THE AUTOEXTREMIST

July 22, 2009

Ten Things.

By Peter M. De Lorenzo

(Posted 7/22, 11:30am) Detroit. The mid-summer blahs have definitely set in around here with most of the industry sturm und drang going on behind closed doors, except for the hand-wringing under way in Washington about the dealer closings that is. That issue is likely to drag on for quite a while as politicians strive to keep their names in the media during these dog days.

But what else is going on? Here are a few things to think about...

The Porsche-VW merry go-round is coming to a halt as Wendelin Wiedeking’s power play to have Porsche take over VW ran up against a reeling global economic meltdown and a determined Ferdinand Piech, a 1-2 combination Wiedeking simply had no match for. After Porsche is absorbed into VW watch for an entry-level Porsche in the $35,000 range, and then watch for “creeping commonality” as Porsches become more corporate VW under the skin.

The Chrysler-Fiat situation is, how can I put it? Nothing less than a giant, steaming bowl of Not Good. With sales falling off the table they’re now offering consumers $4,500 on most of their 2009 models, doubling the cash-for-guzzlers incentive offered by the federal government but making it available to everyone. They refer to this summer clearance sale as "Double Ca$h for Your Old Car." I call it flat-out desperation, no matter how much marinara sauce you ladle on it. Not only that, but they’re still fumbling around trying to decide what they’re going to do in the mid-sized sedan market. We need a bigger bowl...

GM marketing-types are reeling from the fuel-injected input generated by their new Marketing Chief - Bob Lutz. Suddenly, whatever passed for “business as usual” has been blown-up or thrown out the window. This is going to be interesting to watch, to say the least.

In Dearborn, Ford revealed their 2010 product lineup to the media yesterday and it became quickly apparent to everyone that this company is more than just on the move, they are aggressively boosting their presence in the market with an array of impressive products that will transform the company. Over the next 18 months Ford will have the freshest, most contemporary lineup in the business, and the newest fleet of vehicles - in terms of age - on the road. Alan Mulally’s push for “focused consistency” - as I like to refer to it - is going to pay off big-time for the Dearborn-based crew.

And what about Toyota? Their new chief in America, Yoshimi Inaba, is a realist, a refreshing change from the previous attitude displayed by the company formerly known as “The Juggernaut.”. But even more than that, Inaba admitted to the media the other day that Toyota was not profitable in North America. Say that phrase back to yourself slowly and you realize what a stunning admission that really is. He’s confident they will return to profitability here (and so am I), but Toyota has a long, long way to go in this market. And it’s also quite clear to Inaba & Co. that their new chief rival in terms of new product cadence, quality, technology and momentum resides in Dearborn. Make no mistake, this will be a heavyweight championship fight the likes of which hasn’t been seen in this business for a long time.

J.D. Power is flogging its new “Vehicle Launch Index” this week, a new survey/moneymaker which attempts to rate new vehicle launches in terms of sales targets and dealer profit margins. Gary Dilts, a senior vice president at J.D. Power and ex-Chrysler executive told Automotive News that, "How well a new model sells is only one part of the equation for judging how well a vehicle launch has gone.” To that I say fair enough. Dilts went on to say, "The other questions are: Is it selling at the level that was forecast? Is it selling at the expected price point? Is it holding its value in the market? Are dealers making the expected margin on it? Is it causing the manufacturer to spend more than planned on marketing support?” All good questions and issues to be raised, but is J.D. Power the one who should be doing this? I can’t believe that the manufacturers can’t do a better job of evaluating how they’ve done than J.D. Power. It’s another arrow in J.D. Power’s quiver of money-generating products there’s no doubt about it, but that’s all at this point. Oh, and for the record, Power rates the launch of the Hyundai Genesis as the best launch in 2009, followed by the Ford F-150 and the VW Tiguan. Yawn.

Though the new Jaguar design language leaves me cold, there’s no doubt the new Jaguar XJ sedan will merit a closer look when it hits the streets. But the big problem for Jaguar is that there are so many competitors in the segment that no matter how “new” the new XJ is it’s liable to get lost in the shuffle, especially with new entries coming from Porsche (Panamera), Audi (A8) and BMW (5 series GT). Not that any of them – except for maybe the Audi – do anything for me, of course.

We already know that inviting the government to get into your business is a recipe for disaster, but the GM-Opel-German government controversy is even worse than anyone thought it could possibly be. With three bidders involved - private equity firm RHJ International (a Belgium-based financial investor), a consortium of the supplier Magna International and Russia's state lender Sberbank and China's Beijing Automotive Industry Corp. - and the German government being asked to throw-in loan guarantees worth up to 4.5 billion euros ($6.4 billion), the German government and the German states with Opel facilities prefer the Magna bid, while GM is liking the offer from RHJ. This may be resolved quickly, or it could turn into a quagmire too. Either way it’s distracting and keeping GM from focusing on the direction of the new company.

Meanwhile, Honda is refocused, reenergized and back to doing what it does best, which is make excellent machines - albeit with a few glaring exceptions - that are right for the times. I’m not thrilled that they’re veering toward the BMW GT with an Accord version of the same concept, or that the successor to the NSX is a non-starter, but it’s hard not to believe that Honda will continue to make gains around the globe with their “way” of doing things.

And finally there’s Alfa Romeo, which is getting ready to introduce the ultra-exclusive 8C Spider - an even more luscious rendition of its already luscious 8C Coupe – for the princely sum of $299,000. There will be a total of 500 built (by Maserati for Alfa) beginning at the end of the year with just 35 earmarked for the U.S. It’s nice to know that there are still a few car companies out there who are in the business of manufacturing dreams and making real money doing it.

Thanks for listening.

See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, July 23, at 7:00PM EDT at www.autolinedetroit.tv.

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