recently introduced Dan Dufus, the Clueless Salesman.

How clueless? In a video, he misses an opportunity to sell a convertible to a customer, Grace, by ignoring her until her husband arrives.

Source: New York Times, 10/24/07

Silver Tops Charts as Most Popular Vehicle Color, Black and Blue Are Gaining on Repeat Leader

Around the globe, silver is at the top of the charts as the most popular color for 2007 cars... but other colors are gaining on the perennial leader. According to the annual automotive color popularity data released today by PPG Industries (NYSE: PPG) -- the world's leading manufacturer of transportation coatings -- silver is losing some steam as black closes in on the long-time favorite. In addition, brighter hues such as blue, red and niche market colors seem primed for resurgence.

Globally, silver held the top position as the most popular car color at 31.5 percent (down from 33 percent in 2006). Black jumped to 18 percent (from 15.4 percent in 2006) to take second place, followed by white (12.5 percent), blue (12.4 percent), red (8.8 percent), naturals (gold, orange and brown tones, 6.6 percent), other/niche market colors (5.9 percent) and green (3.8 percent).

In North America, silver also held the top spot over other vehicle colors with 22 percent (down two percent from last year). White, another automotive palette staple, was the second most popular North American color for 2007 with 16 percent. Black came in third at 15 percent -- up two percentage points from last year -- followed by red (13 percent), blue (12 percent), naturals (10 percent), other/niche market colors (6 percent) and green (5 percent).

"Silver is popular with consumers and automakers because it accentuates the styling of a vehicle and looks modern while also having a high resale value," said Jane E. Harrington, PPG manager, color styling, automotive coatings. "We're looking at new interpretations to emerge in tinted silvers and charcoal shades. In addition, hue-shifting pigments can really make silvers look unique."

The rising popularity of black, white and other colors stems from the fashion and interior design industries, Harrington said. "Today's consumers are aware of trends and design, and they expect to see that reflected in the vehicles they buy."

Harrington added that automakers realize the right color "can get you noticed," and said a survey PPG conducted at the North American International Auto Show in Detroit showed more than 65 percent of consumers surveyed said they would select one vehicle over another if more color choices were available. "Consumers want choices, and that will lead to a more colorful automotive future."

Color trends for 2010 - 2011 model years

Looking beyond 2007, the colorists of the PPG Global Design and Color Marketing Team examined cultural and lifestyle trends to create cutting-edge color palettes and special effects that meet automakers' goals for brand identity, durability, workability and cost effectiveness. For the 2010 - 2011 model years, they have developed 105 exterior colors and more than 25 interior color concepts for automakers' consideration. The collection is presented to automakers during PPG's global color show, called "VIEW" this year.

"One of the first things you notice about a vehicle is the color," Harrington said. "This year's color show highlights our viewpoint on color, trends, technology and the global automotive market."

Some new colors in the collection are Cold Stare, a tinted silver with a steel blue highlight; Double Vision, a medium green with a red hue-shifting highlight; Out of Sight, a soft brown with a blue hue-shifting highlight; Quest, a citrus-inspired yellow metallic; and Gleam, an icy green with an intense gold flash.

In addition to color trend forecasting, PPG is on the forefront of creating new paint technologies that enhance automotive design and exceed appearance requirements. This year, the company has demonstrated improvements in special effect pigments. The incorporation of Andaro nanopigment technology by PPG into traditional and alternative OEM coating systems is enabling designers to create new color spaces. These pigments offer higher color saturation while maintaining customer-required durability.

"Our focus for this year's global color show explores effect pigments," said Jerry R. Koenigsmark, PPG manager of color design, North America automotive coatings. "To remain a leader in color design, our methods must be outside the normal mode of thinking. PPG continues to create unique ways of using effect pigments that result in innovative looks and add a new dimension to color and technology."

On the forefront of innovation in decorative and protective coatings and environmental application concerns since 1927, PPG helps automakers advance coatings technologies and application processes.

Source: PR Newswire, 10/17/07

Study: Carmakers' Sites Should Max Out on Multimedia

Carmakers are missing a great opportunity to win over online shoppers by not providing more videos and photos on their websites, according to the head of two-year-old CarGurus.com.

Langley Steinart, founder and CEO of CarGurus.com, an auto enthusiast and buying-information website, made the suggestion following a six-month study of new-vehicle shoppers on CarGurus that showed 62% of the pages viewed were of photos and videos instead of articles, user reviews, specifications or pricing.

Connecting emotionally
"The internet is becoming a more visual medium," he told Advertising Age. "Cars are a very emotional and expensive purchase. Automakers have to connect with consumers emotionally."

Online shoppers "first and foremost want videos," said Mr. Langley, ex-chairman and co-founder of TripAdvisor.com, which was sold to Expedia in 2004 for $210 million.

He said he personally visited 15 auto brand sites he linked to from online ads elsewhere. On the landing pages, he was dismayed to find charts comparing car models. Mr. Steinart said he also found lots of text and lists of vehicle features on the linked landing pages. "You have to fall in love with the car visually," he said. "Are you going to fall in love over braking power?"

Automakers generally do a good job with their online photo galleries, although Mr. Steinart said he would like to see them expanded. "Instead of just five photos, I'd have 50 of the interior and 50 of the outside of the car."

CarGurus.com reports nearly 500,000 unique visitors monthly for all areas of its site, which includes blogs, editorial content and shopping for new or used vehicles or parts and accessories. Mr. Steinart said he had "no way of knowing" the demographics of the shoppers on his site who were covered in the research, saying they "cut across all ages." He also did not reveal how many of CarGurus.com' unique visitors were shopping for a new vehicle and thus counted in the research from March through August 2007.

Different types of sites
Ian Beavis, VP-marketing of Kia Motors America, said consumers have different reasons for visiting enthusiast sites and carmakers' sites. He said visitors to third-party auto sites are generally in the very early stages of buying a new car. "They're basically grazing," he said.

An "inordinate number of people" are car enthusiasts, and as such they are just looking for pictures. "They are not buying a car," said Mr. Beavis. By the time consumers get to an automaker's site, they have pretty much decided on the brand and are getting into details, he said.

Nearly half the visitors to Kia.com configure a new vehicle -- picking options packages or transmissions, for instance -- or look for a local dealer or want a dealer to contact them, Mr. Beavis said. Kia's surveys showed some visitors want more pictures, while others want more data.

'Balancing act'
"It's a balancing act," he said, so Kia aims for easy navigation so consumers can find what they want.

Kia's site has photo galleries once a visitor clicks on a specific model.

Jenny Howell, manager of interactive marketing at American Honda Motor Co., said carmakers need text plus videos and photos. She said photos have traditionally been one of the most popular sections on Honda.com and Acura.com.

Honda.com was redone in July by RPA, Santa Monica. The new site trimmed text and started video introductions accessible on the home page, she said. While photos and videos have always been important, they are becoming more popular due to increased broadband usage.

Source: Ad Age, 10/10/07

A Comeback for Coupes?

I was stopped at a light on Woodward Avenue in suburban Detroit, enjoying a beautiful fall evening recently in a borrowed, silver 2008 Nissan Altima Coupe. Glancing to my left, I realized that the attractive, 20-something woman in the car next to me had rolled down her passenger window, and was flashing me a smile as bright as the October sun.

"Hey!" she said.

Freeze the frame.

I am a middle-aged guy with a wife, a mortgage, two kids and a cat. I proudly declare allegiance to reality. Still, she had my attention because in 33 years of navigating public streets, an encounter like this had never happened to me. "Dude!" Yelped my inner 17-year-old. "We gotta get a car like this."

Car companies appear to be betting that a lot of people will want to experience moments like mine -- when it feels great to be in a sleek, sporty car. Over the next four years, forecasters at J.D. Power & Associates expect 31 new or redesigned coupe models to hit the U.S. market, including 16 from luxury brands. Among the coupes J.D. Power sees coming are a two-door version of the Cadillac CTS and, maybe, coupes from Italian brands Alfa Romeo and Abarth (an offshoot of Fiat), that currently don't compete in the U.S. market.

Auto makers have had good reason to be wary of the coupe market, despite the affection many car executives have for sporty cars. Since the mid-1980s, demand for coupes has waned significantly, coinciding with the heart of the baby boom's practical family-hauling years. As boomers slogged through their minivan and child-seat phase, interest in low-slung, two-door, midsized, midpriced cars cratered. It didn't help that many of the offerings in the midpriced coupe segment were fairly bland – such as the outgoing 2007 Honda Accord coupe.

In 1985, U.S. auto makers built 3.1 million two doors out of a total of 8.6 million cars, according to Ward's Automotive Yearbook. By 2005, Ward's data shows the number of two doors built in the U.S. fell to 745,058 vehicles out of 5.8 million. Through the end of September, coupes accounted for 4% of the total U.S. market, down from 4.1% the year before, according to data from the Power Information Network.

Now, however, there are some signs of new life in the coupe segment.

At the low end, sporty little cars such as the Scion tC and Honda Civic coupe are attracting younger buyers. At the high end, luxury car makers are courting empty nesters, and those wealthy enough to have a car for every purpose, with sleek new models such as the Audi A5.

I tend to use the term "coupe" interchangeably with the term two-door, because that's how I still think of the segment. But European luxury marques define a category of "four-door coupes." These are cars that have the swept back roofline of a sporty two-door car, but have four doors. An example of this breed is the Mercedes-Benz CLS, which has enjoyed considerable success. The Porsche Panamera will be another of this four-door coupe style when it arrives in two years or so. BMW recently confirmed plans to build a large four door coupe based on its striking Shanghai concept car, the CS.

In the $20,000 to $30,000 price range, the success of the retro-styled Ford Mustang has inspired a "Back to the Future" replay of the pony car wars of the 1960s. Chevrolet has been touting the return of the Camaro in 2009 since early 2006. Chrysler LLC's Dodge brand is expected to field its Mustang fighter, the Challenger, sometime next year.

More striking – because they seemed to come out of nowhere – are the two new designs from Honda and Nissan. The 2008 Accord Coupe represents a significant departure from its bland predecessor. Honda designers created a distinctive profile for the coupe compared with the Accord sedan, and gave it a unique powertrain option – a V-6 with a six-speed manual. For more than a decade, "sporty Accord" was an oxymoron. The new Accord Coupe restores some meaning to that phrase.

The Altima Coupe, which I test drove last week, is lighter and smaller in most dimensions than the Accord Coupe, but it has more power in both its four- and six-cylinder versions. Consistent with its recent product strategy, Nissan emphasizes horsepower and sporty touches such as a push-button start.

The Altima Coupe's exterior profile – with flaring rear fenders and narrow side glass -- hints at the aggressive lines of the Nissan 350Z or the Infiniti G37. Not that you'd mistake the Altima for one of those more expensive models. But it works as a budget-minded alternative.

The Altima Coupe asks you to overlook the fact that the trunk is surprisingly tiny, the back seat is hard to access and rear leg room for anyone you squeeze back there is 1.4 inches less than in the sedan. But with coupes, it's really all about the driver. Given the demographics of an aging population looking for self indulgence, car makers may be smart to put some effort into this segment.

Oh, right. Let's roll that video.

"Hey," the young woman said, beaming. "Are you from Santa Monica?"

Huh? Why no, I replied, unsure how to process this. Then I remembered. My test car had a California license plate. I live here, I explained. This is just a car I'm test driving. I just moved to Michigan, she offered. You'll get used to it, I said. The light changed. I waved and drove away.

It wasn't me. It wasn't even the car. It was just the license plate. I ordered my inner 17-year-old back to his regular job, compelling me to listen to 30-year-old rock music during my commutes. The Altima went back to Nissan.

It's really for the best.

Source: Wall Street Journal, 10/08/07

G.M. Determined to Make Malibu Its Sales-Stalwart Sedan

General Motors solved one problem this week by reaching a deal with the United Automobile Workers. Now it hopes its new Chevrolet Malibu will help solve another: winning sales and market share back from its Japanese rivals.

A new Malibu is intended to end Asian supremacy in midpriced sedans.

For years, family sedans have been a lower priority for General Motors and the other Detroit automakers. They focused instead on big trucks and sport utility vehicles, which earned tidy profits, while letting Toyota and Honda dominate the less lucrative market for cars.

But the best days for the big vehicles have passed, and G.M. is eager to break the Asian stranglehold on midsize sedans by offering a redesigned Malibu. The car is set to go on sale Nov. 2, and the automaker views it as its most important vehicle in years.

G.M. is spending $100 million to introduce the new Bu, as executives call it, significantly more than the costs for any other car in recent memory. It has to invest heavily, experts say, to make a dent in the market led by the Toyota Camry, the country’s best-selling car for the last seven years, and the Honda Accord.

“It’s tough to get the broad American public to reconsider an American car in that price class,” G.M.’s vice chairman, Robert A. Lutz, said at an industry conference in northern Michigan last month. “The Camry and the Accord have established, and justifiably so, such strong brand value, which means that you’ve got to have a really outstanding car.”

While the Malibu may be improved, so is its competition. This month, Honda began selling a redesigned Accord sedan that is bigger, more powerful and more luxurious than previous versions. The Camry and the Nissan Altima were also overhauled last year.

Honda executives, for their part, say they are not worried about the revamped Malibu. Gary Robinson, senior product planner for the Accord, called it “pretty secondary to what we consider our primary competition.”

Chevrolet dealers, who have had difficulty in the past pushing Malibus off their lots without incentives, say they are excited about the 2008 version, even though few have actually seen one.

With S.U.V.’s no longer pulling as many consumers into their showrooms, dealers have been clamoring for a car that they can steadily sell in large numbers.

“It’s that one segment that’s going to decide how successful you are,” said Travis Jackson, sales manager at the Chevrolet of Naperville dealership in suburban Chicago.

There is plenty of room for growth. Last year, G.M. sold 138,110 of the previous version, but about 40 percent of those went to rental companies. In comparison, Toyota sold 417,104 Camrys, and Honda sold 348,843 Accords. Only about 5 to 10 percent of those sales were to fleet purchasers.

G.M.’s quest for a Camry-Accord fighter has been a long battle. Malibu’s sister car, the Impala, sold nearly 290,000 last year. Unlike their Japanese counterparts, G.M. executives want to sell more than one midprice family sedan.

G.M. will not reveal its production or sales goals for the Malibu, but anything close to the current model’s numbers would be deemed a failure. At one point in the development process, G.M. even considered dropping the Malibu name in favor of something new that might avoid any negative connotation for consumers.

Malibu started out in 1964 as the name for Chevrolet’s top-level midsize car, a version of the Chevelle. It quickly became a hit, selling millions before being discontinued in 1983. G.M. resurrected the Malibu in 1997, but the car has never seriously challenged the Accord and the Camry, which have been at the top of their segment since then.

“The Malibu name might be stale,” said James Edwards, general manager of Heritage Auto Plaza, a Chevrolet and Chrysler dealership in Alexandria, Va. “If you put a Honda Accord out, you know you’re going to sell it. But a Malibu, you really don’t how it’s going to do.”

Chevrolet’s general manager, Ed Peper, insists that the new Malibu “will speak for itself” and will not be hurt by its name, which he says is one of General Motors’ best-known trademarks.

“There is absolutely nothing wrong with the name,” Mr. Peper said. “We’re going to deliver the finest Malibu that we’ve ever delivered.”

G.M. acknowledges that its position as an underdog in the sedan segment means the Malibu cannot be simply as good as competing models — it has to be better. “We built this vehicle to be the best midsize car in the marketplace, period,” Mr. Peper said. “We’re going to deliver more to consumers in this package than any other midsize car.”

The company has spent months aggressively promoting the car. It released a photo of its two-toned interior late last year, even before it put the 2008 model on display.

The new Malibu, with a low stance and gently curved roof, is sportier than its predecessor. There was even a Web site created to sing the praises of the 2008 version.

G.M. has not allowed critics who have driven the Malibu to publish their thoughts yet, but the car received mostly positive coverage at the Detroit auto show last winter.

“The nice surprise here is the car’s striking styling — something we haven’t seen in a Malibu since, er, the ’64 original,” wrote Howard Walker in Car and Driver.

Another auto writer, Rich Ceppos, said the new Malibu “promises to be everything that the previous model was not: stylishly dressed inside and out and as roomy and smooth-driving as the class-leading Honda Accord and Toyota Camry.”

“Exterior fit and finish, quality of interior materials and driving refinement all take a big stride forward,” he said.

G.M.’s goal, Mr. Peper said, was to make the Malibu look as if it cost double the $19,995 starting price. (That is about $2,000 more than the 2007 model.) A gas-electric hybrid Malibu will start at $22,790.

Mr. Peper said G.M., which lost its long-held place as the world’s largest automaker to Toyota this year, is not intimidated by its position as an underdog in the sedan market.

“We relish that position; we look forward to competing with them,” Mr. Peper said. “They will know by the product that we are going to put in the marketplace that they’re going to have some competition.”

Source: New York Times, 9/27/07

Nissan Goes Rogue

Toyota's had a record run in the small crossover SUV category for several years with its Rav 4. Honda's done well with its CRV too. But records are made to be broken and the new Rogue from Nissan could well be a serious, viable contender in the ever-increasing crowded category of small crossover sport utility vehicles.

After four years of planning, designing and engineering the Rogue is starting to hit dealer showrooms next month with sophisticated styling, interesting interiors and arresting attributes: at a starting price beginning at under $20,000.

The Rogue is obviously an homage to the breakthrough styling of the original Murano (an all-new Murano is scheduled for a Los Angeles Auto Show reveal) with, as the presentation detailed, "sleek lines, aggressive silhouette, sculpted roof and a dynamic arch." Take away the design-speak...it translates to good looking.

After several hours of seat time on a scenic ride and drive from Baltimore, MD to Gettysburg, PA, I give the interior design and comfort high marks. The ride up was in the "well equipped" model with leather seats with power controls and other goodies -- it was very roomy and very comfortable. The return was in the entry-level model with two color cloth seats and fewer goodies.

Both models have a big center console and huge glove box. The info-panel is well designed and easy to read during the day. Some day I hope to drive a new model at night to see how the aging baby boomers will see gauges and instruments.

Even as a non-techy, it was the mechanical features, the hidden attributes and assets of the Rogue, which I found most interesting and important. The 4-cylider engine is responsive and quick with good fuel economy. Nissan's Xtronic CVT (continuously variable transmission) was silky smooth. The Rouge's electric power steering is intuitive and reactive to driving conditions. Add computer-assisted vehicle dynamic control and traction control to the other mechanical benefits, and that's a nice package.

The list of comfort and convenience features is lengthy too for all four models of the Rogue: the S class with 2 WD and AWD, and the SL with 2WD and AWD. Naturally, there are option packages as well.

Usually I don't delve into the name given a model, but the Rogue moniker really seems inappropriate. It doesn't fit the dictionary definition of rogue, which is defined as, "an unprincipled, deceitful, and unreliable person; a scoundrel or rascal." But then, if they capture some of the small crossover SUV market from their competitors, it could well be a rogue, couldn't it?

Source: Businessweek, 9/24/07

General Motors Strike

The United Automobile Workers union wielded its most potent weapon against General Motors yesterday, sending 73,000 workers to picket lines in its first national strike at G.M. since 1970.

Union officials said they were left no choice but to strike because General Motors was unwilling to accept the union’s demand that it protect workers’ jobs and benefits.

“We’ve done a lot of things to help that company,” said Ron Gettelfinger, the union’s president, in a news conference shortly after the 11 a.m. strike deadline passed. “But look, there comes a point in time where you have to draw a line in the sand.”

For General Motors, its unyielding stance reflects its decision to accept the short-term pain of a strike at 80 facilities in 30 states to achieve its goals: a lower cost structure and more flexible work force to better compete against surging Japanese automakers like Toyota and Honda.

“This really is a defining moment,” said James P. Womack, an expert on manufacturing and co-author of “The Machine That Changed the World,” which studied the plants of Japanese automakers in the United States. “G.M. has backed away from defining moments for generations. And now somebody there has finally said, ‘We have to do this because it’s a new era.’ ”

The length of the walkout may hinge on the answers to two crucial questions: How long can the U.A.W. afford to stay out? And how long can G.M. endure a strike? While an indefinite strike would pose risk to both sides, each has made a calculated decision that it has more to gain by standing tough.

G.M. is better positioned to handle a strike now than in earlier contract talks, though not for reasons that have to do with strength. With its operations shrinking in the United States, the majority of its sales and profits are now coming from abroad.

It is selling more vehicles built in Canada, Mexico, and Europe, the source of new models for its Saturn division. And it is rapidly expanding production overseas, especially in China, which is fast becoming one of the world’s major car markets.

The company’s problems at home, which resulted in losses of more than $12 billion in the last two years, have forced it to close all or parts of a dozen factories, cut tens of thousands of jobs and offer deals to workers to quit or retire. A smaller G.M. means there are far fewer workers involved in this strike, so a halt in production inflicts less pain on the company.

The U.A.W. membership at G.M. has shrunk by more than 80 percent since the 1970 strike, when 400,000 workers were off the job for 67 days.

In recent years, the U.A.W. has been more cooperative with Detroit automakers, working side by side with auto executives to fashion early retirement incentives to shrink the work force and better match Detroit’s diminished stature within the industry. It also agreed to concessions on health care at G.M. and Ford Motor.

But yesterday, U.A.W. officials sought to dispel any doubts among the membership that they could still stand up to management.

“A strike gives the union an opportunity to say we’re not completely acquiescent,” said David L. Gregory, a professor of labor law at St. John’s University in Queens.

Eldon Renaud, president of U.A.W. Local 2164 in Bowling Green, Ky., where workers make the Chevrolet Corvette and Cadillac XLR sports cars, said, “I think a lot of people are happy the strike happened, because they believe the company is walking over them.”

The strike occurred even though G.M. and the U.A.W. agreed to discuss a health care trust — called a voluntary employee benefit association, or VEBA — that would have assumed G.M.’s $55 billion liability for medical benefits. G.M. considered the formation of a VEBA its major demand.

Investors and G.M. managers have pushed for a VEBA as a way to move the liability of generous health care benefits for current and retired G.M. workers, as well as their families, off the books of the automaker once and for all, even if that required a huge upfront payment.

G.M. has long said that such costs, representing hundreds of dollars for every car it builds, put it at a disadvantage with foreign competitors.

Mr. Gettelfinger, in fact, stressed that the strike was over other issues besides the VEBA, with job security topping the list.

Tom Wickham, a G.M. spokesman, said, “The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company.” He added that company officials would “continue focusing our efforts on reaching an agreement as soon as possible."

Negotiators from each side were back at the bargaining table by early afternoon yesterday. But industry analysts said that given how far apart the two sides appear to be, the strike could last for weeks.

Jonathan Steinmetz, an analyst with Morgan Stanley, said the company could endure a strike lasting several weeks, but not more. After that, G.M. would begin to burn cash, and investors, who have encouraged G.M. to take a firm stand with the U.A.W., might eventually grow impatient in the face of a months-long strike.

Another analyst, Mark Oline of Fitch Ratings, cautioned that the damage caused by the walkout would have a ripple effect on suppliers that sell parts to G.M.

“The U.A.W. strike has the potential for far-reaching, crippling repercussions throughout the industry,” Mr. Oline said in a research report yesterday.

The union, which pays workers $200 a week in strike pay if they take shifts on the picket line, has nearly $900 million in its strike fund, enough to cover a two-month walkout.

G.M., meanwhile, had a 65-day supply of vehicles at the end of August, about normal for summer, and it had already announced plans to reduce production in the final three months of the year because of slowing sales.

Beyond that, however, each side risks damage to its image. In recent years, the U.A.W. had fostered an image of being more of a partner than a foe in Detroit’s efforts to restructure.

Even last week, Mr. Gettelfinger said in an e-mail message to union members that the U.A.W. was committed to avoiding a walkout, although he acknowledged yesterday that he suspected last week that a strike was likely.

Likewise, G.M. has spent years trying to convince consumers that its vehicles are the equivalent of high-quality Japanese models, and that its brands are every bit as appealing as Toyotas, Hondas and Nissans. An angry work force, or one worried about its future, may scare off some buyers.

Before yesterday’s strike, experts had widely predicted that the two sides would reach an agreement, noting that it was in their interest to find common ground to better ensure their survival.

Even Mr. Gettelfinger seemed disappointed at the outcome. “This is nothing we wanted,” he said at the news conference. “Nobody wins in a strike.”

G.M. has an unsuccessful track record of facing down the U.A.W. In the past, its response, by and large, was to cave in to U.A.W. demands. That happened during the last big walkout, at two parts plants in Flint, Mich., in 1998. That seven-week standoff occurred when Rick Wagoner, the current chief executive of G.M., was president of its North American operations.

G.M. never recovered the 31 percent market share it held before the strike, and was forced to offer rebate deals to get customers back into showrooms.

“G.M. has made deal after deal that didn’t deal with fundamental problems,” Mr. Womack said. “This time they have to hold the line on a contract.”

Source: New York Times, 9/25/07