MOTOROBILIA - A Sometimes Contrarian View From The Motor City
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Wednesday, January 27, 2010

Toyota Sales Suspension: Bold Move, Hail Mary or Sepuku?

Toyota has announced that they are suspending North American sales of 8 models affected by the recall relating to unintended acceleration and or sticky gas pedals. They are also idling 5 US assembly plants "to assess and coordinate activities" while they are working to resolve the problem.

This is a huge move, unprecedented in the industry. It involves the heart of the Toyota lineup, including the Camry and Corolla, so the pressure from dealers on Toyota and GE Finance will be enormous. Toyota has to come up with enough of a fix so they can resume sales. Without those 8 models, the dealers don't have much of a showroom.

The question is will this move be seen as Toyota resolutely responding to consumers or will it be seen as the latest chink in their formerly bulletproof reputation for reliability?

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The Truth About The Automotive Carriage Trade

I know someone that lives an automotive fantasy. He's been a car guy his whole life. Success in business has given him the means to drive virtually any car on the planet. He owns cars that most of us only see in pictures, or perhaps get a glance at them behind the ropes at a car show. The Ferrari he drives is an Enzo, the greatest Ferrari ever. The Lamborghini in his garage is a LP640 Murcielago, the most potent bull in Sant'Agata's stable. How many of us have gotten behind the wheel of a Bugatti Veyron, let alone wire $1.5 million to Molsheim for a car made to our order?

It's a world of private studios, like the ones Maybach dealers have, where well-heeled and well-coifed customers are cosseted while they choose from a huge selection of fabrics and interior woods, leathers and even marble. If this cornucopia is not sufficient, the companies will cater to the customers' own suggestions.

I had a thought, though, while watching Bentley's press conference at the 2010 NAIAS in Detroit. They were giving details about Bentley's personalization program. All the ultra luxury marques have one. Whether it's Rolls-Royce's Bespoke, Lamborghini's Ad Personam, or Ferrari's Corrozzeria Scaglietti, all of the big buck car companies offer their wealthy customers the opportunity to have their cars fitted and trimmed to their tastes. So far most of these programs have focused on interior features and trim. Now Ferrari, reacting to the positive response to James Glickenhaus' one-off Enzo based P4/5 by Pininfarina, has announced their One-to-One program, wherein the Italian supercar company will build cost-no-object one-of-one custom cars. Supposedly they will work with the customer to put whatever bodies they want on Ferrari platforms, providing they can be properly and safely engineered.

This is supposed to be a throwback to the era when Duesenberg, Lincoln, and Bugatti sold customers a rolling chassis, which were then sent to coachbuilders for custom bodies.

I worry, though, that the end results will be more Corvette Summer than Bugatti Royale.

The problem with building a car to the customer's tastes is that frankly, some customers have bad taste. At the press conference, Bentley showed a photo of a very well crafted but rather garish interior, filled with tuck and rolled leather in ivory and British racing green. I was wondering, is there some personalization that a fancy car company won't do?

So I asked the only guy I know who's ordered a Ferrari or two.

Q: I suppose my question to you is that will the various bespoke, ad personam, and personalization programs for the high end marques really do whatever someone wants?

A: I don’t even ask about these programs as I agree with you they detract from what the car was meant to be.

Q: Exotic cars are not subtle to begin with. Does a Lamborghini Gallardo really need lime green paint with a lime green interior to get attention?

A: Actually, I have a lime green LP640 with charcoal interior with lime green stitching, nice but I should have kept the Orange color I had before. My wife calls it the Kermit car…lol.

Q: When you buy a car, house, boat, clothes, or whatever has some style, you're paying for the designer's taste. It seems to me that there's a point when one of those companies is going to say, no, we won't put our brand on that, it's ugly and makes us look bad, no matter how much you're going to pay.

A: A true yacht is a one off custom item and by definition is custom, but I agree that the car makers should learn to say NO so they don’t cheapen their product. (note: His previous, smaller, boat was 124 ft.).

Q: That makes sense. A yacht is more like a home, more personal than a car. Speaking of homes, you have a home near Scottsdale and you've been to the January car auctions there. At Barrett-Jackson this year custom Corvettes did very well. Not as well, of course, as 100% original cars, but some of the custom Vettes and other resto-mods brought very strong money, considering the recession. You said that when it comes to production cars you prefer relying on the factory's taste. What about customizers?

A: I like some of the very high end custom cars. I got burned on a Foose '69 Camaro from Trent Performance, they went belly up before I got my car. I really wanted that thing

Q: Do you still own the Enzo?

A: Yes.

Q: What's the next car in your garage?

A: A Ferrari 458.

Q: One last question. You can afford any car built today. Does it bother you and other well heeled car buffs that some high end car makers, like Ferrari and now apparently Toyota with the Lexus LF-A, pick and choose which customers they will deign to allow to buy one of their ultra limited edition models?

A: Yes very much so, even Gulfstream changed when they rolled out the G650, did it by way of a lottery and God forbid you try and sell your position, they will put you in Guantanimo.

Ferrari may not send anybody to Gitmo for taking cuts in line but they do reserve limited editions to selected customers. Only those tifosi with the purest faith were considered, for example, to be allowed to purchase one of 20 FXXs made. My source will remain anonymous. No matter how much money and power he has, he's still waiting for his new 458.

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Pelosi, Hoyer, LaHood Beclown North American Auto Show

The drama of the domestic automakers continues to make the media preview of the North American International Auto Show (NAIAS) in Detroit a must-attend event for journalists. Reduced circumstances may have forced some manufacturers to forego expensive concept cars, catered press conferences, or even displaying at all in Detroit (in the case of Nissan/Infiniti), but still over 5,000 press credentials were issued to journalists, photographers, broadcasters, and bloggers from around the world.

In the wake of the government bailout of GM and Chrysler, with so many reporters present it’s not surprising that the show organizers would also have to issue a large number of credentials to politicians — eager to get publicity and to show the automakers just who is in charge.

The first day of the media preview started at 7:30 a.m. with a press conference for Transportation Secretary Ray LaHood. It ended at 5:30 p.m with a press conference for House Speaker Nancy Pelosi and the rest of the congressional delegation.

Someone threw an auto show, and a political rally broke out. Local, regional, and state politicians are nothing new at the NAIAS, but this year there were scores of politicians and staff members from Washington as well.

From the Obama administration, there were two cabinet members (LaHood and Labor Secretary Hilda Solis), senior EPA official Marg0 Oge, and the head of the National Highway Traffic Safety Administration, David Strickland. Each of them traveled with an entourage of PR people and agency employees. It’s possible that there were also representatives attending from the Department of Energy as well. From the legislative branch, in addition to Michigan’s Debbie Stabenow, Tom Carper of Delaware (who brought his teenage son along) represented the U.S. Senate. Speaker Nancy Pelosi was accompanied by 15 of her colleagues from the House, including Majority Leader Steny Hoyer. Rep. Fred Upton, of western Michigan, was Pelosi’s “bipartisan” fig leaf — the only Republican in the delegation.

Her remarks, and those of Hoyer, were essentially cheerleading for the Democratic agenda and the Obama administration’s decision to effectively nationalize General Motors and turn control of Chrysler over to Fiat.

The Chrysler decision has been attributed to Steve Rattner, whom President Obama appointed to head the Presidential Task Force on the Auto Industry. Rattner was also at the NAIAS. Interestingly, though Rattner works for the Obama administration and though the administration insists it isn’t closely managing GM and Chrysler, Rattner’s badge read “GM” and he walked the Chrysler exhibit with Sergio Marchione, Fiat’s CEO.

I spoke with Rep. Gary Peters, whose district is in Oakland County, just outside of Detroit. I questioned the value to taxpayers of spending so much money bringing Speaker Pelosi and Peters’ other colleagues in for what amounted to a dog-and-pony show.

Peters agreed that one of the problems that people in Michigan and the auto industry faced was that his colleagues were “completely clueless” about the auto industry, and he hoped that the trip might educate them. How broad an education you can get on such a brief trip is open to question, but the fact that many of his colleagues in Congress and in the Obama administration are clueless was plain to see from the LaHood and congressional press conferences.

LaHood told the assembled automotive journalists about the bright future the domestic automakers face now that they’ve been assisted by the Obama administration. Nobody disputes that GM and Chrysler would most likely not have any future at all without the bailout. The transportation secretary based his remarks, he said, on a visit he made to Detroit last fall when he spent “half a day” at each of the domestic automakers’ headquarters. The “half a day” remark brought smiles to many in the room who have spent years following the auto industry. The smiles broadened when he referred to “new products” from Chrysler. Even people outside the auto industry know that Chrysler’s quiver is empty.

That was just too much for one reporter, who challenged the cabinet member [1]:

In your opening remarks you mentioned new products by Chrysler, could you expand upon that?

LaHood’s first instinct was to punt, but instead he reversed course and doubled down. Punting would have been the wiser choice.

Well, you know what? I’ll let Chrysler do that and I think as you all get around this massive showroom you’ll see what I mean, but they’re on the cutting edge of developing the kind of products that I think people in this country and also in other countries are really gonna feel very favorable towards.

Walk around Chrysler’s display on the show floor upstairs in Cobo Hall, and you will see exactly zero new products.

There was a Lancia rebadged as a Chrysler concept (dubbed “Guido” by the auto blogosphere), and a couple of cute little Fiat 500s to show that Chrysler was now under Fiat’s wing, but nothing at the Chrysler stand could be described as “new.” Chrysler did display a number of new trim and feature packages on its now aging stable of cars.

Maybe the die-cut decals are what LaHood meant by “cutting edge.”

During the “merger of equals,” Daimler hollowed out Chrysler and then sold out to Cerberus, which invested almost nothing in new product development. With the compact Caliber, midsize Sebring, and midsize Avenger generally considered worst-in-class, Chrysler has nothing in the pipeline to compete in those vital market segments. Everyone knows that — except the U.S. secretary of transportation.

LaHood continued:

Chrysler particularly, the kind of designs that they’re doing, the kind of innovative approaches that they’re taking is gonna really put them in the marketplace like they’ve never been before … as innovative, creative as I’ve ever seen in the industry.

True, Fiat is bringing in new blood and new designs, but nothing LaHood would have seen while breezing through Auburn Hills last October is going to make a difference to consumers or to Chrysler’s bottom line any time soon. It takes a minimum of two years to design and build a completely new car, and that’s after some time has already been taken to design, evaluate, and approve concepts.

In his remarks, Secretary LaHood referred to “the kind of green car that Americans are looking for.” Speaker Pelosi and Majority Leader Hoyer also stressed how government financial aid is helping the domestic automakers move to hybrids and electric vehicles, vehicles Pelosi and Hoyer claimed that consumers want.

The problem is that while hybrid sales in the U.S. indeed went up in 2009 as the overall market was flat or declining, they still represent less than 3% of light vehicles leased and sold in the U.S. Between LaHood’s praise for Chryslers “new” products and Pelosi’s fantasy that 3% of the market represents what consumers want, it appears that the people running our government know nothing about a major industry that employs, ultimately, one in twelve Americans.

Either that, or they are incredibly cynical and will say whatever they think they can get away with.

Americans may be looking for green cars, but they may not want to pay a premium. Hybrids and EVs are not cheap and will not repay their price premium at current gasoline prices. The politicians may say that consumers want green cars, but they know that without substantial government subsidies, the new technologies are too expensive for immediate mass acceptance. When Chevy’s extended range EV car, the Volt, goes on sale, it will carry a $7,000 federal tax credit. Just before Speaker Pelosi’s press conference, Billy Ford announced that Ford would be investing $450 million to assemble lithium-ion battery packs, a gas-electric hybrid vehicle, and a plug-in hybrid vehicle in Michigan. With $188 million of that coming from tax credits, it’s not surprising that Michigan Gov. Jennifer Granholm joined with the Ford chairman in making the announcement.

You expect to see certain things at a car show: shiny new cars, exciting concepts, and pretty models. I think we can add politicians to that list for the foreseeable future.

UPDATE: The Detroit show wrapped up this past weekend. The NAIAS is one of five major auto shows in North America, along with New York, Chicago, Los Angeles and Toronto. Along with the really big shows, there’s a circuit of regional shows in other major markets. While automotive executives are pretty commonplace at the major shows, you’re not as likely to find a CEO at one of the regional events.

The Washington Auto Show starts later this week. As if to underscore the movement of the domestic auto industry’s center of gravity to Washington, Ford CEO Alan Mulally will be keynoting the Washington show’s media preview. At the Detroit show, General Motors announced that Michigan would join California as a launch market for Chevy’s Volt extended range electric vehicle. Today, in advance of the Washington show, GM announced the greater Washington, D.C., area as the third launch market.

“Concentrating Volt sales in these three key initial markets allows us to give our first customers a high-quality experience,” said Jim Campbell, Chevrolet general manager. “In addition to geographical considerations, each market also has progressive local and state government leaders and utility partners who are crucial in bringing electric vehicles to market.”

Key initial market indeed.

Article printed from Pajamas Media:

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Monday, February 2, 2009

Hey dude, mind if I smoke your car?

Green is the new, well, green. Automakers large and small have jumped on the (biofuel powered) bandwagon, hoping that way lies profit, or at least a government handout. Group Lotus didn't want to merely bask in the reflected green light from their customer Tesla, they've introduced the new Eco Elise concept to display their own corporate enviro bone fides.

You know we're in a new era when one of the world's great sports car companies starts using words like "holistic" and "progressive".

The Eco Elise may appear to be a normal Elise S with a different paint job and interior trim, but that similarity is only skin deep. Actually, it's not even skin deep. The Eco Elise has body panels made not of fiberglass or carbon fiber but rather uses hemp to reinforce the plastic composite. That's hemp, as in pot, reefer, weed, chronic etc. Okay, so this "sustainable" hemp, grown in nearby Anglia to keep carbon impact down, was crossbred to deliver strong fibers, not sticky colas, but like all hemp plants it still has some level of THC, marijuana's active ingredient, albeit miniscule.

Hemp is also used in the hardtop and in the construction of the lightweight seats. Other green features are sisal carpets, naturally colored wool upholstery, and an eco-friendly water based, low temperature curing paint process developed by DuPont. To highlight the hemp material, a racing stripe of the clear-coated composite runs the length of the Eco Elise. The shift indicator light has been reprogrammed to encourage better fuel efficiency. They even managed to trim 70 pounds of weight. Since the base Elise already reflects Colin Chapman's dicta: "add lightness", most of the weight reduction comes from using lightweight wheels and a lightweight audio system, I assume with smaller and lighter magnets in the speakers.

I wonder if the Eco Elise comes with an ashtray. Just don't try driving the Eco Elise through customs.

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Saturday, January 24, 2009

The Jew Who Invented The Volkswagen
& Other Jewish Automotive Pioneers

You know how you notice things and keep mental lists? You sort of store things away and then something notable happens and you make a connection. For a while now, I'd research this or that automotive subject and discover that someone who I was already familiar with in the automotive world turned out to be Jewish. Jewish scientists, entertainers and businessmen are pretty well known, but perhaps because of Henry Ford's infamous Jew hatred and the connection of the Volkswagen to the Third Reich, in the popular mind cars aren't something associated with Jewish success. Actually, as I have found out, at least two important pioneers in the history of the automobile were in fact written out of history by the Nazis. Still, a surprising number of true automotive pioneers were in fact Jews. Well, maybe not surprising in light of the success of Jews in other technical and scientific fields, but something not previously noticed. So I was keeping a mental list. Then I found out about Josef Ganz, thanks to a Dutch engineer and writer named Paul Schilperood. Schilperood is writing a book about Ganz titled The Prevented Volkswagen and its his life's mission to restore Ganz to his rightful role in automotive history. Ganz was a respected automotive engineer and technical writer in Germany in the 1920s and early 1930s. As a consultant he worked on both the BMW AM1, BMW's first in-house automobile, and the Mercedes-Benz 170, a landmark design that was in production for over 20 years, both before and after WWII. Schilperood makes a compelling case that the Nazis, Ferdinand Porsche and Tatra essentially stole the concept and design of the original Volkswagen from Ganz. In 1933 Standard Fahrzeugfabrik, a German automobile company, displayed the Standard Superior "volkswagen" based on Ganz' designs and patents at the Berlin auto show, attended by Adolph Hitler and Hermann Göring. A year later Ganz was in a Gestapo jail. Eventually he escaped to Switzerland and after the war emigrated to Australia where he worked for Holden.

When I found out about Ganz the mental list that had been percolating came to the surface and I decided to write a book about Jews and cars. The funny thing is that the list keeps getting longer. Just tonight I was starting to write about Siegfried Marcus, a Viennese Jew who in 1870 was the first person to power a four wheel vehicle with a gasoline powered internal combustion engine, and also invented the carburettor and magneto ignition. Marcus was once well known as a automotive pioneer. There were four memorials around Vienna to his technical accomplishments, including a plaque in front of the technical university, but after the 1938 union of Austria with Nazi Germany they were removed.

Siegfried Marcus' first vehicle - 1870

Marcus' second vehicle - late 1880s, around the same time that Daimler and Benz were making the first practical vehicles.

While reading about Marcus I found out that in the 1850s Abraham Schreiner, a Jew in Galicia, was the first person to successfully "crack" petroleum to extract naptha, first used as a lighting fuel, later used in the formulation of gasoline. Twenty years after Schreiner "invented" gasoline, Marcus figured out how to harness it's tremendous energy density to move a vehicle. The internal combustion engine has reigned ever since. At the time of this writing, though, gasoline/electric hybrids and battery electric vehicles are now becoming a practical alternative to the ICE. It turns out that before gasoline, there was a Jew working on electric vehicles. Researching Schreiner, I found a reference to a M. Davidsohn of Darmstadt, who around the same time, in 1854, created an electric powered vehicle. The problem with Davidsohn's electric car was the same as current EVs face, batteries with enough energy density. Davidsohn faced much more serious challenges as battery chemistry was pretty primitive in 1854. Forget lithium ion, lead acid batteries weren't even invented yet.

I hope to devote a chapter to each notable Jew important to the auto industry. Fortunately for my research the National Automotive History Collection of the Detroit Public Library is one of the largest of its kind in the world. Unfortunately, due to budget cuts, the DPL now charges non-residents a $100/yr or $10/day fee for using their collections.

Anyway, here's a list that I have so far:

Industrialists and Entrepreneurs
Gerald Greenwald, vice chairman of the Chrysler Corporation
Adolf Rosenberger - German businessman and racing car driver. Helped finance Porsche's engineering firm in 1931, and was instrumental in the famous Auto-Union racing cars from the 1930s
Malcolm Bricklin - first importer of Subarus to the US, later produced Bricklin sports/safety car, and founded Yugo enterprise.
André Citroën - engineer and industrialist, founder of the Citroen car company
Emil Jellinek - entrepreneur and Daimler board member who had a seminal role in the development of the Mercedes 35hp, considered by many to be the first "modern" car. The "Mercedes" Benz was named after his daughter.

Engineers & Designers
Josef Ganz - automotive pioneer, developer of BMW's first car, the AM1, consultant on the landmark Mercedes-Benz 170, and probably originator of the Volkswagen Beetle.
Siegfried Marcus - in the 1870s designed the first gasoline powered car, invented the carburetor and was an early developer of magneto ignition.
Albert Kahn - architect, developer of the modern automobile assembly plant, designed Henry Ford's Highland Park Model T plant and Rouge Complex, as well as the giant Packard plant.
Zora Arkus Duntov - engineer, 'father' of the Corvette and force behind Corvette racing.
Jerry Hirshberg - Designer, artist, founder of Nissan Design International
Abraham Schreiner - Inventor of naptha/gasoline - first successful cracker of petroleum
M. Davidson - early electric car darmstadt 1850s
Victor Houk - hybrid car inventor

Race Car Drivers
René Dreyfus - racer, restauranteur & raconteur
Peter Revson - racer
Mauri Rose - winner of the Indy 500
Kenny Bernstein - champion drag racer
Jody Sheckter - Formula One champion
François Cevert - racer

L.K.J. Setright

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Friday, January 23, 2009

Sen. Bingaman: Taxpayers should own Chrysler, not Fiat

The American taxpayers already loaned Chrysler $4 billion. The Auburn Hills automaker has their hand out for $3 billion more and what do the taxpayers get? A full page ad thanking them and a bunch of IOUs. Meanwhile Fiat picks up a third of Chrysler from Cerberus for little more than blue sky and a business plan. Political and economic ideologies aside, it doesn't seem fair.

Sen. Jeff Bingaman, D-NM, agrees.

During the confirmation hearings for President Obama's nominee for Secretary of the Treasury, Timothy Geithner, Sen. Bingaman asked him about Fiat's acquisition of 35% of Chrysler for no cash while the government has already loaned Chrysler $4 billion and is being asked for another $3 billion. Bingaman raised a question many people have asked about the automaker loans, "It's hard to explain why the American taxpayer shouldn't own Chrysler." He has a point. I'm certainly not in favor of nationalizing businesses, but if the equity value of Chrysler is so low that they can trade away a third of it for a strategic partnership and no cash, the taxpayers should be getting something more than just an IOU. At least when Daimler bought Chrysler, they didn't ask US taxpayers to finance the deal.

On paper, it makes sense for all parties involved. Chrysler gets new product and stays in business. Cerberus offloads 35% of a headache. Fiat gets access to the US market.

Fiat will back out of the deal if the additional $3 billion isn't forthcoming, and if Fiat isn't anteing up any cash, somebody's got to pay for adapting the Fiat platforms etc for the US and retooling the plants. That's where Uncle Sugar comes in. Cerberus, Chrysler and Fiat are hoping that the business sense of the deal is compelling enough to obscure what is happening here - that US taxpayers are financing the deal. From Sen. Bingaman's comments that hope might have been misplaced.

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Thursday, January 22, 2009

Geithner: Comprehensive Restructuring, Substantial Change in Detroit
Gettlefinger: Define Restructuring

UAW president Ron Gettlefinger was "out of pocket" yesterday. He flew back to Detroit yesterday from President Obama's inauguration, and when he got home he did what most Detroiters have been doing for the past month. No, he didn't check the Internet or cable news for the latest bad tidings about the auto industry. He shoveled some snow. This winter of discontent in Detroit has been a very snowy one. After clearing out his driveway the head of the UAW drove downtown to speak to the Automotive News World Congress at the RenCen Marriott. So when Mr. Gettlefinger addressed the AN shindig last night, he hadn't heard Treasury Secretary designate Timothy Geithner remarks in his confirmation hearings in the Senate yesterday afternoon.

Geithner said that any further financial aid to the domestic automakers is contingent on major changes.

"Any assistance the government provides is assistance in support of a comprehensive restructuring that will leave the industry in a stronger financial position where they can be profitable and healthy without government support… That's going to require very, very substantial changes by all stakeholders."

"Comprehensive restructuring", and "very, very substantial changes" might scare a union official of fainter heart but regardless of what Geithner said, Gettlefinger is hoping that with Democrats in control of Washington, the "stakeholders" that he represents won't have to take "too big of a hit."

In his remarks to the AN world congress, Gettlefinger said, "We know that additional sacrifices may be required to get these companies back on track. But all stakeholders will have to participate. Any attempt to single out one group to bear the brunt of the changes needed within our industry will fail, because no one group can solve the problem alone."

One of the things that hurt the Detroit automakers during the congressional hearings in November and December was the fact that the UAW gives millions of dollars in campaign funding and political assistance to Democrats. The UAW's chickens came home to roost when the Senate Republicans had the power to kill the congressional loan package. Gettlefinger didn't get to be president of the UAW by being a bad negotiator. Now he's expecting that the UAW's money was well spent and business as usual in Washington will spare his members from major concessions, no matter what Geithner said on Capital Hill.

During his address Gettlefinger said that "UAW members are optimistic about working with the new congress." I don't want to say that the fix is in, and I'm not sure if the Vegas books will take any action on legislative activity, but if I was a betting man…

After the speech, a reporter from Detroit's WDIV TV news asked the UAW chief about Geithner's remarks calling for change and restructuring. The Obama nominee has worked for Treasury or the Fed for most of his adult life, so he's no naif in the ways of Washington, but Gettlefinger is going to school him on the way things really work in the nation's capital.

Regarding "restructuring", Gettlefinger said, "I'm not sure exactly what that means at this point in time, and I didn't hear it… I missed out on the hearings today but again a lot of times people make statements and then when they look at the facts it's a lot different."

Gettlefinger no doubt figures that Obama is in charge, not his Treasury secretary, and that the newly sworn in president and a Democratic Congress will by sympathetic to the UAW. Concerning Obama, the UAW president said, "He knows and we know that a strong manufacturing base, including a strong domestic auto industry, are vital to the future of the U.S. economy."

From what chairman of the House finance committee Rep. Barney Frank, D-MA, said, Gettlefinger is right. Frank, who has been a vocal critic of the concessions demanded of the UAW in the Bush administration's loan package, was speaking on the occasion of a largely symbolic House vote reaffirming the loan conditions. Frank said, "I'm sure Obama will change those."

Regarding those conditions, the deadline for GM, Chrysler, their creditors and the UAW to come up with a plan that Congress will consider viable is February 17th. Theoretically, if the benchmarks aren't met the government will pull the loans already granted, which would mean immediate bankruptcy.

When asked if the details can be hammered out in less than a month, Gettlefinger said, "I think we can be ready… it's going to be a push on the time." Like I said, Ron's a great negotiator. He had a failsafe loan from President Bush in his back pocket when playing hardball with Senators Corker and Shelby. He now knows that he can dig his heels in negotiating with GM & Chrysler between now and Feb. 17th and a Democratic congress and President Obama will back him up.

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Wednesday, January 21, 2009

Something Detroit Does Well

With all that the domestic automakers have done wrong, one thing they've always done well is heating, ventilation and cooling, HVAC. In a post at The Truth About Cars about dumb moves behind the wheel, Jonny Lieberman mentioned how even when Detroit was making malaise era cars that barely ran, their HVAC systems were the "envy of the world" and more or less continue to be. Sure, Volvos and Saabs had good interior heating and defrosting systems, not to mention heated seats, but Detroit gave the world automotive air conditioning. Detroit also pretty much invented functioning ventilation systems.

The city of Detroit has always affected the nature of the cars that the domestic automakers produce. In European cities streets are narrow and go in all directions, so small cars, handling and cornering were important. Detroit's streets are broad and for the most part on a 90 degree grid, so suspensions were calibrated more for comfort than precision handling and the cars were large boulevard cruisers.

Likewise with HVAC. Every year when the NAIAS rolls around people question the wisdom of holding a big auto show in Detroit in January. It gets cold in Detroit. Real cold. Maybe not Fargo or International Falls cold, but cold enough to evoke mention of brass monkeys' balls, witches' tits and well diggers' asses. Single digit Fahrenheit temperatures are not uncommon and subzero temps can happen any winter. The coldest it's ever been that I recall is 20 below and in the 1990s, there was a four day period when the air temperature never got above zero.

From the perspective of a Detroit automobile executive in the 1960s, it's understandable how the Volkswagen Beetle could have been dismissed. Even a pristine Beetle back then had inadequate heat. There was no electric blower on the heating system, just the engine cooling fan. Pressurized air was ducted off of the cooling shroud into the headers/heat exchangers. Heat, then, was speed sensitive under the best of circumstances. After a Michigan winter or two, with the salt on the roads, the heat exchangers and heat ducts were perforated with rust. Small wonder that VW offered a gas heater, a self contained 18,000 btu gasoline fired furnace.

Those same Detroit auto execs and their contemporary counterparts may have had access to company motor pool cars so they never experienced the joy of dealer service managers and warranty work, but they still had to deal with Michigan weather on the way to and from work. Like I said, it gets cold in Detroit and the auto execs don't like to be cold. Neither do engineers. At the same time while Detroit's not in the desert, in the summer it gets real hot, with temps sometimes reaching the high 90s, now and then up to 100 degrees. There are places in the United States that get colder than Detroit, there are places that get hotter, but there are few places outside of the Great Lakes region that have as wide a temperature swing. Staying comfortable was a Detroit imperative. It was also a way to make more money on a car. Heaters were extra cost optional equipment into the 1960s.

Also by the 1960s the domestic automakers were improving the ventilation systems. Cars had air vents in the fender wells, with cable actuators on the kick panel. Flow through ventilation integrated into the heating system followed. In the 1960s, air conditioning became a factory option on popularly priced cars, though some folks went with aftermarket units that hung under the dash. What was introduced by Packard in 1939 as an ultimate luxury item ultimately became standard equipment.

My dad, may he rest in peace, loved air conditioning. In the summer he'd keep the house at 68 degrees. American Motors used to label the maximum A/C setting as "Desert Cool". They must have had my dad in mind. Though he liked his options, as far as A/C was concerned, they could have had a single setting: max cool, max fan. In the 1970s he switched from Oldsmobiles to Mercurys and you could have cooled your drink on the dashboard of his 1974 Grand Marquis.

As Jonny pointed out, Detroit still is pretty much the standard when it comes to keep you comfortable in an automobile, temperature wise. I've never driven a Detroit product that couldn't blast full heat in subzero weather, or that couldn't keep you comfortable on a blistering hot summer day. Just about every automaker in the world now makes fairly sophisticated climate control systems but I think that's a case of meeting a high standard that Detroit has set.

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Tuesday, January 20, 2009

Longtime Michigan Automaker Files For Bankruptcy

The Detroit critics and bashers have finally gotten their wish, the bankruptcy of a legendary domestic auto nameplate. The UAW doesn't get much lovin', so no doubt there will be some schadenfreude over obstinate union members refusing to negotiate concessions, driving their employer into filing for bankruptcy protection from their creditors. Okay, so maybe the automaker in question is based in Kalamazoo, not Detroit, Auburn Hills or Dearborn, and to be precise it hasn't built any cars for at least 25 years. However Checker Motors Corp. still exists as a corporate entity and last week that corporation filed for Ch. 11 reorganization in U.S. Bankruptcy Court in Grand Rapids.

Checker Motors Corp., started making cabs in Kalamazoo in 1922. Though it stopped production on its iconic Checker sedan and cab in 1982 rather than give in to labor demands at the time, it has continued on as a vendor to the Detroit automakers, supplying them with body and chassis components. The 87-year-old company has 246 employees with assets of $24.5 million and liabilities of $21.8 million. Checker posted net sales of $63.4 million in 2007.

During the debate over federal loans to the domestic automakers, a number of analysts predicted that if any one of the three automakers declared bankruptcy, the other two would have to follow suit. Bankruptcy allows the abrogation of labor contracts and an automaker in Ch. 11 proceedings would be able to lower labor costs significantly, putting the other car makers at a competitive disadvantage. If GM filed for Ch. 11, Ford would almost be forced to do so just to stay competitive.

That's exactly what has happened to Checker. Checker is the eighth major US auto supplier that has filed for bankruptcy in the past year. One reason Checker cited in their bankruptcy filing is a need to have wages that are competitive with other suppliers already in bankruptcy proceedings. The company tried to negotiate wage concessions from its employees' labor union but even with bankruptcy hanging over their heads, the union wouldn't make the needed concessions.

The bankruptcy filing also cited the decreased market shares of its customers. Checker sells stampings and welded assemblies to all three of the domestic automakers and the domestics have lost about 5% market share from 2007 to 2008. I suspect that the 35% decline in overall sales is a great factor than decreased market share.

Supporters of government assistance to the domestic automakers were called Cassandras for predicting a cascade of supplier bankruptcies should any of the domestics be forced into Chapter 11 or 7. With at least 1/3rd of domestic auto suppliers already financially distressed, it may not even take a failure of one of the large automakers to start that cascade. The same day that Checker filed, Lansing based automotive electronics supplier May & Scofield closed its doors after Bank of America foreclosed on its U.S. assets.

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