No. 927
December 13, 2017
 

About The Autoextremist

Peter M. DeLorenzo has been immersed in all things automotive since childhood. Privileged to be an up-close-and-personal witness to the glory days of the U.S. auto industry, DeLorenzo combines that historical legacy with his own 22-year career in automotive marketing and advertising to bring unmatched industry perspectives to the Internet with Autoextremist.com, which was founded on June 1, 1999. DeLorenzo is known for his incendiary commentaries and laser-accurate analysis of the automobile business, as well as racing and the business of motorsports. Author. Commentator. Influencer. The Consigliere. Minister of the High-Octane Truth. DeLorenzo is considered to be one of the most influential voices commenting on the business today.

DeLorenzo'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. DeLorenzo is also the author of The United States of Toyota.

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Monday
May092016

TWO EMPERORS. NO CLOTHES.

By Peter M. De Lorenzo

Detroit. The “swirling maelstrom” that too often defines this industry is something I’ve written about frequently over the years. What is it, exactly? Part I of the definition is it's the kaleidoscope of craziness that far too often overwhelms this industry, compounded by the mind-numbing realization that delusional thinking isn’t an aberration, but rather a full-on cocktail of absurdity that fuels this business often enough to the point that it becomes standard operating procedure. Part II is that it’s the ugly realization that for every three positive steps taken forward, there’s a corresponding and inevitably recurring stumble made up of five excruciating steps back. And it’s this unending cycle of unbridled brilliance punctuated by the festering stench of abject mediocrity that permeates and overwhelms almost every aspect of this business, which thus gives you a crystal-clear picture of the “swirling maelstrom.”

Nowhere was that more evident than during the last couple of weeks, when two acknowledged Master Manipulators of the media also revealed themselves to be certifiable Kings of Delusion, within days of each other.

First up, of course, was Elon Musk, the Master Manipulator of the “new” media. The “new” media being, of course, the various outlets covering his every move with a warped kaleidoscope made up of obligatory, “we’re not worthy” genuflections coupled with a fundamental belief that everything about Silicon Valley = Uhhh-mazing, and everything about the “old” manufacturing sector – aka anything to do with “Detroit” or the hoary auto industry = Pathetic. As in, the sooner this region and this industry lays down its arms for Elon, The Master of All He Surveys, the sooner our automobiles will become benign smile machines, the rolling equivalent of shiny, happy, motorized hugs.

As if.

At any rate, when Musk made the ludicrous assertion that Tesla would be producing 500,000 cars per year by 2018, the mainstream media - which was joined by some card-carrying members of the “new” media - saw right through Musk’s bullshit, err, blue-sky pronouncement and pounced, dismissing the projection as a complete fantasy. (This came hard on the heels, remember, of the frenzy surrounding the hundreds of thousands of deposits the company took on its new Model 3, the so-called “affordable” Tesla.)

The pushback was immediate and the negative comments were withering, and for once the delusional mindset of Elon Musk was exposed for all to see. This is a company, after all, that has struggled to make its highly-touted Model X crossover, a machine that was fraught with design flaws before it even left the gate and one that still suffers from massive production problems. Not to mention the fact that the ugly reality of Tesla’s dismally piss-poor, real-world, in-market quality ratings have been duly noted and decimated by Consumer Reports, a publication that once was one of Musk’s chief enablers.

To be blunt, Tesla has serious manufacturing problems, and the notion that Musk will simply flip a switch and Tesla will start churning out impeccable Model 3s by the trainload simply strains the notions of credulity. Let’s just say that anyone with a shred of experience in this business doesn’t believe it for even a second.

That didn’t stop loyalists in the “new” media from immediately pronouncing Musk’s gambit as being akin to Moses bringing the tablets down from the mountaintop, and that the sky was bluer and our grass greener for it. The unspoken message being that we were – thank goodness - that much closer to eliminating the nasty “old” automobile business once and for all. One pro-Musk member of the “new” media even conjured up the strange notion that Musk was making moon shot pronouncements to exhort his troops onward, which was even more ridiculous considering it was announced almost simultaneously that two of his top manufacturing “experts” had left the company.

So right now, Musk allegedly is scouring the world for top manufacturing experts to help him fulfill his “vision” for building half a million cars by 2018. And where is he likely to find that caliber of talent? Much to Silicon Valley’s chagrin, if Musk is able to talk anyone into running that gauntlet and signing up for his ludicrous death march, the candidates will most likely come from around here.

And why is that? This region is not only crawling with talent, Detroit and its environs constitute the heart of America’s technological and manufacturing know-how, which is why every major auto manufacturer in the world has a presence here. Quite simply, it’s where companies in the transportation business come to acquire the expertise needed in order to get things done. Something, I might add, that Musk is most painfully aware of – although loathe to admit – considering he had to come here to mine that talent to get his vaunted Model S built.

Enough about Musk, however, because there is another Master Manipulator – and King of Delusion – on the loose. Sergio “I’m the G.O.A.T.” Marchionne engaged in his favorite exercise last week, and that is to gather the automotive press at his feet around the proverbial campfire, so he could hold them in rapt attention while he expounded on the world according to Sergio.

Flush with his linkup with Google, Marchionne acted as if the deal to help Google build and test 100 self-driving minivans had put him at the forefront of the frenzied Silicon Valley-Detroit dance, and he was positively gleeful and flush with the notion that he was now The Star of Stars. Except that’s not the case at all. In fact, Marchionne had been wandering around in the desert searching for someone – anyone – to bail his company out. With no technical capability and none on the horizon, Marchionne knew that his time was running out, and lo and behold Google was now his Savior of the Moment. But Google was simply exploiting Sergio’s “take whatever you want” posture, because while Ford and GM wisely balked at forking over company data to the whims and wishes of Google, Sergio basically opened the store and gave the Silicon Valley denizens full access. Why? Because the reality is he had no other choice.

I view this deal between Google and FCA as a short-term evaluation, at best. Google will take what it wants and use FCA for its own needs, and then we’ll see what transpires beyond that. As I mentioned previously in my column entitled "The Fools On The Hill," this is the Hail Mary pass Marchionne (and Fiat heir and FCA Chairman John Elkann) so desperately needed, especially given the fact that Sergio exhausted all of his options. Without the Google deal FCA was facing the prospect of making the Jeep and Ram Truck franchises available to the highest bidder, in effect "parting out" the company in desperation.

Now? This a way for Marchionne, at least in his mind, to cash out the “C” part of FCA for a huge dollar figure - somewhere in the neighborhood of $12-$14 billion - so that he and the Fiat family interests can return to Italy as conquering heroes, flush with boatloads of American cash.

As for John Krafcik - Google’s main man on the autonomous car adventure and a savvy industry veteran – he wants one more shot at running a car company, and a Sergio-less Chrysler would be the perfect canvas for his Silicon Valley-tinged, “new auto industry” theorems. Krafcik is acutely aware that despite Google's flashy, "we can do anything we want" arrogance, without the wherewithal to build the cars and somewhere to service them, Google's Self-Driving Car program is going nowhere, fast.

As for Musk and Marchionne, it’s ironic that we’ve reached the point in this business where two executives – on the surface completely dissimilar – are in fact frighteningly aligned.

Both are acknowledged Master Manipulators of media, both “new” and traditional. Both are insufferable know-it-alls with zero tolerance for insolent behavior (aka anyone who disagrees with them). Both are prone to blue-sky pronouncements when it comes to the boundless prospects for their respective endeavors, even though they often approach the Planet of Absurdity. And both have a remarkable propensity to gloss over the annoying details when they’ve fallen drastically short of expectations.

Two Emperors of their respective Kingdoms, unburdened by clothes.

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

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