Ford Agrees To Preliminary Terms with Canada's CAW Union

By Chris Haak

04.28.2008

In an interesting development, considering the difficulty of negotations in late 2007 between the Detroit 3 and the UAW, plus the increasingly belligerent statements from the CAW's leadership (particularly its president, Buzz Hargrove, pictured) about how it would never accept some of the concessions that the UAW agreed to in its historic negotiations, Ford and the CAW have agreed to a framework for a new long-term labor deal nearly five months before the current pact is set to expire. The current agreement is set to expire at midnight on September 16, 2008.

While the agreement is not the final version, the parties have hammered out the major financial issues, including wages, benefits, and pensions. Once local agreements are bargained (expected to occur in the next week), the agreement will be presented to rank-and-file membership for a ratification vote. The local agreements cover items such as skilled trades and health and safety issues.

Although Ford has not yet released specific terms of the framework, the CAW said Monday that base wages are frozen and temporary lower starting wages (similar to those in the UAW agreements for new hires) are established for the first time. However, in a break with the pattern set by the UAW, the CAW did not concede a two-tier wage structure. Mr. Hargrove vehemently has said over the past several months that the CAW would never, ever accept a two-tier structure. As an outside observer, I thought that he'd have no choice, but apparently, he got his way on that issue. Finally, the endangered St. Thomas plant, which builds the body-on-frame Crown Victoria, Grand Marquis, and Town Car will remain open at least until the end of the agreement, which will expire in 2011.

The deal is important for Ford, which is depending on CAW workers to assemble some of its important, high-profile launches later this year, including the Ford Flex crossover. The UAW's concessionary contracts late last year, coupled with the weak US dollar relative to the Canadian dollar also increased pressure on the CAW, because it was becoming much more expensive to build a vehicle in Canada than in the US. (See related article HERE). Although at the current exchange rate, CAW employees will still receive about $7 per hour more in pay and benefits than their UAW counterparts under their new contracts (about $67 per hour for the CAW versus about $60 per hour for the UAW, according to the CAW), the CAW justifies this disparity by stating that their workers are more productive than UAW workers. However,

Ford will give each worker a $2,200 signing bonus (called a "productivity and quality bonus") upon contract ratification, plus another $3,500 cash payment in January 2009 in return for giving up one week of paid vacation going forward. It also includes improved buy-out offers for employees who would like to take the cash and run.

It will be interesting to see if talks with GM and Chrysler, each of whom are bringing their own wish lists to the table, and neither of whom have immediate high-profile launches scheduled of Canadian-built vehicles in the next few months, progress as quickly or follow the pattern set by Ford and the CAW. Did Ford hurt itself or help itself by settling unexpectedly quickly? On one hand, they averted a labor stoppage that could torpedo the Flex's launch, but on the other hand, they may have been able to wring more concessions from the CAW had they spent more time bargaining or at least driven a harder bargain.

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2008 Mercury Sable Premier AWD Review

By Chris Haak

04.17.2008

Last week, Ford dropped off a 2008 Mercury Sable Premier AWD for me to evaluate. I had actually requested this car because so many people have told me over the past few years that the Taurus and Sable are good cars obscured by their pedestrian, overly inoffensive styling. The line on these cars (when they were still named Five Hundred and Montego) in the past had also been that they were underpowered (by a 3.0 liter V6 producing just over 200 horsepower) and their available CVT transaxles provided an unusual driving experience. The cars now come with an upgraded engine and transmission, and improved styling, but they still are not resonating with consumers.

Exterior
When Ford decided that perhaps it wasn't such a great idea to throw away the Taurus and Sable names after over 20 years in the marketplace, refreshing the Five Hundred and Montego seemed like the perfect opportunity to introduce the reborn names. To my eyes, the Sable's new front clip is more attractive than the Taurus' Fusion-like nose. The overall impression of this car, though, is one of size. It's a very tall car - the rounded roofline does obscure some of its height, but it's only a few inches shorter than many crossovers. My test car was a loaded Premier edition with all wheel drive; I'm not sure if it was the all wheel drive hardware or just the car's fundamental engineering, but its ride height was a little high for my taste; the tops of the tires still left a several inch tall gap between them and the bottom of the fender's wheel openings. The car is so substantial in size that I had assumed it had 16 inch or perhaps 17 inch wheels, but in fact it was equipped with 18 inch wheels and Pirelli tires.

Interior
The first time I opened the door, I was really impressed by the Sable. The interior was, of course, spacious with ample legroom for both front and back seat passengers, and also had plenty of headroom, thanks to the high roofline. Materials had a quality feel; they were similar in quality to the $39,000 Lincoln MKZ that I reviewed a few weeks ago, although the Sable actually left me with more of an impression of luxury because it had ample fake wood instead of ample fake aluminum like the MKZ featured. The wood's realism was actually reasonably convincing, thanks to its interesting darker hue and a lack of unlikely curvatures and shapes. Another nice detail was contrasting stitching on the steering wheel's leather as well as on the seats and center console lid; the charcoal black (Mercury's name - not mine) interior was somewhat monochromatic, but would have been more so were it not for the dark "wood" and white stitching.

It was good to have another chance to use Ford's exclusive SYNC system. As this Sable was equipped with a navigation system (a $1,995 option), it worked identically to the MKZ's two weeks earlier. One complaint/observation that I had about the MKZ's SYNC system still stands for the Sable; it does not remember playlists once the car has been turned off, although it will keep on the last song that you were playing. However, I wish every car had the excellent Bluetooth telephone connectivity that SYNC features; one thoughtful touch is that the number keypad is still active when the car is moving; Toyotas with navigation systems do not allow this and it can be very frustrating, but SYNC eliminates that frustration. After all, the workaround with the Toyota system is to dial the number on your handheld phone, then talk over Bluetooth once connected; it seems safer to enter a number on the navigation touchscreen rather than fumbling with your handheld phone when driving. I did yearn for the MKZ's THX II Audiophile sound system; higher volumes - especially in songs with a lot of bass - tended to upset the speakers a bit. Although this Sable had the "Audiophile" system, it clearly wasn't in the same class as the MKZ's.

Parents of small children will be pleased to know that both a forward facing convertible car seat and a rear facing infant carrier fit in the back seat without any trouble. Further, the car's spacious rear seat, large door openings, and high roofline all make getting little ones in and out about as easy as possible with a car (though a minivan with sliding doors is, of course, still easier). Looking at the two seats side-by-side, I believe that it would be difficult to fit a third child seat in the middle position when the outboard spots also have child seats installed.

The trunk is large enough for a folded stroller and left plenty of room for groceries or other cargo, and both the split rear seatback and the front passenger seatback folded flat to allow the driver to haul long items without the need to tie the trunk to the closed position.

The one odd sensation inside the Sable is the sound that the turn signals make. It didn't bother me, per se, but was unlike any turn signal sound I'd heard before. They sounded like a horse was clip-clopping down a cobblestone street. Other sounds - aside from the growl of the engine under acceleration - were very subdued. Wind noise was not an issue, and I didn't really have as much appreciation for how quiet the Sable was inside until I opened a window and realized how much sound it was blocking. I wouldn't call the car remarkably quiet, but it was definitely peaceful.

Driving Experience
Although the Sable is a large car, it didn't really feel like it, with the notable exception of navigating sharp curves within the parking garage near my office. In those tighter confines, I always felt very conscious of the car's width. As with the MKZ, the 3.5 liter 263 horsepower V6 engine and six-speed automatic transaxle were a good pair, but torque management again severely restricted power from a stop. Additionally, shifts were extremely smooth - even under full throttle - because the engine computer cuts torque when shifting to smooth the transition between gears and preserve the drivetrain. The sensation is one of the car taking a moment to catch its breath between each gear. However, its target market probably appreciates the buttery-smooth shifting.

The steering ratio is slower than I'd prefer, but it seemed to be reasonably accurate. The Sable's suspension was capable of soaking up any bumps that came its way, but driving briskly on a country road could quickly get the suspension to wallow a bit. Again, I'm not in this car's target demographic, so that's probably not a concern among buyers of traditional large cars. Plus, it felt a heck of a lot more buttoned-down than did the last Lincoln Town Car that I rented; many fans of the new Taurus and Sable point out that those cars are about the same size inside as the Town Car, but have the benefit of front wheel drive-based packaging and another few decades of development work that the Town Car didn't enjoy. The Sable's brakes brought the big girl to a stop without drama.

Fuel Economy
The Sable AWD is rated at 17 mpg city and 24 mpg on the highway. Because it's a heavy car with the all wheel drive hardware, it burned a lot of fuel for me in stop and go traffic. Overall, I got about 16 miles per gallon, but when cruising at a steady speed on the highway at 70 miles per hour, a freshly-reset information screen showed figures in the mid- to upper-20s, right in line with EPA expectations. Although the Sable is a larger vehicle than the MKZ, it also got poorer fuel economy under my stewardship, driving a similar route and in similar traffic conditions. Front wheel drive models are rated at 18/24, so the additional all wheel drive hardware forces buyers to sacrifice about four miles per gallon on the highway for the security of all wheel drive. Similarly-sized vehicles such as the Pontiac G8 V6 (rated 17/25 for rear wheel drive) and Chrysler 300 V6 AWD (rated 15/22) can't match the Sable's fuel economy. V8 versions of those competitors get even worse fuel economy.

Pricing
The base price for a 2008 Sable is $24,375 (including destination) for a front wheel drive model. All wheel drive adds $1,850 to the price, and the Premier package (the only trim levels are base and Premier) adds a substantial $3,790, but includes 18 inch wheels, dual zone climate control, SYNC, and leather seats. Navigation, stability control, adjustable pedals, a reverse sensing system, a cargo management system, and Sirius satellite radio added another $3,375 to the tab, for a total MSRP (including destination) of $33,750. The Sable currently carries a $2,000 to $4,000rebate and dealers should be interested in cutting deals, as sales are down 12.4% year to date.

Bottom Line
The Sable was a heck of a good car. I was impressed by its large interior, five star safety ratings, and quality interior materials. The seats were comfortable and roomy, the car was easy to drive, and was pleasant to look at. It's a shame the Sable started its rebirth behind the 8-ball a bit, because the Montego was so unsuccessful and many consumers are probably unaware of all of the significant improvements under the skin compared to a first-year Mercury Montego (primarily improved interior materials, the six-speed automatic, and 3.5 liter V6). However, taking the same fundamental package and wrapping it into a "Superman" wrapper instead of a "Homer Simpson" wrapper will probably help the next Sable substantially. Meanwhile, buyers astute enough to put it on their shopping lists will be impressed by this very credible effort from Mercury.

Click HERE for more photos of the 2008 Mercury Sable Premier AWD.

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Chrysler Figures Out How to Make Good Cars and Nissan Figures Out How to Make Good Trucks

By Chris Haak

04.15.2008

Significantly expanding the product sharing agreement announced a this past January for Nissan to produce a version of its Tiida (Versa) for Chrysler to sell in the South American market, Chrysler and Nissan jointly announced today that they have expanded their product sharing relationship pretty significantly.

Chrysler is getting a small car, to be built on a new Nissan platform and based on a vehicle that Chrysler has "already designed," will be assembled at Nissan's plant in Oppama, Japan. Although Chrysler Vice Chairman Tom LaSorda would not confirm which specific product they had in mind, speculation is that the small car might finally be the Dodge Hornet subcompact, first shown as a concept at the Geneva auto show in 2006. At the time of its public debut, DaimlerChrysler executives claimed that they were searching for a partner to build the car, but the concept was well-received by the media and public. Once Chrysler entered into a partnership with China's Chery, it was assumed that Chery would build the car for Chrysler, and become one of the first Chinese-built mass-market vehicles sold in the US. Since LaSorda would not confirm or deny whether the Hornet is the car that Nissan will build for Chrysler, it remains an open question whether the Nissan-built car will be the Hornet or something completely different. Whatever vehicle it is, it's indisputable that Chrysler is in desperate need of small cars in its lineup (the smallest Dodge at the moment is the husky Caliber), so in a world of $4 per gallon fuel prices, having two stylish subcompacts would be a better place for Chrysler to be than with eleven SUVs as they currently have.

The new Nissan-built small car will begin production in Japan in 2010. Nissan builds some excellent cars (both small and large) and unless things change at Chrysler soon, this vehicle could very well end up as the best car in its lineup.

The other big news, though also not a big surprise, is that Nissan is getting out of the business of building full-size pickup trucks, after just one generation of producing the Nissan Titan. The Titan was launched as a 2004 model to much fanfare, as it was the first Japanese pickup that was a true full-size (the earlier Toyota T100 and Tundra pickups, until the 2007 Tundra, were not as large or powerful as the Dodge, Ford, Chevrolet, and GMC trucks). The Titan suffered from a bumpy launch, as it was dogged by early quality problems from its factory in Canton, Mississippi and had a sub-par interior for its price class. Later models saw quality improvements, but the truck was always hampered by its limited configurations - it was only available with a powerful but fuel-thirsty 5.6 liter V8, with no V6 or diesel options. The Titan is only available as a half ton and only as an extended cab or crew cab; a regular cab is not available. Until recently, a long bed was also not available on the crew cab models. Consequently, Nissan sold only 65,746 Titans last year, while Toyota sold 196,555 Tundras. The Big Three sold even more trucks - GM sold 826,500 pickups, Ford sold 690,589 F-series pickups, and Dodge sold 358,295 Rams. Nissan spent nearly a billion dollars to build and equip its Canton plant to produce the Titan, Armada, and QX56 (among other models) and hoped to sell more than 100,000 Titans annually, but has never reached that milestone. Now, with slow sales and looming increased CAFE standards, Nissan finds itself in a position where it's nearly impossible to justify building the Titan on its own. Further, the company announced last week that it would be ceasing production of the Infiniti QX56 SUV and Nissan Quest minivan in Canton to build light commercial vehicles there. The elimination of Titan production will free more capacity for light commercial vehicle production.

So, what is Nissan going to replace the Titan with? A Dodge Ram, but with a Nissan body and interior, and Nissan driving characteristics. Chrysler currently builds the Ram pickup (which has been redesigned for the 2009 model year) at three plants - one in Mexico and two in the US. It will move Dodge Ram production from Mexico to either St. Louis North (for heavy duty trucks) or Warren, Michigan (for light duty trucks). The Chrysler-built next-generation Nissan Titan will debut in 2011.

Although specific financial terms were not disclosed, Chrysler will pay Nissan for the vehicles that it assembles for Chrysler, and Nissan will pay Chrysler for the vehicles that it assembles for Nissan. For the time being, the arrangment is strictly a manufacturing deal and does not imply a larger alliance or equity transfer. Renault-Nissan CEO Carlos Ghosn unsuccessfully tried to engage GM in an equity alliance a few years ago, and has said that he would still like to add a US partner to the existng two-company alliance. Of course, just because January's Nissan-Chrysler manufacturing agreement was limited only to a rebadged Tiida for South America, that didn't mean that a deeper manufacturing alliance would not result - and in fact did eventually come to light. Could a manufacturing arrangement be a prelude to Cerberus' exit strategy for Chrysler, which is to nurture the company back to health, then sell it to another automobile manufacturer for a handsome profit? I would not be surprised and now believe that Ghosn has a leg up on any other potential post-Cerberus suitors for Chrysler.

The deal appears to be a win-win for all involved. Both companies are getting the products they need in an efficient way. Nissan is able to continue competing in the full-size truck segment while Chrysler is able to field a credible small car. Chrysler also utilizes some of its excess manufacturing capacity. The ironies are so thick in this story; the first one that came to my mind was that although Nissan is outsourcing its full-size pickup production, it is also building the Suzuki Equator mid-size pickup for Suzuki because Suzuki does not have in-house capability to build pickup trucks.

I'm very curious to see both what the small car is that Nissan builds for Chrysler (Tom LaSorda said that Chrysler can build on its design strength in the small car; that strength must have been in occupational therapy between the 300 sedan's debut and today) and how well Nissan is able to differentiate the Titan from the Ram. Also, does outsourcing the Titan to Chrysler mean that Chrysler will make all Ram configurations (including diesels, regular cabs, and heavy duty models) available to Nissan buyers? The 2009 Ram is a nice truck - I've sat in it a few times - so if Nissan can differentiate its product beyond the front clip, it might match the old Titan's sales results at a much lower cost.

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Declining Broadcast TV Audiences Mean a Move to Alternative Advertising

By Chris Haak

04.14.2008

Although network and cable television viewership steadily declines as more and more alternatives are pulling consumers' eyeballs from their TV sets and to things such as the Internet or even mobile devices, the 30-second commercial is still far from becoming completely obsolete. However, in a world where television advertising is no longer the only option, many car companies are reconsidering the way they apportion their advertising energy and dollars. Some are cutting back their TV advertising budgets dramatically, while others are focusing on more specific TV promotions instead of the older shotgun approach that had been favored in the past.

Audi paid a lot of money to produce and broadcast its "old luxury" commerical spoof of The Godfather to advertise its R8 sports car, but the company's objective was not necessarily to sell more R8s, but to get Audi "into the conversation in a much bigger way." To that end, Audi saw its website traffic increase nearly fourfold in February, and saw floor traffic at US Audi dealerships increase by 20% in February 2008 compared to February 2007. However, other than the big splash that a 60-second Super Bowl commercial brings, event-related marketing allows advertisers to tailor their message to a specific demographic within those shows' audiences.

GM has been shifting more advertising dollars from "normal" programming into event programming, such as the NCAA basketball tournament. Betsy Lazar, GM's executive director of advertising and media operations, said that event programming tends to be watched live more often, so is more "TiVo-proof." In other words, when you're watching an event live on television, you can't skip the commercials, and advertisers are clamoring for ways to keep potential customers' eyes on the screen during commercials.

Significant portions of advertising budgets are being shifted to online media. While television commercials still maintain their position of dominance for the time being in most campaigns, marketers are taking a much more integrated approach to other components than they have in the past. For example, the website will maintain the same look and feel of the print and television advertisements, and print and television campaigns usually want the viewer to visit a website for more information or exclusive web-only features. Advertisers love online marketing for the powerful tracking capabilities inherent in the medium; while television (particularly "normal" scheduled shows such as sitcoms) takes a more blanket, shotgun approach, online campaigns can be tailored even to individuals. Suppose the TV advertisements for the Pontiac G8 feature the car only in black but a certain customer isn't interested in black cars; moving to the G8 section of the Pontiac website allows the user to see the car in white, grey, red, or any other color. Furthermore, after gleaning the visitor's postal code, the website can calculate any special offers quickly and without any cost to the company. In contrast, regional special offer promotions on TV are usually given in a different voice at the end of the commercial or are expensive to individually create.

We haven't even spoken about product placement yet, and its growing prominence in today's media marketing environment. When viewers are able to skip commercials with minimal effort, increasingly frustrated advertisers are forced to subtly (or not-so-subtly) place their products into the actual content that viewers are watching. Product placement could be as subtle as the brand of soft drink being consumed by an actor, to the near-infomercial that the recent Knight Rider made-for-TV movie became for Ford. In case you missed Knight Rider, KITT itself is a Ford Shelby Mustang GT500KR, and literally every passenger car during the movie was a Ford product. If that wasn't enough of the blue oval, every commercial break featured a commercial for a Ford product in the first commercial of each break, usually that tied in to Knight Rider. So, one could say that not only did Ford place its products into the Knight Rider movie, but the Knight Rider movie also placed its content into the Ford commercials. I'm not usually one who notices every commercial that I watch (especially since I move through them at warp speed when watching programming on my DVR), but the Ford product placement certainly caught my attention. However, although I'm not in the market for a new car at the moment, it also did not compel me to rush to my local dealer to drive the latest Ford models (though I did visit their website several times in a futile attempt to win a GT500KR - that cross-platform thing again).

One of the latest frontiers for advertisers are mobile platforms. Yes, they want to put ads on your cell phone. Also, the Ford SYNC system, which I experienced for a week in a 2008 MKZ, has the capability to place location-specific advertisements on the vehicle's navigation screen. Looking for a pizza place? "There's one a block away, but HOW ABOUT THIS ONE FOUR BLOCKS AWAY THAT PAID US FOR THIS PROMOTION??" Now, SYNC does not currently do this, but given the pervasiveness of advertising in 2008, do you really think this untapped revenue stream will remain untapped for long?

The advertising environment - indeed, even the television environment - may be dramatically different in a few years as advertisers move from traditional TV advertising into other media. Network and cable broadcasters may be forced to compensate for lower revenue by cutting back on production expenses (and therefore programming quality). Meanwhile, advertisers are probably salivating at the prospect of putting their messages instantly into your pocket or purse (on your cell phone) or two feet away from you (on your navigation screen), and there's not much that we as consumers can do about it.

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Ford Pledges to Reduce CO2 Emissions By 30% Between Now and 2020

By Chris Haak

04.10.2008

Today, Ford Motor Company pledged that it will reduce CO2 (greenhouse gas) emissions by 30% between now and 2020. Shareholder environmental activists who have been pressing many corporations to release a blueprint for how they intend reduce their CO2 footprint in the coming years immediately lauded the move. The Interfaith Center on Corporate Responsibility, which manages over $100 billion in assets and represents over 300 religious groups, responded to Ford's move by dropping a shareholder resolution that had called for Ford to take action on global warming. The organization still plans to apply pressure to GM during its annual meeting in June to make a similar move, but so far GM has not commented.

One change that Alan Mulally implemented when he arrived at Ford was to create the position of group vice president for sustainability, because he saw that the continued sale and marketing of large, fuel-thirsty, carbon-spewing vehicles was, in fact, not a sustainable business model. The incumbent in that job is Sue Cischke (pictured at left). Ms. Cischke admits that Ford had fallen short of fulfilling some of its most dramatic environmentally-oriented pledges in the past, but said that this one came as a result of detailed modeling.

Of course, the two most famous examples of Ford making bold claims about environmental initiatves only to renege on them later were when Bill Ford said in 2000 that the company would improve the fuel efficiency of its SUVs by 25%, and when the company promised in 2005 to build 250,000 hybrid vehicles per year by the end of the decade. The SUV fuel efficiency pledge was officially annulled in 2003, and the hybrid production pledge was in 2006, just a year after it was first announced.

In reality, similar to feeling the necessity of having a top executive focus exclusively on sustainability - because the company doesn't have much choice but to worry about its future sustainability in an environmentally-sensitive world - the company also has little choice but to make its current pledge. Not only would the company have egg on its face for being environmentally irresponsible, but more importantly, since CO2 output is closely correlated to fuel consumption, and new CAFE standards will require a 40% fuel economy improvement by 2020, it actually seems reasonable to expect that Ford can meet its pledge of a 30% CO2 reduction. If it meets the fuel efficiency target, it should hit the CO2 number without any problems. If Ford misses the CAFE number by 2020, it will again look foolish for making such a bold pledge, but Alan Mulally will be long-retired by then and it will be the problem of another generation of executives and another generation of shareholders to deal with.

The next question is, will Ford's competitors follow suit? After all, they all have to meet the same 35 mpg CAFE number by 2020, so should all have the same opportunity to look good to concerned shareholders and customers. I'm betting that Ford won't be allowed to bask in the green glow by itself for very long.

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The US is Suddenly a Low-Cost Manufacturing Country

By Chris Haak

04.09.2008

Thanks to two relatively recent developments – the falling value of the US dollar relative to other currencies and the significantly lower cost structure that GM, Ford, and Chrysler negotiated with the UAW last fall – the domestic auto companies are now hoping to use their lower cost bases to supply US-built vehicles to export markets.

Last year, the US exported $50.66 billion worth of cars and light trucks, while it imported about three times as many. Although $50.66 billion is a lot, many of those exports went to Canada and Mexico, and not to Europe or Asia, where many imported vehicles sold in the US originate. The Detroit Three expect this to change in the next few years.

Other than cost, which is a big factor, manufacturers over the past few years have worked hard to merge vehicle architectures under common platforms, perhaps with the visible parts of the vehicle differentiated. This not only cuts overall development costs significantly (since one single platform may substitute for three or four previous ones), but also allows engineers to put more effort into the handful of platforms that are still necessary. Furthermore, platform sharing across continents means that production of all vehicles built on the same platform can be easily moved to any plant capable of that platform worldwide based on local demand and currency fluctuations.

For example, the Saab 9-3 is built on a version of GM’s Epsilon architecture. A variant of the Epsilon architecture also underpins such American stalwarts as the Pontiac G6, Saturn Aura, and Chevrolet Malibu. However, in its current iteration, the differences between the European Epsilon and the US Epsilon make it impossible to build Saab 9-3s in the US. Unfortunately, this means that Saab is forced to raise prices in a difficult market to offset the weak dollar, while GM has plenty of extra production capacity at the plants that produce its US Epsilons. However, the next generations of these vehicles are being developed collaboratively between Europe and the US, so the next generations of these vehicles will also have the ability to be built in any Epsilon plant.

GM has already announced an agreement with the Chinese government to export the Enclave crossover to China, to help satisfy a buying public that loves its Buicks (you may have heard that Buick sales in China exceeded Buick sales in the US last year).

For its part, Chrysler has decided over the past two years to not renew its third party assembly contracts with Magna Steyr to locally build versions of its North American models in Europe for European consumers. Instead, it will build the Chrysler 300 in Canada and export it to Europe, and will build the Chrysler Voyager (a version of the Dodge Caravan) in the US and export it to Europe. Chrysler still builds some Jeep models in Europe, but when its contract with Magna Steyr expires in 2009, it’s likely to move that production to the US as well. Chrysler is also exporting compact Dodge and Jeep vehicles such as the Caliber and Patriot to Europe from its plant in Illinois.

It’s not just the Detroit Three who are taking advantage of the economics of the weaker dollar; Volkswagen is likely to build a new plant in the US (which it may also share with Audi), and Fiat is in discussions with US partners to build Alfa Romeo cars in the US. Also, BMW is injecting $750 million into its South Carolina plant to significantly increase its production capacity; once the expansion is complete, the plant will build all BMW SUVs for worldwide consumption, most of which is destined for Europe.

The risks to these strategies are numerous; most companies will say that they do not make long-term decisions such as plant construction based on variables that are guaranteed to fluctuate such as currency exchange rates. If the dollar suddenly strengthens – which could happen if manufacturing activity in the US suddenly spikes, or if the economy strengthens in the next year or so – cost projections may go out the window.

For US automobile companies intending to export their products to overseas markets, particularly to developed nations, they have to ensure that the products they intend to export are relevant in those markets. European consumers prefer small, lithe, efficient vehicles (often with diesel engines) and have little interest in the generally larger, more powerful vehicles sold in the US. It’s a similar story in Japan. For developing countries such as China and India, and many Latin American nations, many consumers don’t have the purchasing power to buy the expensive vehicles generally sold in the US, although China and India are expanding so quickly economically that they are seeing the ranks of citizens who can afford larger, more expensive cars growing rapidly.

As with so many developments in the automotive industry, the only thing constant is change. A year ago, unionized US manufacturers were crying about being cost-uncompetitive with their foreign rivals, and today the US companies are in the stronger competitive position. Who knows where they will be in twelve months?

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Ford-Commissioned Study Shows Quality on Par with Honda and Toyota

By Chris Haak

04.08.2008

According to a release from Ford, the first quarter 2008 U.S. Global Quality Research System (GQRS) study conducted on its behalf by RDA Group of Bloomfield Hills, Michigan shows that Ford’s domestic brands had an average of 1,284 things-gone-wrong (TGW) per 1,000 vehicles. Honda and Toyota had 1,250 things-gone-wrong in the same study, so this means that a new Ford is 2.7% more likely to experience an initial quality problem than a Honda or Toyota. However, Ford claims that its quality is now "statistically equivalent" to that of the big Japanese brands. Ford is also pointing out that its quality improved 8% over its results last year in the same research, and that 36 of 40 nameplates saw initial quality improvements over 2007's study.

Ford's customer satisfaction score also inched up one percentage point, from 76% to 77%, compared to last year. The company plans to shout its quality message from the mountaintops via a new ad campaign beginning today, entitled "Drive One." According to the company, the campaign will "tell[s] the story behind Ford’s rise to the top of the industry in initial vehicle quality as well as underscoring safety, smart technology and improved fuel efficiency.

Ford Marketing head Jim Farley and his team have their work cut out for them. Only 41% of US consumers will consider a Ford product when they are shopping for a new vehicle. They're now making products that are well-screwed together, but having trouble getting consumers - particularly import intenders - to notice them or give them another chance. To this end, the 2010 Fiesta should be a great vehicle for attracting conquest sales, since it's stylish, modern, and will get excellent fuel economy. Ford's current lineup, however, leaves a bit to be desired in terms of the "gotta have it" factor.

I'll be spending a week with a Mercury Sable starting tomorrow, so I will get to experience Ford's initial quality firsthand. The Sable was one of Ford's best cars in terms of initial quality, with less than one problem per vehicle. Stay tuned for that review.

Click here for the press release from Ford.

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Customers Responding Well to Isuzu's Going Out of Business Sale

By Chris Haak

04.08.2008

It's extremely unlikely that Isuzu's management is reconsidering its decision to withdraw from the US market in early 2009, but a funny thing happened on the way to shutting down sales operations. Sales actually increased 11.4% in the first quarter of 2008 when compared to the same period in 2007. It's also the first time that Isuzu sales have seen a quarterly increase since the second quarter of 2000 - 7.75 years ago.

More likely than not, generous dealer incentives of between $4,000 and $8,000 per vehicle helped. On top of that, dealers received up to $1,500 per vehicle sold through March 31 if they spent at least half of that money on Isuzu-exclusive advertising.

Many dealers interviewed by Automotive News spoke very favorably of the fair treatment they have received from Isuzu during the winding down of its US business, and many are sad to see the company depart these shores. The company basically folded up its operations when it could not secure any future products, although we speculated on several other possible scenarios Isuzu could have tried if they really wanted to stay in the US as a purveyor of light vehicles.

The company will continue to sell heavier duty trucks in the US, though not at the same dealers that are currently selling rebadged GM compact pickups and midsize SUVs. However, of those light duty Isuzu dealers, the company has signed 140 so far as service-only dealers, with the goal of getting 200 to agree to stay connected through those means. That seems unlikely, since there are only 201 dealers at the moment, and some will probably decide that they don't want to remain as service-only dealers, focusing instead on their used car businesses or other new car franchises.

If you don't mind driving a lame-duck vehicle and want a solid warranty at a huge discount, visit your local Isuzu dealer before their inventory is completely sold out. As of March 1, dealers had 3,125 vehicles in stock (about 16 per dealer), with about 80% being 2008 models and 20% leftover 2007 models. No offense to those who do choose to buy a cheap new Isuzu, but I'd personally rather have a new Kia than a new Isuzu.

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2008 Toyota Camry Hybrid Review

By Chris Haak

04.08.2008

Ever since I spent a week in a 2008 Toyota Prius - and wasn't really impressed with much other than its fuel economy and the underlying technology - I had been looking forward to testing a more spacious, better-performing, more "normal looking" hybrid.

Toyota finally granted my wish last week, when it dropped off a Jasper Pearl Camry Hybrid sedan. I could hardly wait to spend a week with the car, comparing the experience not only to my time with the Prius, but also to the Honda Accord that I normally commute in.

Exterior
The Jasper Pearl paint certainly made a statement. If driving a Prius tells the world that you care about the environment, then driving a bright green Camry tells the world that you also care about "being green." It's certainly an interesting color; you can see it yourself in the photos, but my son called it "Lizard Green" and I'd describe it as something like a pearlescent lime green with a little silver added to the mix. Overall, the car's shape is similar to that of every other 2007 and 2008 Camry on the road (and there are a lot of them!) Elements unique to the Hybrid model are the grille, taillights, and large HYBRID logos on the front fenders. The Camry is not a beautiful car like the 2008 Malibu is, but it's also not a hodgepodge of disparate styling clichés like the 2008 Accord sedan is. It's a car that you can drive anywhere and not get a second look from anyone, because chances are, 10 cars behind you, there is another version of the same car on the road. Toyota rightfully took a lot of criticism about the previous generation Camry's shape (or lack thereof) and responded in 2007 with a car that is far more interesting looking, with low front fenders, a higher hood, and shapely contours around the doors and fenders. My favorite styling feature is the intersection of the upper character line with the curve around the front wheel openings (just below the Hybrid badge), but the overall look is nearly as jelly bean-like as a few models of the Ford Taurus have been over the years.

Interior
Once inside the Camry, it's a pretty large car. In terms of interior dimensions, it's slightly smaller than the recently-upsized 2008 Accord, but a little bit larger than the Saturn Aura (the Aura shares most dimensions with the Chevy Malibu). My tester was equipped with the first-level option package, which included 16" alloy wheels, JBL audio system with a 6-disc CD changer and 8 speakers, Bluetooth cell phone connection, a leather-wrapped steering wheel and shift knob, and an auto-dimming rearview mirror. Desirable options that my tester did not include were a moonroof, leather heated seats, and an in-dash navigation system. Still, the seats were comfortable and I found it easy to settle into a comfortable driving position. Interior materials were, however, slightly disappointing at places. I really dislike the "mouse fur" headliner material, which this car had both on the headliner and on all four door panels behind the door pulls. Most manufacturers such as GM, Ford, and Honda have gone to a woven headliner material that has a more quality feel to it than the mouse fur, which feels the same as your grandmother's 1986 Cutlass Ciera's did. The top of the dash is nicely padded, but the design of the "Plasmacluster" HVAC and audio controls on the center stack looked like they were cribbed from an old Kia (though they did really look sweet at night). There is a storage compartment between the center stack and the console that has a cheap lid that feels like a low grade of plastic was used for it, and the grey plastic surrounding that questionable lid also had a different texture than did other areas of the interior (and sounded hollow when running a fingernail across it). However, I'm nitpicking, and a lot of buyers would be perfectly happy with the interior design and materials in the Camry. I know that Toyota can do better, however, having spent a lot of time in our 2008 Sienna Limited (which is an older design, likely engineered before the 2007-2008 Camry's engineers were told to decontent to remove some cost).

Trunk space in the Camry Hybrid is compromised by the necessary hybrid battery pack, which resides between the rear seat and the trunk's cargo area. The location of the battery pack claims about a third of the trunk's usable area (taking its capacity from 15 cubic feet to just 10.6), but short of sacrificing the spare tire for a set of run-flats, or somehow hiding the battery beneath the rear seat, I'm not sure where else Toyota could have put it. The result was a trunk that could only hold one folding stroller and not much else; the photo gallery linked at the end of this review contains two photos of the inside of the trunk, including the area where the battery pack resides.

On the Road
The Camry Hybrid's startup routine is identical to that in the Prius. Just have the Smart Key fob in your pocket or purse (pocket in my case, of course), and walk up to the door. As soon as you get about a half inch from the handle, the doors unlock. Once inside, you just put your foot on the brake and press the Start button. When the READY light illuminates, you can drop it into gear and go. Usually, you won't hear anything even when the car is on ("ready"), but putting it into gear generally starts the engine. An interesting quirk of the Hybrid Synergy Drive system is that reverse gear is always electric-only (I had heard this before, and never experienced anything other than that with either the Camry Hybrid or Prius). Once underway, only very low-speed, gentle driving with a warm engine will keep the car in electric vehicle (EV)-only mode. Otherwise, the 2.4 liter four cylinder engine starts and provides primary motivation for the car. The Hybrid Synergy Drive system also features a continuously variable transmission (CVT), which is another unique driving experience. For those not used to driving a vehicle with a CVT, it adds a few odd sensations to the other odd sensations that driving a hybrid already bring to the table. For instance, during full throttle acceleration, the CVT will allow the engine to wind up to its optimal speed and just hold the engine at that speed, while varying the ratio as the car accelerates. The sensation, however, is one of a slipping automatic transmission. Of course, there is no "shifting" either, since there aren't discrete gear ratios as in a traditional planetary automatic transmission. The advantage of a CVT, however, is that it's always in the perfect ratio no matter what the situation requires at a particular moment, whether it be maximum acceleration (keeping the engine pegged at the peak of its powerband) or maximum fuel economy (keeping the engine spinning as slowly as possible during steady-state cruising, particularly when the electric motor is helping to move the car). Audibly, the car didn't sound very swift, but watching the speedometer move did validate the car's combined power and torque ratings of 147 horsepower/140 lb-ft of torque in the 2.4 liter four cylinder and 40 horsepower/199 lb-ft of torque in the electric motor. It didn't feel as swift as a V6 Camry or Accord, but it's also short quite a few horsepower compared to the V6 models of those cars.

Steering feel was better than it was in the Prius, but it's still electric power steering by necessity (otherwise, the car would have no power steering when the engine was not running and the car was in EV mode). Any kind of acceleration while turning the wheel (for example, turning left at a traffic light from a stop after oncoming traffic had just cleared) resulted in howls of protest from the front tires. Also, the suspension was too soft for my taste; it was closer to the Lincoln MKZ in terms of recovery from uneven road surfaces than a sportier choice like a Honda Accord would be.

Driving a hybrid for maximum fuel economy requires almost a completely different technique than driving a regular vehicle does. Gentle acceleration and deceleration work for both types, but hybrids do well when braking gently to a stop because braking energy is captured and sent back to the battery in slower stops; panic stops still use conventional hydraulic brakes. There is an obvious change from the regenerative braking to hydraulic braking, as the hydraulic brakes seemed to suddenly grab the rotors; it was not a linear transition between the two. When moving through very slow traffic, a gentle right foot is golden, as it's possible to move for a while on battery power alone, which technically gives an infinitely high fuel economy figure. In the spot where there would normally be a tachometer, the Camry Hybrid has a MPG Consumption gauge that shows instant fuel economy, as well as when the car is in EV-only mode. Having this gauge not only encourages better (meaning more economical) driving habits, but also makes maintaining high numbers (and keeping the car in EV mode as often as possible) a game. In fact, the car even takes the "game" mentality one step further, by displaying a Eco Drive Level graph in the display under the speedometer after shutting down the car. After a particularly economical trip over the weekend (after all, my wife and sons were riding along), the car was so pleased with my achievement of 37 or 38 mpg on the trip that it rewarded me with an "EXCELLENT!" message.

Fuel Economy
Discussion of a hybrid vehicle would be incomplete with a mention of its fuel economy. It was impressive, but not stratospherically high like it was in the Prius. However, the Camry Hybrid is also a much larger car with a larger (2.4 liter rather than 1.5 liter) engine. My first day with the car, I drove my 50-mile roundtrip commute conservatively to maximize my fuel economy and got 33.0 miles per gallon, which is exactly what the car is supposed to get in the city cycle, according to the revised EPA ratings for 2008. My trip consists of mostly back roads, with almost 30 traffic lights as I approach the city that I work in; I typically get about 22 or 23 miles per gallon in my V6 Accord. The next few days, I drove the car "normally" without specifically trying to maximize fuel economy, and it dropped to 31.4 miles per gallon. Today, I was a little more aggressive on the throttle and sank my average to 31.0 miles per gallon. The amazing thing to me was the consistency of the fuel economy over 250 miles; usually, driving style has a huge effect on fuel economy, but I saw much less of that with the Camry Hybrid.

How does this fuel economy compare to similar vehicles? The non-hybrid four cylinder Camry is rated at 21 city/31 highway (25 combined), so the Hybrid's 33/34 (34 combined) is a 9 mile per gallon improvement, with better performance. In fact, the diminutive Honda Fit, while admittedly cheaper than the Camry Hybrid, is also smaller and less powerful, but is rated at 27 city/34 highway (30 combined).

Pricing
The Camry Hybrid starts at $25,860 including destination, although it currently has a $1,000 rebate, and can be found for under MSRP without much searching. Most models that I have seen, however, are equipped with the upgrade package that my tester featured, which added the leather wrapped steering wheel and shift knob, upgraded stereo, and more. My tester's total MSRP was $27,239. While that is a significant jump from the $18,000 that a price leader CE is selling for, a more valid price comparison is against the XLE four cylinder. The Hybrid has everything standard or optional that the XLE has except for a folding rear seat, foglights, and rear seat sunshades, and costs about $1,770 more when adjusting for features. While there are no longer tax incentives available when purchasing a new Toyota hybrid, assuming that it gets 9 miles per gallon better than a regular midsize vehicle, the extra upfront cost of the Camry Hybrid compared to the Camry XLE four cylinder will be paid off in 3.06 years (assuming gas costs $3.15 per gallon and that you drive 15,000 miles per year). After the three years, its cheaper fuel costs will add money to your pocket.

I've been toying with the idea of getting a more fuel efficient vehicle for my next daily driver, and I had been very interested in a Camry Hybrid as one possibility. Although if I were in the market for a traditional midsize sedan, the Camry Hybrid would be an excellent choice, vehicles such as the Honda Fit would be easier to park and more fun to drive, with a $10,000 lower price relative to the Camry Hybrid ($6,000 when adjusting for all of the goodies that the Camry Hybrid includes and aren't available on the Fit at any price). However, for those interested in a fuel efficient vehicle without sacrificing comfort or performance, the Camry Hybrid is a very good vehicle worth investigating. Just be prepared for a driving experience that requires some getting used to.

For more photos of the 2008 Toyota Camry Hybrid, click HERE to go to our gallery.

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Smart ForTwo Passes NHTSA Crash Test With Stars and an Asterisk

By Chris Haak

04.04.2008

The National Highway Traffic Safety Administration (NHTSA) just completed its first crash tests of the diminuitive Smart ForTwo minicar. The good news for Smart is that the car received four stars for driver frontal protection and three stars for passenger front impact protection. The ForTwo also received the top five star rating for side impacts.

The problem is that the driver's door unlatched and opened during the side impact test. Although the belted dummy still survived the crash with relatively minor injuries (thus earning the five star rating), the agency raised "concerns" about the safety implications of a door opening during impact.

Smart expected the vehicle to earn a four star rating from US regulators; it appears that, other than the door latch problem, they exceeded expectations in the side impact test and didn't quite meet them in protecting the passenger from a frontal impact. Smart did not immediately have any comments or rebuttals posted on their media website, but I would certainly expect the company to investigate the door latch issue and redesign the part, then request a re-test.

Crash test results from the Insurance Institute for Highway Safety (IIHS) for the Smart ForTwo have not yet been released; they are expected to be later this month. IIHS tests are generally more difficult than NHTSA tests to pass, as IIHS tests frontal offset crashes where only part of the car's front end hits the solid barrier, which significantly increases crash forces to the part of the car that strikes the barrier. It's easier for cars to absorb a frontal impact that hits the entire front end and spreads crash energy across more of the crash structure.

The "concern" from the NHTSA (plus the three star front passenger rating) are something of a blow to Smart, because the company has very aggressively played up the ForTwo's safety features, primarily to allay concerns that US buyers may have about driving an 8 foot, 8 inch long vehicle weighing only 1,800 pounds on US highways where the average vehicle is nearly twice as heavy (and in many cases is three times heavier or more). In fact, every Smart showroom has a tridion safety cage from a Smart ForTwo on display to show just how such a small car has the ability to protect occupants and dissipate crash energy. For those reasons, my guess is that Smart will respond to this news quickly, but frankly I'm surprised that their PR department has been silent so far.

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Bob Lutz Says a Realistic Price fo the Chevy Volt is $48,000

By Chris Haak

04.03.2008

Well, so much for the $30,000 price point bandied about when the Volt made its debut in Detroit in January 2007.

GM Vice Chairman Bob Lutz told MSNBC in a recent interview (see page 2) that development costs for the upcoming Chevrolet Volt range-extending electic vehicle have been higher htan initially anticipated, and that a "realistic price" for the car would be $48,000.

Now, Volt bashers/doubters on various Internet forums and blogs have thrown up their arms in disgust because to them, the price target has been completely blown up and the car's value proposition - as a car that will potentially eliminate the need to fill the gas tank during normal commuting duties for most buyers - becomes dubious. After all, you can buy a LOT of gasoline, even at $3.15 per gallon, for $18,000. Actually, assuming 40 miles per gallon that a $21,760 Prius can easily manage, $18,000 buys about 228,571 miles of driving. If the Volt were $48,000 with no tax incentives, a buyer could pay for 333,206 miles' worth of gasoline by purchasing a Prius instead.

However, Mr. Lutz also went on to say that a $40,000 price for the Volt may be possible if GM didn't earn a profit on it, and the price could potentially be pushed closer to $30,000 with government tax incentives. Since GM has already made the choice to sell its expensive two-mode hybrid system fitted into its largest trucks and SUVs at a loss to build volume and brand recognition, it seems extremely likely to me that GM will sell the first generation Volts at a loss just for the environmental and PR coup the car would be. On top of that, let's hope that if our own federal government was willing to give generous tax incentives to buyers of hybrid vehicles that still use gasoline (and in the case of some, still use a reasonably large amount of it), it would hopefully be willing to step up to the plate with incentives tailored to the Volt, which - if it performs as advertised - has the potential to significantly reduce oil consumption.

Once the Volt becomes more recognized in the marketplace and production volumes increse, GM should be able to take the time to engineer away some of the more expensive aspects of the car, such as its redundant systems for necessities like wipers, lowering the car's cost, weight, and complexity. I predict that the Volt - or its successors - will fall below $30,000 within the next several years and will be an even better car than the first Volts will be.

So, to all of the Volt supporters and detractors out there, don't put too much weight into the $48,000 figure, because I would be extremely surprised if GM had the nerve to put that large of a price tag on that car, regardless of how much sophisticated technology makes it work. (Of course, inevitably, dealers will be adding "market adjustments" to the price of the initial Volts to take some extra money from early adopters). But I expect the price to be $35,000 or less after tax incentives. We Americans like to buy our vehicles "by the pound," and a sub-midsize Chevy will not be a sales success at $48,000.

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OnStar Announces Additional Navigation Features

By Chris Haak

04.03.2008

Yesterday, GM announced that it was adding some enhancements to the navigation capabilities of the OnStar system, both for vehicles equipped with the more expensive LCD screen-based navigation systems and those with the more rudimentary "turn by turn" navigation that OnStar offers to subscribers.

The first new feature is called OnStar Destination Download. It allows subscribers with screen-based navigation systems to input their destination while the vehicle is in motion by only pressing the OnStar button. Of course, this will be seen as a benefit to anyone who has been frustrated by the inability (for safety and/or liability reasons) to enter a destination into the navigation system of a moving vehicle - even when the passenger is attempting the entry. After pressing the OnStar button and giving your destination information to an OnStar advisor, Destination Download will then utilize your vehicle's regular navigation system and color screen to get you to where you're going.

The second new service is called OnStar eNav, which allows OnStar subscribers who have a Turn-by-Turn navigation-equipped vehicle pre-enter their trip on Mapquest.com. After pressing the OnStar button and speaking with an advisor, the advisor can transmit the Mapquest directions to the Turn-by-Turn navigation display (which is smaller and monochrome, as opposed to the full-color more expensive navigation screens in some other vehicles). However, the process of entering your destination is greatly streamlined.

Finally, the third enhancement is the addition of XM NavTraffic service to all 22 vehicles that GM offers screen-based navigation systems in for the 2009 model year. Currently, only a handful of newer GM vehicles such as the 2008 CTS offer NavTraffic, but it will be more ubiquitous next year. XM's NavTraffic service, which adds an additional charge onto your XM bill, allows the navigation system to reroute the vehicle around poor traffic conditions.

I'm pleased that GM continues to improve the OnStar service. From a customer standpoint, I'm also very glad to know that nearly all 2009 GM models will have factory Bluetooth connectivity available. The $80,000 2008 Corvette Z06 doesn't have Bluetooth available, but the $25,000 Toyota Camry does. The addition of Bluetooth is a big deal for GM, because the company had been extremely reluctant to make it available in the past because it didn't want to cannibalize potential OnStar sales and jeopardize that recurring revenue stream of monthly subscriptions. Many people, however, do not want to pay OnStar for cell phone airtime and do not want to have separate phone nuumbers for their vehicle and their regular cell phone. GM has managed to enhance OnStar's relevance in a world that has ever more competing technologies, and that's pretty impressive.

Personally, I'm still not convinced that I'd be willing to pay a few hundred dollars per year for the OnStar service after the first year that's included in the new vehicle purchase price ended. It might be a more bold move on GM's part to give the most basic OnStar service - emergency response notification - for five years with the purchase of a new vehicle as part of a comprehensive safety marketing campaign. Regardless of my opinion, obviously plenty of people do appreciate OnStar, or it wouldn't continue to be a service offered by GM.

To read GM's press release, click here.

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2008 Lincoln MKZ AWD Review

By Chris Haak

04.02.2008

Last week, Lincoln provided a loaded pearl white MKZ AWD for me to evaluate. I was eager to check out the MKZ, since it's a good looking car and seems to have a lot of great features on paper. Not only that, but I was dying to finally get a chance to try Ford's SYNC system, which of course was developed in partnership with Microsoft.

The MKZ that I drove had every option available, including chrome 17" wheels, DVD navigation, HID headlamps, the interior satin/aluminum package, THX II Audiophile Sound, heated and cooled seats, and a power moonroof. Overall, the car had about $6,000 in options added to its $33,165 base price.

Exterior
The MKZ is a handsome car, particularly in the front end. Of course, those in the know are aware that it's basically an upgraded and rebadged Ford Fusion. The two cars share no visible interior parts, and the MKZ's exterior is unique except for the area between the A-pillar and C-pillar (the doors and greenhouse). The problem with the MKZ's shape is, however, that for a car that was introduced in the 2006 model year (as the Lincoln Zephyr, a name which only lasted one model year until the goofy MK_ names began), the styling is starting to look a little dated already. The center section of the car is very bland, with a shape as forgettable as nearly any other midsize sedan, such as a Honda Accord, Toyota Camry, or a Ford Fusion, but with a windshield whose base is pushed forward very far so that it's less upright than it would be in a traditional sedan. The front clip is not only attractive, but unique-looking. The large chrome grille is its prominent feature, and it has a style that doesn't look anything like an Asian or European vehicle. In the back, a very large Lincoln crosshair logo is one of the car's most prominent features, but aside from that, it's difficult to tell what kind of car it is. The taillights are arranged horizontally, but aren't very interesting to look at.

Interior
Although the MKZ isn't an unattractive car, its best side is probably the inside. My tester was equipped with a two-tone tan interior that looked downright opulent. The seats were a light hue, nearly a creamy white shade (called "sand") and the fronts were perforated leather. Neither my wife nor I were crazy about the aluminum-looking plastic covering the entire center stack, including radio and HVAC buttons, but Lincoln has been consistently using it for a few years in most of its models. Finally, the steering wheel was about 25% too large for my liking. I'm not sure if Lincoln shares the MKZ's steering wheel with the Navigator, but it certainly felt like they did. The dashboard was a little too angular for my liking, but at least the entire thing was covered in a padded material. I actually enjoyed poking around at a soft dashboard, because it's not a feature one sees very often in the new car market in 2008.

However, that dashboard whose shape I disliked and whose texture I liked also was far too high for my taste. At 6'4", it's unusual for me to feel small when sitting in any vehicle, but I constantly had that feeling in the MKZ. The cowl is too high and the bottoms of the side windows are too high. While it helps the car's exterior styling to look more modern, it struck me as a "function following form" choice from Ford's designers. The high cowl reminded me of my grandpa's old 1983 Chevy Impala's, and the high window opening made patronizing drive-up windows a difficult feat. More than once, my hand hit the top of the door panel rather than making its way through the window to transact business. I unscientifically compared the dashboard height of the MKZ against my 2004 Accord, and the MKZ's dashboard was aligned with my chin, while the Accord's was aligned with my rib cage. That's a difference of several inches, and made it difficult for me to find a driving position that combined clear sightlines with appropriate legroom, while preventing my hair from scraping the ceiling.

Other than my gripes above, the interior overall was excellent. The seats were comfortable during several hourlong commutes, the automatic climate control worked flawlessly, and the THX II stereo sounded great. SYNC also worked as advertised. I was able to connect my 5G iPod using its USB cable in about five seconds (the SYNC connections are inside the console as pictured to the left), and also successfully tested the standard 1/8" line-in jack with my portable XM radio. SYNC had trouble connecting with my LG cell phone, but although I initially blamed the problem on SYNC, the phone was unable to re-connect to our van's Bluetooth hookup either, and my wife's Nokia cell phone connected to SYNC in less than a minute. I only had two problems with SYNC. The first was that the voice recognition could get tedious. If I wanted to play a specific U2 song such as "Vertigo" from my iPod, I'd have to push the voice button on the steering wheel, wait for a chime, say, "Audio System," wait for another chime, say "User Device", wait for another chime, then say, "Play song "Vertigo."" It's a shame that the system makes you navigate to the "User Device" each time you want to do something with it; I would have preferred that it just assume I wanted that selection after choosing it once. The other problem I had with SYNC is that after turning off the car, it always forgot what I had asked it to do previously. So, if I had asked it to "Play artist Coldplay," it would do that perfectly, and show which track it was playing out of 30-some Coldplay tracks in my library. However, once I got back into the car after work, it would resume the previous Coldplay song but would not move onto the next or previous selections. Hitting the "next track" button on the radio or on the steering wheel would just begin that track again. If the system can remember what song it had been playing, I wish it had been able to remember the rest of my earlier request when turning off the car. Otherwise, SYNC worked exactly as advertised and did a great job of voice recognition. Not only that, but it repeated trickier names like album titles without sounding too robotic or phony.

The trunk in the MKZ was cavernous. Although I didn't have the opportunity to use it, the combination of a long load floor and a high decklid made a nicely-shaped trunk with plenty of space for nearly anything an owner would reasonably expect to need to carry in it. The trunklid also had gas struts rather than gooseneck hinges, so the cargo area was not compromised by large hinges that tend to crush the contents of some cars' trunks.

We have both an infant carrier and convertible car seat in use in our family. Although both fit into the MKZ, it was impossible for me to find a comfortable seating position in front of the infant carrier that did not put the front seatback tight against the infant carrier. Generally, it is advisable to have a few inches of clearance between the two, but this was not possible in the Lincoln (although, ironically it is in my Accord). This issue was what forced us to trade in our SUV for a minivan last December; remember, my wife and I are both very tall, so more normally-sized drivers and front seat passengers may not encounter this problem at all. Note that the photo to the right of this paragraph shows the infant carrier base without the carrier itself in the vehicle.

Driving Experience
The MKZ's 263-horsepower 3.5 liter V6 and six-speed automatic transmission proved to be a well-matched pair. I never felt wanting for power and never felt like I was in the wrong gear. Even on wet roads, flooring the accelerator from a stop did not cause any wheelspin. Part of that is due, of course, to the car's all wheel drive, but part is because of the engine's aggressive torque management program. Several manufacturers do this to help with drivetrain durability, but basically, engine power is limited in first gear at low speeds to avoid sending shocks through the AWD hardware and the transmission. In my opinion, Lincoln should either beef up their components or otherwise figure out a way to eliminate TM, because it felt like it was severely hampering the car's off-the-line performance. Once TM stopped intervening, the engine noticeably perked up, and the combination of six transmission ratios and 263 horsepower led to quick swings of the tachometer needle within each of the lower gears when accelerating rapidly. Other than torque management, my only drivetrain gripe is the lack of any sort of manual shift option. In terms of forward gears, the choices are only "D" and "L" (also, there is a switch to turn off overdrive). It's a shame to have six ratios but no way to select most of them manually.

The suspension tuning on the MKZ was a little too floaty for my liking, but at least it doesn't feel like the last Lincoln I spent a lot of time driving - a Town Car - which gave the sensation of driving a body on frame SUV that happened to look like a sedan. Although it wallowed a bit over uneven road surfaces, it still handled decently, and the 17" wheels and tires helped keep the car planted on the road.

Fuel Economy
The 2008 MKZ AWD is rated at 17 miles per gallon in the city and 24 miles per gallon on the highway. The all wheel drive hardware adds weight and takes away one mile per gallon city and FOUR miles per gallon on the highway cycle compared to the front wheel drive version (which is rated at 18/28), but of course adds foul-weather security for buyers. In my week with the car over about 300 miles of mixed city, expressway, and back road driving, I got 17.8 miles per gallon - pretty close to the city rating. Still, I was disappointed that the far larger Buick Enclave AWD crossover is rated at 16/22, or only about 1 mpg worse than the MKZ. Competitive vehicles such as the Cadillac CTS AWD and Chrysler Sebring AWD actually have similar fuel economy ratings, however. The lesson here is that buyers will pay a fuel economy penalty for the security of all wheel drive long after the payment book is gone.

Pricing
Pricing of the MKZ starts at $31,720 (including destination) for a front-wheel drive model. The AWD model adds another $1,870, bringing the price to $33,590. Options pushed the price of my test vehicle to $39,265 according to Lincoln.com (the window sticker for the car was prepared before prices increased slightly, and shows a final tally of $38,840). Incentives may bring actual transaction prices to a point several thousand below MSRP. The MKZ offers a lot of car and a lot of features, but I'm not sure that I'd personally be willing to pay $39,000 for the car that I spent a week with.

Bottom Line
While I enjoyed my week with the MKZ, I am convinced that Ford has the capability to do better, and in fact, the upcoming MKS (which is a larger, more expensive car that will serve as Lincoln's flagship) probably is that car. The driving position and fuel economy were definite negatives, but the feature content and comfort level were the best parts of the car. I appreciated all of the technology that Lincoln packed into the MKZ - navigation, SYNC, all wheel drive, etc. - but found myself wanting for more usable interior space if it was going to use so much fuel.

My parents visited last weekend from out of town, and they were completely enamored with the MKZ. I've had a few nice cars in my driveway for testing over the past few months, but this was the first one they showed any kind of interest in. By the way, they're in their late 50s and early 60s - I'm not sure if they're the demographic that Lincoln is targeting with this car, but it clearly did hit them somewhere they liked.

Click HERE for more photos of the 2008 Lincoln MKZ AWD.

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