12/29/97

Watch This...You Might Learn Something

Honda gave the U.S. a little Christmas present last week when it shifted production of two luxury cars from Japan to Ohio. For its '98 model year, Honda will make its Inspire and Saber luxury cars exclusively in its Columbus, Ohio, facility, eliminating all production of these models in Japan. (Nihon Keizai Shimbun, 12/23/97) These cars are intended for the Japanese market only and will not be sold in the U.S. Officials expect twin benefits from the move: reducing the high cost of making these cars in Japan and offsetting Honda imports into the U.S. with its own exports back to Japan. The Inspire and Saber are powered with engines ranging from 2.0 to 3.2 liters, and the company expects to export 20,000-30,000 of the cars from the U.S. in the first year after the move. Some U.S. automakers -- notably Saturn -- may liken Honda's announcement to a gift of broomsticks and ashes, however, since the company proposes to do what they say they cannot: successfully export American-made cars from the U.S. to Japan. American-made cars currently available in Japan simply have not generated much consumer interest. According to an image survey conducted last month by J.D. Powers & Associates, Japanese consumers prefer their own and certain European models over those made by Detroit's Big 3. (NewSource, 12/3/97) Ford and Cadillac ranked highest among U.S. cars surveyed, at 12th and 13th, respectively. Interest in Saturn models hovered at 30th. Heretofore, U.S. accusations of import restrictions have ignored Japan's counter-charges that American cars simply don't suit Japanese tastes. Honda's plans to cater those tastes with exports of its own may give the Big 3 some idea how it's done -- and perhaps inspire a whole new round of excuse-making.

12/23/97

Under one roof

Nissan will steer its North American distribution activities from its Smyrna, Tenn., cockpit beginning Jan. 1, 1998. The company's California headquarters has announced that veteran engineering and operations manager Emil Hassan will assume the new position of Senior Vice President, Projects and Logistics. Although reporting to Nissan North America, Inc. (NNA) chief Minoru Nakamura in Torrance, Calif., Hassan will maintain his office at Nissan Motor Manufacturing Corp. (NMMC) in Smyrna, from which he will oversee Nissan's far-flung and increasingly diffuse vehicle and parts distribution activities throughout North America. In addition, Hassan will coordinate Nissan's shift in production of its Sentra sedan to Aquascalientes, Mexico, as well as oversee all of the company's North American recycling and environmental efforts. Hassan's elevation to a new position is much more than a routine personnel change or the deserved advancement of a valued NMMC executive. For the first time, Nissan is delegating important strategic and logistics responsibilities for its North American operations to its heartland headquarters in Tennessee. Previously, such responsibilities were addressed by a combination of managers in California, Michigan and Japan. According to a industry reports, for example (Automotive News, 12/15/97), Hassan is eager "to improve...vehicle distribution operations," which should untangle such tie-ups as the recent surplus accumulation of Nissan vehicles throughout nearly all available parking areas at Nashville's Starwood Amphitheater. Hassan, who arrived in Smyrna in 1981 from Ford Motor Co., will have an unprecedented opportunity to streamline the distribution of supplier parts and Nissan vehicles from an observation post much more central -- both literally and figuratively -- to the automaker's continental aspirations.

12/22/97

Brother knows best?

Government eco-crats persist in attempts to steer auto design decisions while manufacturers pass them by in the fast lane. While the so-called "Eco-13" dither over separate and unequal emissions standards for each of their 13 Northeastern states, automakers like General Motors, Ford, Honda and Toyota are rolling working prototypes before the public that reduce emissions and raise fuel economy to unprecedented degrees (NewSource 12/19/97). Unfortunately, while environmentalists fiddle, pollutants remain unburned. The prospect of complex, individual emissions regulations on a state-by-state basis are thwarting the manufacturers' need for uniform national standards that will justify mass production of their newest, cleanest-burning engine designs. General Motors and Ford both have engines ready today that will reduce hydrocarbon emissions by 70 percent and smog-producing nitrous oxide by 50 percent. (Washington Post, 12/18/97; "GM, Ford Prepare Clean-Air Cars") Honda's extraordinary Z-LEV engine achieves virtually zero emissions despite using gasoline as fuel. Moreover, Toyota's Prius and Honda's J-VX (pictured) hybrid-power vehicles combine gasoline fuel and electric assist to achieve mileage ratings of 66 and 70 miles-per-gallon, respectively. All of these designs, however, are precluded from manufacture by the prospect of patchwork environmental regulations that would require meeting different emissions standards in different states. If Big Brother wants to enter the auto business, let him step up to the drawing board and sketch away. Otherwise, he should pull over and let the faster traffic through.

12/19/97

The new Confederacy

Clouds of war are looming over the horizon as U.S. automakers confront the Environmental Protection Agency and assorted eco-guerillas over the issue of tailpipe emissions. Faced with the prospect of proliferating and inconsistent pollution regulations state-by-state, General Motors and Ford are holding the EPA and auto buyers hostage in a sense by refusing to manufacture super-clean, next-generation low-emission vehicles (LEVs) that have already been designed. (Washington Post, 12/18/97; "GM, Ford Prepare Clean-Air Cars") At issue are pending changes in EPA mandates that would establish uniform, federal emissions standards applicable to all states except California. Without these changes, states -- in particular 13 Northeastern states including Maryland, Virginia and the District of Columbia -- would be free to enact a patchwork of different and potentially conflicting regulations, including requirements for zero-emissions, all-electric vehicles. For myriad technical and practical reasons, electric vehicles as they currently exist have proven themselves entirely useless for general consumer use. Accordingly, GM and Ford, joined by Honda and Toyota (Associated Press, 12/19/97), have promised that such regulatory confusion would effectively eliminate any economic incentive for the automakers to proceed with new super-clean LEV production. (Honda, however, is already marketing "first-stage" LEV versions of its popular Accord and Civic models; the company expects to sell 450,000 of them by next fall, accounting for 60 percent of its U.S. sales.) On the one hand, eco-activists are lambasting the automakers for this apparent exercise in economic brinkmanship. On the other hand, the EPA is asking the Northeastern "Eco-13" to stop and think things over. The states have 45 days to decide whether or not to relent and adopt uniform national guidelines that would bring on the LEVs. Meanwhile, the administration, in a statement by Vice President Al Gore (U.S. Newswire, 12/18/97), merely applauds GM's and Ford's "ingenuity and innovation" without addressing the latter-day states' rights issues that promise to render these LEV innovations still-born. Instead, Gore promises only that the administration "will propose new tax cuts for businesses and individuals that develop, buy, and use products that reduce pollution." Sounds like a wonderful invitation for each of our united states to develop its own "domestic" auto industry for enslavement to its own individual pollution statutes, doesn't it? 1) My bad. Sorry: >Clouds of war are looming over the horizon as U.S. automakers confront the >Environmental Protection Agency and assorted >eco-guerillas over >>this >issue of >tailpipe emissions. SHOULD BE: Clouds of war are looming over the horizon as U.S. automakers confront the Environmental Protection Agency and assorted eco-guerillas over >>the issue of tailpipe emissions. 2) Don't know what happened here: >Meanwhile, merely applauds GM's and Ford1s "ingenuity and >innovation" without addressing the >latter-day states rights issues that promise >to render these LEV innovations still-born. THE FILE I SENT READS: Meanwhile, >>the administration, in a statement by Vice President Al Gore (U.S. Newswire, >>12/18/97), merely applauds GM1s and Ford1s 3ingenuity and innovation2 without addressing the latter-day states rights issues that promise to render these LEV innovations still-born.

12/18/97

Mr. Secretary Pena, is anybody home?

Private industry is moving ahead with energy-saving and emissions-friendly fuel cells despite Energy Department favoritism. In a significant multi-national move this week, Ford Motor Co. announced a $420 million co-investment in fuel cell research that is already well underway, thanks to the joint efforts of Germany's Daimler-Benz and Canada's Ballard Power Systems. (Los Angeles Times, 12/16/97; "Ford Investing $420 Million for Fuel-Cell-Powered Auto") The Energy Department's silence in reaction to this news has been deafening. In October, Energy Secretary Federico Pena made a widely publicized and self-serving announcement concerning the formation of a government and industry joint-venture, the Partnership for a New Generation of Vehicles, which will promote fuel cell research of its own (NewSource, 10/22/97 & 10/23/97). The Partnership represents a consortium that includes the private research firm Arthur D. Little, fuel cell manufacturer Power Plug LLC and the Los Alamos National Laboratory. At a time when global warming is once again a chic public policy issue, fuel cell-powered vehicles represent an important possible solution to energy conservation and emissions reduction. In simplest theoretical terms, fuel cells convert hydrogen into electricity, with water and heat the only byproducts. In practice, however, many complexities must be surmounted before fuel cells become commercially available. To date, the Mercedes/Ballard NECAR3, a methanol-powered fuel cell vehicle, is among the world's most advanced working prototypes. Ford's collaboration with this project represents the greatest leap forward in this area by a U.S. automaker. By contrast, the Energy Department's consortium has yet to produce a practical fuel cell, let alone a working vehicle. Would it hurt to acknowledge private industry's advances in this area, accomplished without benefit of U.S. government assistance/interference? Or does the Energy Department have some ulterior motive for keeping all of its fuel-cell marbles to itself?

12/17/97

You wouldn't know it at the fuel pump

Music City is one of the cheapest places in the nation to operate a car, a study of driving costs reports. The study, reported today in the Wall Street Journal, found the Southeast was the cheapest region overall in which to operate a car, with Knoxville and Nashville the most economical of all cities. Low annual insurance and maintenance costs were the primary reasons for the efficiency. The study, conducted by Runzheimer International for AAA and others, was based on the cost of operating a 1997 Ford Taurus GL four-door sedan with 3.0 liter, six-cylinder engine. It was driven in each city for one year, for 15,000 miles, and fueled with regular unleaded gasoline. The results: National average operating cost was $6,720, or 44.8 cents per mile. In Nashville, the cost was $5,885, or 39.2 cents per mile -- almost 13 percent below the average. Despite Nashville's local reputation for poor drivers, insurance rates don't bear it out. Incredibly low insurance costs were the reason Nashville fared so well in this study. It certainly wasn't fuel costs -- thanks to fuel taxes, Nashvillians pay more for gas than any other Southerners.

12/16/97

What's it gonna be?

Drive a truck, and prepare to die. That's basically the point of findings announced at the conclusion of a conference organized by the Society of Automotive Engineers last week ("SUVs riskier to drive," The Tennessean; 12/13/97). The story, picked up from the New York Times News Service, reported dangers posed by trucks, including their possible increased roll-over risk and less stringent regulated standards for brake performance. The National Highway Traffic Safety Administration weighed in with a claim that SUVs "are nearly three times as likely as cars to kill the drivers of other vehicles during collisions"; meantime, data cited by the American Automobile Manufacturers Association "show that sport utility vehicles have a slightly lower death rate" than cars. Splitting the difference is the National Crash Analysis Center which showed "that once people in sport utility vehicles are involved in an accident, they are as likely to die as people in cars." In September, The Tennessean resorted again to the New York Times News Service for copy blasting consumers' current fascination with and appetite for SUVs ("Light trucks blamed for rise in fatalities"; 9/24/97). Interestingly, both of these stories also include references to the profitability of making light trucks. Of course, it's bad enough to make money from a popular product that everybody seems to want; but to kill people in the process, well, that's just sensational (in tried-and-true journalistic fashion, that is). What a pity then, when flat-footed reality intrudes in the form of contradictory evidence -- published by the very same New York Times: "Trucks Getting Safer, With a Nudge From the Government"

12/15/97

Don't be messin' with my truck

The American way of life is under threat as a result of the recently concluded global warming negotiations in Japan. At least that's the dismal prospect being suggested by John G. Middlebrook, general manager of GM's Chevrolet Division, in reaction to this week's Kyoto Protocol. (AP-Dow Jones, 12/12/97; "Global Warming Pact Could Disrupt U.S. Auto Industry") This global climate agreement specifies a 7% reduction of 1990 levels of greenhouse gases in the United States by the year 2012. Middlebrook's sentiments are echoed by Andrew H. Card, Jr., president and CEO of the American Automobile Manufacturers Association (AAMA), a trade group representing the interests of the Big Three automakers. ("America's Car Companies React to Outcome of Kyoto Climate Negotiations") There's no question that Americans love their trucks, and there's even less doubt that American automakers love the mark-ups of up to $10,000 per vehicle that that their truck models earn. The Kyoto Protocol, however, would pressure automakers to favor fuel efficient, smaller vehicles at the expense of their profit-making trucks, sport/utilities and minivans. Even casual observers of the nation's automotive scene would agree with Middlebrook's pessimism about forcibly changing consumer's buying preferences. "To say that America is standing in line to buy the most fuel efficient car in America, they're not," he is reported saying in the Dow Jones story. And Card is no doubt correct in castigating the protocol for not applying the same standards of emissions control to developing nations that the industrialized states must observe. On the face of it, encouraging the production of more efficient, less polluting automobiles may be sound in theory; but it is unrealistic in practice -- for the short term at least. In a sense, America's large vehicles
equivalent to a mass transportation infrastructure that public policy continues to neglect. Now, it seems, large vehicles are also conveniently large targets intended to distract public attention away from an international bureaucracy's inability both to define and to understand the global warming threat.

12/12/97

The red and the green

A clash is looming among carmakers between factions in favor of fossil-fuel-powered vehicles and partisans of alternative power sources. Significantly, the fault line runs through the Pacific Ocean, dividing American and Japanese automakers. Amidst news that General Motors' vehicle sales for November are up 10 percent, primarily because of strong truck sales (NewsPage, 12/4/97; "GM November Vehicle Sales Up 10%"), General Motors' Saturn Division celebrated a sea of red ink surrounding the 288 money-losing sales of its EV1 electric car during its first year of availability (NewSource, 12/9/97; "One Good Milestone Deserves Another"). Meanwhile, Japanese automakers are hyping alternative fuel-powered "green" vehicles on the worldwide auto show circuit worldwide while American and European manufacturers showcase heavy-metal, high-performance muscle cars like the Dodge Viper, Chevrolet Corvette, Volkswagen W12 and BMW Z07. ("Japan's Hybrid Cars") It's hard to resist comparing this difference in product development strategies among manufacturers with the fable of the ant and the grasshopper. The last time such a wide gulf of perception opened up between these two camps was during the 1970s when the Arab oil embargo suddenly turned Japan's unfashionably small commuter cars into the high-mileage champions of the Gas Wars. Now it's a case of sweet-smelling emissions from Japan's electric and hybrid vehicles being perceived as sissy perfume by American horsepower addicts. Will the day arrive when American automakers wake up and smell the coffee -- only to find the Japanese have once again beat them to the cream and sugar?

12/11/97

The house that Garth built for sale?

A few days ago, someone plastered a few signs on the newly constructed headquarters of Capitol Records. The signs read: "FOR SALE BY OWNER." Many on Music Row puzzled over the meaning of the prank until the rumor mill explained the signs by suggesting that Pat Quigley, Garth Brooks' bosom buddy at Capitol Records, a New Yorker newly transplanted to Nashville, is not in favor of moving the Capitol offices off West End Avenue and onto Music Row with all the other major labels.Quigley is not a Nashville insider and doesn't want be. With "Sevens" now over 1 million in sales and No. 1 on the Billboard charts, the message is, Music Row insiders don't know how to handle their acts like New Yorkers do. The New York / Nashville struggle continues.
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The buy-product of happiness

U.S. auto dealers are starting to sour on their business prospects, if J.D. Power and Associates' latest Dealer Attitude Study is to be believed. ("Dealer Satisfaction Continues Downward Trend for Third Year in a Row") The study, which reflects personal opinions of 3,000 dealer-owners across the country, shows an average satisfaction index of 95, which is two points lower than the previous year. Saturn dealers, whose 155-point rating leads the list for the sixth year in a row, are most optimistic about their businesses, according to the study. Mercedes-Benz and Lexus dealers are similarly flush, with second- and third-place ratings of 153 and 136, respectively. Least sanguine about the state of the dealer's lot are Lincoln/Mercury dealers with a last-place ranking of 96 and Jeep/Eagle dealers with a second-worst 98 score. Analysis which accompanies the study cites profitability concerns as the chief source of dealer discomfort. "As more and more dealers become pessimistic," the study reports, "the industry will likely see greater consolidation of dealerships as dealers either retire, or sell out to pursue other opportunities." The prevailing mood is ripe, it seems, for auto superstores like AutoNation USA, CarMax and Driver's Mart to step in and make timely acquisitions. This mood also explains the manufacturers' interest in buying back their own franchises to stave off lost sales resulting from dealer discontent.(NewSource, 12/8/97: "Keep your mitts off!" & NewSource, 12/1/97: "Dealer re-shuffle") What's lost in this escalation towards a Battle of the Titans is the fact that the satisfaction indices of Mercedes-Benz and Audi dealers increased the most in this year's Powers study. The credit is attributed to the wealth of d
new products forthcoming from these brands. Might not other manufacturers take heed?

12/9/97

12/9/97

One good milestone deserves another

Nissan and Saturn both have new milestones to crow about, and the nature of their respective accomplishments speaks volumes about their corporate personalities. On Friday, Dec. 5, Saturn celebrated the 1st anniversary of its EV1 electric car in a special ceremony in California. ("Saturn and General Motors Celebrate EV1's One-year Birthday") The event marked GM's status as the first manufacturer in modern times to produce a commercially available electric vehicle for consumer use. Currently, Saturn's '98-model EV1 is available only at select dealerships in Los Angeles, San Diego and Sacramento in California, and in Tucson and Phoenix in Arizona. In the spring, five San Francisco dealerships will also retail the EV1. The car is available only for lease at a capitalized cost of $33,995 ($25,595 in California after special federal and state subsidies). As of Nov. 30, Saturn had leased 288 of the cars in their first year of availability. By contrast, Nissan yesterday celebrated the production of its 4-millionth vehicle in nearly 15 years of operation at the company's Smyrna, Tenn., manufacturing facility. ("Four Millionth Vehicle Milestone Achieved By Nissan U.S.A. Assembly Plant") Appropriately, the car was a Nissan Altima, which is Nissan's best-selling vehicle with 122,426 units sold through Oct. '97. Nissan's Smyrna plant produces four models: the Altima and Sentra sedans, the 200SX coupe and the Frontier pickup. Total production at the facility for the first 10 months of the year totaled 347,676 vehicles, or 58 percent more than Saturn's total of 219,555 vehicles for the same period. The plant also produces sheetmetal stampings and engines for the Nissan Quest/Mercury Villager minivans which are assembled at a Ford facility in Ohio. There is no question that electric and other alternative-power vehicles will play an important role in the distant future of personal transportation. Today, however, their practicality, performance and sales prospects are dismal, as Saturn's first-year results indicate. Meantime, Saturn's competitors, like Nissan, are concentrating on traditional products that are affordably priced and judiciously updated to suit customer demand. Both the Altima sedan and Frontier truck, for example, have been thoroughly updated for the '98 model year, and they are priced better than the '97 models they replace. Saturn's six models, across the board, are seriously in need of "freshening," even while their no-haggle prices have risen for '98. While Saturn has its head in the clouds with product offerings and image marketing that overshoot mainstream consumers, Nissan is keeping its feet planted firmly on the ground and delivering the products and prices consumers seem to want.

12/8/97

Keep your mitts off!

Saturn says it knows what's best for its brand and wants superstore chains to keep their hands off. Today, it was disclosed that GM's different kind of car division will buy back six Saturn dealerships from Republic Industries. (Wall Street Journal, 12/8/97) ("GM's Saturn Division to Buy Six Outlets Owned by Republic") Republic, which operates a national chain of new- and used-car superstores under the name AutoNation USA, acquired the Saturn sites in Arizona and Florida through the purchase of other dealer groups. Although AutoNation is aggressively revolutionizing car and truck retailing with its blend of comprehensive inventory and no-haggle pricing, Saturn officials are apparently loath to associate their "different kind of car" with Republic's "different kind of car dealership." In a wry combination of face-saving flattery and back-handed complimenting, the Journal story quotes a Republic spokesman to say, "Saturn, while a great car brand, is simply not among those best-selling brands." Saturn's determination to control its own destiny is grounded in its conviction that a Saturn lifestyle is equally as important as a Saturn product, if not more so. Whereas its brand-image marketing strategy is hampering Saturn's export ambitions in Japan (NewSource, 12/2/97; "Brand-new disappointments"), company officials persist in emphasizing image fluff over engineering fundamentals. Yet despite persistent efforts to "spin" the truth to the contrary, Saturn sales lag increasingly behind the competition. (NewSource, 12/5/97; "Gui lt by manipulation") Accordingly, today's news of a deal between Saturn and Republic looks less like Saturn's determination to save its dealerships from the greedy clutches of AutoNation USA and more like AutoNation USA saving itself from a herd of white elephants on its car lots.

12/5/97

Guilt by manipulation

Saturn's selective disclosure of sales figures obscures genuine concerns about this brand's market viability. In a brash manipulation of the facts (Nashville Banner, 12/4/97; "Niche autos buoy makers as sales sag"), Saturn spokesman Greg Martin claims that so-called market studies show "Saturn is still selling second in each of its categories, topped only by the Corolla [sedan], the Mustang [coupe] and the Escort wagon." These comparisons are dubious, particularly with respect to Saturn's four-cylinder coupes and Ford's V6 Mustang. Moreover, it is interesting to note that Saturn, since its debut in '91, has never published itemized sales figures for its various models, which now include two coupes, two sedans and two wagons. Although the practice makes it difficult to gauge the sales performance of individual Saturn models within their respective categories, the GM division only discloses its aggregate sales, which for the first 10 months of '97 totaled 219,555 for a 9.4 percent decline compared to a year ago.

In the same period, other aggregate sales figures for comparable models paint a better picture of Saturn's strenuous sales challenge. Chevrolet sold 264,312 Cavaliers (up 11.5 percent), which include just coupe and sedan models only; Honda sold 271,737 Civics (up 15.3 percent), which include two-, three- and four-door models; and Ford sold 244,143 Escorts (down 2.8 percent), which include a coupe, sedan and wagon mix similar to Saturn's. As for the Toyota Corolla, it is fundamentally identical to the Chevrolet (formerly Geo) Prizm; the combined sales of this one sedan for the same period totaled 242,189 (down 3.4 percent). This single model is outselling Saturn's entire line by more than 10 percent. Many industry watchers believe Saturn's chief problem lies in its reluctance to face the truth that its models are outdated and uncompetitive compared to other more innovative competitors, both imported and domestic. Instead of finagling the facts to "spin" a bleak picture into what appears a more rosy one, it might profit the GM division more to face the hard facts, admit the truth to itself (and the public) and take some constructive, corrective action -- all the way back to the drawing board, if necessary.

12/4/97

Don't say we didn't warn you

Toyota's Kentucky auto plant has aggravated Japan's suspicions about U.S. manufacturing quality. Yesterday (12/3/97), the company announced a total recall of all 1997 Camry sedans with automatic transmissions because of a possible defect with the ignition key-transmission interlock. (AP-Dow Jones News Service, 12/3/97; "Toyota Recalls Camrys Built In U.S. Georgetown Plant"). The interlock is supposed to prevent the ignition key from accidentally being removed unless the transmission is in "Park"; but a defective part, manufactured by Fasco Controls Corp. of Shelby, N.C., is implicated in a number of accidents reported to the National Highway Traffic Safety Administration. If the key is removed when the transmission is in "Neutral," it can roll after being parked; if left in "Drive" or "Reverse," the car can lurch when started. The recall is especially embarrassing for Toyota, which is justifiably proud of its reputation as the world's undisputed leader in auto build quality. Moreover, the Camry sedan is destined to become the top-selling car in the U.S. for '97, with projected sales approaching 395,000 units. Toyota places great public relations stock in the fact that most Camrys are built in Kentucky, by American workers with predominantly American-made parts. Adding insult to injury, Camrys made in Japan -- which account for only 20 percent of U.S. sales -- are unaffected by either the defect or the recall. Reluctant as they may be to admit it publicly, some of Toyota's Japanese executives must surely be grumbling "I told you so" with respect to long-standing concerns about the quality of their American operations.

12/3/97

Gentlemen, charge your batteries

San Francisco's all a-buzz over the slew of electric vehicles parked at the city's 40th annual International Auto Show through Sunday. ("Electric Vehicles Sparkle at Auto Show"). Seems that the state whose onerous auto regulations and even more oppressive air quality have made electric vehicles a viable option is curious about the state of the art so far. But instead of an energizer bunny, electric auto buffs must content themselves -- for now -- with an anemic tortoise. Battery-powered vehicles are the only ones commercially available at the moment, and their high price, low range and paltry performance render them universally unpalatable to mainstream consumers. Saturn is among the major lines to introduce electric models in 1998.The world is still awaiting "The Breakthrough" in electronic power generation that will raise practicality while lowering costs. Ironically, one potential technology known as fuel cells, which convert water into combustible hydrogen for generating electric power, is receiving short shrift at San Francisco. If California hopes to meet its mandate of 10 percent electric vehicles on the road by 2003, a change of batteries -- and perceptions -- might be in order.

12/2/87

Brand-new disappointments

Saturn imports to Japan rank 30th in a recent image survey conducted by J. D. Power and Associates(Survey: U.S. cars' image low in Japan). Apparently, the Japanese consumers prefer their own and certain European models over those made by Detroit's Big 3. Ford and Cadillac ranked highest among U.S. cars surveyed, at 12th and 13th, respectively. American manufacturers' new fascination with brand-image advertising draws much of the blame for the poor impression U.S. car are making upon the Japanese. Since this form of marketing is lifestyle-oriented, features and benefits (including warranties and quality ratings) are little emphasized. Perhaps the Japanese might like to know a little bit more about what they're buying. Perhaps we all would.

Ford's youth initiativesTime magazine, 40-year-old William Clay Ford Jr. will become the first family member in two decades to chair the company founded by his great-grandfather Henry Ford. (The Ford in Ford's Future) "Bill Jr." will succeed current chairman Alex Trotman, 64, when the Australian steps down in 1999. The young Ford currently serves as the respected head of the carmaker's finance committee and is also vice chairman of the family-owned Detroit Lions NFL football team. Bill Jr. will be the first family member to head the world's second largest automaker since his uncle Henry II retired in 1980. Although the family controls 40 percent of the voting shares outstanding, it will take more than a name to steer this company along the uncharted and obstacle-strewn roads of the 21st century's auto industry.

12/1/97

Dealer re-shuffle

Independent auto dealers are sitting in the cross-hairs as manufacturers and dealer chains go trophy hunting. In a move of seismic proportions for California's auto industry, General Motors will buy out almost all of its independent dealers in the San Fernando Valley (Wall Street Journal, 12/1/97). This decision follows Ford's recent negotiations to consolidate dealerships in Tulsa and San Diego (Automotive News, 11/24/97), after narrowly failing to do so in Indianapolis and Salt Lake City. Meantime, the publicly traded mega-chain Republic Industries is proceeding with acquisitions now totaling 48 dealer groups representing 233 franchises in 17 states. The future may be dimming for the "mom-and-pop" dealerships traditionally at the heart of the nation's auto business. Retail distribution is the last obstacle to a complete "efficiency revolution" in the auto business. Since GM and Ford worry that volume distributors like Republic may one day dictate what products they can and can't sell, the carmakers are cleaning house among dealer franchises and looking for poor performers and overlapping territories to eliminate. This being the case, Middle Tennessee may have more than a few candidates of its own for the dust buster.

11/25/97

Thinking inside the box

Suddenly the auto world is supposed to gasp with delight upon learning that Cadillac has declared "me too" in the sport-utility free-for-all (Detroit News, 11/21/97). Word is, the as-yet-unnamed luxury SUV will debut next fall and will, of course, be based on existing GM hardware well known as Chevy Tahoe and GMC Yukon. Perhaps we're supposed to forget other such instances of internal plagiarism at GM, as when the best-selling Chevy S10 Blazer reappeared as the can't-give-'em-away Oldsmobile Bravada. And please, let's don't even mention Cadillac's silk purse Cimarron, made from Chevy's sow's ear Cavalier. Sure, Cadillac dealers are gnashing teeth while Lincoln's humongo Navigator SUV outsells Caddy's new Catera Euro-sedan. But what the world needs now is not a new, repackaged SUV. What consumers and, indeed, the entire domestic auto industry need is for some manufacturer of Cadillac's caliber to dismiss this frenzied fascination with boxy SUVs and start thinking outside the box. The Catera is a great first step in a new direction. As the first rear-drive sport sedan from a U.S. automaker in decades, it is poised to challenge BMW and Mercedes, Lexus and Infiniti head on. So why won't Cadillac take up this banner of a significant new trend instead of tagging along, late, after an old and jaded one?

Rates rise on Saturn, Altima

Insurance rates are going up on Tennessee-made Nissan Altima and some Saturn vehicles, a major insurer announced today. State Farm Insurance revises its risk ratings annually based on actual claims paid out for accident damage and theft. The Altima and Saturn's sporty SC1 and SC models were among 107 vehicles that will see rate increases of 10 to 45 percent for collision and comprehensive premium. Saturn's standard SW and station wagon models were among 144 vehicles that will receive a rate decrease from State Farm. See the complete listing at Rates.

11/24/97

Patriotic disservice

GM may have missed several marketing opportunities (including with Saturn, NewSource 11/21), but overall, things aren't as bad as Business Week would have us believe. In a red-blooded display of automotive Jingoism, the business weekly flays the Big Three carmakers in its Dec. 1 cover story (Can Detroit Make Cars that Baby-Boomers Like?). Baby-boomers don't like Detroit's cars, so the future of the domestic auto industry is very dark indeed - or so readers are led to believe. The article's writers Kathleen Kerwin and Keith Naughton are certainly justified in lambasting Detroit for its myriad missed opportunities. If anything, the article doesn't decry enough the domestic dependence on trucks (i.e., minivans, SUVs and pickups), which are the automotive equivalent of crack-cocaine. In other words, they're easy to make, deliver huge profit margins and are dangerously seductive to both manufacturer-dealers and consumer-addicts. Kerwin and Naughton miss a big point, however. The issue in today's automotive arena is no longer "U.S. vs. the world." In the domestic auto market, the imports have met the enemy, and have joined us. At the end of October, domestic cars were outselling foreign imports by 450 percent for the year - that's an 82-percent share of the market. Domestic trucks outsell overseas rivals by a factor of 11, a 91-percent share.It's the U.S.-made auto, not a misplaced nostalgia for Detroit's heavy-metal ham-fistedness, that is the real issue. Far from being overseas threats, this year's top-two bestsellers, Toyota's Camry and Honda's Accord, are made in Kentucky and Ohio, respectively. Instead of abandoning the U.S. auto market in droves, as Business Week would have readers believe, baby-boomers are actually fueling a domestic revolution in manufacturing: the cars they prefer are made here in the U.S., by American workers, in states far-flung from Michigan. Detroit and the Rust-Belt may be losers in the current car competition, but the U.S. - particularly the Southeast where most of the import transplants are locating - is way ahead of the game and still gaining.

11/21/97

GM blew it on Saturn?

General Motors missed opportunities that could have propelled the sagging Saturn vehicle into the No. 1 American automotive division, an industry consultant tells Business Week in its current issue's cover story. (www.businessweek.com) In a report about the American automobile industry's failure to capture the Baby Boom Generation, automotive consultant John Wolkonowicz says GM focused its resources on older, fading brands when it had a chance to score with Saturn. "If GM took all the money it put into Oldsmobile and spent it on Saturn, they could have created a Saturn minivan and sport-utility that would have sold like crazy," Wolkonowicz told the weekly magazine. ''And Saturn would probably be the No.1 American automotive division today.'' GM's president of North American Operations, G. Richard Wagoner, seems to agree. ''There are a lot of calls we didn't make right. You can just add [Saturn] to the list,'' he tells the magazine. Saturn will get a compact version in two years, but a sport-utility or minivan are distant prospects, at best. The Spring Hill-made Saturn, GM's biggest import fighting success, has seen sales drop 9.4 percent this year.

11/20/97

Deflating the issue

Calling it difficult choice, Transportation Secretary Rodney Slater is allowing certain classes of drivers to apply to the National Highway Traffic Safety Administration (NHTSA) for "permission" to disable airbags in their vehicles. The only difficult choice seems to be that of a bureaucracy voluntarily surrendering regulatory control in the midst of a safety controversy for which it is mostly to blame. Airbags, which are required by NHTSA to be standard equipment for drivers and front-seat passengers in all 1998-model cars and light trucks, are known to pose a safety threat to certain occupants. In June, Leonard Evans, a top research scientist at GM's Research and Development Center, announced his findings that airbags actually increase the risk of death for certain occupants. Evans cited his own private research that identifies "females, short people, elderly people and occupants of smaller cars" as particularly at risk when full-powered air bags deploy. In September 1996, 5-year-old Nashvillian Frances Ambrose was killed after a passenger-side airbag inflated in a low-speed crash. This tragedy was the first documented instance of an airbag-related death of a child who was properly seat-belted, and it pushed serious concerns about airbag dangers into the national spotlight. "By now," says Frances' father Albert Ambrose who has become active at the national level in promoting revised safety regulations, "there should be no question that airbags pose a distinct threat to certain classes of people - and not just children. Either we buyers ought to be able to disconnect them if we so choose or, at the very least, manufacturers should be allowed to provide on/off switches for us to use at our discretion." The Ambrose family is currently suing Chrysler Corp. for $60 million. Exploring NHTSA's legal liability for mandating the airbags that Chrysler used is, apparently, an insupportable option. Despite the distinct tone of condescension surrounding NHTSA's agreement to "consider" individual petitions to disable airbags, the larger issue of bureaucratic interference in the matter remains unaddressed. With a skittish insurance industry now hiding behind the skirts of NHTSA's comprehensive airbag requirements, it remains to be seen whether serious financial liabilities become the chief reward for owners who successfully petition to have their airbags disabled. Meantime, through the perverse mechanism of unintended consequences, government-mandated airbags will likely continue to kill unsuspecting drivers and passengers, children and adults.

11/14/97

It takes more than a village

GM's Buick Division is hoping to reinvigorate drooping sales by revolutionizing the design of its ... stores (Detroit News, 11/13). With the opening of a new prototype showroom at Zimbrick Buick in Madison, Wis., Buick is daring to "stay relevant" with consumers. Chief attributes of the new dealership design are a park-like setting, canvas awnings and a carillon clock tower kitted out with interactive kiosks dispensing 24-hour-a-day information. Plans are to convert 150 existing Buick dealers to the new architectural format over the next three years. GM's other sad-sister, Oldsmobile, has been putting its nose to the grindstone lately and turning out a raft of new models - Aurora, Intrigue, Alero, even a Shelby Series 1 supercar (maybe). By contrast, Buick apparently thinks the secret to survival is a walls-and-mortar make-over. The division purports to emulate Lexus, Infiniti and Saturn with the design of its new sales "parks." The only problem is, Lexus, Infiniti and Saturn showrooms are selling distinctiveness and innovation that Buick sorely lacks.

Can't stop the power

A major supplier of anti-lock brakes simply cannot understand why consumers remain lukewarm about this space-age technology. ITT Automotive commands 38 percent of the ABS business. Since ABS brakes first appeared in significant numbers in the '80s, the technology has grown increasingly sophisticated while dropping in price by as much as 80 percent. Still, according to ITT Automotive, only 62 percent of U.S. cars and trucks are equipped ABS - far short of projections that once predicted 75-percent usage by now. Vehicle manufacturers are "de-contenting" ABS from standard to optional equipment; and consumers just aren't buying it. As a result, ITT Automotive consolidated two ABS factories into one North Carolina facility in August, at a loss of 215 jobs. The company has also launched a new consumer awareness campaign to promote ABS as the "biggest safety breakthrough in a generation." Deservedly or not, ABS brakes - like "supplemental restraint system" (SRS) airbags - were over-hyped and under-explained when first introduced. Waves of data show little benefit provided by ABS in terms of preventing accidents and claims. The reason is not because ABS is ineffective; indeed the technology almost miraculously prevents skids and locked wheels during hard- or panic-braking maneuvers. Too many consumers are unaware of the correct use of ABS brakes (i.e., do not pump the brakes and continue to steer normally). It's the power of public misperception that's been allowed by the car and equipment manufacturers to careen out of control.