Detroit auto show: Return of the trucks

By Chris Sorensen - Tuesday, January 15, 2013 at 12:26 PM - 0 Comments

Since 2009, the Detroit auto show has been mostly about cars—the smaller, the better. After being caught flat-footed by the recession and a big spike in gasoline prices, the former Big Three—Ford, GM and Chrysler—were eager to show the U.S. government and taxpayers (which bailed out GM and Chrysler) that they knew how to build more than hulking pickup trucks and gas-guzzling SUVs. Hence, the spotlight was on small cars like the Chevrolet Cruze, Ford Focus and Dodge Dart, while the heavier pieces of metal were parked off to the side.

Not this year. All three automakers are turning their attention back to bigger vehicles—namely pick-up trucks. GM is showing off its new 2014 Chevrolet Sliverado 1500 and its sister model the GMC Sierra. Ford, meanwhile, has a burly Atlas pick-up concept that is believed to represent the future look of its best-selling F-150.

Ford F-150 concept. (North American International Auto Show)

In part, the renewed focus on pick-ups reflects a need to refresh models that haven’t seen a major update in several years (although that didn’t stop the F-150 and Silverado from claiming the top two sales spots in the U.S. last year by a significant margin). It’s also timed to coincide with the rebound in the U.S. housing market, which is expected to draw contractors and other construction types back to showrooms. But mostly it reflects a reality of the U.S. auto business that was swept under rug for political reasons in 2009, but remains as important to the Detroit Three’s bottom lines as ever: Americans like to drive trucks.

Europe’s own carmageddon

By Toban Dyck - Wednesday, October 10, 2012 at 3:20 PM - 0 Comments

(Benoit Tessier/Reuters)

Auto sales are plummeting to levels not seen since 1990, analysts are talking of an industry in need of divine intervention and factories risk closure. Sounds like Detroit in 2008. But this is the picture of Europe’s auto industry today as it heads into its sixth year of falling sales.

The Paris Motor Show is normally a showcase of manufacturing pride and consumer excitement. This year, observes IHS Global Insight auto analyst Carlos da Silva, “I don’t want to say [it was ] ‘lame,’ but it was on the sad side. Confidence levels are so low here in Europe that we need a miracle; we need the Pope to do something.”

Europe’s auto market is projected to shrink 8.8 per cent this year. The European Automobile Manufacturers’ Association said not since its reports began in 1990 have new-car registration numbers been so low; they were down 8.9 per cent last month—at roughly 700,000 cars across the EU—compared to the same period last year.

Carmakers are struggling to keep factories running; poor demand has many functioning below the capacity needed to cover costs. Consumers in Greece, Italy and Spain continue to put off big-ticket purchases, just as Americans did in 2008 and 2009. Ford suffered a 29 per cent decline in sales compared to a year ago, while Fiat, Renault, BMW and Peugeot Citroën weren’t far behind. According to Da Silva, the already dire conditions in Europe are projected to get worse. Even Germany, the eurozone’s one economic stalwart, is facing a shrinking auto market.

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Automakers must double down saving gas

By macleans.ca - Tuesday, September 11, 2012 at 12:14 PM - 0 Comments

Expect to see a lot more electric and hybrid cars on the road in the coming years. Washington recently announced new rules that cars must have almost double the current fuel economy standard of 29 miles per gallon by 2025. Ottawa quickly said it will follow suit with common standards. (The Canadian equivalent would mean moving from 6.6 to 4.4 litres per 100 km). What’s good for the environment, however, is creating something of a dilemma for automakers. They need to continue making big investments in green technology to meet the new requirements, but as yet haven’t found much of a market for green cars. Consumers remain fiercely loyal to the old-fashioned internal combustion engine. In Canada, just 0.03 per cent are buying electric cars. General Motors expects to sell 2,500 plug-in hybrid Chevy Volts in August—its highest monthly rate since the model was introduced in 2010. With sales falling short of projections, GM is shutting down production for four weeks. Sales of Nissan’s electric Leaf, meanwhile, are down 26 per cent from last year. Carmakers will continue making electrics and hybrids—last month Ford said it is hiring dozens more engineers for that purpose—but for now, it won’t do much for the bottom line.

State of the anti-union

By Tamsin McMahon - Thursday, April 5, 2012 at 12:02 PM - 0 Comments

Billy Weeks/Reuters

When German executives from Volkswagen descended on Chattanooga, Tenn., last May for the grand opening of their $1-billion plant, they pointed to the warm Southern hospitality and the cultural amenities of life on the banks of the Tennessee River as key reasons for deciding to build their first North American auto assembly shop in 20 years on the site of a former wartime-era munitions factory in the Deep South.

Auto industry analysts pointed to other reasons the automaker chose Chattanooga: the region’s high unemployment and strong anti-union sentiment, which promised both a massive labour pool willing to work for cheap and more than half a billion dollars in government incentives—nearly $200,000 per worker. Luring Volkswagen, which promised to hire nearly 2,000 workers for as little as $14.50 an hour, was deemed a huge coup for the city of 170,000. Since the plant opened, the city’s unemployment rate has dropped from nine per cent to 7.3 per cent. Volkswagen-branded shirts became the city’s most coveted fashion item.

Volkswagen is merely the latest foreign automaker to target the southern U.S. for expansion into the North American market. It’s a trend that is profoundly reshaping the American manufacturing landscape, pushing the country’s auto belt south from Michigan and Ohio into the cotton fields and cow pastures of Alabama and Mississippi in search of cheaper labour and fewer costly union battles. It’s not the first time the industry has seen a shift to the South, as automakers decamped for places like Kentucky, Tennessee and Missouri in the 1980s in search of cheap labour. But the present-day move appears both more profound and more lasting. For every job created by foreign automakers, mostly in the South, the Detroit Three have shed six jobs, nearly half in Michigan, according to the Center for Automotive Research. It’s a push that now threatens the future of high-paying manufacturing jobs in Canada, and maybe even the future of unionized workplaces.

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Chrysler: Detroit’s comeback kid

By Gustavo Vieira - Tuesday, February 14, 2012 at 10:30 AM - 0 Comments

When the U.S. auto industry collapsed, it seemed likely that the Detroit Big Three (Ford, General Motors and Chrysler) would become the Big Two—and even more likely that the automaker that wouldn’t survive the so-called “Carmageddon” would be Chrysler. But it is Chrysler that has staged the most miraculous comeback of all. Since emerging from bankruptcy and repaying its government loans in 2009, the smaller of the Detroit Three is now leading the pack. In January, Chrysler was the top-selling car brand in Canada, with sales up 22 per cent. In the U.S., sales jumped 44 per cent, the biggest rise among major automakers. Chrysler’s controlling company, Italy’s Fiat, recently reported it more than doubled its net income in 2011—all thanks to Chrysler’s performance. Chrysler achieved all of this without rolling out any revolutionary new vehicles, like the GM Volt. To the contrary, its sales went up thanks to its Jeep brand models, Ram trucks and its existing sedans, like the Chrysler 300 (assembled in Brampton, Ont.). Next up for Chrysler: an even better 2012, forecasts Fiat CEO Sergio Marchionne, who is preparing the company for an initial public offering and the launch of an anticipated new line of vehicles based on Fiat models.

Toronto councillor asked to remove logo from Facebook page

By macleans.ca - Friday, August 12, 2011 at 3:07 PM - 9 Comments

Ford Canada, the automaker, has asked Toronto Councillor Giorgio Mammoliti to remove its “Built Ford Tough” logo from a Facebook page supporting Toronto mayor Rob Ford’s administration. A Ford car spokesman says the company received about a dozen calls from people upset with the unauthorized use of the Ford logo. Giorgio Mammoliti’s Facebook page has been the ire of many Torontians lately, as it promises to block “communists” from its membership list. Mammoliti, once an NDP MPP, has expressed concerns lately about people he believes to be communist making deputations at City Council meetings.

The Globe and Mail

Just don't call it a truck

By Chris Sorensen - Thursday, February 24, 2011 at 3:17 PM - 2 Comments

Mark Thompson/Getty Images

Say the phrase “F-150″ and chances are an image of Ford Motor Co.’s burly pickup truck comes to mind. So when Italian carmaker Ferrari recently announced that its new Formula 1 race car would also be called the F150, the Detroit automaker’s lawyers were quick to claim trademark infringement.

Ferrari later backed off by pledging to use only the racer’s full name, the Ferrari F150th Italia (it’s Italy’s 150th anniversary this year). Besides, Ferrari said in a statement last week, “there can be no way to confuse the one-seater for the next F1 championship with any other vehicle.” But Ford refuses to budge and is pursuing its lawsuit, which likely has something to do with the F-150′s title as the bestselling pickup in the U.S. for three decades running. It’s a different sort of race, and, given Detroit’s suffering over the past few years, one Ford simply can’t afford to lose.

The greenest car of all?

By Chris Sorensen - Friday, February 11, 2011 at 11:25 AM - 23 Comments

Photographs BY Colin O’Connor

At a recent automotive conference in Detroit, Nissan Americas chairman Carlos Tavares hoisted a large car muffler over his head and then accused Nissan’s competitors of misleading people when it comes to electrically powered vehicles. “If you’re calling your car electric and it has one of these,” he said, waving the auto part. “You’re only muddling the message.”

Though sales of electric or hybrid electric vehicles represent a tiny fraction of the overall market, automakers aren’t pulling any punches when it comes to talking up their newest creations. The nascent segment, which automakers have pumped many billions of dollars in research and development into, is fast becoming one of the most competitive. But the rush to go green has created an unintended consequence: consumer confusion. Each automaker has come up with its own take on the electrified car of tomorrow, a category that also includes hybrids and plug-in hybrids—both of which incorporate a gasoline engine. And nobody wants to get stuck with a four-wheeled equivalent of a Betamax in the garage.

For its part, Nissan is betting the future won’t involve gas stations at all. Its compact Leaf electric car, the result of US$6 billion in research and development that began in 1992, is touted as the first-ever mass-produced electric vehicle, and is priced to compete with cars powered by conventional engines (it costs about US$32,000 in the United States before government incentives, which can bring the sticker price down to around US$20,000). “That’s why we went to Detroit with a muffler,” Tavares said during a recent interview with Maclean’s in Toronto. “We wanted to explain to people visually that when you have a zero-emissions car, you don’t have a tailpipe—because there is no gas.”

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Motor City magic

By Chris Sorensen - Friday, January 14, 2011 at 12:01 PM - 1 Comment

Jeff Kowalsky/Bloomberg/Getty Images

They may no longer be the “Big Three,” but General Motors Co., Ford Motor Co. and Chrysler Group LLC were eager to use this year’s Detroit auto show to show the world there’s a Motor City comeback in the making. Amid the usual pulsing lights, puffs of dry ice and pounding music, Olivier Francois, president of the Chrysler brand, stood before a throng of automotive journalists and made references to 8 Mile, the 2002 movie starring Eminem as a white rapper who earns the respect of his peers in a hardscrabble Detroit neighbourhood, as he attempted to whip up enthusiasm for a redesigned Chrysler 300 sedan. “Today you will see what happens when we are backed into a corner,” he said, invoking the image of a prizefighter, before the 300 drove onto the stage and the ear-splitting decibels increased even further. “You will see that we come out swinging.”

Buoyed by recovering sales and corporate restructurings that are finally gaining traction, similar gestures of confidence were also on display by GM, which along with new small cars proudly displayed its silver and yellow Cadillac CTS-V race car (to mark the brand’s return to auto racing), and Ford, the only one of the three Detroit-based automakers that didn’t file for bankruptcy protection or take a government bailout. Ford’s blue-themed display rivalled the size of GM’s and Toyota’s, despite it being a smaller automaker. Ford also introduced a racy-looking Vertrek concept that could one day replace the Escape crossover. “Motown has got its mojo back, obviously” said Dennis DesRosiers, a Canadian automotive analyst.

And, interestingly, for every ounce of hometown swagger—something that had all but disappeared from the North American International Auto Show since the recession hit—there appeared to be a corresponding retreat from the big-name Japanese automakers who’d spent the last few decades eating the Detroit Three’s lunch. Toyota Motor Corp. executives spent much of their time at the Cobo Center, on the banks of the ice-filled Detroit River, answering questions about last year’s recalls of millions of vehicles, as opposed to talking about new models.

But what happens at the Detroit show, with its vast expanses of carpet, soaring displays and dazzlingly lit vehicles, is not always a reliable indicator of what’s likely to take place inside dealers’ showrooms. While the turnaround story at GM, Ford and Chrysler is real, there is still much work to be done. And it’s not like rivals have been standing still for the past couple of years waiting for Detroit to get its act together. Competition will be fierce.

Like other automakers, GM, Ford and Chrysler benefited immensely from last year’s rebounding auto sales in the United States, which grew 11 per cent to 11.6 million after hitting a low of 10.4 million a year earlier. While that’s still a far cry from the 16 million or so vehicles that were being sold prior to the recession, Ford and GM are nevertheless expected to report billions in 2010 profit (Chrysler, still the weakest of the three, is also closing in on the break-even mark after posting losses for the past few years). “The big thing that’s probably shocked everybody is that these car companies can now make money at vastly reduced volumes,” says Jeremy Anwyl, the chief executive of automotive website of Edmunds.com. “They are talking about break-evens now at sales levels of about 11 million a year. To put that in perspective, just a few years ago sales of 14 million would have been perceived as a disaster.”

GM underwent a particularly dramatic overhaul during its 2009 bankruptcy to emerge as a leaner and more focused company. It dumped debt, slashed half of its brands and took steps to wean itself off a destructive habit of relying on steep incentives—zero per cent financing and cash-back deals—to juice sales. “We have to keep our foot on the accelerator here,” said Mark Reuss, the president of GM’s North American division, moments before Chevrolet introduced a sleek new subcompact car called Sonic, which will be sold alongside Chevy’s compact-sized Cruze. “But I think we’re running North America with the right philosophy.”

And, to top it off, the company took a major step toward shedding its “Government Motors” stigma through a successful IPO in November that raised US$23 billion, helping to pay down roughly US$50 billion worth of loans from Washington and Ottawa.

Chrysler also filed for Chapter 11 in 2009 and, in exchange for bailout cash, agreed to a marriage with Italian carmaker Fiat. Despite a lack of new models to sell last year, it too managed to post an impressive 16.5 per cent increase in U.S. sales to 1.1 million vehicles, hitting the target set by CEO Sergio Marchionne. He is now predicting sales increases of 25 per cent in 2011 as Chrysler sends its new 300 sedan to showrooms alongside a vastly overhauled Sebring sedan, now called the 200. Chrysler will also be selling the tiny Fiat 500 in North America, although analysts say it will be the incorporation of Fiat’s small car technology in future models that will truly determine Chrysler’s future.

Ford has taken a different road, having had a head start on its restructuring. With several popular new models and quality rankings that now rival Japanese automakers, Ford’s U.S. sales soared 19 per cent in 2010, and the company managed to increase its market share there for the second time in two years. It also ousted GM as Canada’s sales leader for the first time in more than half a century.

There’s more to come. In Detroit, Ford introduced a new seven-passenger C-Max minivan, marking a return to a segment it abandoned in 2006. It also showed off two five-seat C-Max variants powered by regular hybrid and plug-in hybrid engines (regular hybrids alternate between gas and electric power, while plug-in hybrids run solely on electric power until the charge is depleted and a gas engine takes over), and an electric version of its Focus small car. “The fuel-efficiency story is going to be a major one,” said David Mondragon, the CEO of Ford Canada. He added, however, that Ford has a “very balanced approach to the marketplace,” ranging from the tiny but well-equipped Fiesta subcompact to Ford’s bestselling F-150 pickup trucks. “And with flexible manufacturing, we can build whatever consumers want.”

Having the right mix will be critical as analysts forecast a continued recovery in the all-important U.S. market. Jeff Schuster, director of automotive forecasting for JD Power and Associates, predicts sales of 12.8 million vehicles in the U.S. this year followed by 15 million units in 2012 and a return to nearly 16 million a year later. (Canadian sales increases will be less dramatic, rising to 1.6 million next year compared to 1.5 million in 2010, but only because the market didn’t collapse as badly.) That suggests big profits down the road for Ford, Chrysler and GM, providing they can hang on to their current combined 45 per cent market share, up one percentage point from last year.

Clash of the cruisers

By Chris Sorensen - Thursday, October 7, 2010 at 10:40 AM - 0 Comments

Chrysler Group LLC/ Mike Segar/Reuters/ Ford Motor Co.

For the first time in more than a decade, Dennis Simcoe won’t be able to simply pick up the phone and call Ford Motor Co. when it’s time to replace one of Edmonton’s 230 Crown Victoria police cruisers. That’s because Ford, which currently boasts 70 per cent of the North American police car market, is finally retiring the aging, tank-like police car next year, creating unease among police departments and an opportunity for competitors to step in. “It’s a very well-performing police vehicle,” says Simcoe, who oversees fleet operations for the city of Edmonton and already sounds a touch nostalgic for the Crown Victoria. “You can pound on them and they still keep ticking.”

For Ford, though, the “Crown Vic” lost its commercial appeal a long time ago. Built in St. Thomas, Ont., the car has been relegated to police and taxi fleets since 2007 after Ford decided the consumer market for big, rear-wheel-drive sedans had all but disappeared, save for a handful of Florida retirees. Even taxi companies are moving away to smaller and more fuel-efficient cars. And police departments, although important and high-profile customers, only buy about 60,000 of the roughly $30,000 vehicles a year in total—not enough to justify a dedicated assembly line.

Ford is now attempting to convince police to move to a car based on its front- and all-wheel-drive Taurus platform, as well as a sport utility vehicle, promising performance benefits that stem from modern vehicle stability systems and the improved fuel economy of a smaller but still powerful V6 engine. “We can add that advanced technology and maybe change the way people think about police cars,” says Marisa Bradley, a Ford spokesperson.

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The trucks are still big. The engines, puny.

By Jason Kirby - Thursday, August 12, 2010 at 10:00 AM - 0 Comments

Chris Hondros/Getty Images

When Ford unveiled the 2011 Explorer last week, it was hard to say what was the bigger surprise—that the company hauled several tons of dirt, rocks and trees into the heart of New York City for the big reveal, or that anybody even cared. The rugged truck that kicked off the SUV craze in the 1990s has fallen on hard times amid the recession and steep pump prices. Over the last decade, sales have evaporated, tumbling a whopping 88 per cent, from 450,000 to just 52,000 last year. Yet, when the redesigned and retooled Explorer rolled down a makeshift hill outside Macy’s department store, it triggered gushing praise from analysts, investors and prospective buyers. And it was the clearest sign yet the turnaround at Ford has kicked into high gear.

In many ways, the new Explorer is an SUV in name only. It still resembles a sport utility vehicle—it’s roughly the same size as the previous Explorer, the V6 version offers more horsepower than the previous model and it can still tow a 5,000-lb. load. But everything about the way the 2011 Explorer is constructed points to it being a crossover. The vehicle’s unibody design, in which the body and frame are welded together as a single unit, shares more in common with the Ford Taurus car than with the company’s line of body-on-frame pickups. That has helped make the Explorer lighter and more fuel-efficient.

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Why big trucks mean big sales

By Kate Lunau - Thursday, June 10, 2010 at 1:20 PM - 1 Comment

Getty Images

In a recent commercial, the Dodge Ram Heavy Duty pickup truck is shown splashing through mud, pulling massive loads, and charging across the desert, with a gravelly voice-over from actor Sam Elliott—the quintessential cowboy—in the background. Macho truck ads are nothing new, but lately it seems like the Detroit Three automakers are engaged in a spitting contest over whose truck is biggest, toughest, and manliest of all. Earlier this year, GM even challenged Ford to a truck tug-of-war between their 2011 heavy duty pickups (Ford declined).

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Crashing computers, and cars too

By Chris Sorensen - Thursday, February 25, 2010 at 11:00 AM - 2 Comments

Sit inside a Toyota Prius hybrid and it’s hard not to marvel at all the high-tech eye candy: push-button ignition, touch-screen display and digital images of the vehicle’s dual gas-electric powertrains at work. But while automakers have generally rushed to highlight the sophisticated technology under the hood of their hybrids, Toyota’s recent decision to recall nearly half a million Prius vehicles because of a software glitch may cause drivers to think twice about buying such overly computerized cars.

Toyota decided to issue the recall because of a problem with the Prius’s computer-controlled brake system—specifically the way it switches between its hydraulic (stopping) and regenerative (power storing) braking systems, which can lead to uneven braking on bumpy terrain. Similarly, Ford said it would provide owners of some of its hybrid models with a software patch to fix a similar problem. “Hybrids have tended to be relatively error free compared to regular vehicles—that is, until now,” says Tony Faria, co-director of the University of Windsor business school’s Office of Automotive Research. Suddenly, these high-tech cars can seem downright scary.

The timing couldn’t have been worse. Toyota is in the midst of recalling some 8.1 million vehicles worldwide amid a small number of complaints of “unintended acceleration.” So far, Toyota has identified ill-fitting floor mats and potentially sticky gas pedals as the culprits, but several observers have suggested Toyota’s drive-by-wire throttles (which replace the mechanical link between gas pedals and the engine with an electronic one) are to blame. It hasn’t helped that Apple co-founder and engineering guru Steve Wozniak publicly speculated that he was having software-related problems with the cruise control mechanism on his Prius.

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Detroit’s dirty secret: SUVs rule

By Jason Kirby - Thursday, January 28, 2010 at 12:40 PM - 2 Comments

At the height of the U.S. economic crisis, one of the most potent symbols of American excess was the gas-guzzling sport utility vehicle. When oil prices spiked and millions of Americans lost their jobs, sales of big trucks collapsed, taking General Motors, Chrysler and nearly Ford with them. Only small cars would have a future in this more frugal, sensible economy, we were told. Well, so much for that.

The SUV is back, and American drivers can’t get enough of them. According to Ford, sales of the Expedition jumped 45 per cent in December, while the Lincoln Navigator was up 60 per cent. GM, meanwhile, has announced plans to spend US$1 billion revitalizing its lineup of full-size pickups. The companies are still heavily focused on smaller, fuel-efficient vehicles, and the next generation of SUVs will undoubtedly do better on gas. But any notion that the SUV would go the way of the Model T is gone.

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Detroit Auto Show: Electric dreams

By Chris Sorensen - Friday, January 15, 2010 at 9:00 AM - 7 Comments

There was a whiff of optimism, albeit of the cautious variety, mixed with the usual scents of rubber, new car and acres of indoor carpet at the Detroit auto show this year. After a brutal 12 months that saw sales plummet across North America and two of the former “Big Three” Detroit carmakers file for bankruptcy, auto executives were understandably eager to put the past behind them and get back to the business of selling cars, trucks and SUVs amid growing evidence of an economic turnaround.

While the show lacked the glitz and glamour of even just a few years ago—no trucks were dropped from the Cobo Center’s ceiling or cattle-herded through downtown Detroit—the cloud that had hung over last year’s displays lifted to reveal an industry that, if not completely transformed, believes that it’s finally found the right mix of smaller and greener cars to survive in the new and more cutthroat automotive landscape.

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The future is tiny

By Colin Campbell - Saturday, July 25, 2009 at 11:00 AM - 3 Comments

If you think everyone in the auto sector is feeling grim these days, then you haven’t talked to John Vernile. The vice-president of sales at Hyundai Auto Canada says the recent turmoil has been nothing but good news. Sales for the South Korean automaker are up “in every segment,” he says—amounting to an overall surge in sales of 20 per cent during the first half of this year. “When this downturn hit, it just dialled things up for us,” he says. Thanks in part to the demand for Hyundai’s smaller cars, the company has suddenly emerged as one of the dominant players, not just in North America but globally. It’s now the fifth-largest carmaker in the world. In quality surveys, it ranks ahead of Toyota and Honda. Market share is up, sales are up, and opportunity abounds. Despite the tough economic times, “we quietly celebrate here,” says Vernile.

That kind of talk should have struggling industry heavyweights such as General Motors, which just emerged from bankruptcy protection, in panic mode. It is, after all, a revolutionary shift from 20 years ago when Hyundai was best known for the Pony, a small, cheap and just plain ugly car. Today, Hyundai has one of the hottest cars on the road with the Genesis, a sleek and expensive sedan that won the North American and Canadian car of the year awards. “Who would have ever thought we’d be selling a car over $40,000?” quips Vernile. “We can’t keep them in stock.” Continue…

The trouble with gas sippers

By Colin Campbell - Friday, May 22, 2009 at 12:08 PM - 6 Comments

North American car executives put on a happy face when they stood side-by-side with U.S. President Barack Obama and environmentalists to unveil new fuel efficiency rules this week. Under the new standards, the cars they build will have to get 35.5 miles per gallon (up from 25 mpg) by 2016—a much shorter timeline than any had expected. Speaking to reporters after the announcement, the executives applauded the ambitious move, which will force them to make cars over 40 per cent more efficient. But what they didn’t say publicly, in front of their new boss, is that this will be a severely onerous task for an already very fragile industry.

Meeting the new rules will cost the auto companies billions of dollars as they speed up the necessary engineering work to design and build more fuel efficient cars and retool plants. And this comes at a time when car makers like G.M., Ford and even Toyota have no money to spare. “This is the equivalent to be being very sick in the hospital and then coming down with pneumonia,” says Rebecca Lindland, an auto analysts at IHS Global Insight. Just hours before the deal was announced, Ford informed the White House it might not survive under the new rules and threatened to pull its support, reported the Los Angeles Times. It was eventually convinced to play along.

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Apartheid lawsuit gets a green light

By Rachel Mendleson - Thursday, April 30, 2009 at 8:20 AM - 3 Comments

A New York judge has given the green light to sue multinationals such as Ford and General Motors for their alleged role in the segregation, torture and killing of blacks in South Africa.

Class action suits have been cleared to proceed against Ford, GM and Daimler for allegedly “aiding and abetting” torture and extrajudicial killing by supplying military vehicles used in the persecution of blacks during South Africa’s apartheid regime. IBM faces similar charges for allegedly providing computers for the surveillance of rebels, and Germany-based defence giant Rheinmetall may face a suit for its alleged role in arms dealing. “One who substantially assists a violator of the law of nations is equally liable if he desires the crime to occur or if he knows it will occur and simply does not care,” wrote Judge Shira Scheindlin in her April 8 ruling.

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Cash for Clunkers

By Alex Shimo - Tuesday, March 10, 2009 at 8:12 PM - 12 Comments

Ford Motor Co. has asked the Canadian government to provide a $3,500 incentive to consumers who buy a new car in 2009. The initiative is supposed to stimulate the flagging auto-industry, and get older vehicles off the road. Ford CEO David Mondragon said they would be replaced by cleaner and safer vehicles.

The scheme has been sold as a win-win: good for the environment and economy. Based on the German model, it will likely stimulate the car industry – in Germany, car sales are up 22 per cent from the year before, and are at their highest level in 10 years. The scheme is so successful that many other countries are thinking of implementing something similar - Britain says a cash incentive scheme is on the horizon, and France, Italy and Spain all offer a similar cash for clunkers program. In the US, a similar proposal didn’t make it into the stimulus package, but has strong support from many in Congress.

The European experience suggests the program is good for job creation. Whether it’s good for the environment is another matter. While emissions of newer cars are lower than older cars – they aren’t that much lower. Between 1987 – 2005, fuel efficiency improved by 24 per cent. Which adds up to an approximate improvement of 1.3 per cent per year, depending on the age of your car. When you factor in the carbon cost of producing a new car, you can see that it’s only going to make a real difference to your vehicle emissions if you have a very old clunker and you buy a very clean, green car. The problem is the people who own clunkers are generally not about to buy a brand new vehicle, even with the incentive. If you have a rust bucket, it’s most likely because you are cash-constrained, and government cash will only take you so far. Considering all these factors, many greenies say this isn’t really going to help the environment much at all. One worked out the cost of the incentive, and said you’d get as much value for money by reclassifying dollar bills as biomass and burning them in power stations. Would that be green power? One can only guess.

The Sad Reality facing General Motors

By Steve Maich - Friday, December 12, 2008 at 10:16 AM - 38 Comments

The Congressional plan to bail out the Detroit auto industry died a swift death last night, but the White House may yet swoop in with a unilateral bailout of its own. Reports surfaced this morning to suggest that the Treasury Department, on the authority of the President (and presumably the U.S. Fed) would tap the $700 billion fund to bail out Wall Street in order to get enough cash to Detroit to keep the companies afloat until next year.

That, of course, would finally destroy any notion that the U.S. Government is actually operating with a coherent plan. I know, I know…nobody really believed that anymore anyway. But the Trouble Asset Recovery Plan (TARP) was first supposed to buy up bad mortgage assets, then got converted into a giant bank account to buy bank stocks, and now, apparently, it might also branch out into the car business. This, dear friends, is what’s known as making it up as you go along.

Unlike my friend Andrew Coyne, I’m a little more sympathetic to the idea that governments can lend a helping hand to industry in times of trouble. That said, these bailout plans are disasters in the making. The best explanation of why can be found here (a column from a month ago in the Wall Street Journal by Michael Levine.) Continue…

Rise and fall of the young fogeys

By selley - Monday, November 24, 2008 at 1:32 PM - 10 Comments

Must-reads: Conrad Black on a certain grotesque miscarriage of justice; Jeffrey Simpson on Henry Waxman; Don Macpherson on Mario Dumont; Greg Weston on Bob Rae; George Jonas on “Singapore of the North.”

Brother, can you spare a dime?
From Washington to Lima to the Circuit Gilles-Villeneuve, there’s bad news on the economy. But you already knew that.

The National Post‘s Terence Corcoran asks us if we really want the future of the North American auto industry to be in the hands of politicians intent on aping Jerry Maguire (“Until they show us the plan,” said Sen. Harry Reid, “we cannot show them the money”) or who actually believe “GM would be better off if CEO Rick Wagoner wandered about U.S. airports in search of his luggage.” By all accounts, he observes, a bailout would mean “further suppression of market forces from an industry already burdened by regulations that have driven it into the ground” and the “continued existence of union protections,” among other impediments to future success. Let them go bankrupt, Corcoran implores, in hopes they might someday be able to recover “in a genuine market.”

Playtime’s over, the Ottawa Citizen‘s Randall Denley advises Canadian union members in both the private and public sectors. It may well be unfair that government workers should suffer for the fiscal mismanagement of city councillors or school board trustees, he concedes, but “the same accusation could be made about the management of many corporations that are laying off employees. That doesn’t create any more money for raises.” He suggests the brothers and sisters be happy just to remain employed, and believes “sharing the pain” with their fellow Canadians isn’t too much to ask.

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The car industry crash, by the numbers

By selley - Friday, November 21, 2008 at 5:23 PM - 5 Comments

As a rule, recent years have not been kind to automakers. But amidst the general chaos, the North American car manufacturers—formerly the “Big Three,” now more accurately known as the “Detroit Three”—have sunk well below the rest. As the CEOs of Ford, General Motors and Chrysler plead for mercy from Washington, Macleans.ca presents a statistical snapshot of their nightmare.

Highest stock price of the five largest publicly traded automakers as of the Nov. 20 close on the New York Stock Exchange: $59.79 (Toyota)

Toyota’s stock price on Nov. 20, 2007: $110.07

Best performance of those five stocks over the past year: -43.9% (Honda)

Poorest performance: -89% (GM) Continue…

The decline of the North American car

By Colin Campbell - Thursday, November 20, 2008 at 8:00 AM - 36 Comments

UPDATE (June 1, 2009): General Motors, the once proud icon of U.S. capitalism, filed for bankruptcy Monday. In the following piece, published last November in Maclean’s, Colin Campbell navigates through the rise and fall of the U.S. auto industry. In doing so, he identifies what went wrong at GM and explains whether the car company is even worth saving.

In hall No. 5, tucked far away from the main action at the high-profile Paris Motor Show last month, visitors who looked hard enough would have found the booth belonging to General Motors Corp. Those who went to the trouble—and not many did—were disappointed with what they found.

Paris was the place GM had decided to raise the curtain on a critical piece of its future in a world increasingly focused on efficiency and economy—the Chevy Cruze. The Detroit company is pinning its hopes on the lightweight Cruze to lure car buyers in Asia, Europe and North America away from bestsellers like the Honda Civic. Yet there were none of the usual showbiz trappings at its unveiling: no models leaning against the hood, no rock-concert special effects to usher in the age of the Cruze. Just a plain white stage and the car itself: a conventional, even understated, four-door family sedan. It “had all the pomp and circumstance of a Tuesday,” noted one auto critic. Perhaps it was just as well then that few journalists bothered to show up.

Most automakers look to the Paris show to highlight their next small, fuel-efficient wonders. It’s a science fair disguised as a car show. Mercedes-Benz and BMW were unveiling their first hybrids. Nissan snagged attention with its tiny Nuvu. Hyundai brought along its new mini-car, the i20. But at GM’s second-floor exhibit, visitors were confronted by a collection of massive Hummers and a hulking Cadillac Escalade. “This was emblematic of GM,” says Maryann Keller, an independent auto analyst who has covered the industry since the 1970s. “Here’s this show dedicated to small cars, new technologies, electric vehicles. Why, to Paris, would you bring Hummers, the Escalade and a Camaro? What planet are you on?” Continue…

The real reason a Big Three bailout is a bad idea

By Andrew Coyne - Thursday, November 20, 2008 at 8:00 AM - 133 Comments

Everyone has his own favourite story of Big Auto’s stupidity. Mine is the Great Invisible Japanese Trade Wall of the 1980s. At the time, Detroit was bellowing to the skies that Japan was keeping American cars out of its market, the better to support its case for restricting sales of Japanese cars in the U.S. If it was unclear how the Japanese were supposed to be doing this—Japan’s trade barriers were if anything rather lower than America’s—that only seemed to provoke Detroit to further heights of indignation: those inscrutable Orientals, with their mysterious, subtle ways. Of course you couldn’t see how they did it! That’s why it was so effective!

Until someone pointed out that the cars the Big Three were pressing upon the Japanese consumer were left-hand drive, suitable for driving on the right side of the road. It seems Japan drives on the left. Who knew? Continue…