Chrysler Announces Lifetime Powertrain Warranty

Chrysler announced today that it is expanding its existing 3 year/36,000 mile basic limited warranty to a lifetime limited warranty on powertrain components on "most" new Chrysler, Jeep, and Dodge vehicles purchased from dealer inventory and delivered on or after July 26, 2007.

I applaud this move - it's likely to get the company noticed by buyers and alleviate many of the quality concerns they may have had. It also can work as an olive branch from Chrysler to its frustrated dealer body, who are still smarting from having sales bank inventory shoved down their throats over the past few years. The company also expects that the better warranty coverage could allow it to reduce its incentive spending, which is among the highest in the industry today.

The details are:

• The warranty covers all parts and labor needed to repair covered powertrain components - engine, transmission, and drive system.
• It applies only to the original owner or retail lessee.
• To continue warranty coverage, the owner must have a powertrain inspection performed by an authorized dealer once every 5 years, within 60 days of each 5 year anniversary of the warranty start date.
• Diesel vehicles and SRT vehicles are excluded from the lifetime powertrain warranty plan.

One key detail isn't clear. Chrysler's press release specifically says that the warranty applies to most new Chrysler, Jeep, and Dodge vehicles purchased from dealer inventory. So, what isn't clear is whether the improved warranty coverage also applies to units ordered, and not purchased from dealer stock.

While the move certainly shows a lot of confidence on Chrysler's part in its products, the move could backfire, because there will probably be some die-hards who kept their 2008 Sebring until 2048 and need a part, which may be nearly impossible to find or repair at that point. As long as the powertrains prove to be reliable and durable, and enough original owners sell or trade in their cars before problems arise, it should be a successful program and possibly inspire competitors to improve their coverage. If Chrysler's 2006 and newer powertrains do have problems in coming years, the company is going to be stuck with a huge bill.

Read more!

Nobody Wants to Buy Chrysler's Debt

Chrysler Group, which has been acquired by Cerberus Capital Management, is trying to tap debt markets for $20 billion to fund the new company's automotive operations and its finance unit after the transaction between Cerberus and DaimlerChrysler closes on August 3. The company's bankers have been trying to convince investors to purchase $12 billion in loans for the auto business and $8 billion for Chrysler Financial.

So far, the $8 billion loan sale for Chrysler Financial appears to be on track to be sold by the end of this week, but today, the bankers decided to postpone the sale of the $12 billion loan sale for the auto business due to a lack of buyer interest. Instead, they will fund the bulk of that debt - $10 billion - from their own pockets. If these banks (J.P. Morgan, Citigroup, Goldman Sachs, Bear Stearns and Morgan Stanley) don't eventually find buyers for the loans, and if Chrysler has trouble repaying them, these banks would bear the first losses (investors who bought the rest of the loans would be given priority over Chrysler's assets if the company was in default).

Chrysler isn't the only auto company experiencing this problem. GM's sale of its Allison Transmission unit ran into similar financing problems this week. Wall Street firms put off a $3.1 billion sale of loans that would have funded the buyout of Allison by private-equity firms. Like the Chrysler-Cerberus transaction, the Allison sale is likely to still proceed.

The root of the problem is that debt investors have gotten nervous lately about the huge amounts of debt being underwritten to fund buyouts. On top of that, bonds tied to the subprime mortgage debt market have suffered in the past several months, making debt financing - a favorite tool for both the auto industry and for private equity - more difficult to use.

In the Chrysler and Allison situations, the lack of an interested market for the debt offerings probably won't be a deal-killer, but this development in the debt market may not be welcome news for companies that are in a compromised state and need access to as much capital as they can get to fund their restructurings.

Read more!

Black Ink for Maserati After 17 Years

Today, Maserati announced that it has earned an operating profit for the second quarter of 2007 (before one-time items) of approximately €1 million. This is the first time that Maserati has turned a profit since it was acquired by Fiat in 1990. Last year in the same period, Maserati reported a loss of €7 million. The company also broke even for the first half of 2007, while it had a €26 million loss in the first half of 2006.

The company attributes its newfound financial success to the highly-regarded Quattroporte automatic, which boosted Quattroporte sales by almost 40% over the first five months of its availability. Previously, the Quattroporte's transmission was a rear-mounted Duo-Select semiautomatic transmission which was relatively unrefined (according to reviews) and wasn't happy loping around town. It might have been acceptable in a no-holds-barred performance vehicle such as a Ferrari, but not in a car that competes with other $100,000 luxury sedans.

After much criticism, Maserati re-engineered the floorpan of the Quattroporte and equipped it with a ZF-sourced six-speed automatic transmission mounted in the front of the car to create the Quattroporte Automatica. The new transmission basically addressed nearly all of the complaints that owners and reviewers had about the Duo-Select one, and proved to be a wise move for the Italian automaker.

Maserati expects further success for the rest of 2007; in fact, with the upcoming launch of the Granturismo four-seat premium coupe, Maserati expects to earn a profit for the full year and to sell 35% more vehicles than it did in 2006 (7,600 versus 5,600), and even more in 2008.

Read more!

Germany's Road Sign Deforestation

Germans tend to feel more comfortable when they are given precise, unambiguous rules. To that end, their roads are absolutely covered in road signs - to the tune of over 20 million signs. There is an average of one road sign every 28 meters, or 36 signs per kilometer. Many German drivers now feel that their country's road sign proliferation is so bad that that the sheer quantity of them has become a safety hazard. In fact, 75% of all German drivers in a recent survey conducted by Germany's ADAC automobile club believed their country had too many road signs.

Now, the country is doing something about it. With the encouragement of the German Transport Ministry, local authorities in some towns have been cruising around while having frank discussions about the necessity of some signs, such as a "pedestrians only" sign on a walkway too narrow for even a bicycle, or a "toad crossing" sign at another location. The goal of the sign-reduction project is to get rid of as many as half of Germany's road sign population.

When a sign is identified as potentially unnecessary, it is covered by a plastic yellow hood that advises of the sign's condemnation. If nobody complains after a few weeks of the sign being covered, it is removed permanently. Some of the removed signs are sold for scrap, while others are kept in storage "in case they're needed later."

The small Dutch town of Drachten also suffered from an excess of road signs and traffic lights, so its leadership took the radical step of removing ALL signs and signals, and installing a children's playground in the middle of a road to encourage drivers to slow down. The result was that traffic moved more "safely," but no longer flowed as smoothly. The German town of Bohmte would like to attempt a similar experiment.

Though I would love to have the pleasure of driving a performance car on an unrestricted stretch of open Autobahn, driving through cities and towns in Germany would probably be less enjoyable. I'm all for reducing roadside clutter and driver distractions (in this case, external distractions), but without a navigation system, I'd imagine that it's very difficult to find one's way through a town with no signs.

Read more!

Driving in Manhattan Won't Be Free Much Longer

In 2003, London instituted a £8, or about $16, "congestion charge" on any cars that entered central London. The aim was to clear some of the traffic and clutter from the center of the city, encourage public transportation use, and reduce air pollution. To many, including London's mayor, Ken Livingstone, the plan was so successful that the city expanded the size of the zone in February to roughly double its size and encompass a larger portion of the city. Although at the time of the initial implementation, 40% of Londoners supported the surcharges, 60% of them did in 2006.

Mr. Livingstone touts many successes of the charges:

• In 2002, the average vehicle traveling through the city moved at an average of 8.7 miles per hour; in 2003 it jumped to 10.5 miles per hour
• There are 16.4% fewer vehicles entering the city since 2002
• There is 16.4% less carbon dioxide emissions in the city than in 2002
• Traffic accidents with injuries fell from 2,296 in 2002 to 1,629 in 2005
  

The tolls work like this: When you drive through the marked toll zone between 7:00 a.m. and 6:00 p.m. (or 6:30 p.m., depending on the zone), hundreds of cameras photograph your car's license plate. A computer matches your license plate number against a database of license plates that have paid the toll. Drivers have until midnight on the day they entered the toll zone to make payment (which can be done online, via text message, over the phone, or in convenience stores), or they face fines, which are sometimes very hefty. Residents who live within the toll zones receive a 90% discount. The system costs the city about $184 million per year to run, but generates $430 million in revenue (that's a 57% profit margin).

They are not without opposition, even in London. Small business owners are concerned that the charges dissuade potential customers from shopping at their stores if they are within the toll zone. Privacy advocates hate the idea of the government tracking every car's movements through the city.

Now, New York Mayor Michael Bloomberg would like to implement a similar plan in Manhattan, below 86th street. Under Mr. Bloomberg's proposal, any car entering the area between 6:00 a.m. and 6:00 p.m. would be charged $8. Forget for a moment that the city is asking the federal government for between $200 million and $500 million for this initiative. Also forget for a moment that 55% of New Yorkers already use public transportation to commute to work. And finally, forget the fact that recording vehiclular movements Big Brother style goes counter to the loss of privacy that most Americans will tolerate. Those are all major issues with this initiative, to be sure. But what about the fact that Manhattan is an island? I mean, until amphibious cars are mainstreateam, the only way to get a car into Manhattan is via bridge, tunnel, or ferry, and nearly every way into Manhattan requires payment of a toll. So wouldn't it be exponentially simpler to just add $8 onto tolls for vehicles entering Manhattan? The toll collection infrastructure - whether in the form of ferry tickets, E-ZPass, or human toll collectors - is already there.

The other thing that fundamentally bothers me about this idea as a car enthusiast is that, as if increasing traffic, increasing gas prices, and increasingly inconsiderate fellow drivers aren't already conspiring to remove most of the fun from the driving experience, New York is basically trying to eliminate automobiles, at least to the largest extent they are able. That just doesn't sit right with me.

I've only personally driven in Manhattan twice that I can recall; otherwise, every other time I have visited, I've either ridden the train or the ferry, so this concept doesn't directly affect me. However, the idea is catching on in other cities, and it's only a matter of time before a city near me - or you - tries to implement "congestion charges." Say goodbye to automotive freedom and hello to bureaucracy.

Read more!

2008 Cadillac CTS Pricing Released

Yesterday afternoon, a member at Cadillacforums.com posted official 2008 CTS pricing. The base price for a 2008 CTS with the non-DI engine and manual transmission is $32,245, and the model with the 304-horsepower direct injection V6 comes with a standard automatic transmission and costs $34,545, or $2,300 more. The base car's price represents a $1,575 (5.1%) increase over the 2007 2.8 liter's $30,670 price. However, comparing the 255-horsepower 3.6 liter prices, it's actually a $1,285 price reduction.

Don't get your hopes up, however. If you're a buyer, the news only gets worse from here. Options seem to be extremely expensive. I haven't analyzed the details of what is included in each package, but it's readily apparent that if you want to get ALL the good stuff, you should be prepared to spend a lot of money. A DI model with the premium luxury collection, 18" wheels, UltraView sunroof, etc. will top out at almost $50,000.

According to Cheers and Gears, the package contents are:

Luxury Collection (PDP) - $2600
Luxury Level One Package (Y40)
Seating Package (Y44)

Premium Luxury Collection (PDQ) - $8165
Luxury Level One Package (Y40)
Luxury Level Two Package (Y41)
Seating Package (Y44)
Audio system with navigation (UAV)
UltraView sunroof (C3U)
Wood Trim Package (B19)
Wood Trim Package (B20)
Universal Home Remote (UG1)

Performance Collection (PDR) - $3300
18" All-Season Tire Performance Package (Y42)
Seating Package (Y44)

Luxury Level One (Y40) - $1000
Theft-deterrent alarm system
AM/FM stereo with 6-disc in-dash CD changer and MP3 playback with Radio Data System (RDS) and Bose 8-speaker system
Rainsense wipers
Accent lighting
17" x 8" machined-faced wheels

Luxury Level Two (Y41) - $2025
Heated/ventilated front seats
Split-folding rear seat
Power rake wheel and telescopic steering column
Universal Home Remote
EZ Key passive entry system
Ultrasonic Rear Parking Assist

While the base prices are similar, or even better, the availability of additional options will push the price of a CTS with all the option boxes checked to more than $10,000 over the price of a loaded 2007 model. Apparently GM really does take the idea of moving the CTS into BMW 5-series territory seriously, because top of the line CTSs will be within spitting distance of 535i sedans (which start at $49,400 without leather interiors).

I'm curious to see how the market reacts to this pricing. On one hand, the base price is attractive and the car is a clear improvement over the outgoing model. On the other hand, pricing a new model too high at launch can kill its chance for later success; just ask the Chrysler Pacifica.

Click the image below for a graphic with the full pricing details.


Read more!

Ford sales up 122 percent...

...in Russia.

For all the tears shed, hands wrung, and red ink spilled about Ford's problems in the US market for the past year or two (namely a $12.6 billion-with-a-B loss in 2006 and falling sales and market share), there is at least one part of the world where Ford can literally do almost no wrong: Russia.

Take almost everything that is wrong with Ford in its home market - a truck-heavy lineup, a marginally competitive small car, and unrealistic MSRPs (hence the perpetual $7,000 rebate on Lincoln Town Cars), and Ford does not have any of those issues in Russia. In fact, year to date Ford sales are up in Russia by 122% through June 30, while the overall market was up 70% in 2006.

In Europe, expensive gasoline and a more pragmatic approach to transportation means that few if any non-industrial buyers purchase pickup trucks or full-size SUVs. Although the US market is trending away from these vehicles, they are still very much a part of Ford's US lineup (as well as GM's and Chrysler's). However, as US buyers' tastes shift away from large vehicles, Ford's product plans have not yet caught up to consumer tastes. In Europe, and Russia in particular, the product mix pretty much already matches what buyers want, and are likely to want in coming years. Throw a growing economy flush with oil revenue (wages up 28% in April 2007 versus April 2006) into the mix, and the result is stratospheric sales gains.

Instead of talking about what Ford does wrong in the US, let's look at what they did right in Russia. Part of Ford's success is probably luck, and part can be attributed to good management.

Ford laid the foundation for its success in Russia by becoming the first foreign-owned automotive company to build a production line in Russia, in St. Petersburg, so the company enjoyed a first mover advantage. St. Petersburg has become a "Russian Detroit," as Nissan and Toyota later announced plans to build vehicles there, and other facets of a nascent automotive industry sprang up in the area. Ford currently has capacity to produce 72,000 Focus compacts at its St. Petersburg facility, but just announced plans on July 10 to spend $100 million to expand the plant to produce an additional 28,000 Focuses (100,000 total) plus 25,000 Mondeo midsize cars.

As far as having the proper product mix for the local market, Ford's lineup in Russia is anchored by the Focus. Yes, the Russians get the "good" Focus (on the well-regarded C1 platform, which also underpins the Mazda3, Volvo S40, and others). The Focus starts at just $12,000 and is well within reach of the Russian middle class, particularly with readily available financing. The Focus is so popular in Russia that at its launch, customers had to endure six month waiting lists to buy one. There are still waiting lists, but they're now at three or four months. It's the best selling import brand vehicle in Russia, beating out strong competitors such as Toyota, Nissan and Mitsubishi.

If Ford only Ford was able to emulate its success in Russia in the US, we might be having very different conversations about Ford's future today. Unfortunately, though the Russian Ford sales are way up, they also represent only a small portion of Ford's global sales (115,985 units out of 6.6 million) so aren't really helping the bottom line at this point. However, analysts believe that in the next few years, Russia could become the largest car market in Europe, and Ford appears to be sitting in a great position to capitalize on that.

Read more!

OK, but if they go any higher, THEN we'll cut back...

A Reuters/Zogby poll released today concluded that 40% of Americans would curb their driving habits if gas reached $3.50 per gallon. Somehow, I do not believe this. It's not that I am disputing the poll or its methodology; I dispute that Americans know what they are talking about with gas prices and how they will behave.

Gas prices in late May were already at an average of $3.23 per gallon nationwide. Assuming 22.5 miles per gallon combined economy and 15,000 miles driven per year, the annual cost difference between $3.23 and $3.50 per gallon is $180.09. That means a monthly difference of $15 or a weekly difference of $3.46.

Believe me, I complain about high gas prices as much as the next guy. We own two V6-powered vehicles (though one is a 5000-pound midsize body on frame SUV) and our "fleet average" is pretty close to 20 or 21 miles per gallon (the car a little above that, and it's driven more; the SUV a little below that, and it's driven less). I just don't find it terribly credible for people to say that they will cut back on their driving if gas goes up another 27 cents per gallon from its late-May highs. Instead, I think that the steady climb of gas prices, particularly since early 2005, has almost conditioned the American public to accept them. I actually caught myself calling $2.74 per gallon "cheap" last weekend (and it was, relative to the prevailing $2.90 per gallon everywhere else near me). Meanwhile, US petroleum consumption - in spite of high prices - is actually increasing year over year. The fact is, most people have already cut out extraneous travel from their driving and are combining trips and using

I won't talk much about advocating a gas tax at this time, but ironically, the one period when US petroleum consumption slowed or even declined in the past few years was immediately following Hurricane Katrina, when gas prices suddenly jumped $0.50 or more per gallon. It was a shock to consumers, rather than the Chinese water torture of steadily increasing prices has been for the past two years. Something sudden - like a tax - would likely have the same result.

The overall poll results about how gas prices would affect consumer behavior are:

• 40% would curb their driving habits at $3.50 per gallon
• 19% would curb their driving habits at $4.00 per gallon
• 9% would curb their driving habits at $4.50 per gallon
• 7% would curb their driving habits at $5.00 per gallon
• 19% could not curb their driving habits regardless of price

The total above is 94%. Therefore, the implication is that in spite of gas prices being near all-time records in inflation-adjusted dollars, only 6% of drivers have curbed their driving habits.

A spokesperson for AAA, Geoff Sundstrom, probably said it best when he said, "It's so hard to read what consumer behavior is going to be at higher price pionts - be that $3.50 per gallon or $4.00 per gallon - because we're all in uncharted territory."

However, given past history of the way Americans have complained, but basically shrugged off high gas prices, I expect more of the same as prices continue to rise in the coming years.

Read more!

Child Seat Heads-Up and Plea

In the past month, I've had three conversations with parents or grandparents of young children (or, in one case, future parents of a young child) who spoke of putting their child in an infant carrier in the front seat of their vehicle. After having these conversations, I was almost dumbfounded, because I had no clue that there were still parents in 2007 that didn't put their children in the back seat as all of the safety experts advised. I figured that if I couldn't properly convince those people to use the back seat only for children, maybe I could save some other lives instead of their childrens'/grandchildrens'.

The belief that it's "OK" or "not a big deal" to have a very young child in the front seat of a car is, in my opinion, foolish. The reason cars and trucks have frontal airbags is because most collisions are frontal; simple physics then tells us that the further away from the impact a passenger is, the less likely it is that they would be injured or killed. Just think about that one - the back seat in almost any car is probably four or five feet farther from the firewall than the front seat. According to safekids.org, crash statistics bear this common sense out; one study showed that children are 37% more likely to be killed if seated in the front seat rather than the rear seat. As a father, I am fully in favor of giving my child a 37% better chance of surviving a crash, as should any responsible parent.

Here's another chilling statistic, from the NHTSA: "Motor vehicle crashes are the leading cause of death for the age group 3 to 14 years old (based on 2003 figures, which are the latest mortality data currently available from the National Center for Health Statistics)." The same report also states, "Research on the effectiveness of child safety seats has found them to reduce fatal injury by 71 percent for infants (less than 1 year old) and by 54 percent for toddlers (1-4 years old) in passenger cars." So doesn't it stand to reason that it's important to properly restrain your young child?

Although I have personally buckled up since childhood, and have never driven a car without wearing one, I consider myself far from extreme in my child safety views. In fact, I believe that laws such as Pennsylvania's that require a child of up to seven years old to be in a booster seat to be a little over-the-top, considering there is no weight exemption. If you have a Baby Huey-sized seven year old who weighs 110 pounds, it's ridiculous to have him in a booster seat. I do support mandatory seatbelt laws, particularly for children 17 and under, however.

Here are some excuses I've heard for putting children in the front seat that carry ZERO weight with me, as well as my response to these statements.

"When I was raising my kids 30 years ago, we didn't even have cars seats, and they turned out fine!"
Yes, but there are plenty of kids from our generation who didn't turn out fine, because they were killed or maimed in traffic accidents. The overall fatality rate has basically been cut by more than half since 1975, from 3.5 fatalities per 100 million vehicle miles of travel, to 1.47 in 2005 (link to recent data). So obviously we're doing something better with regard to occupant protection today. Is it possible we know more now than we did then?

"It's much easier to take care of an infant in the front seat, rather than unsafely reaching to the back seat while driving."
While it is unsafe to reach to the back seat to take care of a baby, having a mirror on the seat so that you can see the baby without turning your head makes this situation safer (as long as the mirror is secured properly). I don't think holding a baby bottle while driving is any safer than reaching to the back seat (we prefer to have a single child seat on the right side of the car so the reach is easier). It's also prudent to just pull over for a minute to take care of the baby.

"If it's going to be your time to be killed in a car accident, there's nothing you can do to change that. You can't improve your odds."
Yes, you CAN improve your odds. If you KNEW for sure that you were going to be in a traffic accident tomorrow, and there was nothing you could do to stop it, would you wear a seatbelt at least for tomorrow? Of course you would. That's called improving your odds. If you wouldn't, (and I say this with all due respect), you're an imbecile. I believe very strongly in God, but I don't plan on tempting fate by leaving myself or anyone in my family unprotected in the car. I will also buy every airbag possible in any new vehicle I purchase.

"If you only have a two seat car, it's legal to have the baby in the front passenger seat in Pennsylvania."
Just because it's legal doesn't mean it's safe. I've already mentioned one area where Pennsylvania went overboard with the child restraint laws (no weight limit on the boosters); they have also ignored serious potential safety issues allowing small children in the front seat and allowing children to be unrestrained in a vehicle that has all of the other seating positions are occupied by restrained passengers. So the Baby Huey seven year old needs a booster seat, unless his parents own a five-passenger car and he's the sixth passenger, in which case he can sit on his brother's lap. If someone owns only a two-seat car or pickup, and there is no other way to transport a child, it's still a bad idea, but at least be certain that the passenger airbag is deactivated for all small children, and it's absolutely essential to do so with rear-facing seats.

I apologize for the preachy article, but please, think carefully about the way you are protecting your children in the car. It's your job as a parent to make smart decisions for them.

Additional resources:
Child Seat FAQ
Child car seat safety at Edmunds

Read more!

Diesel Invasion

In the next few years, we'll see more diesels offered in the US than probably at any time in history. Why? Higher corporate fuel economy standards are likely in coming years, and even the US petroleum industry said in a draft report today that world oil supplies from conventional sources are unlikely to keep up with demand over the next 25 years. The problem is a combination of rapidly increasing petroleum consumption in the developing world and slowing or declining oil production worldwide.

Diesels are one piece of the solution to the problem of reducing petroleum consumption. Others include gas-electric hybrids, plug-in hybrid electric vehicles (PHEVs), electric vehicles, and alternate fuels such as ethanol or hydrogen. All things being equal, a diesel generally gets about 30% better fuel economy than a gasoline engine. Modern diesels are almost always paired with a turbocharger, which serves to make diesels have none of the sluggishness that their ancestors did. In fact, diesel engines usually have very robust low-end torque characteristics, which make them ideal for stop-and-go urban driving, although this comes at the expense of higher-RPM power.

One key advantage of diesel engines, other than the fuel economy and torque benefits previously described, is that the infrastructure is already in place in large part because auto manufacturers have been selling diesel-powered pickup trucks for years, not to mention all of the heavy- and medium-duty diesel trucks on the road. Unlike alternate fuels such as hydrogen and E85, which can be found in almost no and very few gas stations, respectively, diesel is available at 42% of the 169,000 service stations nationwide; E85 is available at less than 1% of them.

GM famously/infamously scared an entire generation of consumers away from diesel engines in the 1980s by underdeveloped, unreliable, noisy diesel engines that were converted from gasoline engines. While Europeans have had an auto fleet consisting of many diesels for the past several years, Americans have shied away from them, thanks in large part to the GM diesel issues of the 1980s and to the fact that gasoline was relatively inexpensive.

This is all changing, however. In the past few years, we have seen some interesting developments on the diesel front; Jeep offered a diesel Liberty and now is offering a sophisticated 3.0 liter diesel Grand Cherokee with an engine sourced from Mercedes-Benz. The real fun, however, comes in 2010.

Word on the street is that the reason Honda dropped the Accord Hybrid model after the 2007 model year (besides slow sales) is that a diesel model is on its way. I've heard a 52 mile per gallon figure cited for this car; if this is true, I'll be very impressed. That's more than double the mileage I get from my 2004 Accord V6, and I'm actually more or less satisfied with its mileage. A diesel will probably make it into the Honda Ridgeline pickup and Odyssey minivan as an optional engine choice, plus the Acura MDX crossover and likely some other models.

Honda is an engineering company first and foremost, and they are the only auto manufacturer so far that has not had to resort to urea injection to convert nitrous oxide into harmless nitrogen and water (this is a solution that Mercedes, BMW, VW, Audi, and GM, among others, have undertaken). The problem with urea injection is that there is as tank of it under the hood, and when the supply is exhausted, the exhaust is no longer treated; not a very elegant solution. Instead, Honda has devised a special catalytic converter for its diesel that requires no chemical additives (so is maintenance-free) and the catalysts convert some of the the NOx to ammonia in its first layer, and then a now-ammonia-rich second layer converts the remaining exhaust to harmless nitrogen and water. It reminds me very much of Honda's ability to meet 1975 Clean Air Act standards using its new CVCC engine rather without a catalytic converter.

GM is also embracing diesels in a big way in the coming years. GM Vice Chairman of Global Product Development, Bob Lutz, recently on a video posted on the corporate FastLane blog that in the coming years, GM would introduce a V6 diesel engine for crossovers, passenger cars, and light duty trucks and an all-aluminum 4.5 liter V8 diesel engine for light duty sport utilities, etc. Word is that the Euro-centric Saturn lineup will be among the first passenger car applications of GM's US diesel engines, and the V8 diesel will likely make it into half ton trucks and full-size SUVs (GM has said that anywhere a small block V8 fits, the new diesel will fit). In the same video, Mr. Lutz sought to downplay expectations of the diesel engine as a panacea for US fuel economy concerns, because he said the price premium to build an emissions-compliant diesel is about $4,500 on top of a comparable gas engine, and that as gas engines become more sophisticated (thanks to direct injection and homogeneous stratified charge) and diesels are choked by emission controls, he expected the 30% economy improvement to be reduced to near zero. Basically, he seems to implicitly support Ford's approach of applying diesel-like technology to gasoline engines, while going kicking and screaming into diesels only because they think that the market will demand them.

Apparently at the same time Bob Lutz was recording the above-mentioned video (the first segment was posted June 29), GM was in negotiations to buy a stake in its partner for the upcoming Cadillac CTS's diesel engine in Europe, VM Motori of Italy. Yesterday (July 16), GM announced that it had bought 50% of VM Motori. The press release contained none of the skepticism that Bob Lutz showed in the video clip. The move to buy a large stake in VM Motori sounds like a prudent move if GM wishes to ensure a steady supply of powerful, efficient diesel engines in the next few years.

Other potential future diesel applications include new diesels for the Toyota Tundra and Nissan Titan full size pickup trucks, and a diesel version of the next-generation Nissan Maxima sedan.

It's good to see some alternatives in the pipeline for consumers who wish to improve their fuel economy. It's a good time to love oil burners.

Read more!

The Emperor's New Clothes

Bear with me for a moment, and take a step into your childhood with this excerpt penned by Hans Christian Andersen:

All the people standing by and at the windows cheered and cried, "Oh, how splendid are the Emperor's new clothes. What a magnificent train! How well the clothes fit!" No one dared to admit that he couldn't see anything, for who would want it to be known that he was either stupid or unfit for his post?

None of the Emperor's clothes had ever met with such success.

But among the crowds a little child suddenly gasped out, "But he hasn't got anything on." And the people began to whisper to one another what the child had said. "He hasn't got anything on." "There's a little child saying he hasn't got anything on." Till everyone was saying, "But he hasn't got anything on." The Emperor himself had the uncomfortable feeling that what they were whispering was only too true. "But I will have to go through with the procession," he said to himself.

So he drew himself up and walked boldly on holding his head higher than before, and the courtiers held on to the train that wasn't there at all.

Keeping the above story in mind, I need to get something off my chest.

I don't buy into the hype about the Ford Flex.


It pains me to make that statement, because I really, really want to see Ford pull out of its tailspin and sell some awesome products that resonate with the US buying public. The Fusion has done pretty well in its early life, and the Edge appears to be pleasing its early customers, in spite of a need to diet and some lackluster magazine reviews.

Now Ford wants us to believe that the Flex will be the family hauler for the 21st century, the one that every father and mother has dreamed about as they retch at the thought of commuting in a traditional minivan, and all of the perceived social stigma that accompanies a minivan purchase.

I hope I'm wrong about this, but I think it looks a little too different from the norm. GM's new full-size crossovers (Enclave, Acadia, and Outlook) have similar dimensions to the Flex outside and inside (except height, where the GM vehicles are about five inches taller, apparently mostly in the ride height). The difference is, GM is trying to make their large crossovers look more or less like traditional SUVs, while Ford is trying to make theirs look different. The GM triplets hide some of their length by having a curved, arching roofline, while the Flex has one as flat as Kansas, and you can see every inch of the vehicle's length when viewing the profile. In fact, the orange body and white roof in the press photos make it look even lower and longer than it probably is. People who seem to like the Flex's style compare it to a Range Rover, which has famously squared off edges and a recognizable shape, but the profile and white roof remind many others (me among them) of a double-sized Mini Cooper. The Flex has an innovative interior and lots of space, but I can't get past the idea that it looks a little too much unlike anything else in its class. To me, it just seems too long and low, and I'm just not sure if minivan intenders (or minivan-phobes) are interested in something so different.

Ford has bet big before and hit grand slams (1986 Taurus/Sable, for example), so it's entirely possible they're right on the Flex as well. I'm not going to humor the emperor and say that it's anything but a boxy-shaped crossover, and not the second coming of the minivan. It's just not a great looking vehicle to me, and I'd be dishonest to say otherwise.

Read more!

Halfway to Zero

The first half of 2007 is behind us, and after some crunching of sales numbers, Automotive News reported today that the market share of the Big Three domestic manufacturers (GM, Ford, and Chrysler) has dipped to 50.2% of the US vehicle market in June, thanks in large part to GM's meltdown. Meanwhile, sales of Japanese branded vehicles in the US rose to 37.5%. Since the Domestics' share was 56.0% in June 2006 and the Japanese brands' share was 32.5% in June 2006, this means that almost one for one, every point of market share that Detroit gave up was snapped up by a Japanese brand. European and Korean brands took up the remaining 0.8 percentage points of market share.

What does this mean? Well, unlike an era a generation or two ago, when GM alone held more than 50% of the US auto market, three US-based companies together are likely to not be able to hold onto that share even together. GM has already said that they will not sit idly by while Ford, Chrysler, and even Toyota outspend them on incentives, so expect possibly a slight bump in July in domestic sales, but the long term writing has been on the wall for a while.

Not only has the US auto market become more fragmented - with more models, more brands, and even more countries of origin than ever before - but the domestic brands falling asleep at the wheel for a decade or two in the 1970s and 1980s certainly has harmed their current situation. For decades, their import competition steadily chugged along, improving their products in terms of comfort and reliability with each generation, convincing one buyer after another to switch brands, Detroit didn't do much about it. Now that this ship has left the harbor, and foreign competition has raised expectations and created a generation or two of satisfied customers, Detroit needs to come up with products and marketing that will convince satisfied import owners - or at least current domestic owners thinking of switching to the import side, that their products are worth buying. To do that, they'll need not only superior products, but substantially superior products. They need to look better (and in some cases, the domestic models actually do look better than their import competition), but also have better reliability, better fuel economy, a nicer interior, and be priced competitively. It's a tough hill to climb, and it pains me to say it, but I don't think we'll see Detroit at 50% market share again, ever.

By the way, the title of this post is not intended to imply that Detroit is on its way to zero market share (although the trend line does move in that direction). At some point, it will level off, but who knows when that will happen? The glass is definitely half empty at this point.

Read more!

GM May Eat Some Of Two-Mode Hybrid Cost

GM's upcoming two-mode hybrid system, which the company promises will increase overall fuel economy by about 25% and city fuel economy by up to 40%, is going to debut this fall in the Chevrolet Tahoe Hybrid and GMC Yukon Hybrid. Fuel saving technology in GM's bread and butter fleet couldn't come at a better time for the beleaguered automaker, under fire from many directions and likely to see significant lineup changes over the next decade if CAFE fuel economy rules change.

Now for the bad news: GM Vice Chairman of Global Product Development, Bob Lutz, told Automotive News in a recent interview that the two-mode hybrid system is expensive and that GM might have to eat some of the cost to actually convince consumers to buy it. Mr. Lutz himself said a few months ago that it costs as much as a small car; rumor is that the system costs around $10,000 per vehicle.

GM has already allowed BMW and DaimlerChrysler to join its two-mode hybrid party as partners to help defray its $1 billion development costs, and the Dodge Durango SUV will soon have a hybrid version for sale. It's easier for Mercedes or BMW to eat (or hide) some of the cost of the system because their models are generally more high-end than most of GM's, and Dodge has not announced what the price premium will be for the hybrid drivetrain. Toyota charges various "hybrid premiums" depending on the model, but their strong-selling Camry Hybrid, which improves combined fuel economy over 41% relative to the conventional four cylinder (34 mpg vs. 24 mpg), yet according to truedelta.com, only costs about $1,500 more than a loaded Camry XLE four cylinder when taking equipment levels into account.

If GM takes the myopic approach (which unfortunately has been pretty typical for them over the years) and attempts to recoup their investment in this system quickly by charging too much for it, they'll never get sales volume up to a level that allows for economies of scale similar to what Toyota has for its Hybrid Synergy Drive, and allows it to only charge $1,500 more for the Camry Hybrid. The only people who will buy this system at $10,000 are environmentally-conscious full-size SUV buyers (is there such a person?) or bleeding-edge early adopters who need to have the latest and greatest of everything.

GM also expects to install a variant of the two-mode hybrid system into front wheel drive-based applications, such as the Saturn Vue, in coming years. It's hard enough for me to envision buyers of $50,000 SUVs anteing up an extra $10,000 (20%) for a hybrid drivetrain, but even harder for me to imagine a $25,000 Saturn Vue buyer paying an extra $10,000 for the advanced hybrid drivetrain (40% more expensive). With premiums like that, the timeframe for the upfront payment for the hybrid drivetrain paid for by gas savings alone would extend into the decades and not years.

Let's hope GM makes the right choice in pricing these hybrids, and avoids killing them off before they even had a fighting chance in the marketplace.

Read more!

Future Scion Product: Subaru Tribeca Rebadge?

According to industry publication Automotive News, Japanese magazine New Model Magazine X recently showed a spy photo of a camouflaged vehicle that had Subaru Tribeca-like proportions and dimensions with what looked like a Scion badge on the grille. The magazine went on to speculate that Toyota would rebadge a Tribeca as a Scion to sell in the US.

Toyota has made a point of denying that it plans any additional models for the Scion brand, and sales have climbed steadily for the past several years (up 10.6% during 2006). But with Toyota owning 8.6% of Subaru's parent company, Fuji Heavy Industries - and Tribeca sales not meeting expectations in its first two years on the market (only selling 18,614 units in 2006) - anything might be possible.

My question is - how exactly would a rebadged Tribeca fit in with the rest of the Scion lineup? Scions generally come from the factory with only two different variables: manual or automatic transmission, and color. The rest of the equipment - appearance, comfort, or performance - is installed by the dealer or the owner. The most expensive 2008 Scion will be the tC coupe, at $17,580 (including destination), while a 2008 Tribeca starts at $30,620 (including destination), or 74% more money. The value proposition just seems very different between the Tribeca - arguably Subaru's flagship - and Scion. Not only that, but Toyota has taken a lot of criticism for the way the 2008 xB has grown in size, weight, and power - but seen its fuel economy decline in an environment of high gas prices. Do they really want to hear about a six cylinder, seven seat crossover from the Scion faithful?

Frankly, I don't see this happening, but if it did, it would be another fascinating case study to see how Toyota manages the marketing message, pricing, and styling of a Scion-ized Tribeca.

Read more!

Ford's Future Powertrain Direction

While many auto manufacturers are scratching their heads trying to decide how to meet likely new EPA fuel economy standards in the next few years, Ford thinks it has an answer. They also hope that answer will address the power shortages that some of their engines have relative to the competition (particularly their V8s, in a world where the competition has 400 and 500 horsepower, with the same or better fuel economy of Ford's current engine lineup).

Ford's solution is called Twin-Force, and it means twin turbos coupled with gasoline direct injection. Starting with the 2008 Lincoln MKS sedan, Ford intends to apply twin turbos to I4, V6, and V8 engines over the next several years, and rumor is that engine sizes and power outputs will be:

• 260 horsepower for the 2.5 liter I4 (likely to appear in the 2009 Fusion sedan)
• 350-420 horsepower for the 3.5 liter V6 (likely to appear in the Mustang and F150 later in 2009)
• 400 horsepower for the possible 5.0 liter V8
• 650 lb-ft of torque for the 6.2 liter V8 (likely to land in the F150 and Super Duty as a diesel alternative).

If the power figures appear as rumored, I'll be very impressed. Even more impressive is that Ford expects fuel efficency to be on par with contemporary diesels of similar size, but expects diesel-like fuel economy, at a lower cost because the expensive emission equipment will not be needed.

Finally, the last part of Ford's powertrain future is called a Powershift gearbox, which is similar in concept to Volkswagen's much-loved twin clutch DSG gearbox. DSGs promise less driveline loss than a conventional torque converter-equipped automatic (so better fuel economy) and faster, more direct shifts.

Giving Ford the benefit of the doubt that they actually can meet these rumored horsepower and fuel economy numbers, plus rolling out a DSG, all they'll need to get in order is a more interesting, engaging styling direction. They have the ideas (the Ford Interceptor would be a nice start), but need to actually implement them.

I was someone who questioned Ford's strategy of going with a twin turbo V6 in the upcoming Lincoln MKS rather than the Volvo-sourced V8 in the original concept car, but if a Twin-Force V6 exceeds the V8's fuel economy, and with potentially 400+ horsepower (versus about 311 for the V8), it's hard to argue with the results. The photo at the top of this post is of the Twin-Force V6 in the Lincoln MKR concept car, which was first shown at the NAIAS in Detroit in January 2007.

I wish them luck. Now let's see these engines and transmissions actually installed in production vehicles.

Read more!