Trends: Is the market passing Honda’s Civic by?

As you may very well know, the battle for the title of top selling car in Canada is a virtual three-way race. Depending on the month and which way the incentive winds are blowing, it’s either the Mazda 3, Honda Civic or Toyota Corolla finishing one-two-three on the podium.

But based on Honda’s lack of initiative with its Civic, you have to wonder how long its compact can continue to compete at the top.

Bailout Blues: Can Fiat keep Chrysler’s lights on to see through its Five Year Plan?

We waited five months and seven hours for this?

After an all-day press conference, Chrysler’s new Italian caretakers, Fiat, came through with little—if anything—that makes me change my mind that this enterprise isn’t going to make it to 2012, the year when reskinned Fiats will start selling in Chrysler showrooms. Maybe.

Except for the no-news of any plans for North American Alfa Romeos, the product plan varies little than what was leaked last week.

The Plan calls for deep-sixing next year the PT Cruiser and Jeep Commander, and the Dodge Dakota in 2011—something consumers have already effectively done, what with Chrysler’s U.S. sales off 30 per cent last month.

But the cars that no one is buying today—like the Sebring, Avenger, Caliber, etc.—will be gathering dust in Chrysler dealerships for another three years until their respective Fiat replacements come to the rescue.

So how in the name of Lee Iacocca does Fiat keep Chrysler in business until then?

The reality is, Chrysler is still in deep doo-doo. It’s still stuck trying to sell the low-quality, unattractive and getting-older-by-the-day products that currently no one’s buying.

Except for the niche Fiat 500 (that’s coming next year as a Chrysler) consumers will have no compelling reason to visit a Chrysler/Dodge/Jeep showrooms until 2012, expect for refreshed 300 and Charger sedans and a new Grand Cherokee and Durango—not exactly the types of products that are selling, n’est pas?

And then what? By then, Chrysler will be even further behind the competition.

Rivals will have jumped into the small car market (Ford Fiesta, Focus, C-Max, Mazda2, Chevrolet Spark, Aveo, Cruze, etc.) that the reskinned Fiats hope to compete in.

Even if customers suddenly flock to the Chrysler-badged Fiats, realistically, it will take at least a full generation of product (eight years) to win people back.

So, does Fiat have deep enough pockets to keep Chrysler afloat until 2020?

Here’s a hint: Google “Renault” and “AMC” for your answer.

Bailout Blues: GM says to Magna, No Opel for you

So, it looks like Opels aren't going to be built in Canada afterall. Hey, not that I'm one to say I told you so. But…

Look, like I’ve said since the start of this soap opera back last spring, there was little chance that Canadian auto parts magnate Frank Stronach's Magna and his Russian friends—or Fiat or whoever else was sniffing around—were ever going to get their hands on Government Motors’ crown jewels.

GM never really wanted to get rid of Opel. It was being forced into it because of its dire financial situation. If GM is serious about being a global automaker (i.e. NOT like Chrysler), they really don't have much choice but to keep Opel.

And just so you conspiracy theorists out there get any ideas, the U.S. Treasury (the majority shareholder in GM these days) is officially denying that the Obama administration had anything to do with GM’s decision.

Right. And if you believe that, they also have a bunch of empty Saturn stores they'd like to sell you, as well...

Anyway, this doesn’t mean its blue skies and sunshine for Opel going forward.

GM could still send Opel into bankruptcy. Ditch a lot of debt and manufacturing costs and Opel may (may!) be very profitable. Otherwise, it’ll continue to be a money pit.

Do you think this was the smart thing for GM to do?

Or do think Magna would have done a better job in making struggling Opel a success?

Bailout Blues: Magna’s Opel Interruptus

I optimistically thought that by the time I got back from being out of the country for a week, the whole Magna/Opel/Government Motors soap opera would be signed, sealed and delivered

But nooo…

Just to recap: Under a deal that had been expected to be signed last week GM plans to sell a 55 per cent stake in its struggling European Opel operations to Canadian-owned Magna and Russian state-owned lender Sberbank.

GM would retain a 35 per cent stake in Opel under the deal, and autoworkers would hold the remaining 10 per cent.

But now, it looks like European Union politicos are waking up and smelling the stinky roses of this deal.

The European Commission announced late Friday that it had doubts about Germany's offer to provide 4.5 billion euros ($6.95 billion Cdn.) in aid for Opel as part of the deal with Magna.

It’s concerned that “significant indications" that Germany had made the aid to Opel contingent on Magna being chosen as the winning bidder, a strategy that is contrary to EU competition rules.

Since this sad soap opera has been going on since last spring—which also saw Italy’s Fiat and China's Beijing Automotive Industry Corp. come and go as potential Opel suitors— why this issue is only being addressed now is beyond me.

Is it because, in the end, GM has no intention of letting go of Opel, and all of the associated technologies and engineering resources?

The Wall Street Journal thinks so

It cited “people familiar with the matter” that GM is “ready to keep control” of Opel if the EU blocks the sale to Magna, a strategy that, actually, makes a lot of sense for GM.

The big question is: Can GM find the money to go it alone?

Its former sugar daddy, Belgian investor RHJ International has moved on.

Do I smell even more government money than the $4.5B Euros heading GM’s way?

[Sources: Automotive News, Wall Street Journal]

Magna cum Opel: The Fat Lady’s only warming up in the Opel Magna deal

So, Frank’s finally been admitted into The Club, eh?

While the media is ready to crown his Magna's Russian-backed deal to takeover Opel as Canada’s first modern automaker, I’d keep the champagne on ice for awhile:

• This seems to be a political decision rather than an economic one. Magna wasn’t Government Motors first choice. GM was GM’s first choice. Opel is the core of GM’s passenger car engineering, and the automaker was scraping every barrel and looking under every seat cushion to drum up enough pennies to keep its European arm.

In the end, though, GM realized that they don’t have enough money to hold on to Opel. And the German government was not going to give the estimated $6 billion needed to keep Opel running to the GM-backed RHJ bid.

So despite the song and dance routine GM has putting everyone through the past little while, GM was left with only two options: close Opel down or lob it off to Magna. For now…

• Then there are the unknown “conditions” GM has put in place before it hands over Opel, lock, stock and smoking factories.

Like, say, a written confirmation that Opel workers “will support the necessary cost adjustments” (i.e., big pay cuts.) Or, perhaps, maybe, a bailout plan from a German government that still needs to go through a national election on September 27.

Whether Magna can fulfill these conditions won’t be known until after the elections.

• Then, finally, Frank needs to make Opel work. Which is a whole different kettle of fish. I mean, Opel wasn’t exactly knocking the lights out in sales before this circus started. So it’s going to take a lot of cash and a lot of time.

Optimists in Magna’s camp bleat on about the potential in the European and Russian markets and access to GM’s technology.

Cynics (yours truly included) see some existing Magna parts customers (the whole Volkswagen Group, for example) may be (you think?) a bit reluctant working with a company that is now both a supplier and a competitor.

Does Frank have the stomach and the wallet to play with the big boys now?

Zut Allure: Is GM Canada dissing Francophones?

Back in April, GM Canada officially announced details of its new-for-2010 Buick Allure, far left—its best shot yet at taking on the luxury-lite class–leading Lexus ES 350.

But in an abrupt about-turn, a decision has been made to switch the Allure badges back to LaCrosse, as the identical car is called south of the border since the last version debuted in 2005, above right.

Mais pour quoi?

The story goes that LaCrosse not only alludes to our official national sport, but a form of self-pleasure in Canadian French slang. Whether that’s seen as a positive or a negative when you’re trying to sell a car, well, I’ll leave that up to you.

However, do you think GM’s reversal of naming fortunes will hurt 2010 LaCrosse sales with Francophones?

Or in this age of the Interweb, is this type of regional marketing sensitivity just plain irrelevant?

Bailout Blues: GM can’t afford to throw out its Opel baby

So, the Who’s on First? Opel bidding war continues.

The latest has Government Motors refusing to explain the “why” it can’t make a decision between what the German government wants (Canadian Magna’s Russian-backed bid) and what the automaker wants (Belgian private equity RHJ International’s bid that would give GM more control in a new Opel.)

Now listen up. Your Canadian pride may be backing Magna (Way cool—Canada’s first modern automaker!!) But as a Canadian taxpayer now with a share of GM, you may want to start cheering for the RHJ guys.

Here’s why.

Just one look at GM’s current passenger car lineup will tell you why it can’t afford to lose control of Opel. Like Ford, GM relies heavily on its non-U.S. divisions for the development of anything other than pickups or SUV platforms.

Here’s the truth.

GM Asia (aka Daewoo) takes care of the subcompacts, i.e. Chevy Aveo and Spark.

GM Australia (aka Holden) takes care of its mainstream rear-drive platform, i.e. Chevy Camaro and dead-car walking Pontiac G8.

While GM Europe (aka Opel) is responsible for the meat-and-potatoes compacts, i.e. Chevy Cruize, Orlando, AND the vitally important mid-size FWD cars, i.e. Chevy Malibu, Buick Regal and Allure, Cadillac XTS.)

That’s why the thinking around the GM board table these days is not to throw out its Opel baby with the bankruptcy bathwater.

They only need to look across town in Detroit at Chrysler and see how losing control of mainstream passenger car development would be corporate suicide.

So say what you want about the strengths and weaknesses of the two remaining Opel bids, but my taxpayer money is behind the GM-backed RHJ gang.

Autopocalypse: Cash-for-clunkers conks out Monday. Then what?

Recession? What recession? According to some business writers, the worst economic downturn since World War II is over.

Hallelujah! And pass the profits.

And most of the credit (along with rebounding Asian and European markets and a weak U.S. greenback) is being put on a the manufacturing sector, specifically autos.

The U.S. Federal Reserve reports that production of “motor vehicles and parts” increased 20.1 per cent in July from June, after falling 69.6 per cent in the first quarter of the year.

But how long can that be sustained?

Since the automaker-formerly-known-as-General Motors introduced 0 per cent financing after the 911 tragedies, a good chunk of domestic new car sales have been done based on some kind of incentive.

This time, it’s the U.S. government’s $3,500 - $4.500 (US) cash-for-clunkers scrappage rebate program that’s sending new car buyers into showrooms, depleting inventories and prompting renewed activity at plants across North America, like the Chrysler’s Windsor and Government Motors Ingersoll, Ontario, plants which are adding shifts to meet the recent demand.

Trouble is, cash-for-clunkers is just a short term boost. Then what?

The Obama administration plans to cut off dealer funding for cash-for-clunkers program on Monday at 8 p.m. EDT, after finding that the $3 billion fund is drying up,

When the president signed off the bill in June, the budget was just $1 billion, with the expectation that it would last until the end of October this year.

So unless offered thousands in discounts, will new car buyers keep buying?

Can auto sales stay high without this free money on the hood?

[Source: Automotive News]

Green is Good: Ontario puts the EV cart ahead of the horse

Imagine this: N.H.L. commish Gary Bettman is holding a press conference to announce a sweeping, league-wide change in policy. Say, like a new playoff format or salary cap system.

But he’s announcing it in the Ottawa Senators’ home rink. Wearing a #11 Daniel Alfredsson jersey.

Not good, eh?

But that’s exactly the bias impression Ontario Liberal Premier Dalton McGuinty left after yesterday’s press conference heralding new electric vehicle rebates of up to $10,000

At the Courtesy Chevrolet dealership on the Queensway in Toronto.

In a Government Motors’ Chevrolet Volt.

Okay. So McGuinty’s PR team needs a slap down for favouring a single manufacturer’s product. An automaker, by the way, that we Ontario tax payers now own a chunk of.

But the moaning and groaning aftermath from the suits at rival Toyota and Honda was no better.

Can you say Hypocrisy 101?

Both those companies don’t seem to have a problem with the $2,000 Ontario provincial sales tax rebate currently available to their respective gas-electric hybrid vehicles, do they.

PR bumbling, political hedging and corporate gamesmanship aside, the biggest problem with Ontario’s new EV rebate program is timing. Here’s what I mean:

In the near future, I’ll get $10k off my new plug-in EV. Fantastic. But where in the name of Nikola Tesla am I supposed to plug it in when the batteries die?

With no plug-in infrastructure in place, er, nowhere, I guess.

It’s simple: McGuinty has put the EV cart ahead of the infrastructure horse.

Oh, he half mentioned his government’s infant partnership with California high-tech company Better Place, which is working to build battery recharging stations for EVs and plans to open a demonstration centre in Toronto next year.

But the technology is not proven. And more importantly, not in place.

So until I can drive my EV from Toronto to Ottawa to watch the Leafs and the Sens play, sorry McGuinty, I don’t want your “free” EV money.

Bailout Blues: Will the next Chevy Caprice be built in Oshawa?

After extricating itself from U.S. bankruptcy courts last Friday, one of Government Motors bold, “new” moves was to bring back 77-year-old Bob Lutz to head up the automaker’s global advertising and marketing.

But “Bob being Bob” meant he could not not get in a few words on what type of cars he thinks GM should be building. And one of those is the reincarnation of the lame-duck Pontiac G8 sedan as the next Chevrolet Caprice, left.

Building on Lutz’s riff, today there’s now speculation from the web site Automotive Traveler that the rear-wheel-drive Caprice (currently made by GM’s Australian Holden arm for Middle East markets) will be built in Oshawa, Ontario, right alongside its platform mate, the Chevy Camaro.

The reasons: First, the long-in-the-tooth Impala, introduced in fall of 1999, needs to be replaced.

Second, GM is nowhere in the high margin fleet and police package markets that is currently dominated by the Canadian-made Ford Crown Vic. A domestically made Caprice would fix that.

Trouble is, both those arguments conflict with plans for the Impala to move to the new Epsilon II FWD platform in Oshawa, and Lutz’s comments that one of the reasons he wants to sell the Caprice in North America is to primarily to uphold contracts with Holden that is losing the G8 business.

Will the Caprice end up in Oshawa?

Don’t hold your breath.

[Source: Automotive Traveler]