No. 743,
April 16, 2014

About The Autoextremist

After a more than two decade career in automotive advertising, Peter M. De Lorenzo founded Autoextremist.com on June 1, 1999 as a weekly Internet magazine devoted to news, commentary and analysis of the auto industry and the business of motorsports. Since then the site has become a weekly "must read" for leading professionals within and outside the auto and motorsports industries, and De Lorenzo is considered to be one of the most influential voices commenting on the business today.

De Lorenzo's latest book is Witch Hunt (Octane Press  witchhuntbook.com). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. De Lorenzo is also the author of The United States of Toyota.

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Tuesday
Jul162013

Halfway through 2013 and what have we learned?

By Peter M. De Lorenzo

Detroit. It has been quite a year in the auto biz. Tumultuous in some respects, cloyingly tedious in others and just plain unremarkable overall, I’d like to say it’s a brand-new day but it’s not. Not really, and not enough to qualify as such.

The big source of talk this year so far has been about Elon Musk’s Tesla. We’ve gone beyond the simple kudos stage and now we have Musk rapidly ascending to sainthood, all thanks to the media who just can’t do it any other way. Is the Model S an impressive car? It is. Did it happen on account of Elon’s self-proclaimed brilliance alone? No, of course not, not by a long shot. As a matter of fact much of the development of the car was made possible by people who have done it before in this industry. And where might these people be from? About 2200 miles east of Silicon Valley, in case you need to be reminded.

As for Tesla’s stock price it reminds me of the tech stock frenzy that drove the market to the edge of oblivion a decade and a half ago. That came to a screeching halt in the spring of 2000, but there’s no telling when the artificial exuberance over Tesla’s stock will sink back to reality - and with a thud too.

But that’s okay. We live in a vacuous world of five-minute celebrity in everything from music, to what passes for “culture” these days - as pathetic as that might be - to business. (It used to be fifteen minutes but that’s so old-school now, besides, I shudder to think what would happen if you mentioned Warhol’s famous prediction to today’s cultural derivatives. You’d probably get the response, “Andy who?” complete with a blank expression signifying nothing.)

And then there’s The Great Sergio Marchionne, the Supreme Ruler of all things Fiat-Chrysler, who has basically spent the first half of the year careening around trying to steal, uh, make the best deal for Fiat to finally absorb the rest of Chrysler. Having been gifted Chrysler the first time around and having its debt burden quick-rinsed in the bankruptcy wasn’t enough, apparently. Now, he wants the last pound of flesh from every stakeholder involved so he can emerge glorious and unsullied, the undisputed champion of the automotive world and the G.O.A.T.

Whew, that’s a lot, even for Sergio and his espresso-fueled minions.

The only good thing about it is that we’ve been spared from having to sit through another excruciating wave of promises and five-year plans from Sergio that have more holes in them than one of Kate Upton’s red carpet outfits.

Speaking of which, how ‘bout that Maserati, folks? As we reported last week, the luxury Levante SUV (formerly known as Kubang) - you know, the one that was going to drive Maserati to profitability and make it a big-time player in the segment, according to Sergio’s boasts - is dead. It was a quiet death that went unreported, which is to be expected because after all, when Sergio wants to get all puffed up and preachy and remind everyone that he’s the smartest guy in the room, his pronouncements and pontifications are duly etched in stone for all of us little people to study and fawn over. But when things don’t work out? Ah well, never mind.

But Sergio will always be Sergio, thank goodness, and there will be no shortage of hubris out in Auburn Hills as long as he’s keeping all the spinning plates in the air. I can hardly wait for the gushing pronouncements to start for the Chrysler 200 that’s arriving shortly. As I’ve said before, by the time Sergio gets through stoking the fires for the 200 the media will have it pegged as being something akin to the greatest entry ever in the mid-size segment, when in fact the reality will be something quite different. Will it allow Fiat-Chrysler dealers to have something to sell in that segment? Yes, absolutely. Will it be the greatest thing since sliced bread? No. There’s a vast difference between greatness and being present and accounted for, or are you all forgetting about the Dart?

It has been a trying first half of the year for some of the lesser lights in our beloved automotive media who can’t seem to function unless they’re gathered at the feet of Sergio in rapt repose, but hey, there’s always another GM’s got it goin’ on! story to regurgitate.

Speaking of having it goin’ on, Dan Akerson - our favorite Accidental Tourist of a CEO - sure has the reins of GM in his teeth, doesn’t he? He’s going to have GM cars be all connected and all electrified, and damn if he isn’t going to show us poor bastards toiling away in the industry what the car business is really all about. My, my, my, I haven’t seen this much tone-deafness at work in this business since Jacques Nasser decided that Ford wasn’t going to be in the car business any more.

As I’ve said many times before, it’s Captain Queeg’s agenda vs. The World, and never the twain shall meet. He has his so-called loyalists within the Silver Silos and on GM’s relentlessly incompetent Board of Directors, but they’re only loyal on paper. If there were a scenario that had Akerson calling in one morning saying he’s done, his “loyalists” would quietly mutter to themselves, “good riddance.” The problem is that Akerson is hanging around until next May, and that’s not a good thing for GM. As a matter of fact it’s a heaping, steaming bowl of Not Good, because Akerson’s cost-cutting jihad - to the extreme detriment of everything else - will destroy GM’s competitiveness for years to come.

And then there’s Ford, or in this case Ford’s handling of Lincoln. In this nanosecond attention span world we live in today, Lincoln has been written off and Ford has been derided for having the temerity to even bother to save it for so long now that people forget that the new MKZ has only been in-market for three months. Let me say that again, three months.

After a nonstarter launch Ford has only just now resuscitated Lincoln, and the brand is barely in re-hab. To say the journey has only just begun doesn’t even begin to explain the half of it.

I predict the biggest determination of the future of Lincoln will rest on Ford’s own internal hand-wringing. The old-school Detroit mindset would have everyone looking at their watches after a couple of quarters asking, "now what?" Ford executives have to be vigilant and fight to prevent that mindset from ever creeping back into the discussion about Lincoln, because if they allow it the rejuvenation of Lincoln won’t have a chance.

As for the rest? Mercedes may very well have a hit on its hands with the CLA, but if there were ever a product that will cannibalize from the rest of the Mercedes lineup the CLA is it. And Mercedes will continue to joust at it its traditional rivals, Audi and BMW, but despite its sales success there’s no question the brand isn’t what it once was, and I remain convinced that Mercedes’ German overlords don’t have a clue how to fix that.

Audi still has its foot on the gas, but its posture in the market doesn’t seem as noisy as it once was. Will the new A3 change that? We’ll see. And BMW is still trying to be America’s favorite go-to luxury brand, jamming more vehicles into more niches than any other luxury-performance automaker. How will it end? We don’t know that either. But BMW’s bet on its electrified “I” brand is going to be a huge test of the company’s mettle. If BMW can pull the “I” brand off in the touchy-feely enclaves around the country, watch out.

VW is riding a roller-coaster in this market. Again. The scenario goes like this: VW builds some excellent products, then makes grand pronouncements touting their can’t-miss success (VW execs have predicted 800,000 sales in the U.S. by 2018), then they seem to run out of gas. And then they start the cycle all over again. What have they learned? Not much, apparently.

Acura is desperately trying to convince us that they have their mojo back, and the media has duly followed by anointing the new MDX crossover as the Next Big Thing, but will it last? It hasn’t up until now so don’t be surprised if it doesn’t this time either. There is no compelling emotional connection surrounding the Acura brand or its products.

And the same can be said for Infiniti as well. Hell bent on pounding credibility into the brand no matter what it takes, Johan de Nysschen is making bold moves on behalf of Infiniti, counting on creating a different persona for the brand here and especially in China to overcome any residual mundaneness associated with the brand. So it’s Formula 1 and advanced technology all the time and it's pound, pound, pound away at that. It took Audi almost fifteen years to achieve the top rung in the luxury-performance segment. It will take Infiniti at least that long.

Hyundai remains in its perpetual state of wanting to be taken seriously, but the Korean overlords and their American functionaries are finding out that it’s just not that easy. Hyundai is akin to the industry’s pop candy hit, all flashy and with a decent beat complete with sexy and alluring videos. The problem is that those pop candy hits have a dramatically short shelf life and though initially nice to look at and listen to there’s nothing memorable or long lasting about it.

I am not going to mention all the other players because, well, there’s just not that all much new to mention, although there’s one battle that’s shaping up to be exceedingly interesting, even though it’s at the nosebleed end of the market.

In one corner there’s Ferrari, the ultimate sports car (to some) with the undeniable heritage and unrelenting Italian passion. And in the other there’s McLaren, cold, calculating and ruthlessly efficient at building some extravagant high-performance cars, although some would argue that the British machines are merely mechanical instruments utterly devoid of passion.

Ferrari has everything McLaren wants, the undeniable lineage, the rabid fans – especially those who can afford to spend huge amounts of money on the latest example of Ferrari unobtanium – and the blind (albeit nonsensical at times) loyalty. But for the first time Ferrari has a real threat to their kingdom in McLaren, one flexing its muscles outside the gates with technical know-how second to no one.

To make matters more interesting, it’s no secret that Ferrari management has gotten lazy and caught up in the ill-fated “gee, we’re geniuses” disease that seems to take over all car executives at one time or another (just ask Sergio and Captain Queeg, to name the latest two). There are now one too many Ferrari boutiques and one too many Ferrari theme worlds distracting Ferrari executives, which seem to indicate that they have forgotten who they are and what they stand for. Oh, they talk a good game, but they’ve cracked the lid on the bottle and enough of the genie has slipped out to make them vulnerable.

McLaren has beaten Ferrari on the racetrack, and they are firmly convinced that they can take it to Ferrari in the showrooms. I wouldn’t count McLaren out by any stretch of the imagination.

So here we are, halfway through 2013 in the car business and the soundtrack I’m hearing is all about embracing the digital landscape while developing a social media resonance, new avenues of connectivity, electrification, autonomous cars, the Green Imperative, finding new and creative ways of taking care of the customer and blah-blankety-blah.

But what has this industry learned, really?

From where I sit? Not much.

Because when all the rhetoric stops if these companies don’t have the product, well, they’ve got nothin’.

And that’s the High-Octane Truth for this week.

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