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My work has appeared in a number of major publications either as writer, photographer, or source. I enjoy talking about all things automotive. Recent Posts
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CarSpace Hudson's BlogAll around the car world there are stories and these are just a few of them. A new blog is posted every Monday. Sometimes more often. Jun 4, 2009 - Bankruptcies and Government LoansWe all know that the automotive industry is in trouble. Bankruptcies at GM and Chrysler were the expected outcome. These two companies used the “excuse” of economic upheaval to radically reorganize themselves in ways that labor unions, stockholders, and franchise laws wouldn’t allow otherwise. But their current problems are not wholly the fault of the UAW or the dealers. There’s plenty of blame for the Big3 themeselves. GM (and Chrysler and Ford) have not helped themselves by concentrating on trucks. It has been very short-sighted to focus up to 60% of their product mix on trucks when the marketplace is only, at best, 50% trucks. And when fuel prices spike (which we all expected at some point), trucks are the first segments to be hit. Sure, the other manufacturers have been hurt but the Big3, and their concentration on the US market, has hurt them more than others. GM and Chrysler are not in the same place that Chrysler was in 1979. When Chrysler asked for loan guarantees thirty years ago, they had radical new products ready to hit the market. Chrysler’s newest products, the Dodge Omni and Plymouth Horizon, had already set the groundwork for the K-Cars which would, in turn, lead to replacing all of Chrysler’s antiquated products…it was a seismic shift at the time. GM (and definitely Chrysler) don’t have that product ready to rock the industry. The K-Car in 1980 was revolutionary…a $6,000 6-passenger car that got 25 mpg city. Today, GM has some very good products. Vehicles like the Chevrolet Malibu and Cadillac CTS are very competitive, but they aren’t class-leading. It’s not that GM can’t build class-leading products; it’s just that they have the whole market to cover with “good” products while other companies can concentrate on one segment. It’s a very competitive marketplace with very strong competitors. GM is spread very thin. Having good gas mileage or winning an award or two does not mean the vehicle is “class leading.” While there is absolutely a need in the marketplace for vehicles like the Silverado, recent economic shifts have proven that you can’t rely on sales of full-sized trucks to carry the rest of the company. Manufacturers need to be ready with cars when more than half of the marketplace buys cars and yet more than half of the sales from GM (and Ford and Chrysler) come from trucks. It’s a global marketplace and no company is rooted in any one country. GM, like Toyota and Honda, harnesses their global reach to design and build their vehicles as best as it can. Whether it’s Australians working on the Zeta platform (for the Chevrolet Camaro and Pontiac G8) or Germans working on the Epsilon platform (for the Chevrolet Malibu, Saturn Aura, Pontiac G6) or Koreans working on the Theta platform (for the Saturn Vue and the new Chevrolet Equinox), the money and technology flows around the world. But now GM is selling divisions and brands and reducing it’s ability to compete globally, which had been a key strength of General Motors. If GM were to close its doors (which I can’t see happening), the supplier base would be hurt. But most of GM’s suppliers have spread their eggs across many baskets, including many of the transplants. It would take some time, but the suppliers would shift their focus from GM to one or more of the transplants (and/or remaining Big3). And the production volume lost if GM were to disappear would eventually be made up by other companies. Production volume would remain in the US as it is more economical to build many vehicles in North America than to import them. Suppliers would grow to support this change in the industry. Auto workers would remain, supplier workers would remain…possibly at lower volumes but still making the same number of vehicles and the industry would continue. The transplant companies are not so dumb that they don’t realize a vibrant US economy is necessary for the sales of their products. Whether or not the car companies are physically based in the US, the American economy will survive and grow and thrive. And when it comes to the US market, the Big3 have put themselves in a bad position. While the reliability and durability of Big3 cars is on-par with the top brands from other countries, perceived quality and dynamic thinking is not quite there. Why did Toyota and Honda have to come out with hybrids nearly a decade before any of the Big3? Why aren’t there any diesel cars from the Big3? GM was ahead of the curve with the EV1…so where has that technology led? GM was toying with fuel cell and steam(!) powered vehicles in the 1960s and rotary and Sterling engines in the 1970s…what have they done lately? The US can and does compete on a manufacturing level…or else Toyota and Honda and Nissan and Mercedes-Benz and BMW and the rest wouldn’t be making vehicles on US soil. Why do US manufacturers need to put $3,500 of incentives on every car and truck for every $2,000 that the other brands use to sell their products? Why are 5-year old GM products worth a fraction of the competitive models from Honda and Toyota? GM touts the strength of its Chevrolet Malibu, but why does the Camry (as well as the Accord and Altima) outsell the Malibu with fewer dealers and a higher price tag? Loaning money to failing companies without a concrete turnaround plan was a losing proposition and bankruptcy was the only possible outcome. Without filing for bankruptcy, GM had the impossible task of turning itself around. With a bankruptcy filing, they have the nearly impossible task of convincing the buying public to make a long-term investment, with the purchase of a vehicle, in a company that just walked away from many of its American creditors…including contracts with American workers. History has shown that businesses do not learn much from the past experiences of their industry, so little can be expected from GM and Chrysler following this recent set of events. Loaning money to these companies should be treated as if a parent were loaning money to their child: it’s as good as gone. Even with large holdings in GM and Chrysler, getting any return on the government’s investment is a long shot. With some luck, the American workers will take this opportunity to find more stable employment in preparation for the next market shake up.
May 21, 2009 - Why We Should Not Fear 39mpg CAFESenators and Representatives debating the benefits and, more importantly, the pitfalls of requiring cars and trucks to get better gas mileage may be in the news, but these same elected officials along with television talking heads seem to forget that this happened 35 years ago. Corporate Average Fuel Economy (CAFÉ) regulations came about in the 1970s as a response to the combination of skyrocketing fuel prices and gas guzzling vehicles. The answer to the problem was to require manufacturers to make more fuel-efficient vehicles. Sounded good at the time…simply force them to increase the fuel economy from 12 mpg to 27.5 mpg in just over a decade. Arguments against this new requirement included a reduction in weight of vehicles and, by extension, a reduction in safety of said vehicles. Cars would transition from 2 ½-ton compact cars spewing toxic waste to 1-ton subcompact rolling deathtraps by 1985. And prices would shoot through the atmosphere. Well, that’s how it looked from 1975. When the 27.5 mpg level was finally reached, just a few years late, cars were smaller. Against all odds, cars and trucks remained affordable and got SAFER! How did that happen? It came down to engineers doing what they do best…engineering. They solved problems and made better vehicles at the same time. Another two decades pass and the decision is made to increase CAFÉ regulations for the first time in well over 30 years, but a (mostly) new generation of elected officials return to the same well for the same tired arguments against this progression. Oh, cars will get smaller. Oh, cars won’t be as safe. Oh, the government is dictating choice. Let’s start off by saying that I am NOT for CAFÉ. GM Vice Chairman Bob Lutz once stated that “forcing automakers to sell smaller cars to improve fuel economy” was akin to “fighting the nation's obesity problem by forcing clothing manufacturers to sell garments in only small sizes" (reiterated in a recent David Letterman interview). And that’s how I feel. But I also feel that engineers can overcome many obstacles to create fuel efficient vehicles that get nearly 40 mpg. Whether it’s with turbodiesel engines or hybrid powertrains, it’s possible. Additionally, we NEED to transition from the current petroleum economy to something else. ANYTHING else. The way to get the public out of gas-guzzling vehicles and into more practical models is to raise the price of fuel. Europe and Japan know about this because their gas prices have been double, triple, and quadruple that of US gas prices for ages. They drive four-cylinder cars that regularly return 30 and 40 mpg…and diesel engines are very reasonable alternatives to gasoline engines in almost every size vehicle. In the US, a gallon of gas costs far less than a gallon of milk and a fraction of what Americans typically pay for bottled water! Since no politician wanting another term on the elected-official gravy train would introduce any bill recommending raising gas taxes by two or three dollars a gallon, we’re stuck with artificially low gas prices and consumers wasting untold barrels of oil on the freedom to drive 400hp SUVs to the corner donut shop for a cappuccino. Which brings us back to the CAFÉ regulations and putting the pressure on manufacturers to build something other than what the public wants to buy. But the arguments against CAFÉ are borrowed from politicians and pundits of 35 years ago, which make politicians and pundits of today look stupid. I know it’s their job to assume Americans are dumb. But I know too many bright Americans who see right through their lack of education. The automotive industry is too short-sighted to take the current downturn and create a range of vehicles and flexible plants that can weather any economic trouble this side of the apocalypse. When the market returns, which it will, hybrids will continue to be anomalies and powerful V6 and V8 engines will continue to be the norm. And somebody will find a way to weasel out of any regulations forcing consumers to waste fewer natural resources. Isn’t it in the Constitution ensuring our right to Life, Liberty, and a 350hp Hemi V8?
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