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Lexus has been taking a beating in the US market posting several consecutive sales declines of over 30% in a row.
Those Lexus advocates who clung to reliability and sales as the mainstay of their favorite marque might need to rethink their stance though. The month of March is starting to take its toll of the luxury brand, and may be signaling tougher time for the highly regarded brand.
First JD Power indicated that Lexus slipped to 3rd on the latest Vehicle Dependability Survey scores, in itself a blow but not a big one. However with the March sales results in, it appears that Lexus is no longer the number one selling brand in the US either.
Yes, hard to believe but true:
Lexus year to date sales are a mere 42,069 units down 35.9%
BMW year to date sales are now 42,371 units down 26.8%
Are we witnessing a change of epic proportions? Has Lexus lost its Grip on the US Market?
April 2 (Bloomberg) -- Bayerische Motoren Werke AG, Renault SA and Daimler AG surged as European auto stocks tracked Asian manufacturers including Nissan Motor Co. higher amid optimism that a slump in sales may be bottoming out.
BMW, the world's biggest maker of luxury cars, rose as much as 15 percent, the most since 1992, as did Renault, France's second-biggest carmaker, while Daimler, owner of the Mercedes-Benz brand, added 14 percent. Among parts companies, tiremaker Michelin & Cie. gained 17 percent, auto-engineer GKN Plc was up 24 percent and Continental AG rose 11 percent.
Nissan, Japan's third-largest carmaker, had the biggest jump in five months after figures released last night showed that U.S. auto sales fell less than analysts had forecast in March, rebounding from a 27-year low in February. French registrations rose 8.1 percent last month, according to numbers published yesterday, snapping a five-month decline as government incentives enticed consumers back to showrooms.
“People are realizing that they don't have to be as pessimistic as they have been,” said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong.
Renault, based near Paris, jumped 2.49 euros to 19.28 euros and was trading at 19.10 euros as of 12:14 a.m. local time. Munich-based BMW advanced 3.36 euros to 26.10 euros before trading at 25.74 euros and Daimler, which has its headquarters in Stuttgart, added 2.78 euros to 22.06 euros and was later priced at 21.78 euros.
Michelin Boost
Clermont-Ferrand, France-based Michelin, the second- largest tiremaker after Bridgestone Corp., rose 4.71 euros to 32.68 euros, the biggest jump since Oct. 2, 1989, at least, before trading at 32.35 euros and Redditch, England-based GKN advanced 16.75 pence to 87.25 pence, the most since Nov. 25. It was later priced at 86 pence in London.
Hanover, Germany-based Continental, Europe's second- biggest auto-parts manufacturer, added 1.38 euros to 12.96 euros and was later at 13.85 euros. Lenders to its debt-laden owner, Schaeffler Group, agreed to provide a 500 million-euro ($668 million) bridging loan, giving more time to come up with a rescue plan, Handelsblatt said, citing unidentified bankers.
Fiat SpA, Italy's biggest auto company, rose 15 percent to 6.09 euros and was later priced at 5.94 euros. Sports-car maker Porsche SE, which counts the U.S. as its biggest market, rose as much as 15 percent to 41.69 euros before trading at 40.90 euros and PSA Peugeot Citroen, the French No. 1, added 11 percent to 16.67 euros and was subsequently at 16.42 euros.
U.S. auto sales tumbled 37 percent to 857,735 last month, suggesting an annual rate of 9.86 million, according to Autodata Corp. That beat the 8.8 million average estimate of eight analysts in a Bloomberg survey and was an improvement from February's 9.1 million, the lowest since 1981.
Nissan shares had surged 14 percent to 438 yen at the close of trading in Tokyo. Honda Motor Co. jumped 11 percent and Toyota Motor Corp. added 5.5 percent.
U.S. deliveries for Nissan and Honda, both projected to fall 42 percent in a Bloomberg survey, dropped 38 percent and 36 percent respectively. Toyota, the world's largest automaker, declined 39 percent, also less than the 41 percent forecast.
TOKYO - Toyota Motor Corp. is going for the jugular with its upgraded Prius, setting a 2.05 million yen starting price ($20,750) in Japan that is on par with the newly released Honda Insight.
Toyota notified Japanese dealers of the cutthroat pricing policy for its redesigned 1.8-liter gasoline-electric hybrid on March 25, dealers here say.
Toyota has not yet officially announced pricing and declined to comment.
The move stokes a high-stakes price war between the Prius and the Honda Insight, which went on sale in the United States in March starting at $20,470, including delivery. The third-generation Prius goes on sale next month and had been expected to start around $24,000.
Aggressive U.S. pricing likely
Bringing the starting price down to Insight levels will steal Honda's thunder as purveyor of world's first affordable hybrid vehicle. Toyota's pricing strategy for the Prius in the United States is still unclear. But if Japan is any guide, it will be very aggressive.
In Japan, a bottom-rung Prius at 2.05 million yen ($20,750) would cost the same as a middle-trim Insight. Toyota might use the price to lure buyers and switch them to higher grades.
The best-trim Insight tops out at only 2.21 million yen ($22,370) in Japan. But a fully-loaded new generation Prius will stretch out to 3.27 million yen ($33,100), dealers say.
“It's great news for me, but the dealer margins are lower than ever,” one dealer said.
The current generation Prius starts at 2.331 million yen ($23,590) in Japan.
A newer Prius that is also cheaper will be an easier sell against the archrival Insight. It is not only bigger and roomier than the Insight, it boasts much better mileage. The Insight has an EPA rating of 40 mpg city/43 highway, while the Prius gets 51 mpg city/48 highway.
Current Prius stays on sale
At the same time, Toyota will continue selling the current generation Prius in Japan alongside the new version, which is expected to hit showrooms here May 18.
Toyota will redesign the interior of the current Prius and knock down its price to 1.89 million yen ($19,130) to match the bottom-trim Insight, dealers say.
Rebadged as the Prius EX, it will target mainly fleet customers
April 6 (Bloomberg) -- Toyota Motor Corp.'s $64,000 Lexus LS sedan and $67,000 Lexus SC Coupe are magnifying the carmaker's financial pain in the biggest auto market.
Sales of the best-selling luxury car brand in the U.S. fell 37 percent in the first quarter, led by a drop in demand for the most expensive models. The company has sacrificed profit margins to stanch the decline.
Toyota had its first annual loss in six decades as the global recession decimates auto sales. Surging incentives at other luxury brands including Bayerische Motoren Werke AG, Daimler AG and Audi AG has forced the Toyota City, Japan-based carmaker to more than quadruple discounts on Lexus models in the last two years, according to Edmunds.com.
“Since 2002, we estimate this is the cheapest time ever to buy a Lexus,” said Jesse Toprak, director of analysis for Santa Monica, California-based Edmunds.com. “The increase in incentives comes straight from the bottom line.”
U.S. Lexus sales shrank 27 percent in Toyota's fiscal year that ended March 31, versus a combined 23 percent drop for Toyota and Scion models. While the premium line accounts for 12 percent of Toyota's overall U.S. volume, analysts estimate it has generated a much larger portion of profit.
Higher Profits
“Luxury vehicles are always more profitable. The margins are higher, the absolute dollars are higher,” said Efraim Levy, a New York-based equity analyst for Standard & Poor's. “Lexus has been one of the drivers for Toyota's rapid earnings growth in North America in recent years.”
Toyota doesn't disclose financial details for the brand, said Greg Thome, a Lexus spokesman. He declined to confirm a 2004 estimate from former Lexus general manager Denny Clements that, depending on sales volume, product cycles and exchange rates, Lexus generated more than half of Toyota's U.S. earnings in some years.
The drop for Lexus models that sell for an average of $41,000 according to Edmunds.com, also erases revenue Toyota needs to combat the costs of under-used North American plants. Edmunds.com's Toprak estimates that average incentive spending on Lexus vehicles jumped to a record $3,179 in this year's first three months from just $785 in 2007.
Toyota's shares gained 1 percent to 3,740 yen today in Tokyo, adding to the carmaker's 29 percent rise so far this year. The stock still lags behind a 44 percent gain for both Honda Motor Co. and Nissan Motor Co.
Lexus, Camry
“A Lexus can't cost three times as much to build as a Camry, so it's been an extremely good business,” said Jeffrey Scharf, president of Santa Cruz, California-based Scharf Investments, a $500 million fund that sold its shares of Toyota in 2008. “If the trend toward higher-priced vehicles has peaked, their profits would be deteriorating,” Scharf said.
Recession, weak consumer sentiment and rising job losses have cut sales of new vehicles this year to the lowest level since the early 1980s, down 38 percent through March.
Lexus' drop mirrors the overall plunge for luxury cars and sport-utility vehicles, which are down 38 percent in the first quarter, according to sales tracker Autodata Corp.
Customer Growth Partners LLC, a retail consulting firm in New Canaan, Connecticut, estimates overall U.S. luxury purchasing has fallen 21 percent this year, after a 12 percent drop in 2008's fourth quarter.
The jump in incentives was the result of clearing out supplies of RX SUVs, the top-selling Lexus, when a new version recently went on sale, according to Mark Templin, Lexus's general manager.
Incentives
Overall luxury car incentives averaged $4,022 last month and luxury SUV discounts were $3,944, according to Edmunds.com. Lexus first-quarter incentives trailed BMW, which offered $4,936 per vehicle and Mercedes-Benz's average of $4,569. The two European companies increased such spending last month, while Lexus' dropped to $1,928.
Luxury segment competitors' “incentive spending is at incredible levels now and that's not necessarily the best way to run a business,” Templin said. “Our focus at Lexus has never been on volume.”
In Japan, Lexus sales sank 50 percent in March and 35 percent in the just-ended business year, according to figures the company released this week.
“The global luxury car market is expected to remain tough,” said Mamoru Kato an analyst at Tokai Tokyo Securities in Tokyo. “The brand will continue to struggle.”
While the recession cuts Lexus demand, not all of Toyota's models are losing sales. Sales of the Passo compact car surged 31 percent in February in Japan. The car costs $13,000.
AT the Detroit auto show in January, Adrian van Hooydonk, the director of BMW Group Design, had a gender-bending surprise for reporters examining the new BMW Z4 with a retractable hardtop.
They told him, he recalls, that the redesigned car looked “more sporty, more dynamic, more aggressive and more masculine.”
Mr. van Hooydonk would listen politely, tell them they were exactly right, and offer to introduce them to the designers. Then he would bring out the women most responsible for the car's masculine swagger: Juliane Blasi, 32, the exterior designer, and Nadya Arnaout, 37, who did the interior.
He says the reporters were surprised. “I guess still a lot of people think that women can only design round shapes and soft shapes and fluffy stuff,” he said. “And I know that's not true.”
The 2009 Z4 will be one of BMW's attractions at the New York auto show, which holds media previews this week at the Jacob K. Javits Convention Center before opening to the public on Friday.
To pick the designers for the Z4 project, the automaker held a competition. Designers from both BMW studios — at the headquarters in Munich and at DesignworksUSA in Newbury Park, Calif. — submitted sketches and eventually full-size clay models. To ensure that personalities were not a factor in the judging, the creators remained anonymous.
No one was more surprised by the outcome than the two German women: Ms. Blasi because it was the first full-size clay model she had done since she was hired at the Munich studio in 2003, and Ms. Arnaout because she had just switched to interior auto design at DesignworksUSA. Previously, as a product designer since 2000 at the California studio — which also does designs under contract for other companies — she had worked on things like vacuum cleaners and sports equipment.
Although Ms. Blasi ordinarily works in Munich, at the time she was in California on an exchange program.
“Of course, you know the designers who don't win are not happy,” she said of the internal competition, known in the studios as a “bakeoff.” She knows, she said, because, “We have experienced that situation a lot of times, also.”
But not this time. And, although some people are surprised that the Z4's designers are women, Ms. Blasi and Ms. Arnaout said being women didn't mean they were locked into a feminine style. “If you look at the car you should not be able to see whether it was designed by a woman or a man,” Ms. Blasi said.
Ms. Arnaout added: “A designer just has to be able to communicate with a form language that fits the concept. I love roadsters and I've owned them before. I think that made it easy for me to get into this project and come up with concepts and ideas for it.”
Ms. Arnaout focused on making the interior driver-oriented, not gender-oriented. And Ms. Blasi said she didn't try to make the exterior look masculine. “I tried to make it look fierce and strong, and some people would probably relate it to the male.”
But, the designers agreed, that's just because people are programmed to think that way.
Their boss, Mr. van Hooydonk, noted that in design, it's the creativity that matters. “One could have thought maybe we shouldn't let two women design this car because so many male customers are going to buy it, and it should be seen as sporty.
“We could have influenced the sketch competition, if we had wanted to let male designers win. But we didn't because we are absolutely convinced that the most important thing for the company is to get the best possible design.”
The new roadster replaces both the previous Z4 roadster and coupe. Its solid retractable top posed two big major challenges for Ms. Blasi. One was keeping the look as coupelike as possible when the top was up. The other was keeping the long-hood, short-deck proportion of a roadster.
“Normally, it's hard to hide a retractable hardtop in the trunk and still have the roadster proportions, because it takes up more space than a fabric top,” she said. “It's important to give a sports car width from the rear. So that was my main emphasis, to make it look as wide as possible. I kept it all very horizontal — and the rear light, I kept it superhorizontal and wide.”
One problem for Ms. Arnaout was finding a way to incorporate her idea for an asymmetrical center console — angled toward the driver — into a car built with both left- and right-hand drive.
The console was important, she said, because it emphasizes the driver orientation of the cockpit. Her solution was to make the console symmetrical, but then add a piece of extra trim on one side or the other, depending on the market, making it appear asymmetrical.
The project, which began with sketches in 2005, still doesn't seem real, Ms. Arnaout said. “It still feels like a project as it stands here,” she said. “Once we see it driving on the street it's going to hit us. I think the true excitement comes at that point.”
Our 2008 BMW 135i spent the month of February with our East Coast staffers, who were more than happy to spend some time with the little, alpine white sportster. East Coast editor Jamie Kitman and senior editor Joe Lorio managed to rack up more than a thousand miles in and around New York City.
Jamie Kitman, East Coast Editor
20,054 miles
It's not hard to like the 1-series-great chassis, solid as a brick with more than 20,000 miles on the clock, and a straight six strong enough to make a big car fast, much less this smallest of the BMWs. The straight six engine is a wonderful product differentiator for BMW. It's a wonder (almost) no one makes them when they're so creamy smooth.
20,228 miles
Ignoring things like my children and luggage, I'd take a 1-series over a 3-series. I like the relative lack of girth; the extra snugness, which can be a little opressive-claustrophobic even-when you're just puttering around, makes a lot of sense when you're getting it on in the 1.Still in my heart of hearts, I think it is too big heavy. 200 pounds less than a 3-series is not enough; 500 would have been better. If it were that easy, though, I expect they would have done it already.
Joe Lorio, Senior Editor
20, 519 miles
Especially after the string of SUVs and crossovers I've been in recently, the 135i feels awesome, with its M-worthy levels of power, and tight, precise steering.
Pulling to a stoplight at the crest of a steep hill in Jamie's riverside town, I discovered something new and, at that moment, quite welcome about this car; a hill-holder clutch. The brakes don't let go until you hit the gas. That's one more reason to go for the stick shift, 1-series shoppers.
21,058 miles
Our 135i is definitely sporty enough for most- I keep absentmindedly referring to it as the M3-and a bit too hard-core for others; the big wheels, with their wide, low-profile tires do tend to crash over the fresh potholes in our freeze-thawed blacktop. Of course, mellower spec is available.
The size is too big for some, and too small for others; personally I found back seat space adequate for a pair of elementary school kids, but there's not a lot of growing room back there.
21,312 miles
Despite all the differences of opinion about our 135i, I think we can all agree that the 1-series is the most welcome addition to BMW's U.S. lineup in a long, long time. More so than any SUVs or crossovers or coupe/sedan half-breeds, the 1-series- a compact, practical, fun-to-drive entry with a full measure of family DNA-is the kind of brand extension that is easy to get behind.
Our assistant editor, David Zenlea, was charged with retrieving the 1-series from New York. To make it worth his while, he added several side-trips before making his way back to Ann Arbor. He was so smitten with the 135i that we had to pry the fat steering wheel from his hands.
David Zenlea, Assistant Editor
22,881 miles
I just spent a week and a half and more than 1500 miles-from New York to Washington D.C. then back to Michigan, by way of Chicago- in the 1-series and if I could drive it again tomorrow, I would. Even after 24 hours of highway seat time, I delighted in unnecessarily heel-and-toeing as I slowed for a toll booth and then squealing away, slightly sideways, through first gear. Despite being an enthusiast of American muscle cars, I'll happily admit the rush of the straight six at full throttle is every bit as satisfying as that of a big, pushrod V-8. What I love about the 1-series is that, unlike some of the bigger, more expensive BMWs I've driven, it doesn't seem to take itself too seriously.
2008 BMW 135iBase Price: $35,675
As Tested: $39,125
Options:
- Black boston leather - $1450
- Cold weather package - $600
- Sport package - $1000
- iPod adapter - $400
Overview
body style 2-door coupe
accommodation 4 passengers
construction Steel unibody
Powertrain
Engine 24-valve, DOHC turbo I-6
Displacement 3.0-liter ( cu in)
Horsepower 300 hp @ 5800 rpm
Torque 300 lb-ft @ 1400 rpm
Transmission type 6-speed manual
Drive Rear-drive
Chassis
Steering Power rack-and-pinion
Turning circle 35.1 ft
Suspension, front Strut-type, coil spring
Suspension, rear Multilink, coil spring
Brakes F/R Ventilated disc, ABS
Tires Pirelli Winter Sottozero RFT
Tire size F/R 215/40R18 / 245/35R18
Measurements
headroom f/c/r 37.9/ 37.1 in
legroom f/c/r 41.4/ 32 in
shoulder room f/c/r 54/ 53.4 in
L x W x H 172.2 x 68.8 x 56 in
Wheelbase 104.7 in
Track f/r 57.9/ 58.9 in
Weight 3373 lb
weight dist. f/r 52.3/ 47.7 %
cargo capacity 10 cu ft
fuel capacity 14 gal
est. fuel range 350 mi
fuel grade 91 octane
Since the X5's introduction in 2000, BMW's M division has refused to tune any of the brand's SUVs, even though that crossover's basic architecture comes from the 5 Series. Now with the intro of the X5 M and X6 M at the New York auto show, BMW is giving in to competition from the Porsche Cayenne GTS and the Mercedes-Benz ML65 AMG. In more certain times, the X5/6 Ms would be surefire profit-makers.
Instead of the M5's 500-horse, 5.0-liter V-10, the X5/6 M are powered by a new version of the 4.4-liter twin-turbo V-8, this one featuring a new exhaust manifold set in the engine's vee. The manifold has one turbo inlet for every two cylinders (normally, it's one inlet per turbo scroll) and swaps out cylinders to get a pulse every 90 degrees. The two Garrett twin-scroll turbos work both sides of the vee, not one per bank. There are a larger intercooler and air cooler than in the standard, production twin-turbo BMW V-8, although the oil cooler and water cooler are the same. The Ms get different camshafts and pistons and a 9.3:1 compression ratio. The cylinder head uses the same aluminum alloy as BMW's diesels.
The new M twin-turbo V-8's max engine speed is 6800 rpm (with turbos spooling to about 16,000 rpm at maximum turbo boost) and the engine produces a heady 502 pound-feet of torque from 1800 rpm on.
The X5/6 M set another BMW precedent, as the first M models with an automatic transmission. The X5/6 M's "sport" mode speeds up shifting among the six gears, and the "M" mode speeds them up even further. Click on the X5/6 M's M mode and all-wheel-drive bias shifts heavily to the rear wheels, making them great drift competition candidates, BMW says. The rear bias is well past 20/80, although BMW says it's not pure rear drive.
BMW allowed a short drive of a preproduction X6 M, its steering setup still two generations away from final production, which begins this fall (X5 and X6 M go on sale late this year). Even in M mode, the X6's ultra-high grip and utter lack of body roll trumped attempts to set the tail loose on tight two-lane curves. The X6 M didn't feel too harsh out there, but we were on mostly tabletop roads outside of Munich. On crustier roads, even the standard X6 is a bit harsh.
Most important these days, the X6 M uses about 10 percent less fuel on the European mileage testing cycle than the M5. You can bet on the twin-turbo V-8 instead of the V-10 when BMW replaces the M5 in the 2012 model year.
VANERSBORG, Sweden (Reuters) -- A Swedish court on Monday granted General Motors' making unit money-losing Saab unit an extension of the period it is protected from creditors, giving the carmaker further time to restructure.
The court, in Vanersborg, approved the extension after hearing that no creditors had entered reservations against Saab's proposed reorganization plan, under which creditors would write off 75 percent of its non-prioritized debts.
"The reconstruction can continue until May 20 at the latest, if no other decision is taken before then," the court said.
Had a creditor objected, the court would have been able to stop the restructuring process, putting Saab at risk of bankruptcy. Some 1,300 creditors were summoned to Monday's hearing, the Swedish news agency TT reported.
A court-appointed administrator, Guy Lofalk, said about 20 "actively interested parties" were eyeing Saab and that a deal is expected in June. The U.S. parent, which is shedding marginal brands to survive, has said it will cut its ties with Saab after 20 years by Jan. 1, 2010.
"Comprehensive contacts have been undertaken with different interest parties," he said.
Chinese companies such as Dongfeng Motor Corp. and Swedish industrial groups are among the interested investors, a company source familiar with the negotiations told Automotive News Europe last week.
Seeking shelter
Saab sought protection from creditors in February in its effort to survive the economic downturn and buy time to find a new owner.
"During the reorganization Saab plans to begin negotiations with creditors on writing down the company's non-prioritized debts by about 75 percent," court-appointed administrator Lofalk said.
A deal on the debt was expected to be concluded in July, with a payment to creditors a year later.
A senior tax authority official, representing the Swedish state, as well as a representative of GM, which is also one of the chief creditors to Saab, told the court they supported the plan.
Auto analysts said creditors preferred reorganization over an outright bankruptcy in the hope that Saab will be able to find a new owner willing to invest enough in the business for it to survive.
Breakeven at 130,000
Lofalk said in a court filing that a concentration of production and the launch of new models would boost capacity utilization at the company while efficiency measures lowered its breakeven level to an annual production rate of 130,000 vehicles.
"Saab also expects a positive cash flow already in 2011 as well as good returns at a production level of 150,000 cars," Lofalk said.
The court document showed Saab expecting to have lower volumes both this year and next compared to the 93,000 units produced in 2008, but that a gradual recovery in auto markets as well as the broader economy would benefit the company.
Saab needs $1 billion of financing to help it overhaul production and launch new models. It aims to raise $600 million of that sum from the European Investment Bank while GM would inject $400 million in the shape of debt write-offs and production equipment, the court filing showed.
The company -- which has been making cars in the industrial town of Trollhatten since 1949 and is one of Sweden's best-known brands -- has said it lost about 3 billion crowns ($370 million) last year and expects a similar loss in 2009.
Saab last month announced it would cut 750 jobs out of a total of about 4,100 in Sweden.
FORGET about thinking outside the box -- or inside it, for that matter. Nissan Motor is betting an estimated $20 million during the worst automotive sales slump in a generation that a spirited campaign can get drivers to forgo the box for the cube.
Actually, it is the Cube, as in the Nissan Cube, a cute, smallish car scheduled to go on sale on May 5. And scratch the word ''car,'' for the campaign to introduce the Cube in the United States, which begins on Monday, takes a big step, er, outside the box by calling it a ''mobile device.''
The phrase, borrowed from the digital domain, signals that the intended market for the Cube is younger drivers. It also signals the focus of the campaign: presenting the Cube as a part of a fun, busy life that can be customized and personalized as easily as a cellphone ring tone or a Facebook page.
To underscore all that, the campaign borrows terms from technology like ''search engine,'' ''browse,'' ''storage capacity,'' ''add friends'' and ''set preferences'' to describe features of the Cube. And the media mix skews decidedly toward nontraditional elements like iPhone games, wallpapers, text messaging, the Internet and MP3 downloads.
The ads in the traditional media also come in 2.0 versions. For instance, commercials are labeled ''all-screen videos,'' because they are meant to appear on computer screens, screens in movie theaters and cellphone screens as well as on television screens.
The Cube is entering a crowded category of the depressed auto market composed of niche models meant as emotional purchases rather than rational. Such cars are intended to attract attention for unusual design rather than horsepower, bling or fuel economy. Examples include Chevrolet HHR, Fiat Qubo, Ford Edge, Honda Element, Honda Fit, Kia Soul, Mini Cooper, Smart Fortwo and Toyota Scion.
Niche models tend to appeal to younger drivers, as should the Cube, or at least its price: starting at $13,990 (and $695 in destination charges). For many, the Cube is likely to be their first car -- assuming, that is, they have jobs, credit and enough confidence to face the uncertain economy.
As challenging as the climate may be, ''we think the Cube's a perfect vehicle for this time'' because ''it offers a tremendous value,'' said Erich Marx, director for marketing communications for the Nissan division at Nissan North America in Nashville, a unit of Nissan Motor of Japan.
For those who may still need a boost into the driver's seat, said Phil O'Connor, senior manager for marketing communications at the division, ''we've got a number of plans in place to help that customer,'' including enabling buyers with ''a limited amount of credit history to get financing.''
Still, conditions may deter even the most determined customers. Nissan sales in this country in March fell 37.7 percent from March 2008. They declined 35.2 percent in the first quarter, compared with the same period last year.
''We've certainly assessed various options through the filter of what's going on with the economy,'' Mr. Marx said, ''but we're sticking with our launch plan.''
''The first half of 2009 is protected in every sense,'' he added, referring to elaborate introductions for the Cube and the Nissan 370Z sports coupe. ''There's no hunkering down.''
The campaign is starting a month before the Cube goes on sale to pique curiosity -- or, as the intended audience would say, build buzz -- about the car, whose offbeat looks and quirky sales pitch may prove polarizing.
The first look at the campaign will come during the episode of ''Heroes'' scheduled to be broadcast by NBC on Monday night. The Cube plays a cameo role, part of a long-running branded entertainment deal between Nissan North America and NBC, part of the NBC Universal unit of General Electric.
After the episode appears, a Cube commercial -- or all-screen video, if you are Cubean -- will go up on a Facebook fan page for the car.
The Cube will also be featured in an online graphic novel devoted to ''Heroes'' that is sponsored by Nissan North America; it can be read on a section of the NBC Web site (nbc.com/heroes/novels). Plans include a contest on the Web site to give away a Cube.
''This is a tough time to bring anything out, whether a car or a new TV,'' acknowledged Kerry Feuerman, group creative director at the Playa del Rey, Calif., office of TBWA/Chiat/Day, part of the TBWA Worldwide unit of the Omnicom Group, which is the Nissan North America creative agency.
''So we decided we wouldn't think about it as a car,'' he added, but rather ''position it as designed to bring young people together -- like every mobile device they have.''
Of course, TBWA/Chiat/Day is not unfamiliar with such devices; it is the creative agency for the iPhone.
TBWA/Chiat/Day is creating the aspects of the Cube campaign that include the videos, print and outdoor ads, social media like Facebook, the iPhone games and the music downloads.
The ''Heroes'' appearance was handled by a sibling Omnicom agency, OMD, along with media buying. OMD is also working with TBWA/Chiat/Day on events and other so-called experiential marketing elements of the introduction.
The Designory, a Long Beach, Calif., agency, is working on Cube content for the Nissan Web site (nissanusa.com).
Those with long memories may recall a soundalike brand, Qube, a cable TV system begun in 1977 that prefigured services like pay-per-view shows.
Dodge-Jeep dealer Jim Giddings in Woodbridge, Va., knows firsthand how the cloud of bankruptcy over Chrysler LLC is hurting sales.
Some customers have been offering him half the price of vehicles. When he refuses, Giddings says, "Customers say, 'You'll be selling soon for whatever you can get because you guys will be going under, going bankrupt.' "
Chrysler, General Motors and their dealers are wrestling with a huge problem: The threat of bankruptcy — amplified by nonstop news coverage — is chilling sales.
The automakers are fighting back with new incentives. And President Barack Obama is chipping in. Dealers report that Obama's promise to back GM and Chrysler warranties is helping, but most are convinced that the bankruptcy frenzy is bad for business.
In an Automotive News survey last week, 78.3 percent of GM dealers and 73.7 percent of Chrysler dealers said bankruptcy fears were hurting sales.
And 88.4 percent of GM dealers and 83.9 percent of Chrysler dealers said showroom customers question salespeople about possible automaker bankruptcies.
GM and Chrysler have broader fear-related problems — financially shaky suppliers wary of extending trade credit and dealers reluctant to order cars, to name two. But the core problem is loss of retail sales.
Chilling effect
GM and Chrysler dealers overwhelmingly say the possibility of bankruptcy is hobbling sales. Here are 2 key survey questions.
In recent weeks, there has been much media speculation that General Motors and Chrysler might enter Bankruptcy Court. Is this hurting your dealership's sales?
• GM dealers: 78.3% yes
• Chrysler dealers: 73.7% yes
Are customers in your dealership asking salespersons if the factory might file for bankruptcy?
• GM dealers: 83.9% yes
• Chrysler dealers: 88.4% yes
Source: 1,040 respondents
'Drag on sales'
Publicity about a possible GM bankruptcy "has been a big drag on sales," says Troy Clarke, president of GM's North American operations. "Dealers tell us that. All of us are on the phones on the weekends, checking with the dealers."
In an interview last week, Clarke said customers want assurances that a newly purchased vehicle will have a valid service warranty and that the vehicle will retain a good resale value.
GM's newly introduced Total Confidence sales promotion answers those concerns, Clarke said.
Last week GM and Chrysler gained one weapon to counter consumer fears: The federal government pledged to back their warranties. New GM Chairman Kent Kresa called the Obama administration's move a key step "to solve the problem for the buying public by fully backing the warranties."
But GM must walk a fine line. Because federal backing would be triggered by crippling financial problems or bankruptcy, such government backstopping is awkward to promote.
GM marketing chief Mark LaNeve said the company will make only a glancing reference to it in its Total Confidence sales promotion, which began last week.
GM will say its warranties are "fully backed," said LaNeve, GM vice president for vehicle sales, service and marketing.
Detroit area Chrysler-Jeep dealer Bob Shuman is not hesitating. Shuman started running radio ads Wednesday, April 1.
"Our cars are backed by the full faith and credit of the United States government," Shuman says in his ads. "That's right, our Jeeps are backed by the greatest country in the world."
Federal backing of warranties is on target, dealers say. Bill Stasek, owner of Bill Stasek Chevrolet in Wheeling, Ill., said that support gives dealers a positive response to worried consumers.
"That's the number-one concern they have — what's going to happen to my warranty, and where am I going to get my car fixed," Stasek said.
Credit woes, too
Dealers said other concerns also discourage car buyers. In the Automotive News survey, lack of available credit ranked as the biggest problem. Giddings said banks' reluctance to make retail loans is tied to bankruptcy fears.
"The banks are so concerned about bankruptcy that the few that will take our paper are only giving us 85 percent of net-net financing," he said. That means the dealer and buyer have to put up 15 percent of the sale price.
Automotive News contacted about 13,000 dealers by e-mail for the unscientific survey and got 1,040 responses. Some dealers said they are doing all right, despite the bankruptcy talk.
Steve Jones, owner of the Jones Family of Dealerships, including a Buick-Pontiac-GMC store in Lancaster, Pa., said he has "seen an uptick in traffic."
"It's not dramatic, but you sit here and wait for things to get better, and it's getting a little better," Jones said. "I think they addressed the number-one concern with the government-backed warranties."
When Hollywood scriptwriter Scott Nimerfro needed a car to bridge stints between his job in Los Angeles and his home in Cottage Grove, Minn., he took over the remaining lease on a 2008 BMW from a stranger.
The two-year lease gave him the snazzy car he craved without a long financial commitment.
As the recession digs in, Nimerfro is on the cusp of a trend. The trading of car leases is growing as more lease holders opt to exit contracts because of job losses, salary cuts and general cost-cutting, say online service firms such as LeaseTrader.com and Swapalease.com, which match trading partners on the Internet for a fee.
"In the fourth quarter of 2007, the No. 1 reason people were getting out of a car lease is because of a mortgage situation. Today, the No. 1 reason is because of job loss," said John Sternal, marketing vice president for the Miami-based LeaseTrader.com.
With the nation's unemployment rate topping 8 percent and monthly lease payments averaging $620 last year and $570 this year on mostly luxury cars, people are looking for relief. According to CNW Marketing Research Inc., Americans leased about 9 million cars last year, about 19 percent of new-car deliveries, with leases averaging 39 to 48 months.
"We have found that most of the people who are swapping auto leases would prefer not to," said CNW researcher Art Spinella. Yet lease swapping "has doubled and the people who use [an online service] for the most part are pretty happy with it."
LeaseTrader spokesman Evan Sneider said: "We did 20,000 transactions nationwide in 2006, 35,000 in 2007 and we exceeded 45,000 in 2008. This year we are tracking to be above where we were last year."
While many people will shed their leases to cut expenses, short-term leases are attractive to those with secure jobs.
These days, Michael Underwood is sneaking onto the Web site of General Motors Corp. and building himself a 2009 Cadillac Escalade. He flirts with different colors, adds every possible option and admires features new to the 2009 model, such as a system that warns about blind-side traffic.
What he doesn't do, however, is print the order and take it to his local Cadillac dealer. "I'm not going to do it," he says.
The fate of the teetering auto industry hardly rests on whether Mr. Underwood decides to buy the 2009 Escalade. But it does rest on the battle between want and need. Automotive talk often focuses on practical matters such as price, fuel-efficiency and reliability. But what drives many sales is the romantic allure of a new vehicle.
Mr. Underwood has long been a frequent buyer, the auto equivalent of the frequent flier. In an era of seven- and 10-year warranties, nearly 40% of trade-ins last year were newer than four years, and more than half were newer than five, according to J.D. Power and Associates.
Until last year, Mr. Underwood had been purchasing between two and five new vehicles a year. At age 53, he had bought as many as 75 new vehicles, not counting those purchased for his commercial flooring and real estate businesses here.
But he hasn't bought a new vehicle in 14 months. His wife thinks it is only a matter of time before desire gets the best of him. "Sometimes he can't help himself," says Joni Underwood.
There is evidence that that love affair is fading, and that for more Americans the car is becoming a longevity-driven commodity like the Maytag washing machine. New-vehicle sales fell 38.4% in the first quarter compared with the year-ago period, according to Autodata Corp. A recently released annual survey from R.L. Polk & Co. found that the median age of American vehicles in operation has risen to a record 9.4 years from 9.2 the previous two years.
And perhaps most worrisome for the industry is the recent disappearance of that iconic American character: the new-car enthusiast, otherwise known as the tuner, motor head, speed freak, buff, nut and zealot. The percentage of trade-ins newer than two years had hovered for years between 9% and 10%, says J.D. Power and Associates. Last year it slipped to 8.4%, and in the first two months of this year it fell to 6.6%, says J.D. Power.
The worst recession in recent memory has a lot to do with that. When unemployment rises and investment portfolios decline, new cars are a clear target of cutbacks.
There are other factors. Back in the 1960s, '70s and '80s, buying a new car every year or two was a tradition for many Americans. And some took it to extremes.
Jim Hewitt, for example, once traded a new car for a newer one eight times in a single year. Back then, he recalls, dealers would buy back a nearly new car for just a few thousand dollars less than he had paid for it.
Now, however, the instant a new car is driven off the lot its value can drop as much as 30%, perhaps twice the depreciation rate of the 1970s. One reason: As rental agencies and corporations replace their low-mileage fleets with new cars, the market becomes flooded with nearly new vehicles. As well, in recent years auto makers offered a flurry of incentives on new cars, bolstering even further the supply of used cars that still smelled new but boasted a significantly lower price tag. Also, it's becoming harder to find dealers offering the option to lease, wherein drivers essentially rent cars and return them after years of monthly payments.
Yet a lust for new cars isn't easy to kill as Mr. Hewitt, a retired boat dealer, has found. Until last fall, he thought he'd kicked his habit, with 87,000 miles on his 2004 Mercury Grand Marquis. "I'd never put that many miles on a car before," says Mr. Hewitt, 70, in Meriden, Kan.
But last autumn a Pontiac G5 coupe caught his eye as drove past a dealership near Topeka. "Next thing I knew I was driving it home," says Mr. Hewitt.
In an interview in early March, Mr. Hewitt talked about his love of the Pontiac and his intention to keep it for several years.
But a few days ago he was driving by a Kia dealership when he fell in love with a top-of-the-line 2009 Optima. Within moments, he bought it, trading in his eight-month-old Pontiac, which had only 15,000 miles on it. "When the mood strikes, heaven help me get out of the way because I'm going to do it," he says.
Compared with other indulgences, new-car lovers say that their passion is unfairly maligned. Buying the latest season's designer clothes, for instance, is often perceived as hip, and a well-worn passport is a badge of sophistication. But while cars retain their value better than high-priced clothes and vacations, buying a new one is widely portrayed as wrong-headed.
"Only buy a new car if you're filthy rich," says Dave Ramsey, a national radio financial adviser, who recommends a cold shower for bouts of "car fever."
Few car buyers struggle with these issues as intensely as Mr. Underwood. In the Colorado Springs neighborhood called Motor City, home to dealerships galore, he is a legend. "Mike Underwood -- you can't overstate the value of a customer like him," says Michael Jorgensen, president of Red Noland Cadillac in Motor City.
But after the purchase early last year of a 2008 Ford F350 pickup, which came two months after the purchase of his sixth Cadillac Escalade, Mr. Underwood vowed to stop. It wasn't necessarily the recession, though that has reduced demand for his commercial-flooring business.
Mr. Underwood increasingly was feeling some embarrassment about his purchases. He recently bought a new pickup in the same color and style as the old one to avoid detection.
His accountant was hounding him, too. "He just went nuts over how much money I was throwing away," says Mr. Underwood.
Perhaps the biggest issue was depreciation. He'd long been accustomed to losing money on new cars that he traded in.
But lately the losses had jumped from thousands to tens of thousands. In 2006, Mr. Underwood had sold his year-old Dodge Viper for $21,000 less than he bought it new -- even though it had only 378 miles on it. His 2004 Lexus (miles: 38,000) recovered barely half its purchase price in a 2007 trade-in. And when recently he checked the trade-in value of his 2008 Ford pickup, he found that it would net him barely $35,000, compared with the $53,000 he'd paid for it 15 months ago. It has fewer than 5,000 miles on it.
"This just doesn't make sense any more," he says.
On the other hand, he and his wife can afford it. Their four children are grown. Of the small fortune he has earned in commercial real estate and flooring, Mr. Underwood never invested a penny in the market. He notes that his purchase of new cars has cost him much less than if he'd heeded the expert advice to invest in stocks.
It isn't just a guy thing: The 2005 Corvette of his wife, Joni, is her fourth. After recently informing her husband that her 2007 Mercedes is approaching 40,000 miles, she asked playfully, "Time for something new?"
Mr. Underwood didn't say no. His own primary vehicle, the 2008 Escalade, no longer excites him, even though -- like all his automobiles -- it looks new inside and out. Lately, he's been going online and building new vehicles, adding every imaginable option. Custom-made is how he likes his vehicles. He isn't certain when -- or if -- he'll print out his dream car and order it from a local dealership.
Crowd Pleasers
Some cars that won the hearts of American drivers.
1957 Chevy
This car became a symbol of postwar American prosperity.
1964 Ford Mustang
The car that made Lee Iacocca famous remains a classic.
1970 Pontiac GTO
This muscle car ruled the road until gas prices soared.
1984 Dodge Caravan
The advent of the soccer mom made this minivan a surprise hit.
1997 Ford Explorer SUV
The sport-utility vehicle restored muscle to the family car.
2006 BMW 3 Series
This German sedan became a symbol of affluence.
MUNICH -- BMW is the top-selling premium brand in the United States for the first time.
With first-quarter sales of 42,731 light vehicles, the German automaker passed longtime U.S premium leader Lexus, Toyota's premium brand.
Lexus was No. 2 with a volume of 42,069 light vehicles (combined cars and SUVs), according to the Automotive News data center.
Mercedes-Benz finished the first three months in third place with U.S. sales of 40,255 units.
A BMW spokesman said on Wednesday that in the past the automaker has been the U.S. sales leader for premium cars, but this is the first time it finished No. 1 in light vehicle sales.
Despite reaching the milestone, BMW's U.S. sales were down 26.8 percent in the quarter while Lexus slid 36.8 percent and Mercedes dropped 30.1 percent.
The United States accounted for more than 18 percent of BMW's and Mercedes' global sales during the quarter.
German premium automaker Audi finished 10th among luxury-brand sales in the United States with a first-quarter volume of 15,808 units, according to the Automotive News data center.
April 6 (Bloomberg) -- Bayerische Motoren Werke AG, the world's largest maker of luxury cars, will increase wages by 2.1 percent for more than 60,000 German workers, as planned in May, unlike competitor Daimler AG.
“The increase will come,” Michael Rebstock, a BMW spokesman in Munich, said today in a telephone interview. Demand for the new Z4 roadster, the 1 Series compact, and 3 Series models will let the company return to normal working hours at its plant in Regensburg, Germany in May, a month ahead of schedule, he said.
Stuttgart, Germany-based Daimler, the world's No. 2 luxury-car maker, said on April 1 it plans to delay a similar 2.1 percent wage rise to December as part of an effort to cut costs by 2 billion euros. BMW anticipates a 500 million-euro drop in its 2009 wage bill after cutting jobs last year. It's also not paying a profit-sharing bonus this year.
The two automakers are stepping up a purchasing cooperation as they seek to cut costs as tight credit market and the global recession stifle demand for luxury cars. BMW's sales in the U.S., its largest market, fell 23 percent in March, while U.S. deliveries of Daimler's Mercedes-Benz Cars declined 25 percent.
BMW plans on bringing two new M cars to market in the 2014 model year; the next-generation M3 and an all-new M coupe based on the second-generation 1 Series. Both the next 3 and the next 1 Series production models will bow in late 2012 for the '13 model year.
In keeping with M's new philosophy of cutting cylinders/displacement while cutting weight to maintain performance levels, the next M3 will return to a six-cylinder engine. The question, M division CEO Ludwig Willisch says, is whether it will be an inline-six or a V-6. A V-6 would provide better balance and more packaging versatility, while an inline-six would be lighter, a key quality for BMW's future, and avoid uproar among Bimmerphiles.
The new six-cylinder M engine isn't based on the current 3.0-liter family, Willisch says, “and I'm not saying whether it is a twin turbo. It will be a turbo six-cylinder engine. That is, I'd say, almost sure. We're really at the very, very beginning of the project. M3 hasn't started yet.”
With a 1 Series M (the obvious name, M1, would also be problematic with hardcore BMW followers), Willisch is looking to recapture the spirit of the four-cylinder, E30 M3.
“It was the first one, and it's so much fun to drive,” he says of the E30 M3. “And if you just look at the spec sheet, you'll say, ‘It really won't move.' Twenty years ago, it was fine and now you need at least 420, 450 horsepower in order to have decent acceleration. But once you drive it, you're really impressed because you can brake later, you can corner faster.”
That car also is in the inception stages, with BMW M working on its business case. The 1 Series M will weigh less than 2900 pounds and its turbo four must make at least 300 horsepower, Willisch says. “I would love to have a car like that in our range. It would also be a good thing to get the interest of younger customers again. This would only be a story for the next 1 Series, so you'd be looking at 2014 or so.”
The Specs
BMW fans have been waiting for an M-tuned version of the X5 SUV for nearly a decade. Well BMW has finally delivered, and even upped the ante by offering its highest level of performance on both the X5 and the new X6. At the heart of these M machines is a twin-turbocharged 4.4-liter V8 packing 555 hp and 500 lb.-ft. of torque connected to a 6 speed automatic. BMW says the SUVs can hit 60 mph in just 4.5 seconds. Launch control ensures even the most ham-fisted driver can hit that number. As one might expect, suspension, brakes and the wheel and tire package have all been upgraded. The brake rotors are simply monstrous, measuring 15.6-inches upfront and 15.2-inches at the rear. BMW provides 315/35R20 rear tires and 275/40R20s to get the power to the ground.
The Bottom Line
Quite simply, the new X6M and X5M are the most powerful SUVs available—even eclipsing Porsche's Cayenne Turbo.
BMW, Toyota/Lexus, and Hyundai make the cars with the most advanced technology, according to an annual report from iSuppli called the Technology Availability Scorecard. BMW has six of the top 10 spots including the BMW 7 Series (photo), 5 Series, and 6 Series running 1-2-3, while Toyota and Lexus have two, and upstart Hyundai has the other two top spots. "Advanced technology" means driver safety aids such as lane departure warning or active cruise control, navigation, iPod adapters, telematics (Mayday calling), Bluetooth, back seat entertainment, voice recognition, hard drive storage, and other stuff that makes your daily commute a delight if you can figure out how to use it all. BMW wins the top award for the fourth straight year.
The new-for-2009 BMW 7 Series boasts 30 of the 35 features in iSuppli's rankings, including an 80-GB hard disk drive for navigation data and audio files, the second generation of the Flir night vision system, an updated iDrive system that finally can be used by not-geeks (see our BMW 7 Series review), traffic sign recognition (just not in the U.S.), blind spot detection, and a boatload of wireless features such as the industry's first Internet browser (just not in the U.S.), real time traffic information, HD radio, satellite radio, and premium Harman Kardon audio.
2009 Technology Availability Scorecard
1. BMW 7 Series, 30 of 35 possible features
2. BMW 5 Series, 28
3. BMW 6 Series, 27
3. Hyundai Equus (not available in U.S. until 2010-2011), 27
5. BMW X5, 25
5. Lexus LS, 25
5. Hyundai Genesis, 25
8. BMW 3 Series, 24
8. BMW X6, 24
8. Toyota Crown (NA in U.S.), 24
Source: www.isuppli.com (Global Most Technologically Advanced 2009 Vehicles)
Most Commonly Available Tech Offerings
According to iSuppli VP Phil Magney:
--Navigation systems are offered on 66% of vehicles worldwide. The number is going up in part because the price is coming down, although in the U.S. the cheapest is still more than $1,000 (the Hyundai Sonata's $1,250 option).
--Hard disk drives are available on 25% of 2009 cars, up from14% last year. "Available" doesn't mean that a quarter of the cars sold have hard drives, but that on one in four models, you can get it with a hard drive
--USB ports are on 25% of 2009 vehicles vs. 12% in 2008. iPod interfaces are on 33% of 2009 models (including some USB ports that are versatile enough to handle more than just iPods). Note that when Apple says something like 80% of cars have iPod compatibility, they mean ... "even if it's just a line-in jack that would work with your 1980s Walkman cassette player."
--Telematics solutions with emergency calling and collision notification are on 18% of new vehicles. News-weather-sports info is on 15%. Remote diagnostics are on 8%.
The iSuppli rankings measure the availability of the offerings but not the quality or the cost. All real-time traffic information isn't very accurate, for instance. An automaker gets the same credit for having satellite radio standard as they do for charging $500. And Ford gets no more credit for having the free or low-cost Sync system in the majority of its cars than Bluetooth and iPod options costing $1,000 on other brands.
What it means: BMW continues to set the standard for high technology. Korea's Hyundai shows it's a force to be reckoned with. But some high tech options remain costly as automakers refuse to use industry-standard technologies that have driven down the cost of, say, PC technology.
FRANKFURT (Reuters) -- Volkswagen AG will overtake U.S. rival General Motors this year to become the world's second-largest automaker by volume, market research company R.L. Polk Germany said on Monday.
Global production of passenger cars and light commercial vehicles is forecast to fall 19 percent, or two million units, to 52.8 million vehicles this year -- the lowest output since 1998, Polk said.
While GM will suffer a 31 percent drop in production, VW will likely only see a slice of some 15 percent, thanks in part to its low exposure to the U.S. auto market, where industry sales have plunged 38.4 percent this year.
"Volkswagen will therefore overtake ... GM and advance to become the new number two after Toyota," Polk said in a statement.
Polk expects global car output to increase in 2010 again, with strong growth rates in the next two years that allow the market to achieve a record production level of more than 70 million vehicles in 2012.
NEW YORK (Reuters) -- General Motors' request for $10.3 billion in loans under a U.S. Department of Energy program is now contingent on the automaker's 60-day restructuring review, a top GM executive said.
"Treasury wants to fully understand what our ultimate destiny is before giving us that (DOE) loan," Larry Burns, vice president of research and development and strategic planning, said on the sidelines of a product briefing Monday.
The Energy Department program, which stemmed from a 2007 law that raised mileage standards, has earmarked about $25 billion in low-cost loans for the auto industry to support development of fuel-efficient vehicles.
President Barack Obama last week rejected GM's turnaround plans that were submitted as part of the company's requests for more than $16 billion in additional federal aid.
GM, which has lost about $82 billion since 2005, has already received more than $13 billion in U.S. loans.
Obama ordered GM to accelerate its survival efforts and brace for possible bankruptcy, saying it had not done enough to justify the taxpayer money it was seeking.
The White House-appointed auto task force has given GM 60 days to come up with a restructuring plan that cuts costs and debt levels more deeply than the automaker had planned.
Separate requests
GM's two separate loan requests are now being considered by the government together as the task force tries to figure out if the automaker can be a viable, Burns said.
He said the U.S. government has questions about how the automaker is positioning itself to be more competitive in 'green' technology, such as making more cars and crossovers -- car-based sport-utility vehicles that are roomier than the typical car and more fuel-efficient than truck-based SUVs.
GM has said it would use part of the $10.3 billion in low-interest government loans to support the development of three new hybrid vehicles, including two spinoffs from its electric vehicle, the Chevrolet Volt.
The Volt, which is scheduled to go into production in late 2010, remains one of the most closely watched new GM vehicles. After years of building gas-guzzling trucks and SUVs that hurt its image, GM has made the Volt central to its efforts to reinvent itself in the eyes of consumers.
The government, in response to GM's viability plan and request for additional emergency funds, has said the Volt would be too expensive and would need substantial reductions in manufacturing costs to be commercially viable.
"That is an accurate statement about the Volt, and about any new technology," Burns said. "The Volt is going to have to go through a generational process."
Burns said the government is talking to GM to make sure the automaker has the wherewithal to go through a few generations of the Volt before it becomes commercially viable.
GM's new CEO, Fritz Henderson, last week said a court-supervised restructuring in bankruptcy might be necessary.
Contingency plans for a GM bankruptcy developed by advisers would split the automaker into its more promising assets -- such as electric car technology -- while keeping lower-margin and loss-making operations under court-protection.
Auto makers continue to push ahead with battery-powered cars despite waning demand for fuel-efficient vehicles.
On Monday, Fisker Automotive Inc. said it received $85 million in additional venture capital that will help the 18-month-old California start-up begin producing the Karma luxury sports car it has been developing.
Fisker hopes to sell 15,000 Karmas in 2010, and plans to show the car at the New York Auto Show starting this week.
Separately, Chrysler LLC selected A123 Systems Inc. of Watertown, Mass., to supply lithium-ion battery cells, packs and modules for electric cars that Chrysler expects to have in showrooms in late 2010.
The potential sales of such vehicles is unclear, however. With gasoline going for a little over $2 a gallon, sales of high-mileage vehicles and gas-electric hybrids have plunged.
In March, Toyota Motor Corp. sold 8,924 Prius hybrids, down 57% from a year ago, according to Autodata Corp. It had planned to build Priuses in a new plant in Mississippi but has frozen the project indefinitely. General Motors Corp., meantime, sold just 547 hybrid versions of the Chevrolet Malibu in March.
Last week, in an assessment of GM, the Treasury Department's auto task force expressed concern about the Chevrolet Volt, an electric vehicle GM is developing. While the Volt "holds promise," the task force said, it will probably be much more expensive to make than gasoline-powered cars and need substantial cost reductions to be "commercially viable."
Henrik Fisker, chief executive of Fisker Automotive, said in an interview that the new round of capital signals "that plug-in hybrids really have the mass-market potential that people have been waiting for."
The capital will come from Eco-Drive (Capital) Partners LLC, an investment consortium, and Kleiner Perkins Caufield & Byers, a veteran Silicon Valley venture-capital firm. The company says it now has funding well over $100 million but declined to be specific.
The Fisker Karma is a sleek sports car that is supposed to start at $87,900 and travel 50 miles on electrical power and for an additional 250 miles on a 2.0-liter gasoline engine before requiring refueling. The Irvine, Calif., company has orders for 1,300 vehicles, Mr. Fisker said.
"I definitely believe the plug-in hybrids will be the dominant alternative type of vehicle in the next five to six years," Mr. Fisker said, "and we feel we can actually take the lead in this new technology."
Chrysler is aiming for a similar spot in the market with the Dodge Circuit sports car. It also is working on battery-powered versions of the Jeep Wrangler, Jeep Patriot and Chrysler Town & Country minivan.
Lou Rhodes, president of the Chrysler ENVI unit working on the electric models, acknowledged the models are unlikely to help the company reach profitability in the short term. But he said getting started in this area is critical to be viable long term. The objective, he said, "is for Chrysler to be a leader in electric vehicles."
Chrysler is leaning heavily on partners. Electrical components and some design for the Circuit will come from Britain's Lotus. Mr. Rhodes declined to say who is building other key components such as the control unit or motor.
Uncle Sam wants your old gas-guzzling SUV. But he may be low-balling the price.
Now that President Barack Obama and Congress are in the auto business, the interests of Detroit and Washington are lining up in ways Americans have never seen before. One result of this 21st-century twist on the old line about "what's good for General Motors" is a flurry of interest on Capitol Hill in the idea of a government-funded "cash for clunkers" program.
Mr. Obama supported the idea of offering consumers a bonus to scrap their old guzzlers in a speech on the government's plans for restructuring General Motors Corp. and Chrysler LLC. Mr. Obama also cheered industry officials by saying he wants any scrapping-bonus plan to be made retroactive to March 30. The last thing auto makers need is for the president to give consumers another reason to delay buying a new vehicle.
The White House, Congress and the industry are in broad agreement: Without some action to lift auto sales from their current dismal levels, all auto makers in the U.S. will suffer. Ford Motor Co.'s effort to restructure without government loans is threatened unless sales get back above a pace of 11 million to 12 million a year, compared to under 10 million a year so far this year. The government's loans to GM and Chrysler are at risk, too, unless sales ascend to a higher level.
The cash-for-clunkers proposals circulating in Congress vary. But the basic concept is represented by a plan backed by U.S. Rep. Betty Sutton (D., Ohio). Her bill would offer bonuses starting at $3,000 for someone who scraps a 2001 or older model for a U.S.-made car that gets 27 miles per gallon on the highway. Buyers of a U.S.-made car that gets 30 mpg on the highway could get $5,000.
Dumping a "clunker" to get a new U.S.-made truck that gets at least 24 mpg on the highway would make you eligible for a $4,000 payment under Ms. Sutton's proposal. Businesses that buy a "work truck" that is cleaner than the vehicle replaced based on federal emissions testing could get $5,000 -- so long as the truck is registered in the name of a business.
Consumers shouldn't get hung up on the details of Ms. Sutton's proposal or any of the others now under discussion. The horse-trading on the exact parameters of a cash-for-clunkers program has just begun, and the auto industry's main trade association in Washington, the Alliance of Automobile Manufacturers, has yet to weigh in. Spokesman Charles Territo says the group will call for a plan that doesn't discriminate against foreign-made vehicles. Writing too strong a preference for U.S.-made vehicles into the program could also get the U.S. in trouble with trading partners and the World Trade Organization.
But never mind the WTO. The real problem could be that for a lot of people now riding around in SUVs acquired during the waning days of the dot-com bubble -- remember that? -- a $3,000 or $5,000 tax-funded payment is worth less than their truck could fetch in a conventional trade-in or private sale.
If I owned a 2000 Ford Explorer Eddie Bauer all-wheel-drive model equipped with a 5.0 liter V-8 -- a popular configuration that year -- I would be getting about 15 mpg or less in daily driving. This is exactly the kind of vehicle Mr. Obama wants retired to the junkyard. But if Mr. Obama was a car dealer, I'd want him to give me as much as $5,300 for my old Explorer, based on the used vehicle trade-in values at Edmunds.com, an auto-shopping Web site.
An even-thirstier vehicle is the Ford Expedition. Last summer, you could barely give away these nearly three-ton, V-8 powered beasts. Now, Edmunds says a 2000 Eddie Bauer four-wheel drive Expedition -- rated at 13 mpg -- could have a trade-in value of as much as $7,473.
The impact of a government-backed program to turn guzzlers into cash and new car sales could depend as much on psychology as on financial calculations. Psychologically, auto makers want the government to fund such a program in part because it could represent a big "buy" signal that gets consumers off their couches. In Germany, a cash-for-clunkers bonus of €2,500 ($3,350) has touched off a buying frenzy, something that doesn't happen too often in that country's restrained consumer culture.
But prying Americans out of their paid-off SUVs may require more than offering a fraction of the vehicle's trade-in value -- and that means more public money.
True skinflints also know it's almost always cheaper to keep a vehicle that's paid off and not suffering from expensive mechanical problems than it is to sign up for a new-car loan.
I am the owner of an 11-year-old Toyota Camry, and I judge its value two ways: What I could get if I sold it, and what it would cost to replace it. If I sold it, I might get $2,000 to $2,500, according to Edmunds. To replace it with a comparable new vehicle could cost me $20,000 or more.
What's more, my old Camry is too efficient to qualify as a "clunker," at least under Ms. Sutton's definition. So until Congress is prepared to offer tax-funded bonuses to rid the nation of ugly cars, I may just have to sit tight.
TOLYATTI, Russia — If there is a country that truly needs a car czar, it is Russia, home of the czars — and Lada.
The factory here has been stamping out the same version of the Lada, the typical boxy people's car of the former Eastern Bloc, for four decades.
Known as Avtovaz for short, it is one of the least efficient automobile factories anywhere in the world — each worker produces, on average, eight cars a year, compared with 36 cars a year at General Motors' assembly line in Bowling Green, Ky., for example.
Yet the government is giving Avtovaz (pronounced aft-OV-az) billions of dollars in aid, no strings attached. No chief executive firings. No renegotiation of workers' contracts. No demands to turn out better-quality cars, much less fuel-efficient hybrid cars. (The first car with an airbag was introduced here in 2005.)
But the auto bailout, Russian style, is intended more to ensure peace in the streets than restructure a business, much to the lament of some critics who think tough love might be better.
“The key issue is too much government protection,” Yegor T. Gaidar, a former prime minister, said. “The factory will create as many problems for the Russian economy as General Motors for the States.”
Moscow's concerns extend far beyond automobiles. As mounting economic anxiety prompts worker protests from China to Ukraine to the Czech Republic, politicians and economists say the Kremlin is calculating that it can keep the peace by bailing out Russian workers.
The country's manufacturing base, wobbly in the best of times, is contracting quickly in the global downturn. Layoffs are spreading. Manufacturing declined by 13 percent in February alone. And industrial discontent is stirring in the most hardscrabble Russian factory towns.
On March 11, 16 Russian steelworkers announced a hunger strike to protest wage cuts at a Ural Mountain mill. (The same week Severstal, one of Russia's largest steel makers, announced it would lay off 9,000 to 9,500 workers.)
Here in Tolyatti, when a G.M. joint venture laid off 400 people in December, riot officers were called in to disperse an angry crowd that had gathered in the plant parking lot.
It is a trend with a history here; a shrinking manufacturing base in the late Soviet period contributed to social unrest. To keep that from happening now, government officials promised at a meeting here last week to give additional aid to the factory: $730 million in an interest-free loan for one year, $230 million in loans from state banks at a favorable rate, and a commitment by state-owned banks to help Avtovaz raise an additional $2.6 billion from banks.
“Avtovaz, along with producing cars, is fulfilling a social role. It is employing the population. Either fortunately or unfortunately, the state must support Avtovaz,” Vladimir R. Yagutyan, a former deputy mayor of Tolyatti, said in an interview. “The stability of the town depends on it.”
Apart from the company's role as an employer, economists see little point in propping up such an aging giant.
The factory, a monument to Soviet gigantism in industrial design, is a panoramic sprawl of pipes and smokestacks on a bank of the Volga River, 460 miles southeast of Moscow. It employs 104,000 assembly line workers, many of whom still toil with hand-held wrenches.
All told, the Avtovaz factory and its suppliers support two million jobs, according to a statement by the factory's management, out of a total Russian work force of about 75 million. Many of those jobs are in small and medium-size towns not far from Moscow.
The collapse of the car market came later in Russia than in the United States, but it could be more severe. Russia had been the fastest growing major car market in the world, with 35 percent growth in 2007. The country was projected to surpass Germany as Europe's largest automotive market in 2009; that is no longer the case.
Now car sales are projected to fall 25 to 50 percent, or 1.6 million to 2.3 million vehicles, according to a report by the Moscow office of PricewaterhouseCoopers.
Last fall, the Russian government deftly shifted the economic hardship away from this politically fragile car industry belt in central Russia. It imposed a tariff on imported cars. The move set off protests and a police crackdown — but in Vladivostok, a major center for importing and servicing secondhand Japanese cars, more than 5,000 miles from Moscow.
Now, the government is backing a no-layoff policy at Avtovaz, in spite of tumbling demand for its products. The government is also subsidizing auto loans to stimulate demand. The factory has requested state loan guarantees, which were approved last week.
Even employees forced to take furloughs seemed unconcerned about being laid off. “The factory is our wet nurse,” Denis N. Makarov, a clerk in the factory office, said. “We have nothing else. If it stops, the whole town will be out on the streets. We all understand this.”
Still, Timofey G. Bushuyev, 59, a sheet metal worker, said he understood the factory's troubles last year when he bought a new Lada only to discover the horn and heater did not work and the belts squeaked.
In a possible silver lining for Avtovaz, more expensive foreign brands have fared worse. G.M., Hyundai and Toyota, all companies with assembly lines in Russia, were among the biggest losers.
Avtovaz's management, in a written response to questions, hailed the company's “indisputable advantages” in a downturn owing to its inexpensive product line. The car now marketed as the Klassika — a design for the squared-off Fiat 124 that the company bought in 1974 — sells for $4,160.
“In crises Avtovaz always had a product people wanted to buy,” the company said. “From the onset of the crisis Avtovaz has not laid anybody off, and does not plan to do so.” Instead, the factory has gone to a four-day week, with two six-hour shifts. Workers are offered voluntary furloughs at two-thirds pay.
But even the unions, used to believing the worst of management, say layoffs are inconceivable here.
“It would become a political issue for this city and this country,” Andrei A. Lyapin, regional coordinator of the Interregional Trade Union of Automotive Workers, said in an interview. “They will print enough money to pay these people.”
Why's that? It only reflects how much US automakers have fallen.
It shows that they are pushing less fleet/ rental cars, also it paints a more urgent need to kill off the UAW and let them build good cars and turn a profit.
DETROIT/FRANKFURT (Reuters) - Europe approved $1.2 billion of loans to support the region's struggling automakers Tuesday, even as preparations intensified for a possible bankruptcy at General Motors Corp due to lack of progress in restructuring the ailing company.
GM, which has until June 1 to complete a reorganization plan, is in 'intense' and 'earnest' preparations for a possible bankruptcy filing, a source familiar with the company's plans said, sending its shares down 13 percent.
The European Investment Bank approved 866 million euros of loans ($1.17 billion) to several automakers, including Volkswagen AG, Nissan Motor Co Ltd and Jaguar to help them develop and build more fuel-efficient vehicles in Europe.
The money is part of a 7 billion euro package to the industry the European Union's lending arm expects to complete in the first half of this year. The bank lent money to German, Italian, French and Swedish automakers in March.
Providing additional support, Germany's coalition government has agreed to increase funds for its program aimed at encouraging drivers to ditch old cars for new ones to 5 billion euros ($6.77 billion) from 1.5 billion, a government spokesman said. The subsidy would run until the end of 2009 at the latest, the spokesman told Reuters.
The series of measures to support the industry came as several German automakers reported lower March sales which underscored the severity of the global downturn in auto sales triggered by an economic recession.
Germany's BMW said its global vehicle sales fell 17.2 percent in March and global unit sales for Daimler AG's luxury Mercedes-Benz brand were down 16 percent.
The DJ Stoxx European Auto Index ended down 2 percent, paring earlier losses of as much as 4 percent.
GM BANKRUPTCY INEVITABLE?
Worries about the impact of possible automaker bankruptcies are widening and Canadian Industry Minister Tony Clement said Tuesday the government must be prepared for GM or Chrysler to enter bankruptcy protection.
Clement said Canada would guarantee the warranties of cars sold by GM and Chrysler, regardless of whether the automakers go into bankruptcy protection.
GM, operating with $13.4 billion of government loans since the start of the year, is under pressure to cut unsecured debt by two-thirds and make half of its remaining payments into a union healthcare trust in equity to preserve cash. The government has warned the alternative would be bankruptcy.
A plan to split GM into a 'new' company made up of its most successful units and an 'old' company of unprofitable units, is gaining momentum and is seen as the most sensible configuration, said a source familiar with the talks.
GM shares fell nearly 13 percent, or 29 cents, to $1.98.
GM's bonds were steady to slightly lower in late morning trading. GM's benchmark 2033 bond slipped, with the 8.375 percent bond trading at 12 cents, compared with 12.75 cents before the news came out, according to MarketAxess data. The bonds closed at about 11 cents Monday, according to MarketAxess data.
Moody's Investors Service said GM and Chrysler have a 70 percent chance of bankruptcy due to the difficulty of winning deep concessions from creditors out of court.
'Given the lack of progress achieved and the additional progress that will be required in the revised plans, this threat will need to be seen as credible in order to compel adequate movement on the part of stakeholders,' Moody's said.
Chrysler, owned by Cerberus Capital Management LP, also faces possible bankruptcy. Chrysler has until April 30 to complete an alliance with Italian automaker Fiat.
(Additional reporting by Helen Massy-Beresford, Chelsea Emery, Jan Strupczewski, Matthias Sobolewski, David Bailey; Editing by Andre Grenon and Matthew Lewis)
BMW has been on a roll with its MINI brand, and after the raging success that the revived Cooper had in its first generation, the German automaker saw fit to give the brand its first major revision back in 2006. A year later, the automaker released the extended-length Clubman model and this year it finally launched the new convertible. What's next? Almost certainly the first MINI Crossover, which is expected to make its formal debut at the upcoming Frankfurt Motor Show.
You'd be forgiven for assuming that BMW's MINI team would be content to rest on its laurels for a few models years after all of this activity, but the ever-active rumormill wouldn't agree. According to MotoringFile, a new MINI Speedster may (finally) be on the way, based on the running gear of the current R56 Cooper. If true, we can expect to see a fabric top along with a possible removable hardtop and the same 1.6-liter engines as used in other models from MINI. Longtime MINI followers may recall that a speedster variant was often mooted for the previous Cooper, but in recent times, that talk has diminished somewhat.
A small, two-seat, roadster that promises equal portions of driving fun, reasonable fuel economy, and an attainable price tag? Now that's an idea we can get behind.
IRVINE, Calif. — Two decades ago, car designer Tom Kearns would make a point of strolling the floor of the big annual auto show in Detroit to see the latest designs from Asian competitors. What impressed him? Not much.
"You almost didn't pay attention," says Kearns, who was working for General Motors at the time. "I thought we clobbered them."
Now Kearns is head of the U.S. design studio here for South Korean maker Kia. His latest handiwork and that of others goes on display to reporters today and Thursday at the press preview for the New York International Auto Show, open to the public from Friday to April 19. It will range from minicars to a 621-horsepower Bentley cruiser.
Kearns considers the sleek metal babies that his team is cranking out to be designs as good as or better than anything Detroit is offering.
In fact, they all have a lot in common.
Consumers used to embrace new cars and trucks from GM, Ford Motor and Chrysler because despite any failings, they were considered better-looking and distinctive.
Today, all new cars from the world's major makers are designed by pretty much the same folks — a roving band of top designers for hire. Their careers are spent going from one automaker to the next, spanning the globe. As a result, designs are often not as distinctive as in the past.
Also, most of their cars must eventually be on sale on several continents at once. As beautiful as they might be, it's harder to make them distinctive as designers are forced to seek lower common denominators to appeal to multiple regional tastes.
Safety and technology features force an international homogenization of appearance as well. The Europeans adopted regulations designed to better protect pedestrians when they get struck by cars, and cars worldwide became more snub-nosed and devoid of hood ornaments as a result.
We are the world
It's a far cry from the American showboats of the 1950s through 1980s that stood apart from just about everything else produced. Newfangled Toyotas shipped in from Japan ran like clocks but never could capture the panache of a mid-1960s Chevrolet Impala.
Today, a Nissan Altima competes in size and looks with a Ford Fusion. A Toyota Tundra pickup takes aim at a Dodge Ram. A Pontiac G8 may be marketed as pure American muscle, but it's actually a buff Australian import.
Designers themselves love how they are stretching borders. Sure, foreigners are luring away top American talent. But many of them go on to design some of the world's most famous cars for other markets. Conversely, some top foreign designers turn their talents to developing icons of the American highways.
The quest is always the same: to dig into the ethos of a place and a people to figure out what kind of ride they will love.
"We're cultural architects," says Freeman Thomas, now a top designer for Ford Motor after stops at Porsche, Audi, Volkswagen and what was DaimlerChrysler. "It's designing for a specific culture and customer."
American design was always rebellious, free-form, not as tied to tradition, Thomas says.
"American is about something provocative, taking the risk on something flamboyant," says Ralph Gilles, vice president of design for Chrysler. The result can be a success like Gilles' 300C, Chrysler's hit sedan earlier this decade. The risk: a disaster like GM's much-maligned Pontiac Aztek, long gone from the lineup. The damage from failure usually isn't long-lasting: Americans, Gilles notes, "have no fear of reinventing themselves." Or their cars.
That's why foreign brands often want U.S. designers when they want to break out of a rut.
Car design on a global scale
It is common now for a product lineup to be a mix of designs from teams around the world.
Sometimes that's true of a single car. With GM's 2010 Buick LaCrosse, a brand that sells well in China, the exterior was given a traditional Buick appearance right down to the stylized version of the brand's trademark "porthole" engine vents. The interior, however, was designed by GM's Chinese joint-venture studio. The car was shown first at last year's Beijing auto show. In China, it will be sold under a name from Buick's American past: Invicta.
"It wouldn't be right to say the whole interior or exterior is influenced by one region," says Michael Simcoe, GM's head of exterior design, who happens to be an Australian import. GM has 11 design centers around the world.
In fact, artistic flair plus wanderlust seem to be a winning combination for getting ahead in the car biz these days. At the Art Center College of Design in Pasadena, Calif., one of the leading training grounds for auto designers, many students take internships abroad. "These guys come back from their internships, and their eyes are just opened," says Jay Sanders, director of transportation design.
Top designers, however, don't always have to grab a long flight to change from an automaker in one country to another. Often, the shift is only a few miles in Southern California.
Automakers have clustered design centers here in the nation's largest auto market. Studios range from BMW Designworks in the north to Nissan Design America in the south. Kia is only the latest, opening last year in Irvine, just a few miles from studios of Ford and South Korean sibling brand Hyundai.
When star Hyundai designer Joel Piaskowski, another GM veteran, decided to join Mercedes-Benz last year, he needed to go no farther than another design center a few miles south in San Diego County.
Designers adapt to the times
As bright as their creations may be, new realities for designers are the recession and rising government gas-mileage rules.
"What was considered, until a few months ago, as the American ideal of auto design is being questioned," says Stewart Reed, the transportation design chair at the Art Center College of Design. But such pressure to innovate can stimulate creativity.
No one knows better than Michelle Christensen. Fresh out of Art Center at age 25, she sketched the first outline of a likely star at this week's New York show, Acura's ZDX. The prototype of the sporty four-door that looks like a coupe will be unveiled today.
Her design beat others in the cutthroat internal design competitions brand parent Honda holds for new vehicles, years before they show up as concepts under the klieg lights at the shows — and longer yet before they are real-world vehicles headed for dealer showrooms.
"This whole thing has been extremely humbling," says Christensen, now 28.
She knows all about internationalism. The basic shape of the ZDX, a concept car now but likely to be prowling American roads before long, was inspired by the roofline of a volleyball stadium that Christensen saw in Japan. She says she sees interesting shapes everywhere.
"You see forms in your head, and they start to take shape on a page. It's kind of a burden. You can't help but look at every little detail," she says.
Her exterior design boss, Damon Schell, says the ZDX ended up with a look that is easily identified with Acura. "People wouldn't have a hard time connecting it." But, he adds, the car is aimed for international appeal. His crew talked about how it might sell in China or Russia.
Kia embodies the trend
Nowhere is the globalization of design more evident than at Kia's stunning new design studio in Irvine in Orange County.
Kearns, a lean 45-year-old who grew up in the Midwest, shows off the turntables and wall-size viewing screens where designs are pondered, not far from the booths where milling machines turn computer drawings into full-size clay models.
Among his 15 designers are Korean, Italian, Venezuelan, Chinese and American nationals. "It's like the United Nations in here," says Ray Ng, one of the Americans.
Italian designer Massimo Frascella, who worked for Italian designer Bertone and for Ford before Kia, says differences exist among brands from different continents, but they can be subtle. "We have to go deep into the DNA of the brand" to draw needed distinctions.
Kearns knows firsthand. At GM, he worked on the acclaimed Cadillac CTS sedan and saw how to make it distinctly American. The car's sharply creased, angular body was similar to the stealth fighter jet, an American icon. The car's high-tech feel is also in keeping with buyers' affection today for electronics, from iPods to personal computers.
Making a fresh start
At emerging brand Kia, Kearns is creating a new design heritage, starting with the Soul, just out. He's not stuck with longtime signatures — BMW always gets a split grille; Saab's ignition key always goes in the center console.
Still, there's a healthy respect for the competition. In one room, Kearns keeps a few parts from cars that he especially admires. Kearns loves the way his palm cradles a BMW shift knob. There's also a particularly swoopy headlight from Audi.
Kearns' big achievement so far is the Soul, a youth-oriented car that could help set the standard for a run of Kias to come.
His goal was a cleaner, simpler yet bolder look, even if it's not especially in tune with other designs coming out of South Korea.
His exterior designer, Erik Klimisch, is another Ford veteran. He says he likes having less bureaucracy at Kia compared with the endless design meetings in Detroit. Though he loves American cars, he says the Asian and other brands have made huge strides.
Auto makers must boost fuel economy under new government regulations, and a sure way to do that is promote small cars. But that poses a challenge for Detroit: How can the Big Three battle back in a market segment dominated by foreign rivals such as Toyota and Honda?
The latest attempt is just getting under way at Ford Motor Co. The company has picked 100 young, Web-savvy drivers to get behind the wheel of its new Ford Fiesta subcompact for six months and post their impressions on sites such as YouTube, Flickr and Twitter.
The marketing campaign starts later this month, almost a year before U.S. consumers will be able to buy the Fiesta. Since the Fiesta name has been absent from the U.S. market for years and Ford hasn't been in the subcompact market for a long time, the company has to find a way of turning heads away from top-selling small cars like Toyota Motor Corp.'s Yaris and Honda Motor Co.'s Fit.
"In terms of awareness, we have to go from zero," said Chantel Lenard, Ford's global car marketing manager.
Ford's battle for young buyers will be faced by its Detroit rivals in the near future. General Motors Corp. will introduce its own new small car, the Chevrolet Cruze, in about a year. And Chrysler LLC plans to roll out new compacts under its proposed alliance with Fiat SpA.
For Ford, the push to establish the Fiesta is part of a broader gamble that the Dearborn, Mich., company will be able to attract a new kind of customer -- the sophisticated, coastal, Generation Y buyer who may have never considered a domestic model.
A successful U.S. launch of the Fiesta in 2010 is critical to Ford Chief Executive Alan Mulally's strategy to wean the auto maker off hefty profit margins from pick-up trucks and sport-utility vehicles. He believes the company must succeed in small cars, not only in foreign markets where its brand reputation is stronger, but at home, where Ford has suffered from consumers who won't even look at a small model built by Ford.
Last summer, the company marked the shift by disclosing it would convert three truck plants to passenger car production. But as gas prices dropped below $2 a gallon this year, the stocks of small cars on dealer lots ballooned as many consumers returned to larger vehicles.
Ford is hardly alone in the online-media space. Toyota's Scion line of small vehicles created a popular and personalized online community for its customers. In March 2008, before receiving a government bailout, GM committed half of its $3 billion media budget to digital and one-to-one marketing through 2011.
To build a new generation of Ford car buyers, the "Fiesta Movement" marketing effort is enticing its 100 test drivers with a free car for six months, auto insurance and gas. In return, they agree to upload their adventures online.
Ford selected the 100 participants from more than 4,000 video submissions viewed more than 640,000 times online. Ford assigned applicants two scores: a "social vibrancy" rating based on how much they were followed online and across how many platforms; and an overall grade based on those factors plus creativity, video skills and their ability to hook a viewer within the first five to 10 seconds.
The auto maker also did background checks that included scouring the applicants' driving histories.
Among the winners: a Los Angles bicyclist who talked about his free pancake breakfast at Denny's and a college trio who disco-danced while their cars' hazard-lights kept time.
Another winner is Tim Chantarangsu, a 23-year-old Southern California rap-artist/waiter, whose submission video -- called "CAUTION-ASIAN DRIVER!" -- has been watched more than 285,000 times on YouTube.
The Fiesta "looks more sporty than Fords usually do," Mr. Chantarangsu said in an interview. "I think at this point a lot of young people are looking for something more fuel-efficient. When you think of Ford, you think giant SUV -- giant and polluted."
Ford is hoping the participants will serve as "opinion leaders" and generate a grass-roots following. "It was our goal to build a collective of digital storytellers," said Budd Caddell of Undercurrent, a New York-based social media consulting firm working on the Fiesta project.
But the campaign isn't without risks. Ford says it will have no control over the online material posted by the 100 participants. That means some could be bluntly critical of the car and Ford won't be able to stop it.
Marketing experts say that enlisting consumers and soliciting their feedback is essential in the digital age where, for example, a hotel review on TripAdvisor can make or break a traveler's decision.
"It's a growing reality," said Allen Adamson, managing director at Landor Associates, a global branding firm in New York owned by WPP PLC. Companies "can either embrace it or pretend it doesn't exist but you might as well embrace it and encourage it because it's not going away."
Even if a few people post negative comments, the strategy is seen as necessary since consumers will consult all types of reviews before making a purchase, especially a car, Mr. Adamson said.
When Ford first tossed around the idea of loaning 100 cars without the ability to control what the drivers might say, Ford's sales chief emerged as the leading internal skeptic.
"I was like, 'Nah, go to Third Street Promenade in Santa Monica [Calif.], go to Royal Oak [Mich.] on a hot night with the kids out for ice cream,'" said Jim Farley, Ford's global vice president for sales and marketing. "Pull up with 10 vehicles, give away free T-shirts, have people do test drives, broadcast the whole thing on the Web."
Mr. Farley said his reluctance softened when a group of sons and daughters recruited from Ford's largest dealers endorsed the six-month online effort.
"The interest in the Web [campaign] had far exceeded my expectations," he says. "My hunch was pretty traditional."
Toyota Motor Corp. is considering a major reorganization of its U.S. operations, bringing sales and manufacturing under one powerful executive, in an effort to keep closer tabs on its American business, which traditionally has been Toyota's biggest source of profit but is now losing money.
The Japanese automaker's top managers are expected to decide how to structure the U.S. operations this month, say people familiar with the situation. A decision would be formalized in June, at the same time that Toyota will anoint a new president in Japan, Akio Toyoda, the grandson of the company's founder.
The prospect that Toyota may install an executive in the United States with over-arching powers appears likely now that the management in Japan has taken the unusual step of rehiring a former top executive with U.S. experience. Yoshimi Inaba, who retired abruptly in 2007, is returning to take a position with Toyota in the United States.
Toyota officials would not comment on possible changes in the North American operations because discussions are ongoing.
Toyota's main North American operations -- its sales subsidiary based in Torrance, Calif., and its manufacturing arm in Erlanger, Ky., now report to sales and manufacturing managers in Japan.
Toyota was prompted to consider a far-reaching reorganization by the collapse of the U.S. auto market that led to the first losses in nearly 60 years at Japan's -- and now the world's -- largest automaker, according to people familiar with the situation.
Traditionally, Toyota has generated half or more of its profit in the United States. 'Toyota in the U.S. has known nothing but success,' said Daniel Gorrell, president of AutoStratagem in Tustin, Calif.
The move to rehire Inaba suggests that top managers are prepared to take exceptional measures to reinforce the ranks at a tricky time for the company.
The new CEO, a member of the founding Toyoda family, will be surrounded by seasoned advisers, but he has not been tested the way a career executive would have been, financial analysts say. A Tokyo-based analyst, who spoke on condition of anonymity, said the ascent of a family member had provoked 'a quiet unease' among investors. While all automakers are struggling in this environment, Toyota's share price has fallen slightly more than stock in its closest competitor, Honda Motor Co.
Japan's second-largest automaker, Honda has expanded more cautiously than Toyota, and resisted pressure to build more large engines and vehicles, settling for a quirky, car-based pickup, the Ridgeline, at the top of its U.S. model range.
By contrast, Toyota's ill-timed assault on the U.S. full-size pickup segment, including the construction of a plant in Texas dedicated to building trucks only, has been very costly. The plant was idled for three months last year. This year, Tundra pickup sales are running about 40 percent of the levels originally forecast.
Its disappointing launch strained relations between U.S.-based managers and executives in Toyota City who were reluctant to make such a big pickup.
People familiar with the situation say managers in Japan feel the U.S.-based executives were overly optimistic in their sales forecasts. On the other hand, U.S.-based managers and dealers complained that some bosses in Toyota City were equipping vehicles too richly for the U.S. market, making them too expensive.
Quibbling turned to finger-pointing as Toyota's results deteriorated dramatically. The company has forecast a $3.5 billion loss for the fiscal year ended on March 31 -- a stunning $20 billion swing from the previous year's record result. 'Clearly there needs to be close coordination between sales and manufacturing, especially today when the market's moving so fast,' said George Peterson, president of consultancy AutoPacific Inc. 'You've gone from being able to sell every Prius you could build last summer to not being able to give them away.' By installing someone like Inaba, who knows the U.S. market and speaks perfect English, Toyota executives expect to get a better reading of this key region.
To be fair, says CSM Worldwide Vice President Michael Robinet, 'the rapidity of the decline caught everyone by surprise.' Although Toyota has tried to reduce its reliance on the U.S. market in recent years, 'North America is still a very important market. Assigning Inaba there speaks volumes about his experience and his knowledge,' said Alberto Lapuz, Tokyo-based vice president of J.D. Power and Associates' Asia Pacific branch.
Irv Miller, a spokesman for Toyota's U.S. sales subsidiary in Torrance, said he could not say what Inaba would do. 'What his role and function will be has yet to be determined,' he said. 'I know there will be a management change, but I have no idea how the organization will be structured at this point in time.' One option for Inaba: heading the automaker's holding company in New York City, Toyota Motor North America. That job traditionally has been ceremonial -- which is why Jim Press left it two years ago to join Chrysler LLC. But it could be turned into a powerful position.
Ralph W. Sifford wears a gold Rolex and keeps his tie tight, and his seven General Motors dealerships in New York and Florida carry a distinctly American name: Grand Prize. ''Everyone's a winner,'' Mr. Sifford said, smiling with pride. ''That's our slogan.''
These days, however, buyers are harder to find. Survival might be, too. All around Mr. Sifford car dealerships are closing. Five have disappeared or gone up for sale within a 10-minute drive of his showroom here; nationwide, more than 1,000 shut down in 2008.
And in the midst of such churn, Mr. Sifford and his staff have become the American car industry in miniature: on any given day, both the upbeat predictions that kept Detroit from changing and the brand loyalty that gives dealers hope are on full display.
Mr. Sifford, who gives his age (70) only after people guess, admits that something has changed from when he started out full of ''excitement and vinegar.''
On his desk sits a scale model of his first car: a 1958 powder blue Chevy Impala convertible. Back then, Chevy was as cool as James Dean, he said, and its dealerships were as beloved as mom and apple pie.
''We're not that any longer,'' he said. ''And now to bring the American image back it's going to be a lot of work.''
Already, the changes are dizzying. Mr. Sifford has laid off 20 people here out of staff of 120. Memos now reach his desk almost hourly from Detroit explaining not just new rebates, but also new demands from a new corporate power center: the White House.
Mr. Sifford said he appreciated Washington's help so far. He predicted that the Obama administration's decision to insure G.M. warranties in the case of bankruptcy would restore confidence to both buyers and dealers.
Recently, he said, he even started to think the politicians had national security in mind.
''In World War II, the Big Three, the automobile industry, built the tanks, and vehicles to get us through,'' he said. ''If they don't have the Big Three, or General Motors, the biggest of the Big Three, there is nobody that the United States could turn to in a new war.''
Patriotism, here at least, is what G.M. has left in the tank. Mr. Sifford claims to be the first dealer in Miami to hang an American flag from a pole 80 feet high; red, white and blue color his company like a poster of Uncle Sam.
For some shoppers, it works. Three families that bought cars from Grand Prize on a recent weekday cited nationalism as a strong motivating factor.
''We already lost Budweiser to Germany or Belgium,'' said Jose Colon, 37, a corrections officer who arrived with several children and a newborn in tow.
A strong G.M., Mr. Colon said, is ''the way it's supposed to be.''
Even Cindy Slade, who said she was shopping because the transmission on her 1995 Chevy just conked out, was back for another. ''I'm a Chevy girl,'' Ms. Slade said, ''and I'm going to stay a Chevy girl.''
Mr. Sifford chuckles when he hears this sort of thing with a grin ready-made for a television commercial. He, too, has never bothered with imports; a single Ford dealership next door is as far as he has moved from his beloved Chevy.
And although he sold one G.M. franchise last year, he said he planned to open another soon in Nanuet, N.Y. On the phone with G.M. to discuss final details, he tapped the desk with excitement.
''We'll have every G.M. franchise other than Hummer and Saab,'' he said after hanging up. ''We'll be the superstore.''
His staff, too, like the title character in Graham Greene's novel ''The Quiet American,'' managed to see only the upside.
''I don't think it's really as bad as everyone thinks,'' said Mark Levenson, a raspy-voiced salesman who used to sell Harley-Davidson motorcycles.
It was the last day of March. Mr. Levenson shouted to another salesman, ''Right now we've got what, 78 vehicles out?''
''Almost 80,'' the other salesman said.
''And last month we did 50,'' Mr. Levenson said, ''so that's a big improvement.''
March actually ended with 99 vehicles sold. It was success only in the narrowest sense: A few years ago Grand Prize Chevrolet sold 180 to 190 each month, Mr. Sifford said. Most were new; last month, the majority were used.
Mr. Sifford, in his office overlooking the showroom, said that maybe everyone, winners still, needed to get used to smaller prizes.
''Once you've had steak, how do you go back to hamburger?'' he said. ''It's really difficult -- and that's what we have to do.''
The president's auto industry judges have decided that Chrysler cannot continue to exist on its own. It needs a partner, and that partner is to be Italian Fiat. Chrysler wants $6 billion more of government money; the government says merge into Fiat by the end of this month, or no government money. No money, end of Chrysler.
This deal makes no sense to me. It would take two to three years for Chrysler and Fiat to figure out how to make this work. In that time, Chrysler could design and build its own new cars as long as the government is providing the money. So why does it need Fiat?
Some background: Under the plan, Fiat would take 20% of Chrysler initially with no money invested. Chrysler gets access to Fiat technology, engine and car platforms. The idea isn't to import Fiats labeled as Chryslers or Dodges into America. It just doesn't pay to import low-priced cars from Europe. The idea is to build them here in a Chrysler plant.
What's in it for Fiat? Fiat wants to reestablish itself in the U.S. and would build its own Fiats and Alfas at the same North American plants, and probably sell them through the Chrysler dealer organization. Fiat would also own a substantial part of Chrysler without any investment.
What would happen to the other 80% of Chrysler? The story is that creditors and we taxpayers would end up with much of it. German Daimler, which once owned Chrysler, and Cerberus Capital Management, which bought 80% of it from Daimler, would own bits, too. And maybe the United Auto Workers union would get some.
Here's the problem: Today's Fiats and Alfa Romeos aren't engineered to meet the U.S. laws for safety and emissions. So they must be re-engineered, or new models designed to meet our standards. But that's not all. Then the North American plant or plants must be retooled to build these cars, and the workers retrained. By any standard, that is a two to three year job.
So Chrysler must continue to live by its own efforts and with maybe more government money for two to three more years. But if it's going to take that long, then Chrysler could build its own cars. I've covered the auto industry for more decades that I care to remember, and I can't figure it out. And don't be so sure that Americans would leap to buy Fiat-inspired cars. They never have.
Chrysler's pickup, the Ram, is well thought of, as are are its minivans and Jeep. The big trouble is its cars; they don't sell, and the lineup is weak. But with government money, Chrysler could rehire engineers and design new ones.
A better possibility could be some kind of affiliation with someone other than Fiat, someone that builds cars here now. The perfect partner would be Nissan, because as Chrysler could use its cars, rebadged as Chryslers and Dodges, Nissan could use Chrysler's pickups and minivans, rebadged as Nissans.
Alas, that doesn't seem likely to happen. Nissan says it has no interest in any get-together now.
The plus side of a Fiat deal is that its chief executive, Sergio Marchionne, did a top-flight job rescuing that company, and he spent part of his life in Canada, so he has some familiarity with these markets. He's certainly better at saving companies than anyone at GM or Chrysler today.
Will the deal come to pass? Can't tell, but we will know in a few weeks. Our government made it clear it wants to save GM, and that it doesn't really care one way or the other about Chrysler.
Like this guy i never understood how fiat would be able to help chyrsler
DEARBORN, Mich. — On Nov. 29, 2006, Ford Motor made a surprising pitch to the nation's biggest banks. In a packed ballroom at a New York hotel, Ford's chief executive, Alan R. Mulally, said he would mortgage all the company's assets for billions of dollars in loans to finance an overhaul of the troubled automaker. Although the economy was healthy then, Mr. Mulally said the money would give Ford “a cushion to protect for a recession or other unexpected event.”
At the time, the request was considered an act of desperation. But the $23.6 billion in loans it received turned out to be Ford's salvation.
Plunging car sales have driven its two American rivals, General Motors and Chrysler, to the brink of bankruptcy, forcing them to borrow $17.4 billion from the federal government to stay in business. The future of both companies will be decided in the weeks to come by President Obama and his special auto task force.
But because of the money it borrowed nearly three years ago, Ford is in far better shape than its two crosstown rivals. The loans have kept it independent and on a course to survive the worst new-vehicle market in nearly 30 years.
“It was a defining moment for us,” Mr. Mulally said in an interview. “But they never would have been willing to lend us the money if we weren't on a different path.”
Mr. Mulally had been on the job as Ford's chief executive less than 90 days when he asked for the loans. But as he told the bankers, he was prepared to make tough decisions, including selling off brands, shedding jobs and focusing Ford's efforts on small cars rather than trucks and sport utility vehicles.
Since then, he has accelerated Ford along that path, pursuing a top-to-bottom transformation that extends from its global product lineup to its renewed focus on the Blue Oval trademark.
As a result, for the first time in decades, Ford's fortunes no longer seem so closely tied to the broader fate of Detroit.
Mr. Mulally, 63, is doing all he can to separate Ford in the public's mind from its hometown competitors.
To emphasize his point, he pulled out a recent newspaper cartoon that compared college basketball's Final Four to Toyota, Honda, Volkswagen — and Ford.
“We are competing against the best in the world,” Mr. Mulally said. “It's not just with the companies in the U.S.”
While G.M. and Chrysler wait for more federal aid, Ford is capitalizing on its status as the only one of the Big Three in Detroit to make it, so far, on its own.
Some surveys are showing consumers migrating away from G.M. and Chrysler to Ford showrooms. Inside Ford headquarters here in Dearborn, management sees a unique opportunity to expand its market share and further separate Ford from the competition.
“I don't take any joy in watching G.M. and Chrysler struggle,” said William C. Ford Jr., the company's executive chairman. “I wish them well, but I wish us better. I want us to win.”
Ford is hardly out of the woods. The company lost $14.6 billion last year, when its vehicle sales in the United States slumped 20 percent, compared with 22 percent at G.M. and 30 percent at Chrysler.
Its once-bulging bank account is dwindling as well. Industry analysts estimate that Ford has about a year's worth of cash left to carry it through a still-depressed car market.
Still, Ford's decision to borrow billions in 2006 when the capital markets were thriving will go down as one of the most significant moves in the company's 105-year history.
“We believe this foresight to strengthen the company's balance sheet is what has separated Ford from its crosstown rivals during the economic downturn,” a Merrill Lynch analyst, John Murphy, said in a report to investors this week.
The Obama administration is forcing G.M. and Chrysler to obtain big concessions from union workers and lenders to qualify for more federal aid.
Ford, however, is having better success on both fronts without a government mandate.
Unlike G.M. and Chrysler, the company has reached agreement with the United Automobile Workers to finance half of its new retiree health care trust with company stock.
Earlier this week, Ford also completed a deal with its creditors to retire $9.9 billion in corporate debt — some of which was part of the big borrowing in 2006.
Investors have welcomed the moves. Ford's stock climbed 13 percent to close at $3.95 on Wednesday, the highest it has been since October.
That was when the car market crashed and the auto companies began burning through huge amounts of cash. A month later, Mr. Mulally was in the spotlight — along with G.M.'s chairman, Rick Wagoner, and Chrysler's chairman, Robert L. Nardelli — during Congressional hearings on Detroit's financial woes.
Mr. Mulally said Ford never intended to ask for federal help but needed to support the industry during its crisis.
“From Day 1, we had no desire to access the government money,” he said.
Ford parted ways with G.M. and Chrysler in December, when its two rivals effectively came under government supervision as part of their loan agreements.
Last month, the presidential task force forced Mr. Wagoner to resign at G.M. and began an effort to replace the company's board.
Meanwhile, Mr. Ford, whose great-grandfather founded the auto company, and Mr. Mulally continue to pursue their long-range turnaround plans.
When Mr. Mulally came to Ford after 37 years with Boeing, one of his first tasks was to borrow the money needed to streamline the company and hasten its shift to smaller, more fuel-efficient vehicles.
He made his presentation to more than 400 bankers in the ballroom of the Marriott Marquis in New York, and he knew he was facing a skeptical audience.
“The No. 1 thing we need to do is deal with our reality and tackle those issues head on,” he said.
At the time, the consensus among analysts was that G.M. was in better shape than Ford.
“It was not seen as a positive that Ford needed to leverage itself so dramatically,” said John A. Casesa, a former Merrill Lynch analyst and consultant to auto companies. “It was more of an act of desperation.”
But Ford benefited from the easy credit of the times. The company originally sought to raise $18 billion and ended up with $23.6 billion.
It has needed every bit of it. Mr. Mulally acknowledged that he did not foresee that annual auto sales in the United States would drop to 13.2 million vehicles last year, from 16 million in 2006, and possibly as low as 10 million this year.
He also knows that a continued slump in sales will put even more pressure on Ford's balance sheet.
“We have sufficient liquidity to handle what the situation is now,” he said.
Ford is betting that its newest products can stabilize its falling revenue. It has high hopes, for example, for the new Taurus midsize sedan that Mr. Mulally pushed for in his early days at the company.
But it is still an uphill climb. Ford's sales are down 43 percent in the first three months of this year compared with the same period a year earlier. The overall United States market is down 38 percent.
Ford's market share has been holding steady at about 15 percent. But that could move up, particularly if either G.M. or Chrysler is forced into bankruptcy.
A recent national study by the firm AutoPacific found that 72 percent of those surveyed would be more likely to buy a Ford product because the company is not taking government loans.
“This is America, and this is about making products people want and being self-sufficient,” Mr. Mulally said. “Clearly, the reputation of Ford is on the rise in the consumer's mind.”
Recently I began writing a column about advertising and marketing for this paper, a process that has awakened my sense of the ludicrous, chicken-salad-flavored fertilizer that passes for brand marketing in this country. And no automotive company has agonized more over the meaning of its brand than Infiniti, Nissan's luxury division, whose image advertising has at various times invoked the serene austerity of a Japanese tearoom and the tuck-and-roll dissipation of a Nevada cathouse.
After wandering in the desert in a way that was nothing less than Hebraic, Infiniti has finally emerged with something approaching a meaning. Infinitis are: keenly Japanese, with telling details -- such as the sword-foil grilles and the washi textures on interior panels -- that celebrate a kind of corporate nationalism. (It would be like Ford using spent brass shell casings as interior trim on its pickup trucks, or beef as upholstery.) Infinitis are: sporty and athletic cars that are not defined by their performance. Infinitis are: sleek, quietly handsome cars that are not obsessed by their beauty. Infinitis are: technologically enabled cars that are not bent on cutting-edge gadget domination.
To compile all that: Infinitis are very comfortable, superbly built Japanese cars with a kind of measured compromise and reasonableness in every direction, cars with sterling goodness but not greatness, cars that are very sound but not sensational in any way.
So what is the company's brand tagline? "Inspired performance." Really? Inspired? This way to the desert, Israelites. . . .
There is nothing particularly inspired about the new G37 Convertible. In fact, it's a fairly rote can-opener job of the G37 Coupe. At the media launch in West L.A. last month, Infiniti executives said the G37 was designed from the beginning to be both a coupe and convertible. Not quite. When pressed, they conceded that the convertible required some major overhauling of the rear suspension (more on that in a moment), as well as beefing up of the steel structure and other rejiggering. Although the result is impeccable -- the Karmann-supplied top mechanism is beautifully fitted into the rear deck and unfolds with biomechanical smoothness, like the jaws of a praying mantis -- this was certainly not an easy, planned-for conversion.
Thanks in part to the fact that the roof panels are steel and not aluminum, the convertible weighs a staggering 462 pounds more than the coupe. So if you like the way your G37 Coupe drives, just throw a Kawasaki Ninja in the trunk and see how that grabs you. The other significant downside to the convertible is that the lowered top all but devours trunk space, down to around 2 cubic feet. Yes, you can take the kids to school in alfresco glory, but there's no room in the trunk for their lunch boxes.
Now, in fairness, the reason the top takes up so much trunk space is that Infiniti refused to muck with the well-wrought lines of the G37 Coupe. Ordinarily, four-seat cabrio versions of coupes develop these weirdly overlong rear decks and rear overhangs (e.g., BMW 3-series, Pontiac G6) in an attempt to accommodate the roofs and retain trunk space, making the cars look if they are wearing a Victorian bustle.
The G37 Convertible retains the coupe's surety of line, the wind-fluted rear shoulders and short rear overhang. So, point to Infiniti: This is the best-looking coupe/hardtop cabrio conversion out there. The only problem: Where they are going to put the trophy?
Mechanically, the G37 Convertible is almost a mirror image of the coupe. Under the hood is the sweetly slick 3.7-liter V6 rated at 325 horsepower (five less than in the coupe on account of some changes to the exhaust plumbing). Buyers have a choice of either a seven-speed automatic or six-speed manual (with the Sport package). The Sport package also kicks in 19-inch alloy wheels, bigger brakes, quicker steering and sport seats.
Out in the sun-damasked canyons around Malibu, the G37 Convertible was a tolerably good car to throw around, but the performance was, well, slightly less than divinely inspired.
The car feels quite a bit more deliberate than the coupe thanks to the weight -- 0-60 mph is probably in the high 5-second range now -- and the convertible exhibits more tremble and cowl-shake over rough roads than the closed-roof car.
As part of the cabrio surgery, Infiniti re-engineered the rear suspension in such a way as to limit wheel travel. One consequence is that, in hard cornering, the outside rear wheel travel can get used up, leaving the car to hop and heave on its bump stops if it hits a rough patch. It's not terrible and it certainly won't break any pending deals with the real estate agents and paralegals of Malibu, but it's noticeable.
On the upside, the G37 advances the art of keeping the air out of an open-air car. The available Premium package includes adaptive climate control that adjusts heating and air conditioning levels depending on speed, roof position and outside temperature (there are also heated and cooled seats). Also included is the Bose Open Air Sound System, with speakers built into the front headrests and active noise cancellation.
With the effortless hardtop deployment (30 seconds to raise or lower the roof), the excellent wind-management (including a wind-blocker screen) and the ever-adapting climate control, the G37 certainly takes a lot of the pain out of drop-top driving.
Infiniti expects the car to skew more heavily female than the coupe and so, I predict, a minute drop in global hairspray levels.
In recent weeks, America's comparatively stratospheric price of diesel fuel has slid back down to achieve parity with the price of conventional gasoline. One might think this development means it's a great time to invest in a new oil-burner for the driveway, but the reality is that unless you're an OPEC minister, there's no good way to ensure this pricing trend is here to stay. So, allow us to table the fuel economy argument for a moment and suggest a radically different reason for going diesel: driving enjoyment.
While this idea may strike as an inherently foreign concept to most American motorists, the truth is that the torquetastic nature of diesel engines is particularly well suited to the Great American Roadscape – even more so than hybrid drivetrains. You can be forgiven for thinking otherwise – after all, automakers haven't exactly given U.S. consumers a boatload of entertaining derv burners to sample, have they? Thankfully, the folks at BMW may have just the prescription: the 335d.
Long the benchmark of the entry-level luxury class – the very yardstick by which sport-sedan driver engagement is measured – BMW's 3 Series has sprouted a new diesel model for 2009. Packing a dual sequential turbo 3.0-liter inline-six that's 50-state legal, the 335d offers a utile 265 horsepower (at 4,220 rpm) and an embarrassment of torque – 425 pound-feet of the stuff at just 1,750 rpm. For those taking notes, that's five more than the 6.2-liter V8 honker in Chevrolet's new Camaro SS . In other words, this innocuous Alpine White sedan harbors the stones of a muscle car – or a full-size pickup.
Given such lopsided power figures, you might surmise that the 335d gets down the road in a decidedly different fashion than its gas-fueled Bavarian brethren – and you'd be right. While the 300 hp, 300 lb-ft. 335i has plenty of gumption, the 335d delivers its ceaseless shove from idle on up, rendering gearshifts from its six-speed automatic all but superfluous. Like all diesels, this 24-valve I6 is a low-revver, but its BorgWarner sequential blowers deliver sufficient torque to fell every last tree in the Black Forest.
Carpet the throttle, and the distant gurgle emanating from beneath the hood swells and hardens appreciably – but not objectionably. And while the mechanicals remain well isolated, even among casual gearheads, there should be no mistaking this powerplant's noises or its delivery for the gasoline model. In contrast, the likewise wonderful 3.0-liter twin-turbo gasoline setup in the 335i is quicker to rev and makes an altogether different, more melodic noise. Which tone you prefer aurally will depend on whether you favor a tenor soundtrack or basso profondo.
By extension, the 335d feels more at home piling up miles on the interstate than its octaned-up stablemates, where it can lope along effortlessly, its gargantuan passing power just a throttle-tickle away. We piled three Autobloggers and our gear for a 300-mile jaunt from Ann Arbor to Chicago by way of Lansing, whereupon we quickly learned that this car's natural, almost sleepy cadence lurks dangerously above the 85mph mark. Passing double- and triple tractor-trailers was a doddle, requiring little more than an outstretched pinky toe to gush past. At such velocities, the d's engine noise is just this side of nonexistent, and its ride so finely-snubbed that it's nearly impossible to appreciate the rapidity of the experience without sneaking a look at the gauges. At 80 mph, the engine is barely shrugging, turning just 2,000 rpm. There's a reason that BMW speedos read in 20 mph increments.
As an almost incidental footnote to our phenomenal progress, we realized a handsome 32.7 miles-per-gallon while lending absolutely no thought to fuel conservation. Given this the car's 16.2-gallon tank, this means that total range figures to be a Kegel muscle-straining 525+ miles – or longer if you are more restrained with the throttle. For its part, the EPA (and the sticker job on our cleverly disguised test car) says you should expect 23 miles-per-gallon city and 36 highway, and we believe it. By comparison, a 335i is rated at 17/26. Tipple lightly on those beverages, dear passengers, because this BMW ain't stoppin'.
All of this highway talk is not to say that the 335d isn't adept at carving duty – the car's rock-solid chassis, progressive, drama-free brakes and tight, linear rack-and-pinion steering all reward just like every other 3 Series currently on the market (Note: Active Steering is not available on this model in the U.S.). It's just that the d's low-revving delivery is more in tune squirting away from stoplights and dispatching interstate miles by the stateful than it is bouncing off the rev limiter while straightening spaghetti corners. It's a fundamentally different sort of enjoyment and it reflects a set of priorities.
At one point in their development, it was hard not to loathe run-flat footwear, but now that both tire manufacturers and suspension engineers have had a few generations to refine and integrate their unique ride and handling characteristics, they seem to be on better terms with each other. We didn't find our car's front strut/rear multilink setup to be objectionably firm, although lateral breaks in the pavement did deliver a noticeable thwack from the 17-inch Bridgestones. However, even this was noted more in our eardrums than by our backsides. We suspect the optional sport pack ($2150) with its stiffer suspension, inch-larger footwear, and firmer sport seats might be pushing things a skosh for those with sensitive nether regions, but in the past, we've had a 2008 sport pack sedan on Michigan's pockmarked winter roads and the combination didn't strike us as intolerable.
Admittedly, this is all sounding like so much gravy – is there nothing to complain about? Well, hang on. Despite reportedly effecting upwards of 2,500 changes to the 3 Series for 2009, there's no getting around the fact that this sedan's cabin is getting on a bit. Color and trim choices are restrained and rather somber, there's too much hard (if well-grained) plastic, and the pop-out cupholders are about as accommodating as the warden at Sing Sing. In fact, the whole interior generally feels style-free – perhaps because its architecture is so familiar. At least everything feels reassuringly solid, the seats are well sculpted and the armrests are finally usable, but a bit of surprise-and-delight would go a long way here.
Lest we forget, BMW's latest iDrive is now markedly more intuitive than before, thanks largely to a new array of buttons clustered around the ol' metal porkpie. The system even seems to be quicker scrolling from menu to menu. However, iDrive still isn't terribly easy-to-use, and it strikes us as telling that with each successive generation, BMW has been backing out more and more redundant buttons to go along with its all-in-one controller. Progress through regression, as it were. At least there is a new bright and crisp 8.8-inch display to keep tabs on all of the functions. Still, at $2,100 for sat-nav, we would be sorely tempted to consider going the iDrive-free Garmin route instead.
Speaking of cost, you can all but grenade your 401k (well, what's left of it) just upgrading the stereo. Riddle us this: $875 for the upgraded 13-speaker Logic7 premium stereo, plus $400 for an iPod/USB adapter and $595 for Sirius (including one year's service). HD radio? That'll be another 350 clams, bitte . Add in navigation and you're looking at $4,320 in center-stack extras, and you still don't have segment standards like Bluetooth ("smartphone"), keyless entry ($500 "comfort access"), leather cosseting your keyster ($1,450), or even folding rear seats ($475).
All of which makes the $100 paddleshifter option seem like an even bigger bargain, but since there's not much need to swap cogs with all that torque (and there's a standard tipshift feature on the console-mounted gearlever anyhow), the more significant "get" is the three-spoke sport steering wheel that the paddles come bundled with. Not that there was anything wrong with our tester's standard wheel, but for a Benjamin we'd take the racier-looking item. Those looking for a three-pedal arrangement will have to settle for a 328i or a 335i, however, as there are no manual transmission diesels for America, just as there is no all-wheel drive model, no coupes, convertibles, or touring bodystyles. If you want hot oil, it's an automatic rear-drive sedan or nothing, which makes sense, considering BMW wants to minimize its exposure while still seeing if there's sufficient demand for its diesels in America.
If the 3's interior is starting to look overly familiar, so is the sheetmetal wrapper it came in. BMW has actually refreshed a substantial number of exterior pieces for this model year, including a new grille, bumpers, hood, side mirrors, and updated light fixtures front and rear. That's a lot of changes, yet most bystanders and carspotters alike won't notice these alterations in isolation – you really have to view the 2009 model side-by-side with a 2008 to appreciate the improvements. While the 3 still isn't what we would call a beautiful car, it is now more assertive looking, particularly from the rear, where the reshaped jeweled taillamps and wider stance (up .95 inches) help it look a bit less frumpy and a bit less, well, mid-Nineties Nissan Maxima. Like most BMW sedans, the 3 is a design that responds particularly well to the fitment of larger wheels and tires, so the modestly-sized kicks on our tester downplayed things somewhat.
Any other issues? Sure, we observed a brief bout of stereotypical diesel rattle during one particularly cold morning warm-up, but it wasn't pronounced or accompanied by any of the "wet dog shake" that we've experienced in some less well-behaved modern diesels. More germane to the drivetrain's operation is its urea injection system, whose ablutionary powers require fresh AdBlue fluids every 12,000 to 15,000 miles – but at least that's free for four years or 50,000 miles (as is most everything else with BMW's standard Maintenance Program).
From where we sit, the fact that the 335d is the costliest 3-Series this side of an M3 doesn't really upset its value proposition. The model retails for $43,900, while a comparable 335i automatic rings up at $41,625 (plus $825 in destination charges for either), meaning that there's a $2,275 difference. Thankfully, Uncle Sam helps out by kicking in a $900 tax credit, leaving a shortfall of just $1,375. Sure, the diesel gives up 45 horsepower, but it also gains 125 additional torques, a substantial improvement in fuel economy and a motoring style all its own. Don't get us wrong – we treasure the 335i's 3.0-liter gas twin-turbo engine – it's one of our very favorite powerplants. But this 335d is a different kind of wonderful, and it paves its own way to driving excitement.
According to a post on the forums at GermanCarZone , BMW is currently working on a new version of its 3.0-liter six-cylinder diesel engine, which puts out 286 horsepower and 413 lb-ft of torque in its current, twin-turbocharged guise. To bump that power peak a bit higher, those crazy German engineers are rumored to be adding a third turbocharger that would boost horsepower to around 350. This new tri-turbo diesel V6 would see its first application in a BMW X5 Performance Diesel. In a bid to maintain the oil-burners fuel efficiency, BMW would add hybrid componentry that includes stop/start and regenerative braking. These bits would earn the big SUV entrance into the automaker's Efficient Dynamics club.
In addition to the high-performance engine, the X5 Performance Diesel would reportedly get a unique body kit that includes subtle lips around the wheel arches along with revised air intakes and a front spoiler. It's too early to verify any of these rumors, but we'll be sure to keep our ears to the ground for more.
Mini's upcoming crossover has been spotted once again by our intrepid spy photographers and this time, the unofficially dubbed Crossman was seen undergoing handling testing on the famed Nurburgring circuit in Germany. While there, we also managed to get a sneak peek of its interior.
In being the brand's only crossover, it touts a higher ride height while rolling on bigger wheels and tires. For added soft-roading capability, its 1.6-liter four-cylinder engine will power a Getrag-sourced all-wheel drive setup. Don't be surprised if a 210-hp, turbocharged "S" variant arrives alongside the naturally-aspirated variety as well.
Design-wise, its fairly obvious the Crossman takes its inspiration largely from the extended-wheelbase Clubman. It'll sport four real doors, rather than an additional swing-out third door as seen on the Clubman. Once inside, passengers will be treated to Mini's standard cabin layout consisting of aerospace-inspired buttons, switches and oversized gauges.
Check back for more Mini Crossman details as they emerge ahead of its expected debut later this year/ early 2010.
NEW YORK — Volkswagen expects diesels to account for up to 30 percent of U.S. sales of the 2010 Golf, which goes on sale this fall.
The forecast is based on higher-than-expected demand for 50-state clean diesel Jettas, says Stefan Jacoby, CEO of Volkswagen Group of America.
About 50 percent of Jetta wagon sales and 30 percent of Jetta sedan sales are diesels. VW had expected 20 percent. VW is bringing in more diesel Jettas to meet demand.
Other makes aren't doing so well with diesels. BMW of North America CEO Jim O'Donnell says diesel versions of the 3 series and X5 "haven't taken off," largely because the brand hasn't advertised them much.
O'Donnell said BMW expects to sell about 3,000 units this year. The BMW diesels debuted in January.
Mercedes-Benz USA CEO Ernst Lieb says the diesel-powered E-class sedan and diesel SUVs account for about 8 percent of total sales for the vehicles.
Audi's first diesel in the United States, the Q7 SUV, goes on sale this month. The price is $51,725, including shipping.
Audi of America President Johan de Nysschen says Audi expects about a quarter of Q7 sales to be diesels. This year, Audi will launch a diesel version of the A3 hatchback.
De Nysschen said Audi hasn't decided whether to offer a diesel in the A4 sedan in the United States.
Just a year ago, working as a product presenter at an auto show was a pretty straightforward job. You stood next to a vehicle, you called it a marvel of engineering, style and comfort and then you fielded softball questions like, ''What does this baby cost?''
But that was before the bailout. Now that the government has helped General Motors and Chrysler stave off bankruptcy with billions of dollars in loans, these companies are finding somewhat hostile crowds at their exhibits. Which leads to scenes like the one on Friday at the New York auto show, where a blond woman in a tight black dress stood on a rotating platform and pitched the sporty Dodge Circuit, one of five electric cars that Chrysler is developing.
Donald Han, an accountant from Queens, sounded unmoved. ''Why now?'' he asked the woman, rather curtly, once she had finished her patter. ''How come you've got to nearly go bankrupt before you come out with a car like this?''
Long a glamorous showcase for carmakers, auto shows have lately become a place for buyers and gawkers to vent. Few of the attendees at the Javits Center, where the New York show runs until Sunday, will ever encounter a top executive from G.M. or Chrysler. But all of them get within heckling range of the presenters and for some, that is good enough.
It does not seem to matter that these women -- they are nearly all women, most of them young and attractive -- work part time for marketing firms and talent agencies that have contracts to run the exhibits. Many know little about the car companies they are working for beyond the scripts they have memorized.
''I try to explain that we're not involved in corporate decisions, so complaining to us doesn't really make a lot of sense,'' said Kerri Moss, standing on a large turntable next to a Jeep 4X4 Laredo, a Chrysler product. Recently laid off from her job as a teacher, she is trying to earn some money on the car show circuit, which runs from September to May. ''And if that doesn't work, I tell them we're doing the best we can.''
Often, that does not work either. One G.M. presenter said a woman told her the company was responsible for the death of American soldiers in Iraq. The logic went like this: if G.M. made more fuel-efficient cars, the country would not need so much oil, and if the country did not need oil, United States troops would never have invaded.
''I didn't say anything,'' recalled the presenter, who like many others here declined to give her name because she is not supposed to speak to the news media. ''What can you possibly say? 'Thanks?' ''
Even if they ignore the snide comments and occasional jeers, presenting for an ailing car company just is not as fun as working for one that is thriving. The G.M. and Chrysler spaces are smaller and less flashy than they were a year ago.
The Jeep exhibit used to have a 54-foot-wide waterfall that continuously dropped 1,000 gallons of water and was programmed, like an ink jet printer, to spell out brand names and logos in the falling streams. Not any more.
And for the first time, some G.M. presenters are wearing the same outfits they wore last year.
''We used to get a new one every season,'' said Christine Alt Parry, during a break from her duties beside a black 2010 GMC Terrain, wearing the flower-pattern dark blazer and black slacks she wore a year ago. ''I think they're trying to save some money.''
Downstairs at the Kia exhibit, meanwhile, it is party time. A D.J. is mixing oom-chick-oom-chick club tracks on an Apple laptop, beside huge LED screens that spell out phrases like ''Schwing!'' and ''Kia Sips Gas.'' The men are wearing new Hugo Boss suits, with dark-purple hankies, and the women are wearing designer dresses bought recently at the Beverly Center in Los Angeles.
On Friday, Subaru handed out flutes of Brut Cuvee Champagne to visiting Finnish car dealers. And they are preening over at the Hyundai space, where the staff is decked out in new Armani jackets, Cole Haan sweaters and a few other items picked up at Nordstrom.
''I haven't seen anyone who looks as sharp as we do,'' said Mark Laffrey, the wardrobe consultant.
The exhibit for Ford, a company in better financial shape than its crosstown rivals in Detroit, is huge and dominated by an atmosphere that could be described as we-didn't-take-your-money festive. There are slot car races, a magician doing card tricks, and the crew of MTV's ''Pimp My Ride'' upgrading a car in a cordoned-off section called Mustang Alley, which has a spring-break vibe.
''We're the bad boys of the auto show!'' yells a man who calls himself Flames, one of the ride-pimpers, as he gets to work.
Not that any of these companies are making huge sums of money. But unlike G.M. and Chrysler, they do not need to project an air of austerity and seriousness.
So is this new image winning over potential buyers? Well, there are people who say they would indeed buy from either company. But many attendees echoed the sentiments of Mark Lee, who was photographing his daughter next to the gleaming rims of a 6,000-pound Hummer. ''Absolutely not,'' he said when asked if he was tempted.
On the other side of the hall, an electrician, Kurt Moore of Pleasant Valley, N.Y., sat in a Toyota Highlander and explained why he was not going to buy American anytime soon.
''You know how they say, 'Never buy a car made on a Monday or a Friday?' '' he said, getting comfortable in the passenger seat. ''It's because the people building the cars aren't focused on the job. Well, how well do you think they're focused today, with all this talk about how they're going to lose their jobs?''
The G.M. and Chrysler presenters have heard questions like that, and dozens of variations of it, in the last couple months.
''We get a lot of, 'You're going out of business,' 'You guys are going bankrupt,' '' said Shannon Melahn, part of the Chrysler presenting team. She shrugged and added, ''We just smile.''
the bold type goes to show you how bright car buyers are
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