car_guy's Comments

Cash-For-Clunkers Reveals Weakness Among Detroit Brands

Tue, 10 Nov 2009 10:03:32 -0500

You conveniently avoided mentioning California, which was awarded the lions share of the funding, $322,677,500 or 11.3% (almost twice runner up Texas). Over 72% of their purchases with the program were for Asian OEMs. They also had the highest percentage of Toyota sales in the nation with 28% of total purchases being Toyota's. They also had the 2nd highest percentage of Honda sales, after Hawaii, with 19%.

Gee, California buys Asian OEM vehicles, and the mid-west buys US OEM vehicles. What amazing insight. This is hardly a useful picture of the US car market.

Chevy Volt: How It Stacks Up

Sun, 23 Aug 2009 12:59:57 -0400

Rick,

Good article. Accurate and factual and objective. Rather rare traits for Auto articles on Seeking Alpha. I strongly agree with the thesis that cost/mile is a superior rating to mpg for consumers to use. This should be one of a number of possible metrics for rating performance/efficiency based on a person's objectives/expectations. A web calculator for carbon/mile would be straight forward to develop based on the location of the user. A calculator for petroleum used/mile would also be useful if we are still interested in reducing dependence on foreign oil.

Chevy Volt: How It Stacks Up

Sun, 23 Aug 2009 12:44:12 -0400

The article's assumption of 20mpg under the gas engine is the crux of the argument and obviously calculated backward to support the thesis that the Volt will be no better than the Prius. 20mpg from a 1.4 L gas engine is ridiculously low and the Volt will easily achieve more than that, likely 40-50mpg running on gas. GM's statement that they expect the combined mileage to be 'triple digit' means they expect 100mpg combined which would mean 40-50mpg highway.

On Aug 23 01:55 AM John Petersen wrote:

> There's a good article in Friday's Economist that talks about how
> the Volt's mileage was calculated and the factors that will likely
> impair mileage.
>
> www.economist.com/scie...

Cash for Clunkers: A Wildly Expensive Way to Cut Emissions

Sun, 16 Aug 2009 19:43:59 -0400

Your understanding is very wrong. The average buyer increased the fuel economy of their vehicle by over 60% and top selling vehicles have been the Ford Focus and Toyota Corolla. To qualify for the $4500 you have to increase mpg by 10 which which is a minimum of 26-28 mpg. Increasing the requirement to 32 mpg eliminates all of the vehicles at 30 mpg combined, including the Corolla and Focus, and leaves only 1 vehicle, the Ford Fusion hybrid, that is manufactured in the US. Eliminates the incentive to preserve remaining jobs at US plants (Toyota, Honda, Hyundai, Ford, GM, Chrysler, Nissan, etc) and destroys the payback in taxes and reduced unemployment comp.

On Aug 16 10:43 AM Kodi wrote:

> Let's face it, CFC is an expensive vote buying program that should
> have been applied to electric or alternative energy vehicles. Don't
> forget, that to produce a new vehicle, there are environmental costs
> as well. Add up the carbon footprint required to produce a new car
> in steel production, petroleum based plastics, electrical components,
> tires, paint, commuting workers, shipment of a new vehicle, visiting
> showrooms, waste produced, etc. It appears that no one considered
> all the ancillary activities associated with the production of a
> new product. This whole thing stinks of political pandering that
> those of us who did not participate, get stuck with the tab.

>
> Additionally, my guess is that those who could truly afford a new
> car loan, are not the needy, but likely the son or daughter driving
> the old clunker back and forth to college or work. I see a lot
> of truly poor people still driving clunkers who are unable to purchase
> even a worthy used vehicle. So what does our government do, increase
> personal debt load to satiate a chosen few and increase the prices
> in the used car market.
>
> My understanding is that pick up trucks have been the major purchase
> through this program. What kind of incremental improvement is that?
> It seems to me to truly make an improvement in the environment, the
> minimum mpg for a new vehicle should be set at 32 mpg.

Is the Chevy Volt Only a Fair Weather Car?

Thu, 13 Aug 2009 18:17:49 -0400

Jack,

You also seem to convienently drop the term City mileage from your discussions of the 230mpg discussion. GM has not released any highway mileage estimates but has said they expect combined mileage to be 100mpg or above. This means that highway will be well under 100mpg which is logical because the vehicle will be using the ICE for power, not the batteries, much sooner in the cycle.

The city cycle keeps speeds at 45 mph and under and is limited to approx 50 miles. This maximizes the Volt's electric only distance. If the Volt gets 50mpg when using the ICE and only uses it for the last 10 miles of the test it would use 0.2 gallons of gas. For the 50 mile cycle using 0.2 gallons of gas would result in a 250mpg rating. Adding full loads for a/c and more aggressive driving makes the 230 mpg rating reasonable.

GM didn't design the test. Toyota gamed the test for years and the incredibly high mpg numbers for the early Prius vehicles led to the redesign of the test cycle. At $2.50 gas no hybrid, including the Prius makes any econonmic sense.

Lies, Damned Lies and MPG Claims for the Volt

Thu, 13 Aug 2009 18:08:50 -0400

Jack,

No matter how cute or sarcastic you say it, doesn't make it true. The Volt has a range of 300 miles. The 40 mile range is for electric only.

Do some research, you'd be surprised what you learn.

On Aug 13 11:00 AM Jack Lifton wrote:

> John,
>
> This "controversy" makes me think of the World War II American admiral
> who while retreating from superior Japanese forces radioed "I am
> retiring before the enemy with all deliberate speed." I don't think
> the EPA or DOT is "actively complicit" in any deception of anyone
> other than themselves.
>
> I did the same calculation as you have done and came to the same
> conclusion.
>
> I have a new marketing approach for GM for the Volt:
>
> "The Chevrolet Volt, the car that makes decisons on travel distance
> for you. Never again worry about getting anywhere more distant than
> 40 miles in a reasonable amount of time. Let your car make the decison
> for you. Admire the scenery as you wait hours for a recharge, or,
> better yet, admire the neighborhood as you walk looking for a recharging
> capability in an area with which you are not familiar.
>
> See America the Volt Way
> In your Chevrolet
> Walking

Is the Chevy Volt Only a Fair Weather Car?

Thu, 13 Aug 2009 18:03:33 -0400

The Volt does not work in the way you describe. Instead the car runs off battery power for the first 40 miles and then the ICE drives a generator that produces the power needed to run the car for the next 240 miles (300 mile range).

See below for the mileage explanation.

On Aug 13 03:00 PM Advill wrote:

> Perhaps I´m wrong but the basic difference between Prius (or alike)
> and Volt IS THE WAY IN WHICH ELECTRICITY IS USED.
> In Prius you have a battery drive meanwhile you have power on them,
> after that point the ICE takes the total workload.
>
> In VOlt as far as I know the ICE (a Sterling or similar) is always
> moving (at a regular RPM) producing electricity in a similiar fashion
> the service turbine in jets that supplies electricity to AC water
> etc. when the plane is not flying.
> SO you have a electric generator feeding batts in a continuos way...a
> small no reciprocate engine producing a electric charge could get
> the 230 miles.....maybe.
> I do not want to believe in GM doing an official number if they are
> not able to get it, they were working at the beginning with a 100
> MPG number and now is 230.
>
> Insulating and refrigeration now days is a matter of cost is not
> a technical issue.
>
> Regards

Is the Chevy Volt Only a Fair Weather Car?

Thu, 13 Aug 2009 18:00:26 -0400

Jack,

Taking you at your word, that "I want General Motors to succeed", your poor impression of the Volt comes from a complete lack of understanding of how the vehicle actually works. You are confusing the marketing terms and language with the actual engineering concepts used for these vehicles.

A hybrid vehicle is one that has both an ICE and electric motor used to propel the vehicle and that has the ability to run in electric only mode. A hybrid does not need the ICE to mechanically drive the wheels. Feel free to show me any 3rd party definition for hybrid that requires this.

The Volt is a serial hybrid vehicle. It has a gas ICE that runs an electric generator and electric motors at the drive wheels. There is no mechanical connection between the ICE and the wheels. The Prius is a parallel hybrid where either the ICE or electric motor can directly power the wheels. It has a very complicated software package and transmission that switches between the 2 engines based at low speeds. There are also 2 mode hybrids which are parallel hybrids that use electric motors in the transmission to proivde all electric drive at low speeds and electric assist at high speeds. The Prius does not provide significant assist above approx 45 mph which is why the city and hwy mpg numbers are almost the same.

Serial hybrids are much more efficient designs because they avoid all of the mechanical linkage to the wheels including the transmission. However, they require very high energy density batteries to work. These did not exist in the mid '90s when Toyota began development on the Prius so they invented the parallel system to enable low speed electric driving with lower energy density batteries. A brillant piece of engineering that solved that mid '90s battery problem.

Just because the Volt's ICE is not mechanically connected to the wheels does not mean that it cannot drive the wheels. The Volt has a 1.4L ICE which is much bigger than it would need to only charge and condition the battery. This engine produces enough electricity thru the generator to fully power the car w/o the batteries. In this mode the Volt runs the same way all train locomotives have run for the last 50+ years. When the engine comes on it's lowest priority will be recharging the battery because that would put excessive load on the engine and is not very efficient or necessary. The battery is meant to be recharged with the plug when the owner returns home, assuming they drive less than 300 miles in a single day.

Lastly, let me break down the marketing term "extended range plug-in hybrid". Plug-in hybrid simply means that the battery pack can be charged using the grid instead of the ICE, which is much more cost effective and possibly cleaner depending on where you live. Extended Range is in reference to the fact that the vehicle works exactly like an electric car for a period of time/distance but the ICE provide EXTENDS the range another 240 miles.

GM already has 60 prototypes built off of production tools and is busy performing final validation testing. They are also letting journalists drive the prototypes which is almost unheard of because fit, finish, and even performance of prototypes can be very rough depending on how well the program is going.

Typically side by side test are done with actual production vehicles. Auto makers, including Toyota build and test prototypes to validate and refine their designs. Since software has a significant impact on hybrid performance, production vehicles should exceed the performance of the prototypes. Your demand for an immediate face off simply reflects your lack of knowledge of the process. Unless you were suggesting a face off between the Volt and the plug-in Lion Prius....

Is the Chevy Volt Only a Fair Weather Car?

Thu, 13 Aug 2009 17:00:21 -0400

The ICE actually powers a generator, there is no mechanical connection between the ICE and the wheels. This is a big deal because this not been done before in volume production vehicle and combines the benefits of an electric vehicle with the range of a gas/diesel fueled vehicle. Second, the Volt operates 100% on battery for the first 40 miles at all speeds. This gives the eco-minded the opportunity to run the Volt as a pure electric and not use any 'nasty' gas, yet still have the capability to travel long distances if desired. The Prius engages the gas engine above 25 mph and even the new Fusion engages the gas engine above 40 mph so these vehicles do not offer the option to go 'pure electric' for normal driving around town. The 40 miles assumes a 'normal' driving style, I am sure a lead foot will get you less than 40 miles and hyper-mileage driving will get you more.

The batteries are always a big deal with these types of vehicles. The Volt will initially have separate heating and cooling systems to manage the battery pack and it will operate within a range of 50%-80% charge to maximize pack life. Battery life and cost is the #1 issue with this car so it reasonable to assume that in the extreme weather conditions described in this thread that the vehicle will use the ICE/generator for propulsion until the battery pack is at proper temperature and charge. GM is planning to put a 10 year 150,000 mile warrenty on the battery pack and powertrain so they need to make it last.

On Aug 13 02:08 PM MRTTF wrote:

> My concern, from a technical standpoint, isn't the Volt data. It
> is strictly from a battery standpoint. I am pretty sure that my knowledge
> of the Volt is not entirely right. However, if the ICE is powering
> the vehicle, than why all the hype about how the ICE only is there
> to recharge the battery?
>
> My interest is purely in the battery side, since that is the area
> that I work in. As I previously stated, commercial cells will not
> operate with any meaningful perfomrance at such low temperatures.
> And conditioning the battery "for a few minutes" as Weber states,
> will do very little for a thermal mass of that size.
>
> I have no problem admitting that my knowledge of the Volt is seriously
> lacking. What I do have a problem with is the lack of fundamental
> understanding of the everyday problems associated with a 16kWh battery
> pack.
>
> On Aug 13 12:45 PM car_guy wrote:

Is the Chevy Volt Only a Fair Weather Car?

Thu, 13 Aug 2009 16:03:17 -0400

The range for the Volt is 300 miles. The 40 mile range is for electric only running off the batteries. The next 260 miles is with the ICE driving a generator that provide electricity instead of the batteries. If you commute less than 40 miles/day you will not need to use any gas. For your 80 mile commute you would do the first 40 off batteries and the next 40 off gas, assuming you did not charge up at the office.

On Aug 13 01:36 PM billddrummer wrote:

> My problem with the Volt is its range. In my experience, very few
> people commute less than 40 miles/day. It's more like 75-80.
>
> I see limited appeal for people who don't live in major cities.

Is the Chevy Volt Only a Fair Weather Car?

Thu, 13 Aug 2009 12:45:28 -0400

This would be true if the Volt operated the way that Jack keeps insisting it operates. However, contrary to Jack's repeated statements, the Volt's ICE powers a generator which powers the vehicle first, keeps the battery conditioned second, and then recharge the batter with any residual remaining power. In the article referenced by Purdone the GM engineer clearly states that if started in very cold conditions or even after sitting for a long period of time, the car will NOT start in electric mode but will instead start the ICE which will power the car and then condition the battery. For decades GM's durability testing program has included cold start after 24hr cold soak in their proving ground in Kapuskasing, ON on Hudson Bay. Rest assured that a number of the 80+ Volt prototypes will be spending the winter there.

Your battery facts are accurate, but your Volt information is totally wrong.

On Aug 13 11:23 AM MRTTF wrote:

> Jack, I loved this article when you instablogged it, and seeing those
> who are bowing down before the almighty Volt come out of the woodwork
> gave me a good laugh before work today. As I have said previously,
> commercial Li-ion cellshave an optimum operating temperature range
> of 0 to 40degC (32 to 104degF for those so inclined). The "extreme"
> operating conditions, such as those published by Sanyo are -20 to
> +60degC (-4 to 140degF). Operating at those extreme conditions can
> greatly shorten the battery life and could cause a safety issue at
> the high end. The low temperature performance of commerical cells
> below -20degC is often laughable, and charging at low temperatures
> is near impossible and WILL permanantly damage the cells. All the
> insulation around a pack in the world is not going to change the
> fact that in large parts of the country, this car will be unuseable
> for 3-5 months of the year.

Chrysler: Reshuffle the Corporate Capital Structure?

Sun, 03 May 2009 14:41:54 -0400

Many of Chrysler's plants are brand new and loaded with advanced automation technology. GM/Ford/Chrysler plants tend to have higher levels of advanced automation because they are compensating for much higher labor rates. In the '80s and '90s the US 3 were closing very old outdated plants that nobody wanted. The remaining plants have modern layouts and it would be much cheaper to buy one of these than to spend $1-2B building a new one. Also, Honda has multiple plants in heavily union Ohio and has had them there for over 30 years.

That said, these plants still have very little value because of the overcapacity that exists, especially in a 10-13M vehicle market (down from 16 in 2007). Also, the only plants built by the import OEMs in the last 10-15 years have been truck plants to support that uniquely US vehicle the SUV. With the SUV dying or dead, the existing plants will likely be converted to build other vehicles, but there is no reason to build a new plant. I doubt there will be a new auto assembly plant built in the US for next 10-20 years if not longer. Remember, Toyota has a brand new plant sitting empty with no plans to fill it.

On May 03 12:22 PM PastTense wrote:

> I don't agree.
>
> 32% debt recovery in cash is better than 100% of nothing. Lots of
> us think that Chrysler is going to fail shortly and I see it as having
> negligible liquidation value: What would auto companies buy? The
> distribution network and brands are probably salable (I think the
> Chinese might be interested). But who would want the factories? Any
> auto company would prefer to build a high-tech automated factory
> in a non-union state. And since manufacturing is moving overseas
> anyway I don't see much demand from other industries who would have
> to spend a fortune to refurbish the sites. I suppose Chrysler has
> some general real estate which is salable. But the manufacturing
> equipment is so specialized it probably has little more than scrap
> value.
>
> And the whole bankruptcy process bleeds value--so much of the money
> goes to lawyers...
>
> As far as the federal government note the government is paid not
> only returns from the company (which as stated are very poor)--but
> also the government collects taxes and avoids paying benefits to
> laid-off workers and retirees (underfunded pension plans). So I think
> the risk is worth taking for the government.
>
> As to the UAW, I think it will decide to kill the goose who lays
> the golden egg (via greedy collective bargaining demands)--so will
> end up with nothing.

Chrysler: Reshuffle the Corporate Capital Structure?

Sun, 03 May 2009 14:07:33 -0400

You have a number of items incorrect, but you do make some interesting points.

First, Fiat is not "paying" $2B for 20% of Chrysler. Fiat is receiving their equity stake for specific commitments to share technology, distribution network, and to make specific investments to build product in the US. Fiat estimates it will spend $2-3B, however, Chrysler estimates that it will save $8-10B it would have to spend to develop the same technology. This is one of the many things the Cerberus bankers learned about the Auto industry AFTER they bought the company from Daimler. Chrysler will replace all of their mid-size & small cars & trucks (B, C, D platforms) with models based on Fiat designs and produce new very small cars (A platform) from Fiat designs & engines. Chrysler must have these platforms & engines to meet new US CAFE standards, even if gas stays cheap for the long term. Daimler would have provided this technology with the DCX model. With Cerberus Chrysler tried to farm it out to partners (Chery, Nissan, etc) and was unsuccessful (only Nissan came to fruition and the strong Yen broke that model). Chrysler's only options were outright aquisition, which the credit crisis made impossible, or a Renault/Nissan style alliance which is what they accomplish w/Fiat.
The terms for Fiat earning the additional 15% are defined in the press release and are the result of specific milestone achievement (build 40mpg car in US, build new small engine for Chrysler in US, sell Chrysler vehicles w/global network). Tooling plants to produce the car & engine will require cash from Fiat, at least $1-2B. What Fiat gets from Chrysler is hardly mutual. Aside from the US sales distribution network, which is really cost avoidance on their part, they get access to Chrysler's new V6 engine and SUV platforms which are helpful, but not mission critical. Chrysler can't survive w/o Fiat because they can't meet the 2020 CAFE standards without the $8-10B investment even if gas stays cheap in the long run. Fiat wants the Chrysler alliance because Marchione believes that a global Auto OEM will need to produce over 5 million vehicles/year to survive in the future. While this is logical, only Toyota, GM, VW, Ford, and Renault/Nissan achieved this goal in 2007 which would provide Fiat with plenty of partners if this theory becomes more real.
Cerberus gets to keep Chrysler Financial (which they admit they ran into the ground in WSJ) and Chrysler Real Estate which has value, but how much is not clear. Cerberus is also using Chrysler to be GMAC's (not GMCC) captive Auto OEM since, due to more brilliance on their part, GMAC is no longer tied to GM and suddenly needs to compete for business. They don't walk away empty handed, but this obviously was not the ending they intended. I agree, no tears for them.
The US taxpayer gets 8% (Canadian get 2%) for their initial $4.5B loan ($1B from Canada). The return is more like 20%. The DIP funding and approx $11B to get out of C11 will be loans that will have to be repaid.
The UAW is not really getting 55%. Classifying them as an unsecured debtor may be legally accurate, but is not an accurate description of the liability they hold for Chrysler. When Cerberus bought their 80.1% of Chrysler from Daimler, they took on $18B of health care liability. The UAW took over this liability for approx 0.70/$1 when the VEBA was created in 2007. The $10B was the remaining cash owed to the VEBA to fund the $18B liability. Counting the approx $2.5B in cash already deposited into the VEBA, the UAW's liability is around $15.5B so using your numbers they recover approx 30%. Same as the bond holders, but they can't simply write off their losses. The UAW is still on the hook for the health care costs and is going to be struggling with this for years to come.
You are right on the money with your assessment of how this situation was impacted by CDS. Based on their actions, it is reasonable to assume the hold outs were fully hedged and drove the C11 to cash out their positions. This is no different than buying a building and burning it down for the insurance money. You would think that the companies issuing the CDS would be smart enough to protect against this behavior or at least void the claim. You propose that the hedged owner transfers their voting rights to the insurer, which makes sense. I propose that a simpler solution is to simply call this what it is, insurance fraud, and prosecute accordingly.

Ten Cars Detroit Should Copy

Mon, 30 Mar 2009 07:12:41 -0400

Actually CR does look at long term reliability and their statement is about reliability of all systems not just fit and finish. The JD Powers 3 YEAR reliability study which I reference also obviously looks at 'engineering', using your definition. You are mistakenly referencing the JD Powers 90 day quality study, which I agree provides minimal value. GM still beat Lexus for the reliability study.

On Mar 29 06:32 PM TinyTim wrote:

> "small, luxury domestic crossover" like my Pontiac Vibe; may not
> be total luxury & it is based on a Corolla platform
>
> "Consumers Reports states that Ford's quality equals Toyota and Honda
> and that many GM vehicles, but not all, are also world class for
> quality."
> There's a big misunderstanding between quality and engineering.
> Consumers looks at fit and finish and obvious defects for about 2
> weeks. My 88 Civic has 285K miles on it, only cost me $7K new in
> Oct 87 and my teenager is driving the piss out of it. That kind
> of reliability is engineered in. Toyota used to call it life-cycle
> cost before they fell victim to US mktg and started with Tundras,
> etc.
> Even Honda caught the Detroit disease as the new Civics look like
> the original Accords. The Fit is just their recognition that there
> is a place for a cheap, sporty econobox, unlike the Yaris which
> is just a cheap econobox.
> What's always been missing from the Big3 is any appreciation for
> engineered reliability. After all, these guys invented planned obsolescence.

The Administration Doesn't Like What GM and Chrysler Have to Sell

Mon, 30 Mar 2009 06:51:33 -0400

The administration is walking the fine line between destroying consumer confidence in the company (what is left of it) and putting enough pressure on the bondholders to get them to move. The 'quick rinse' terminology should scare the heck out of them since I assume they would be rinsed. The tone for Chrysler is expected since the administration doesn't want to be seen bailing out Cerberus.

Ten Cars Detroit Should Copy

Sun, 29 Mar 2009 16:51:17 -0400

My favorite example of this was the news of the Tesla sedan announcement at the LA Auto Show. Not only was the company given a free pass on their statement that they will begin to sell these vehicles in 2011 when they don't even have a plant site selected, but the reports I heard and read went out of their way to classify the $350 million dollars from the DOE fund Tesla is requesting as loan. When these same people refer to the US 3 getting money from this same fund it is always termed a bailout. This is in spite of the fact that the $25B fund was established in he first place to offset the $70B+ cost of implementing the new CAFE standards. Point of fact is that Tesla cannot qualify for money under this program as an OEM therefore must be applying as a supplier of battery technology. Really sad the double standard at play.

On Mar 29 11:02 AM User 385103 wrote:

> Interesting how "journalists" gravitate to ANY argument that supports
> their one-sided game of dodge ball. "

Ten Cars Detroit Should Copy

Sun, 29 Mar 2009 16:36:31 -0400

Stop living in the '80s. The latest JD Powers 3 year reliability studies show Buick #1, dethroning Lexus after 14 years; Mercury, Lincoln, and Cadillac beat Honda (Mercury beat Acura also); Ford and Chrysler beat BMW and Mercedes and along with Chevy beat Nissan. Ofcourse everyone, except Suzuki, beat VW.

This isn't only JD Powers, even Consumers Reports states that Ford's quality equals Toyota and Honda and that many GM vehicles, but not all, are also world class for quality.

On Mar 29 02:49 PM ksmithdc wrote:

> Instead of copying ideas from Asian competitors, the big three need
> to innovate and create new markets with a focus on ultra high reliability
> (something which we've NEVER been able to compete toe-to-toe with
> the imports).
>
> Better to be #1 in a niche than to be playing catch-up in already
> existing fields.

Ten Cars Detroit Should Copy

Sun, 29 Mar 2009 16:25:53 -0400

Rick,

I normally like your articles because unlike the vast majority of Seeking Alpha contributors you typically do some homework before commenting on the Auto industry. This article however, is not one of those times. Here is some item by item feedback:

Honda Fit - GM & Ford have these vehicles in Europe and Asia where people actually buy them. Aside from a couple of months last year vehicles this small are very low volume and Americans consistently equate small w/cheap, something I do not personally agree with, therefore the legacy cost penalty the US 3 have been paying really hits home in this segment. However, Ford will be selling the new Fiesta in the US next year (weak US $ is keeping them from importing them this year). The Fiesta came in second, 1 point behind GM's Opel Insignia and 87 points ahead of the VW Golf, for the 2009 Car of the Year award in Europe. The Fit, known as the Jazz in Europe, was a candidate for CoY but did not even make the nomination cut.

Tiguan? Reallly? The US News article you reference in your link rates the interior for the Chevy Equinox higher than the Tiguan, the Escape equal, and the Saturn Vue 0.1 point lower. It also ranks the Ford Escape Hybrid 3rd in the class and the Tiguan 6th. VW is the one trying to catch up in this category, not GM or Ford.

"Quick, name a small, luxury domestic crossover" - Lincoln MKX, Buick Enclave, even the Cadillac SRX falls into this category. This another very weak argument. Just because US News made up a new category and placed a few random vehicle in it, does not make it a valid category. Size is not issue, gas mileage is the issue. None of the vehicles in the "small luxury SUV" category get significantly better mileage, so why sacrifice the size to fit full size adults? The Lincoln is a weak showing, but the Buick is a hit and attracting new customers to the brand. The new SRX is due in May. The key Japanese competition in this category is the Lexus RX 350, not the Infinity.

Hybrid vehicles. You will have to explain why Honda is so far ahead of GM & Ford since Honda had to redesign their systems because they originally targeted performance improvement and not fuel economy. Toyota is the obvious leader in both technology and especially market. Honda is attacking them with the Insight by essentially building a cheaper Prius. It will be interesting to see if this works since people prefer to buy the original rather than the knockoff. The Prius has also attained mythical status with much of the public so directly attacking it is high risk. GM & Ford & Chrysler have already learned this so they are attacking in different markets and with different technology. They attacked the SUV space, where they are strong. They put out less expensive mild hybrids in the car space to test the market for a low cost alternative. This worked well for ABS brakes, but not for hybrids. What they discovered is that hybrids aren't about fuel economy, they are about everyone knowing that you are helping to save the world. To succeed the vehicle has to be something the owner can brag about and use to make a statement. Ford is attacking the Camry with a vehicle that is priced the same and beats the Camry Hybrid mileage by 8 MPG and drives all electric to a higher speed. It not only beats the pants off Toyota's hybrid but their higher all electric top speed means you can drive around town without using the gas engine, something you can brag about. The mid-size sedan market is also much larger than the small car market. If gas hits $4 again people will buy the Fusion because they fit their family in it while saving $. GM and Chrysler plan to move past Toyota with serial hybrids that are electric vehicles w/small gas engines to recharge the batteries and extend range. This will allow people to drive locally w/o using any gas but not have to worry about being stuck if/when the batteries run out. Drive all electric like a Tesla and have the range and convenience of a Prius, in a bigger car with much better mileage. Both GM & Ford's strategy is to simply build a greener vehicle than Toyota. This is a much better strategy than being cheaper since the cost of batteries makes being cheaper difficult and risky while being better enables you to charge a premium. If GM can their batteries to work, and since they are leveraging their EV1 and hydrogen fuel cell research they most likely will, Toyota will be in a very tough spot. They will never be able to reach the performance of a serial hybrid with their parallel model and they will be forced to be the cheaper alternative, someplace they haven't been in a long while.

Audi's don't sell because they are overpriced VW's. They used to be unique but not any more. This is actually a big problem for VW and a really bad example.

Mazda MX5 - The 2 seat convertible market has always been very small and very finite. That is why everyone in the under the under $30K market has pulled out except Mazda (Honda is killing the S2000 which wasn't that old) in the last 10-20 years. This market is only good for aspirational vehicles that bring people into the showroom only to buy a more practical vehicle. This is why Mazda keeps the MX-5, Chevy keeps the Corvette, and why Pontiac & Saturn built their vehicles. Aside from the surge in initial sales this market never sells in sustaining volume for anyone. The vehicles are to impractical and outside of the south and west cannot really be used year round. Ford has the Mustang, also in convertible form and they learned they didn't need a 2 seater after the Thunderbird, which sold well for the segment but did not justify a unique vehicle. Chrysler had the same experience with the Crossfire, which was based on a Mercedes, but recently killed it to cut back on costs. In fact you can still buy a Crossfire if you do some searching.

GTI - While the GTI is a great car, you sell the Cobalt way short. From Car & Driver's test of the '09 GTI vs Cobalt they said "The steering, brakes, transmission, and suspension are all contenders in this class. " and "The Cobalt is fun to drive, but it’s also amazingly well composed, and not just for a Cobalt." and "But considering how much ground Chevy has gained in such a short time with this car, we’re eagerly awaiting the next iteration. " The next iteration will be off of the Cruze platform which is far superior to the existing Cobalt. Their only complaint was the interior and the Cobalt SS came in 3rd behind the 2nd place GTI. Ford will compete here is a performance version of the Fiesta and Chrysler competes here with the Dodge Caliber SRT. The US 3 have been in this space for decades and they increased their efforts in the beginning of the decade when the Japanese lost the interest of the West Coast tuners. The vehicles, like the Caliber, may not always be successful, but the effort and attention is there.

Genesis - Hyundai learned this trick from Chrysler who pulled the same thing off with the 300C. All of a sudden it was cool to drive a Chrysler. The Genesis is a threat to every high end brand, not just Buick and Lincoln. However, offering luxury for less is easy to say and very hard to do because it requires that you get the biggest bang for your buck w/every $ you spend on your interior. You put the majority of your $ on a few key items that you hope will give the customer that luxury impression and hope they don't mind/notice the areas where you spent less $. The 'full price' luxury brands spend their $ on all of the important items to avoid guessing wrong.

Mazda 5 - I guess a small minivan is only a good idea when a Japanese company builds it. Chrysler had a short wheelbase minivan since they invented the vehicle segment in 1984. However with small SUVs and now crossover vehicles/wagons nobody is much interested in a short wheel base minivan and they canceled it 2 years ago. The US 3 make at least a dozen vehicles in this segment including the Taurus X, Ford Edge, Dodge Journey, Saturn Vue, etc. Since the Mazda 5 is hardly a sales leader in this category and since GM and Ford have very similar euro vans in Europe (Ford's is probably built off the Mazda 5) I don't get your point. Mazda is simply trying to grab market by being very different. That is what you do when you are way behind not ahead like Chrysler is in the minivan market and the US 3 are in the SUV market.

Forester - Gee its a crossover/suv with a start price just under $20K. The Jeep Patriot and Compass do this and the Patriot's interior has been vastly upgraded this year to address the only real complaint about the vehicle. You conveniently leave out that the price tops out at $30K which then includes a variety of similar US 3 vehicles, many better than the Forester. Is you point that the US 3 should build a stripper vehicle to try to sucker people into their showrooms? I seem to remember that didn't work out so well.

Overall this article is an example of one of the real problems the US 3, the gap between the public's perception of the issues and the actual reality of the industry and market. The media make the problem worse by continuing to publish misleading and downright incorrect information about the industry. Buick and Jaguar just displaced Lexus as #1 in the JD Powers 3 year durability report for the first time in 14 years and the media either ignored this or downplayed it. The Buick Century & Regal and Mercury Sable beat the Honda Accord and Toyota Camry in the study and yet you still continuously read and hear how the Toyota's and Honda's quality is better. You still hear and read, even in this article, that the US 3 only like to build big vehicles. Gee maybe that's because Americans only pay big $ for big vehicles and the cost to make a big vehicle is not much higher than a smaller one. Apparently the pundits would invest their capital in low margin, low volume vehicles instead of high margin high volume vehicles. I would really like to know why Rick and others apparently believe this makes sense.

It would be great if the media actually worked at educating the public on the reality of the situation rather than continue to feed the mis-perceptions. It won't matter what great product these companies produce if nobody realizes something has changed.

William Holstein on Why GM Matters

Sun, 22 Feb 2009 11:43:00 -0500

The Senate Republicans (Shelby, Bunning, McConnell, etc) blocked the original loan bill with a filibuster so it is appropriate to 'blame' them. This is why he singled out Senate Republicans.

Please explain the 'large' number of GM vehicles that are being designed a produced offshore. GM has done this with niche vehicles like the Pontiac G8, Chevy Aveo, and Saturn Astra, but not with their high volume core vehicles like the Malibu, Impala, CTS, Silverado, etc. Nor with strategic technologies like the Volt. GM, like every other major car maker, is using global platforms to design and build similar vehicles in different regions of the world to improve quality and cost. However, they still employ far more white collar workers in the US than Honda or Toyota. A recent study showed that for every 6 Big 3 jobs lost in the US 1 foreign auto job was added. No signs of that trend changing, especially if big trucks fade and our vehicle tastes align with the rest of the world.

On Feb 22 11:06 AM carcrazy wrote:

> Interesting article - a few issues, though...
> When the majority of Americans are against the bailouts for autos,
> blaming the "Senate Republicans" (who are in the minority) is irresponsible.
> Some Senators who are against it have both transplants AND domestic
> auto plants in their state. While a few GM US-made models have been
> replaced with new US-made models; more new models have been both
> designed and manufactured off-shore. The design, engineering and
> CAD/CAM jobs the author discusses are being performed overseas for
> many new products - the US-based workforce for these areas was shrinking
> dramatically long before the drop in auto sales. For Li-Ion batteries,
> the author doesn't seem to realize that Toyota has been using and
> gaining experience with Li-Ion for >5 yrs in the Vitz. They'll have
> it in a demonstration fleet of plug-in Prius as well. They have
> years of experience and based on this; still contend there are issues
> that prevent it from becoming a high-volume solution.

William Holstein on Why GM Matters

Sun, 22 Feb 2009 11:30:09 -0500

Amazing to read a factual, well reasoned article on the Auto industry on Seeking Alpha. Very good points on all items including Chrysler , Toyota, the Volt, and the future of the Michigan and Detroit economies.

I wish his Volt answer was clearer. I assume that he means if GM is able to achieve their target performance and range with the Li-Ion batteries in the Volt they will pass Toyota by producing a mid-size sedan that needs 0 gas for the first 40 miles. Even a plug-in Prius using Li-ion batteries, will still use gas above a certain speed, so it will not be as green as the Volt.

Toyota is a great company, but they are learning how tough it is to be #1 and on the hybrid topic they are being attacked from above by GM with the Volt and below by Honda with the Insight. That will make the plug-in Prius very difficult to sell because they won't really be able to charge for the cost of the new tech because Honda is already cheaper and the Li-ion batteries will provide better mileage, but not pure electric driving like the Volt.

GM and Chrysler: Why's Bankruptcy So Expensive?

Sun, 22 Feb 2009 11:09:23 -0500

Why is this true for GM & Chrysler but not Citi & BofA. Give GM $350B like Citi and they would be the healthiest company on the planet.

On Feb 21 06:39 PM k9s-4-k8 wrote:

> Let's face facts here. They have already seen a large dropoff in
> sales and have already set themselves up to request more and more
> at a later date because they're tieing everything to whether they
> see sales pick up in 6 or 8 months. That means they will keep the
> meter running through this slow period while on the taxpayer's dime
> leading to many tens of billions of taxpayer infusion which they
> will later point to as loss if we don't cough up more. It will be
> presented in a more diplomatic way of course, but the end result
> will be the same. So, bankruptcy tommorrow is the cheapest and best
> option. Additionally, if one was to pick a time to fundamentally
> restructure a company it should be when the economy sucks anyway
> so long as the government agrees to infuse capital after the bankruptcy
> filing.

GM and Chrysler: Why's Bankruptcy So Expensive?

Sun, 22 Feb 2009 11:08:10 -0500

Not true. Delphi went Chapter 11 and were forced to keep their pensions & health care obligations and GM was forced to either pay for them or take some of the employees back.

If GM went Chapter 11 it would take the pension trust down with it so they are already planning to fight any transfer. Another reason C11 is really C7.

On Feb 22 12:25 AM Alex Filonov wrote:

> It's simple really: pension and retirees medical care obligations.
> In case of bankruptcy government takes part of these obligations
> on itself. And they are really big.

GM: The Neverending Bailout

Sat, 21 Feb 2009 20:14:36 -0500

"You Can't Make Up Stuff Like This"

Apparently you can and still be published on Seeking Alpha. Adam Lass is like most contributors to this site in that he sees no reason to actually do any research, vague recollections and creative writing are just fine.

The court never found any of these companies guilty of a grand conspiracy to replace the trolley cars with buses. Instead they found them guilty of exchanging investment capital for exclusive purchase contracts for buses, parts, etc. This was deemed a violation of anti-trust. Here is the actual court transcript:
www.altlaw.org/v1/case...

Here is an interesting article by Time magazine from 1944 on the LA trolleys. Seems they were not the clean effiecent machines described above. Time used the following description:
"The Fitzgeralds usually revive run-down transportation systems by scrapping car tracks, replacing trolleys with busses. This will be a welcome move in Los Angeles, which has the greatest accumulation of antiquated rolling stock on the Pacific Coast. Some of the 1,140 cars were running in 1910. But even the old cars are needed today. Any modernization must await war's end."
Here is the full article:
www.time.com/time/maga...

Lastly, doesn't Brooklyn have a subway system? Isn't that an electric rail system?

The 'New' GM: Too Much Like the Old GM

Sat, 21 Feb 2009 19:47:22 -0500

GM was not passed by Toyota in 2007. GM included sales for a JV in China that it owns less than than majority interest in, but that describes literally every JV in China. Toyota also always includes the volume for Hino, which is a commercial truck manf that GM does not really compete with.

GM does outsell Toyota in China and Europe, almost 2 to 1. Toyota sold 1.47M vehicles in Japan, which is essentially a closed market for cars. I wouldn't laugh so hard because outside of Japan, where GM actually competes with Toyota, GM still sells more vehicles than Toyota.

On Feb 20 10:21 AM Tony Carlos wrote:

> <<> wide. GM Still sells more cars outside the US than Toyota, Honda,
> and the so called European "premium" brands. And Toyota barely overtook
> GM here.>>> Thadeus
>
> LOL.
> GM was surpassed in worldwide sales in 2007. It became official
> after 2008. GM does NOT outsell Toyota worldwide.
> They still do outsell Toyota in the US, though with the dropping
> of these brands, there is a question of how long that will remain
> true.
> But don't let not having a clue about the facts stop you from posting
> opinions!

The 'New' GM: Too Much Like the Old GM

Sat, 21 Feb 2009 18:59:04 -0500

Where are you planning to get the billions of dollars to buy out the dealers for 5 brands? Remember that it cost GM $2B to shut down Oldsmobile. Your plan would cost $10B and not make a single vehicle any better.

On Feb 19 12:01 PM Bad Idea wrote:

> My take on GM's restructuring plan:
>
> Hummer - I agree. This brand is the poster boy for in-your-face
> American excess. I'm not a tree-hugger, but Hummer could build a
> 100 mpg hybrid and I still would not buy it because of their image.
> Mullet-sporting short guys who own pit bulls will have to find another
> ride.
>
> Pontiac - Just get rid of it. It will never a poor man's BMW. I
> like the G8 and the G6 coupe, but two cars are not enough to keep
> a brand viable. Turn the G8 into an Impala SS and the G6 into a
> Monte Carlo and move on.
>
> Saturn - It was a nice car in the early 90's. GM ruined it with
> their typical cost-cutting moves. Saturn dealers finished it off
> by adding crappy dealer-installed options on every car on the lot
> to maximize profit. That said, Saturn has a nice product line to
> work with at this time. Spend some money on interior fit, finish,
> and quality and dump Buick.
>
> Saab - A stupid, panic-induced purchase that never should have happened.
> GM saw Ford buying Jaguar, Land Rover, and Volvo, and they felt they'd
> better buy something before Ford owned it all. Owner's of "real"
> Saabs stopped buying, and who can blame them? I've never been a
> Saab fan, but I have to admit it is insulting when GM started selling
> Chevy Trailblazers as the Saab 9-7x.
>
> One other thing to note about Saab - In it's BEST year, Saab sold
> fewer cars than Oldsmobile did in it's WORST year.
>
> Buick - Nice cars, if you are over 75 years old. Get rid of it.
> Give the Enclave to Cadillac.
>
> GMC - Get rid of it. GM spends all of it's ad money on Chevy trucks.
> It does not need an identical brand to compete for the same customers.

The 'New' GM: Too Much Like the Old GM

Sat, 21 Feb 2009 18:51:32 -0500

shure46 - interesting comments, here are my responses to some of your thoughts:

...... There is a huge untapped market for a basic , simple , affordable , quality car that gets decent gas mileage
--Everyone says this, too bad it isn't true. If it was, Saturn would be successful and GM would be in a little better shape. Saturn built exactly the type of cars you describe in a single plant and for the first couple of years was successful. However, people mature and very few people want, or even can, drive these types of cars forever.

...... and our government needs to shore up social security and create one huge health care pool that all Americans can buy into ....reasonable premiums , and a health care program that is not full of loopholes to avoid payment when needed ....partly guv subsidized , and partly private pay .....but not RUN by the government
--This would make us like every other European and Asian industrialized country, what a concept. If this were the case, GM would be just fine. GM currently pays health insurance benefits for 1 million people in the US alone and these benefits have doubled in cost since 2000. This costs them about $1,500-2000 per car which is why they make money on expensive vehicles (>$30K), like trucks, but not less expensive vehicles (<$20K) like some cars.

.... and we can do without all the complicated safety regulations, electronics , and wall to wall airbags in cars that adds thousands of dollars to the sticker price As for me , you can keep your airbags for 3,000 dollars , and I am fine with seatbelts , and I don't need ABS brakes , or a car to think for me ......I am still capable of making my own decisions
--blame the government for this, not the car companies. Thanks to Ralph Nader and his lawyer driven friends all of the things you complain about are mandated by the government.

The Swedish Solution

Sat, 21 Feb 2009 17:50:20 -0500

Felix,

Watch how well it works for Saab. This time next year you won't be able to buy a Saab in the US, maybe even outside of Sweden, if the company still exists. Best case for Saab is a Chinese company buys them or the Swedish government nationalizes them.

GM would prefer to avoid either of those options which is why Chapter 11 is a last resort.

Citi and BofA on the other hand need to go C11 asap so the economy can move on and the taxpayers can stop wasting money.

Please, GM, Don't Slit Your Own Throat

Sat, 21 Feb 2009 17:44:39 -0500

Your faith in electric vehicles, and Saturn, is admirable. However, the biggest lesson from Saturn is that you can't get by on a single model or kind of car and retain customers. This is why Toyota added versions of the Camry, crossover vehicles, minivans, trucks, etc. You need to have every 'kind' of vehicle in the showroom when your customer comes back to replace their vehicle. Many vehicle purchases are driven by life events like marriage or the birth of a child. Replace the 2 door after the first child, get the 3rd row of seats after the 3rd. If those vehicles are not in the showroom the customer goes somewhere else.

GM's brand strategy is focuses on this concept and is aligned with their global brand/sales strategy.
1-Chevy is a full line affordable brand, small cars to trucks including electric. Chevy goes after Toyota globally.
2-Cadillac is a full line luxury brand, mid-lux to trucks and high-end electrics. Cadillac goes after Lexus, BMW, MB, etc globally.
3-Buick/Pontiac/GMC puts 3 part-line brands in a single dealership to create a full line brand. Pontiac for small & sporty cars, Buick for mid size and large cars and crossovers, GMC for trucks. It makes the best of a bad situation because it would cost a fortune to shut down all 3 brands and many dealers already had 2 of the 3 brands in a single dealership. Buick is also very strong in China, although that is not necessarily a case for keeping it in the US.

Saturn tried to be the small car brand, but Americans don't like to buy small cars if they don't have to, so Saturn struggled. Now GM has given it a full line of vehicles (except a truck) and it essentially competes with Chevy.

On Feb 21 10:08 AM a. palmer jr. wrote:

> The above comment was similiar to what I was thinking. Turn Saturn
> into an all-electric car company to build only hybrids and EVs. Turn
> Chevrolet into small cars and build a few performance cars and have
> Cadillac build the regular Cadillacs and a slightly cheaper model
> to replace the Buick. I understand GM is already going to dump the
> Pontiac, good move IMO, End up with Saturn Electric, Chevrolet,
> and Cadillac. I think it would work.

Please, GM, Don't Slit Your Own Throat

Sat, 21 Feb 2009 17:26:46 -0500

The point of a separate brand is to provide a different variation of a common product to drive higher sales volumes and lower overall unit price. A brand may have a unique aspiration vehicle, but everything else is shared. The only unique vehicle in the Lexus lineup is the LS 400, everything else is based on a Toyota product.

Saturn was set up as a separate 'company' primarily to negotiate a better union contract (very few job classifications and work rules) that would hopefully be used as the pattern for a future GM contract and to avoid using the GM parts bin to design a small car which would hopefully result in some innovative new designs, which it did (high volume plastic body panels, new auto trans design, etc).

However, Saturn was incorporated into GM because it couldn't survive on a single platform, especially a small car platform. Toyota doesn't just make a Corolla and Honda doesn't just make a Civic so Saturn couldn't just make it an SL1 and survive for long. The Civic and Corolla are not even the biggest sellers for those brands. So Saturn sold many vehicles to new buyers but didn't have a place for them to go.

GM waited way too long to fix this, but they have made a huge investment in Saturn over the last 5-6 years because they did have faith in the brand and the dealer network. Saturn quietly has the best lineup of vehicles in GM and they were allowed to launch the Outlook crossover almost 1 year before Chevy launched the Traverse to help Saturn gain sales. They also had some of the first GM hybrids and the fuel efficient Astra. However, despite this major investment, sales have not even grown proportionally.

Do you deal with banks that are feeding off taxpayer $$$?

On Feb 20 07:39 PM bcncv wrote:

> Saturn used to have a good brand, and make good cars, but the same
> mis-management that killed GM killed Saturn. My 97' Saturn was a
> great car, but I wouldn't touch any of the new ones. They tried
> to make it just like any other GM car, which goes entirely against
> the point of a separate brand.
>
> If GM had time, money, and competence (which they don't) they could
> rebuild Saturn. Now, they're just buying months until they die.
>
>
> I would love to buy an American car again, but I will absolutely
> refuse to buy a car from any company that has taken taxpayer money.
> Feeding off taxpayers is as un-American as it gets. Too bad Ford
> doesn't make any models I like.

Please, GM, Don't Slit Your Own Throat

Sat, 21 Feb 2009 17:13:15 -0500

Another article by someone who doesn't actually understand the industry.

Saturn is a brand, not a car company. It doesn't have a factory or and engineering organization or even a parts operation. GM would sell the brand name & whatever unique pieces of distribution exist and avoid paying the dealers billions in buyouts. This would not net them much cash and would be a convenience to the buyer. GM doesn't sell, they will have to buy out the Saturn dealers, at a minimum their products and parts, and the same dealers could put a Tata sign on the old dealership the next day (depending on the buyout terms). This way GM saves the $ to buyout the dealers, the dealers keep their investment, and the new brand owner saves some time building a network. Nothing keeps a dealer from buying a competitive franchise so there is no barrier to entry to this market.

I would bet that the new owner would sell their brand alongside Saturn and then phase out the Saturn brand when GM stops providing vehicles. This is what Renault did when they bought a piece of AMC in the late '70s. If GM was smart, they would continue to supply some Saturn vehicles under contract to the new owner to keep the Saturn volume while avoiding most of the expense.