Autos Blog

Category: Other

U.S. new vehicle inventory lower

One good sign for automobile manufacturers is the state of the light vehicle inventories this January as reported by wardsauto.com . Compared with last January, number of days' inventory is 50 percent for the Detroit's Big 3 and about 58 percent overall.

This means that production is much better balanced with demand and vehicle carrying costs at dealerships is much less, a healthy situation all the way around.

Of course, consumers can expect that the $4,000 or $5,000 rebates common last spring may be a thing of the past along with excessive inventories.

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Category: Mercedes

Investors say "Yippee-Ki-Yay" to Bernhard's Mercedes promotion

If investors are saying "Yippee-Ki-Yay", the workers had better watch out.

Over the weekend, Daimler announced that Wolfgang Bernhard will take over responsibility for the production of Mercedes cars, a move which is also said to make him favorite to succeed current CEO Dieter Zetsche when he runs out of road.

These names will be familiar in the Detroit area. Bernhard was Zetsche's right-hand man for a while during his stint running Chrysler, before the Germans sold the company now controlled by Fiat of Italy. Bernhard left Daimler after sounding a bit too aggressive about his plans to cut jobs, but returned after a spell with Volkswagen.

According to Bernstein Research of London's Max Warburton, Bernhard faced down the UAW and slashed 40,000 jobs during his tenure at Chrysler. During his time at Volkswagen, Bernhard took out 15,000 jobs and slashed the costs of each VW Golf by 1,000 euros (about $1,300).

This explains Warburton's reaction to the news.

"He's Back: Time For Investors To Say Yippee-Ki-Yay", is the headline on Warburton's latest research note.

According to Warburton, Mercedes has been making impressive progress restoring its profit margins, raising them to about six per cent in the last quarter of 2009, but still needs to make more cuts. Mercedes only makes 12 cars per worker a year, 15 per cent less than BMW, and 30 per cent less than Audi.

"The company now has a man well placed to make those cuts " if Bernhard is able to do even half of what he achieved at VW, then we can expect a structural lift in Mercedes margins," Warburton said.

What methods to expect from Bernhard?

"The Bernhard strategy " fixed costs, heads, pricing," says Warburton.

Other investors joined in the euphoria.

"Wolfgang Bernhard is widely credited with an aggressive cost-reduction program at VW, the benefits of which are still being felt today, and Chrysler, which was at least initially very effective. We believe the market will like this news a lot, and it should raise speculation that there is more cost cutting in the pipeline at Mercedes," said Dorothee Cresswell, autos analyst at Nomura International.

Cresswell warns though that Bernhard will not have things all his own way.

"Daimler's unions remain very influential. When CEO Zetsche tried to relocate C Class production out of Sindelfingen (Germany) and into Tuscaloosa (U.S.) and Bremen (Germany) with a negative 3,500 head-count impact last December, the unions nonetheless forced through an employment guarantee at Sindelfingen," Cresswell said.

So far the German unions have been restrained in their reaction.

Zetsche might also be a little uneasy.

""In case it's not obvious, Bernhard's accession to the top job at Mercedes makes him favorite to be the next CEO, post Zetsche," Bernstein's Warburton said.

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GM charity donates trucks to Haitian relief effort

The General Motors Foundation donated 30 GMC trucks to help the Haitian relief effort following a Jan. 12 earthquake.

Two GMC Sierra pickups arrived Wednesday with the rest scheduled for mid-February to fill a need for trucks to transport supplies to survivors. The donation through GM's charitable arm is being coordinated with the William J. Clinton Foundation, which is transporting the vehicles to the Caribbean nation.

The GM Foundation contributed $100,000 towards relief efforts plus $250,000 raised through a charity auction of a limited-edition Chevrolet Corvette last month. No taxpayer dollars were involved, according to a GM spokesman.

"Immediate needs in Haiti include basic supplies and reliable transportation that can handle rugged and mountainous terrain," said GM Foundation Chairman John T. Montford. "We believe the donation of 30 GMC trucks can have an immediate and beneficial impact on relief efforts in Haiti."

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Category: Ford

Ford Europe's S-MAX has EcoBoost engines and double-clutch auto boxes

JEREZ, Spain " Looking at the pictures it might be hard to believe but Ford of Europe's updated S-MAX Minivan is fun to drive, thanks to its new amazingly powerful little EcoBoost 2.0 turbocharged gasoline engine and six-speed, double-clutch automatic gearbox.

You might expect a two-litre four cylinder gasoline motor to struggle a bit to lug along an up to seven seat minivan, but this new engine produces 200 hp, thanks to new direct injection technology which raises power by 25 per cent but cuts carbon dioxide emissions by 19 per cent. Average fuel consumption is claimed to be 29 miles per U.S. gallon.

The S-MAX, and its slightly bigger cousin the Galaxy, are the first European models to adopt Ford's EcoBoost engines, which combine direct-injection, turbo-charging, and twin variable camshaft timing to deliver improved efficiency and performance.

Ford plans to produce 1.3 million EcoBoost engines annually across the world " 750,000 in the U.S. - and by 2013 Ford expects to offer this across 90 per cent of its global line-up. In Europe, diesel engines have traditionally provided enhanced power with scarcely believable high fuel economy. They have been so successful, that about 50 per cent of all new European cars sold today are diesels. But the added expense of making diesels clean enough to meet ever tougher European Union emissions rules, are handing the initiative back to gasoline engines which are easier to clean up.

Ford first introduced EcoBoost on the Lincoln MKS sedan with a 3.5 liter twin-turbocharged V-6, saying it would produce the power and torque of a V-8 engine with the fuel efficiency of a V-6.

With direct injection, fuel is injected into each cylinder of an engine in small, precise amounts. Compared to conventional port injection, direct injection produces a cooler, denser charge, delivering higher fuel economy and performance. When combined with modern turbo charging " which uses waste energy from the exhaust gas to drive the turbine " direct injection provides the best of both worlds: the responsiveness of a larger-displacement engine with more economy.

Ford also introduced the PowerShift gearbox, which it says provides the fuel economy of a manual as well as the ease of use of an automatic. PowerShift has two clutches, one operating gears 1, 3 and 5, the other 2, 4 and 6. When the vehicle is accelerating and actually using second gear, the computer anticipates that the next gear will be three so engages the clutch ready for instant action when that gear is required. PowerShift dispenses with the need for torque convertors, planetary gear sets and other components which add weight and complexity.

The new S-MAX has a few external changes to the front and rear, although it doesn't look much different from the old one. The S-MAX, as all modern Fords, drove well on the highways and mountain roads around this town in southern Spain. The steering was accurate and quick, with little body roll. The high quality interiors are almost Audi/BMW like. The EcoBoost engine was not only powerful, but uncannily quiet too. New technology options include a blind spot system to warn about approaching danger, and an adjustable speed limiter. Other available engines include a 143 hp or 172 hp 2.0 litre gasoline motors, or various diesels ranging from 113 hp to 160 hp.

Ford hasn't announced the price of the new S-MAX yet, which goes on sale in the spring and isn't available in America. A big rival will be the Kia Sedona, which fully equipped and with a 2.2 litre diesel engine and auto box costs about $33,000 after tax, which is good value by European standards.

Facts often a casualty in the Toyota story

Every automaker can share Toyota Motor Corp.'s pain when it comes to dealing with recalls because they've all had experience with them.

But Toyota's two major recalls stand out for the sheer confusion surrounding them.

Some is attributable to the fact that there are two separate recalls and both deal with the gas pedal.

But some is attributable to the huge amount of attention they have received in the media and at the watercooler.

And not all of it has been correct.

Armchair experts can be overhead in restaurants disseminating misinformation and even some media have attributed completely unrelated recalls by other car companies around the world to bad Toyota gas pedals.

For the record, the Honda Fit recall has to do with window regulators and there is no Toyota gas pedal connection whatsoever.

When the mighty fall, whether they are the No.1 carmaker or the No.1 golfer in the world, the story can take on a life of its own and during a reporting frenzy facts can get lost along the salacious way.

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Category: Kia

Kia ratchets up European assault with new Venga, Sorento

BARCELONA, Spain ... Kia of Korea is cranking up its assault on the European market, and is about to launch the little Venga mini-MPV, along with the Sorento compact SUV which made its debut at the Detroit car show earlier this month.

Kia raised its market share in Western Europe to 1.5 per cent in 2009 from 1.4 per cent the previous year, according to Automotive Industry Data (AID), and with its Korean parent company Hyundai increased its share to five per cent, from 4.2 per cent in 2008.

This isn't as impressive as Hyundai-Kia's assault on the U.S. market, where market share in 2009 jumped to seven per cent from 5.1 per cent, with Kia accounting for 2.9 per cent, up from 2.1 per cent in 2008, AID said.

But the prospects for Kia-Hyundai look good in Europe, where economic hard times have made buyers more inclined to eschew fashionable, trendy brands in favor of cars that represent good value for money. Sales have also been boosted by Kia's warranties, which have been up to seven years and 100,000 miles for some models in certain markets. Kia has now extended this to all its vehicles sold in Europe.

"Europeans are looking more and more to value and are buying more Dacias and Skodas," said Peter Schmidt editor of AID's pan-European newsletter.

Dacia is the cheap-and-cheerful value subsidiary owned by Renault of France. Skoda is the downmarket equivalent for Germany's Volkswagen.

"The (brand awareness) gulf that existed will narrow and that's good news for Hyundai-Kia and no doubt will continue to increase European sales to U.S. levels," Schmidt said.

The new little Venga is made at Kia's factory in Slovakia, Central Europe and was unveiled at the Frankfurt Car Show last September. The Venga and Sorento were being driven by journalists at the launch, based close to this north-eastern Spanish city. The Venga mirrors the Honda Fit, sold as the Jazz in Europe, with the wheels pressed to the corners to create the maximum space and versatility inside. Venga buyers can choose from two gasoline motors of 1.4 liters/89 hp or 1.6/123 hp, or a 1.4 liter/87 hp diesel. Kia has no plans to sell the Venga in the U.S. as yet, although given the success of the Fit, there must be a ready market for the car in America. Prices are steep in Europe, ranging from $18,600 to almost $25,000, after tax in Britain.

The Sorento for Europe is produced at Kia's Korean factory, unlike the America version which is made at the new U.S. plant. The European Sorento will be mainly powered by an impressive, high-performing 2.2 liter 191 hp diesel engine. The new Sorento will be a big threat to incumbent SUV makers in Europe because of its handsome looks, top flight quality and competitive prices.

All things being relative, the Sorento's European prices look good compared with its main rivals here like the Audi Q5, and VW Tiguan. Sorento prices start in Britain at the equivalent of $33,000. This will cause a gasp of amazement in the U.S., where you can buy a Sorento from $20,000, though admittedly before tax.

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Category: Alternative Fuels

Why not natural gas?

Sometimes the obvious is difficult to see. That appears to be the case with alternatives to gasoline and diesel - petroleum-based fuels.

Our government seems intent on taking the most difficult and expensive route in achieving a break from oil dependency. High on the government wish-list is the plug-in electric vehicle. That sounds like the perfect solution. Plug your car into an outlet in your garage and drive it wherever you want to go in the morning. Clean, cheap transportation.

Except, of course, for the batteries that use environmentally toxic materials and the fuel for the electricity, which is a long way from being generated by the wind.

The obvious alternative fuel for the U.S. is natural gas. There is an abundance of that fuel. There is the infrastructure for distribution of that fuel. There is the technology for tapping that fuel distribution right in your own home. Yet, for some reason, natural gas just can't gain any traction with the government or with manufacturers. Ford gave up in 2003.

Honda has an ongoing effort but it's a hard sell - even with available home refueling technology.

It seems that the anti-oil politics rubs off on natural gas. You have to wonder why.

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Category: Fiat

Fiat of Italy's new Punto Evo has MultiAir engine technology

Fiat of Italy is rolling out new small cars in Europe powered by its MultiAir technology, which it claims raises the power of gasoline engines by about 10 per cent and increases fuel efficiency by between 10 and 25 per cent.

Fiat, which has a 20 per cent stake in Chrysler, has said it will raise its stake to 35 per cent by allowing Chrysler to gradually build up its use of the Italian company's small car and small engine technology. This will be done in three, five percentage point increments. MultiAir was one of the technologies which Fiat promised to give to Chrysler as part of this process. Chrysler is expected to apply MultiAir technology to improve the efficiency of its gasoline 4, 6, and 8 cylinder engines.

The technology improves the flow of air in the engine's combustion process, and can be used to improve the efficiency of diesel engines. MultiAir handles the electro-hydraulic system of engine valves for dynamic and direct control of air and combustion, cylinder by cylinder and stroke by stroke.

"Thanks to a direct control of the air through the intake engine valves without using the throttle, MultiAir helps to reduce fuel consumption. Pollutant emissions are likewise reduced through combustion control," Fiat said.

Fiat, which first presented the technology at the Geneva Car Show in March 2009, has an impressive track record in engine innovation. It developed "common rail" diesel engines, which use high-pressure fuel delivery to dramatically raise the power of small diesel engines. Modern European diesel motors account for about 50 per cent of sales in Europe, and provide more power at lower engine revolutions for smooth, peppy, quiet and economical performance.

The first cars to be powered by MultiAir engines will be this new Punto Evo, and the Alfa Romeo MiTo sports coupe. Fiat owns the Alfa Romeo, Lancia, Ferrari and Maserati brands. The Punto Evo is a face lifted version of the Grande Punto, and has a different face and rear-end. The interiors have been improved and more "big-car" features included as standard, like satellite navigation, telephone

communications, more air-bags and stop-start.

Fiat said that the Punto Evo with a 1.4 liter, 4-cylinder 135 hp gasoline engine will produce 12 per cent more power, 13 per cent more torque, consume 17 per cent less fuel, go five per cent faster, and cut the sprint from a standstill to 60 mph by 0.4 of a second.

Fiat has no plans to sell this generation of Puntos in the U.S., but the even smaller 500, made in Mexico, will debut late this year.

Category: Chinese

China car market: More room to run?

As recently as in early 2008, forecasters expected China to equal the American car market in size by 2015 or 2016.

Here we are in 2010 and China is already No. 1.

Part of the story, of course, is the collapse of the American market, where perennial demand of 16 million-17 million cars and trucks dropped like a stone to less than 11 million last year. But let's not discount China's stunning rise. The Middle Kingdom added the more than 2 million cars sales in 2009 - the equivalent of two Koreas.

Could we be witnessing the beginning of real mass motorization in China? There are two competing schools of thought:

Optimists say that fresh car demand by consumers from China's second- and third tier cities was driven by steadily rising incomes and more affordable cars. Chinese government data shows that much of the 2009 growth came from inland provinces like Shaanxi, Sichuan and Anhui, where the new "middle classes" bought small cars at low prices. The nation's best-selling model in 2009 was the BYD F3, a compact car that starts at just $10,000.

Skeptics counter that the 2009 sales record defies ordinary explanation. The surge must have resulted from the flood of loans that banks were instructed to extend, they argue. Beijing officials directed much of that 1 trillion dollars in lending to the more hardscrabble areas far from places like Shanghai and Beijing.

For now, demand remains exceptionally strong. Automakers I talked to this month say that their most significant worry is inventory shortages. BYD expects to increase sales from 450,000 cars in 2009 to 800,000 in 2010.

Other car makers are playing it more safely, predicting market growth of around 10 percent this year. After the miraculous market results of 2009, they genuinely do not know what awaits around the corner this year.

Watch the government's stance on lending. Should there be an abrupt tightening of credit, then today's torrid pace of car sales will fall off in a hurry. This happened both in 2004 and in 2008 when officials in Beijing took action to damp the economy.

But if China's financial mandarins keep money flows loose, then look out. There seems to be no end to the Chinese yen for new cars.

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Category: SUV

Smaller SUV styling - rough versus refined

When it comes to small or mid-sized SUVs, there is a bit of an identity crisis. These vehicles tend to be city vehicles that women love because they offer high-seating visibility and the utility for hauling a couple of children plus some gear in the back. In addition, they offer fairly decent gas mileage.

But when you look at the styling cues, you have to wonder what kind of identity the manufacturers had in mind. The Jeep Compass looks like a crossover except for the fender bulges that mimic a Hummer. The GMC Terrain looks like a more traditional SUV, also with the Hummer fenders. Ford seems to have conceded that macho is not the identity of the Escape and has opted for refined.

I'd say that Ford has found the sweet spot for that market.