New Hotness From....Saturn

Matt Vella

Talk to General Motors executives and they’ll tell you that, while it may be the hobgoblin of little literary minds, consistency is without a doubt the key to reversing public perception that the company’s vehicles aren’t as fuel efficient or reliable as those made by import manufacturers like Toyota and Honda.

At Saturn, on top of the shockingly good Sky roadster (BW review: 4.5/5 stars), Aura sedan (BW review: 4/5 stars) and Outlook crossover (BW review: 5/5 stars), GM showed the next version of the Vue SUV at the LA Auto Show. And, even in soft-serve light blue, it looks better than the PreVue concept it’s based on.

If the new Vue can match or exceed those new models’ strengths, especially the Outlook, it seems that Saturn will be well on its way to satisfying Bob Lutz’s recent pledge for the brand of “better products and more of them.”

For more, check out David Kiley’s current piece on GM’s fighting chance and Gail Edmondson’s exploration of the European turnaround.

Chrysler's Sebring, Topless in LA

Matt Vella

A la Nikki and Paris Hilton, Chrysler’s Sebring sedan definitely lives in the shadow of its considerably racier, less-clothed sibling. Even when Chrysler debuted the new sedan earlier this year before its drop top counterpart, the main question on everybody’s lips was, “what about the convertible?!”

The wait’s over. Chrysler took the wraps off America’s favorite domestic convertible at the LA Auto Show. The 2008 comes in many flavors, with vinyl and cloth top options, as well as 4- and 6-cylinder power plants. A hard top version joins the Volkswagen Eos and Pontiac G6 at the burgeoning inexpensive hard hat party.

When I saw the Sebring sedan at a Chrysler brand tour a few months ago it failed to impress – especially sandwiched in between the large Pacifica and massive Aspen. (Two exceptions to this were the nifty but non-functioning MyGig prototype and the car’s C pillar, which strongly echoes the last generation Mercedes E-Class.)

Luckily the new Sebring convertible looks a lot better, especially with the top down. Unfortunately when the hard top is up, the car looks, well, gaptastic with unseemly seams marring the top, trunk, and doors. With an expected base price around 30 grand and the hard drive based multimedia options, the Sebring has a good chance of staying on top though the competition is tougher than ever.

Will the US go diesel?

Gail Edmondson

This year's Los Angeles Auto show is like a debutante's ball for automakers eager to display the charms of their new green technologies. Mercedes, Volkswagen and Honda are all betting that diesel will win US converts when the word finally gets out about the great fuel mileage, the low emissions and the terrific torque. After all, more than 50% of new cars sold in Europe are diesel. You can't succeed anymore in the European auto market without a robust lineup of cutting-edge diesel engines. Consumers know these cars are a "best buy."

The conventional wisdom is that it will take years for diesel to take off in the US -- based on old images of dirty belching cars. I think that's short-sighted. I bet the buzz about clean diesel will ricochet around the US market as fast as the buzz about Toyota's hybrid Prius. That was about 18 months. Why should it take longer? After all, oil prices are high and not coming down. Mercedes Diesel E class costs only $1,000 more than a regular E class. A Lexus GS sedan costs $10,000 more than the gasoline version. American consumers are not dumb. I'm betting they will make a beeline for new diesels. Any takers?

VW Tiguan A Year Away

David Kiley

Volkswagen showed a close-to-production concept car of its Tiguan SUV, due in showrooms a year from now.

The show Tiguan is powered by a diesel engine that uses Bluetec technology -- the result of a joint effort among VW, Audi and Mercedes-Benz to promote clean-burning diesels.

An SUV at the low-end, priced in the mid $20K-$30K bracket is way way overdue for Volkswagen. As soon-to-be former Bernd Pischetsrieder told me once...it wasn't his idea not to build a platform for the current generation Golf that could more easily accomodate a small SUV. That bit of business, he said, was on former chairman and current antagonizer Ferdinand Piech's plate.

When It Comes To Cars: Color Is Everything.

David Kiley

I didn’t used to think too much about paint color with cars. But it’s been on my mind more these days. Perhaps as vehicles get more expressive in their designs, colors matter more. Does that make sense? I mean…does anyone care if their 1999 Camry is silver or Champagne?

Volkswagen produces the best blues. Hand down. I saw a Dodge Charger, which I like, in Gray, and hated it. The Ford Edge I just drove looked great in this deep copper color.

Into my mailbox today came the DuPont car color report. The findings: Silver (BOOOORRRRING) is the top color globally. Silver has been the top choice since 2000 when it overtook…..Green?

According to DuPont, the bottom half of the top ten colors forecasts future color leaders. A clear trend for the future, says the chemical giant, includes warmer tones such as red as well as the continued strength of blue. That makes sense to me. If you have a hot design in your driveway, I’d rather see it with an expressive color than silver or Champagne.

Red surfaced as the top color choice in the compact vehicle segment in South Korea, with 22 percent, as well as in the North American market compact/sport category, from 9 percent in 2005 to 15 percent in 2006. Black remains a top choice across the global landscape. It is among the top five colors in the regions examined and has gained ground in specific segments in North America. The 2006 color popularity report sees growth of black in the North American luxury segment with 22 percent, mirroring
black’s longstanding first place among European luxury vehicles with 37 percent.

Its amazing how bad some cars look in certain colors. Remember the Chrysler LH cars that preceded the 300c. The Chrysler Concorde in Champagne was one of the nastiest pieces of work to come down the pike in a while. The Ticonderoga pencil yellow Pontiac Aztek? Ouch! That looked worse than I do in horizontal stripes.

This seems pretty self serving for DuPont. But the company says that 40 percent of consumers willing to switch brands for a specific color, according to a national poll it commissioned. Would you?

For comments, how about some candidates for the worst design/color combo you can recall.

Silverado Ads Getting Better

David Kiley

I hated...HATED....the opening ad for the 2007 Chevy Silverado--the one that showed images of Rosa Parks, Ground Zero, Vietnam soldiers, Richard Nixon's farewell and California forests ablaze. The subsequent ads, which just use images of people working hard with their trucks on farms, oil rigs and the like, are much better. But I still don't know why they adopted the new theme song from John Cougar Mellencamp..."This Is Our Country."

Morning radio show personality Don Imus gave me a load of crap for criticizing Mellencamp's relevance, pointing out he has been leading the way on Farm Aid for years. Okay. But I still prefer Bog Seger's Like A Rock. I might have asked Seger to lay down a new recording that was a little more dramatic than the original.

In my conversations with GM suits about the ads, my favorite moment was when sales and marketing chief Mark LaNeve, a very good sport, said he must have looked at the anthem ad 20 times or more and never recognized that the twin beams of light on the Manhattan skyine was, in fact, Ground Zero. He said he did reject an image of kids diving under their desks in the early 196os during the Cuban Missile Crisis. But he greenlighted Nixon's farewell wave?

Dongfeng Motor eyes Japan

Ian Rowley

Dongfeng Motors cannot be accused of lacking ambition. According to reports in Japan over the weekend, the Chinese automaker is planning to enter the Japanese market next year with a four-seater passenger sports car. According to the Nihon Keizai daily, Dongfeng is planning to offer a 2-3 liter model for about 10% less than models currently sold by Japanese automakers. The initial sales target is 2,000 a year.

That might not sound much but the move shouldn't be underestimated. It would make Dongfeng it the first Chinese automaker to enter Japan. What's more, it will test the company in arguably the world's toughest auto market. This year auto sales in Japan have been down every month year-on-year. Meanwhile, overseas brands account for only one-in-twenty cars sold. Last week, I wrote an article looking at the difficulties faced by U.S. automakers in Japan, which have less than 1% share in Japan. Other foreigners, with the notable exception of German carmakers like BMW and Mercedes-Benz, fare just as badly. Korea's Hyundai sold only 2,295 cars in Japan last year--four years after its Japan debut.

Whether Japanese will take to cheaper Chinese cars is far from clear. For one thing, evidence suggests that Japanese rarely buy foreign cars on price alone--hence the success of expensive German marques and failure of just about everyone else. And competition is such in Japan that undercutting the likes of Toyota, Nissan and Honda in Japan and still making a profit looks tough. Still, at least execs at Dongfeng don't have to go far for advice. The company already partners Nissan and Honda in China and the Nikkei reports that Mitsubishi Motors will supply the engines for its Japanese cars.

Why VW's Berhnard Didn't Resign

Gail Edmondson

So what happened? Turnaround ace Wolfgang Bernhard hasn't resigned at Volkswagen. His departure was widely expected last week in the wake of CEO Bernd Pischetsrieder's ouster and the appointment of Audi boss Martin Winterkorn as new CEO. A VW board member told AutomobileWoche (AutoWeek) that VW is trying to convince VW brand boss Bernhard to stay. That's the first indication that the powerful and mercurial Supervisory Board Chairman Ferdinand Piech, who orchestrated Pischetsrieder's departure, may yet be serious about accelerating VW's overhaul.

Winterkorn's plan to restructure the grouping of VW's seven brands in two clusters -- mass market and premium -- also makes sense. Piech and Winterkorn just need to figure how Bernhard can play a strong role in the new organization. VW, which still loses money on cars built in its German factories, can't afford to see Bernhard's cost-cutting efforts slowed or derailed. And engineering-driven VW needs a manager with Bernhard's market savvy.

Winterkorn and Bernhard have a cool relationship, but the duo flew to China together for the Beijing auto show. Many German auto executives are still betting Bernhard will go, but it will be a coup for Piech and Winterkorn if they convince him to stay.

MKZ on Amazon a Perfectly Good Publicity Ploy

David Kiley

Ford Motor Co. is about to start offering its Lincoln vehicles on amazon.com. Search, click, and it takes you to a pagte where you can start optioning. The car doesn't come to you by UPS, though. Actual sales will be handled through the closest Lincoln dealership to the customer, based on the zip code they enter. Good news for customers is that Lincoln scored in the top five this week on J.D. Power and Associates' annual Sales Satisfaction Survey, which measures how happy customers are with their dealership experience.

Okay...you can't buy a car like you can a CD or book. So, why do it? Publicity dude.

Lincoln is trying to revive its brand from nowheresville. Those Wall Streeters and Hollywood moguls who get ferried around town and to the airport in Town Cars want nothing to do with owning one for their own driveway. Add to that two new model names, the MKZ (formerly known as Zephyr) and the MKX, and you have a real awareness problem at Ford's American luxury unit.

Interesting that only the Navigator, MKX and MKZ get their own amazon product pages. No Town Car page? I guess that makes sense. If you look around at who is still buying a Town Car for their own daily driver, you will notice that they are still tryping their own letters on a manual Underwoods, not computers, and paying their phone bills in person at the phone company.

The amazon deal is to generate stories for a one-day news cycle about Lincoln and the new models. See, it worked. I just wrote about them.

Ghosn is still shopping in the U.S.

David Welch

Renault-Nissan CEO Carlos Ghosn made an appearance in Detroit for the first time since General Motors Corp. gave him what must have been a stinging rejection of a plan to link the three auto makers up in an alliance. He says he’s still interested in a U.S. partner, but the timing is bad. So any real talks with Ford Motor Co. or with the Germans about taking Chrysler off Daimler’s hands just aren’t in the cards. Ghosn says he needs time to get Nissan’s profits headed back in the right direction and to focus on Renault’s coming new-car launches. That makes sense. Plus, Ford seems less interested in a tie-up these days. And the Germans figure they will give one more stab at making money with Chrysler before admitting defeat, driving a Jeep Commander to Versailles and handing the keys to the French. “Today isn’t the right moment,” Ghosn said. “There isn’t an opportunity out there.”

But he did hint that something else may be in the cards. When asked by reporters after the speech if he would maybe buy some of the U.S. plants that Ford and GM are closing, he didn’t rule it out. He said the cost of a new plant and real estate is big. Buying an old Detroit plant and retrofitting it to make new Nissans might be cheaper, he said. “We obviously are very pragmatic people,” he said. “Every time you need more capacity, you have to look at the best way to add it. If there is capacity available and there is a win-win for the seller, we’d do it.” Ghosn went further to say that his company’s current sales projections outstrip its capacity. In other words, he thinks he needs more plants.

Don’t expect Ghosn to hire some of the union hands who left those old plants, though. He has played hardball when the United Auto Workers tried to organize Nissan’s Smyrna factory. He wants nothing to do with the union. Even without hiring ex-GM or Ford workers—most of whom are headed off into retirement anyway—there is still a hint of irony. If Ghosn ends up buying idle Big Three factories, he would at least be restarting some of the plants that his resurgent Nissan helped make obsolete as they stole market share over the past six years. Bad news for Detroit, yes. But it would still be a tidy little gift to a U.S. economy that has watched manufacturing jobs disappear steadily since 2000.

A Few More for the Road

Matt Vella

For the speed freaks in the crowd, BusinessWeek.com has put together a sizeable supercar special report that focuses exclusively on the automotive superlative. Of course, we’ve touched on small, indie shops like Koenigsegg as well as the efforts of larger operations that have produced the likes of Audi’s hot new R8 recently.

But this time, we take an in-depth look at the origin of supercars, shine spotlights on today’s most glamorous models, profile up and coming nameplates as well as the industry’s design stars, and even -- for the lucky few who might need them -- provide a few tips on how to buy a supercar.

After putting it all together, though, I spent some time thinking about the cars that didn’t make the coverage but probably should have. From the gut:

- Chevy Corvette Stingray
- Porsche Carrera RS & GT
- Maserati Ghibli
- Acura NSX
- Plus, obviously, a handful of timeless Ferraris and Lamborghinis like the Enzo and Countach.

All of these are significant, and there’re undoubtedly more. What other must-drool over supercars, of all time or on the market now, would you add to that list? Sound off in the comments.

Porsche Tightens Grip on VW's Wheel

Gail Edmondson

Since the surprise resignation of Volkswagen CEO Bernd Pischetsrieder Nov. 7, Supervisory Board Chairman Ferdinand Piech has tightened his control over VW almost daily. Porsche, which is controlled by Piech and his family, increased its stake in VW duing the past week from 21% to 27.45%. Today Porsche announced it aims to boost its holding to 29.9%.

Call it the "going private" of Volkswagen. For the past year, Piech has been engaged in a pitched battle to wrest control of the company from state hands -- namely the State of Lower Saxony, which owns 20% and has long reigned as VW's largest shareholder. And Piech, the wily engineer and grandson of Ferdinand Porsche, is now close to winning.

For those not up to speed on Germany's most riveting industrial drama, Piech launched his attack a year ago, using his family's control over Porsche to nab a controlling 21.3% share in Volkswagen for some $4 billion. He then installed Porsche CEO Wendelin Wiedeking and Porsche CFO Holger Haerter on VW's supervisory board. In a mini-putsch last November, he also rammed through a new head of personnel, against the wishes of Pischetsrieder, provoking a firestorm of corporate governance criticism.

Piech nearly toppled Pischetsrieder last spring, but several board members rallied to the beleaguered CEO's support. If Pischetsrieder had led a more forceful transformation at VW, he may have survived longer, but his legacy was one of dithering. On Nov. 7, Piech finally succeeded in forcing out Pischetsrieder and replacing him with his confidant, Audi boss Martin Winterkorn.

Plenty of questions still remain. Can Piech, Wiedeking and Winterkorn speed up VW's lagging restructuring? How will they convince the unions that VW needs radical change? And will Piech's putsch alienate VW brand chief Wolfgang Bernhard, the former DaimlerChrysler executive who was recruited to lead a massive cost-cutting drive? The betting is that a frustrated Bernhard, whom Piech once dubbed the crown-prince at VW, will resign this week.

More answers will come on Friday when Volkswagen's supervisory board meets to approve a long-term strategic plan and the personnel changes. German magazine Der Spiegel reported Tuesday that Winterkorn aims to reorganize Volkswagen's structure around premium brands and mass-market brands. The premium brand group would include Audi, Bentley, Bugatti and Lamborghini, and the high-volume brand group would include Volkswagen, Seat and Skoda.

That makes sense -- the old constallation which grouped Volkswagen and Skoda with Bentley, was artificial and contrived. But analysts worry a corporate reorganization layered on top of VW's current restructuring could bog down vital cost-cutting efforts.

One thing is clear. Volkswagen needs to get out of the slow lane. Virtually every European automaker has set Toyota's production efficiency as its benchmark. Volkswagen costs are so high it loses money on every car made in Germany. Once the "value-for-money" brand, VW has lost its identity. The longer it waits to forge a new compelling strategy, the riskier.

No question Piech's methods are autocratic and alienating to minority shareholders. But the status quo was also untenable. The model Piech is aiming for may be something like the benevolent Quandt family control over BMW, or the Porsche family control over Porsche -- which favors long-term strategic investments but also demands rigorous management accountability. Family control of VW is actually a clever alternative to the currrent paralysis. But if that's Piech's goal, he will have to curb his domineering instincts, stop meddling and allow managers to manage.

Mitsubishi's award winning minicar

Ian Rowley

It's been a rough few years for employees at Mitsubishi Motors. They've endured a huge recall cover-up scandal, a failed alliance with DaimlerChrysler and, for a car company of Mitsubishi's size, mind-boggling losses.

Small wonder, then, that a couple of awards for the Mitsubishi i minicar have got Mitsubishi staffers in Japan smiling again. On October 25, the 660cc i was awarded the prestigious Good Design Grand Prize by Japan's Ministry of Economy Trade and Industry. The i has also just won a "best car" gong from the Automotive Researchers' & Journalists' Conference of Japan (RJC) and is in with a shout for Japan's Car of the Year Award. That would be no small feat given that other nominees include Mercedes E320 CDi green diesel and Lexus LS460.

How long CEO Osamu Masuko can keep Mitsubishi employees smiling, though, is far from clear. Financial meltdown seems to be at an end, but the company is still barely breaking even at a time when Japanese rivals like Toyota, Honda and Nissan all have profit margins in excess of 7%. On October 30, the company said it was cutting its unit sales target for the current financial year by 86,000 to 1.32 million. Perhaps more telling, credit for the i's success has to be shared with DaimlerChrysler and employees at affiliated companies. DaimlerChrysler designer Olivier Boulay headed the i design team--something the Japanese company doesn't go out of its way to acknowledge--while rumors persist that employees at other Mitsubishi group companies, such as Mitsubishi Heavy and Mitsubishi Corp, were encouraged to boost sales of the i after its launch in January. For all that, anything that raises morale at the struggling automaker can't be a bad thing.

Those Other Red Dot Awards

Matt Vella

The red dot awards may be one of the most coveted set of trophies in design. But, auto manufacturers obsessed with their reputations and bottom lines are much more interested in another set of powerful red dots – the ones doled out by Consumer Reports in its annual Reliability Survey.

The latest from CR, available here (registration required), contains a few unexpected goodies in a field solidly composed of same-old, same-old results. The highlights:

--Ford Fusion and Mercury Milan score slightly better than the Honda Accord V6 and Toyota Camry V6.
--Lincoln Zephyr scores second in predicted reliability in its class, right after the Lexus ES350.
--Buick Lucerne and Cadillac DTS score above average for large cars.
--The Lucerne ekes ahead of the Toyota Avalon.
--The Chevy Tahoe, GMC Yukon, and Pontiac Vibe also did well.

On second thought, nothing here seems out of joint. The Fusion and Milan are solidly put together even if their exterior styling tends towards the anonymous and Ford’s marketing of both isn’t nearly as juiced as it should be. Same story for the Lucerne and DTS – both take decent steps away from the early-bird special, blue hair styling of past models. (Case in point, I love, love, love Buick’s Maserati-esque portholes even if they’re a product of unrestrained mimesis.)

Reading through the rest of the results, the high wears off fast. Of the 45 cars tagged as least reliable, 44% are domestics, 42% European luxury nameplates, and a mere 11% Japanese – all of those courtesy of Nissan and Infiniti no less. Of the 47 vehicles with highest predicted reliability, 39 are Japanese. New subcompacts from Honda and Toyota outpace Chevrolet’s Aveo....and on and on.

The take-away? Domestic manufacturers may be making gains, but "slim" is still the keyword. The trick now is keeping it up year after year and letting consumers know – all while trying to expand that stable of red dots.

Can Europeans Out-maneuver Toyota?

Gail Edmondson

European auto managers have set the bar high. Every one of them has vowed to match Toyota's manufacturing excellence. And the chorus is growing louder and more urgent every day. Fiat is the latest convert. At a strategy presentation in Turin on Nov. 9, CEO Sergio Marchionne vowed to bring Fiat's operating profit to a robust 6% by 2010 and to achieve best-in-class production efficiency. "Toyota is a flawless execution machine. We need to learn how to execute at that level. It's not optional. It's the only way to guarantee the long term success of the business. Toyota will only get better."

Sure, European automakers from Volkswagen to Mercedes to still have plenty of work ahead to bring quality and efficiency up to the grand master's level. But the good news is that it is still early days in the battle for European consumers. Toyota only has 5,8% of the European market. And Toyota's luxury brand Lexus is still nearly invisible, though it is starting to grow from its small base at a 100% clip.

Even if half of Europe's domestic champions can make big strides in quality and efficiency, it will help avoid the mass migration to Japanese brands which US automakers have suffered. Europeans still enjoy a design edge over Asian rivals. That helps. But they need to bolster the value-for-money equation. Otherwise a certain base of loyal customers will erode over time, puncturing factory use and putting the squeeze on profits.

BMW has been quietly taking Toyota's lesson to heart for years, and the results are impressive. It's factories are the most flexible among premium automakers. Everyone from the shop floor to the CEO is obsessed with continual improvement -- a prerequisite for keeping pace. On top of that, BMW developed a unique ability to customize cars extensively and efficiently -- a skill that is hard for Toyota to imitate.

That kind of achievement doesn't happen overnight. BMW's new CEO Norbert Reithofer, former head of production, has been obsessed with the Japanese giant since 1990, studying Toyota's US plants intently. It's thanks to his foresight and leadership that BMW's plants are highly competitive. Now that the rest of European automakers are racing to fight Toyota with similar armour, their chances of defending the home market are appreciably improved.