by Peter M. De Lorenzo
As we transition from the Horsepower Era to the Reduced Expectations Era, "reality" and "inevitability" will be the auto industry watchwords in 2008.
Detroit. Today marks the 427th issue of Autoextremist.com, eight and one-half years after we started back on June 1, 1999. And on this ninth day of January 2008, the frigid winds of reality are sweeping over this town with an inevitability that is both swift and unforgiving.
For the first time in 102 years, the Ford Motor Company finds itself the No. 3 automaker here in the North American market, supplanted by Toyota. Toyota became the No. 2 automaker in the U.S. last week by outselling Ford by 61,962 vehicles in 2007 (2.62 million vehicles to 2.56 million). Toyota's U.S. market share is currently at 16.8 percent to Ford's 16.4 percent.
In Ford's case, the company is finally dealing with the fundamental reality that you can't keep churning out cars and trucks at a rate over and above the demand for them. This has been the hardest lesson for the Detroit-based automakers, but it is one that had to be learned - or else. Ford is forgetting the old volume and statistical bragging game that dominated this town for so long and instead is doubling down on reality by focusing on designing and building cars and trucks that people actually want to buy, abandoning the strategy of manufacturing for manufacturing's sake.
Ford insists they won't waver from their new Alan Mulally-instilled mantra, and even though there will be more bad news emanating from Dearborn as they get their proverbial shit together, I believe them. Ford simply has no choice, and being relegated to "No. 3" in the U.S. is - and should be - the least of their concerns at the moment.
This is just the beginning of the news about Toyota vs. Detroit in 2008, however, because it's inevitable that Toyota will also surpass General Motors globally in sales to become the world's largest automaker sometime this year.
Speaking of GM, they're embarking on the Centennial celebration of the company this year. Unlike Ford's Centennial celebration of a few years ago, which went big on that company's heritage, GM's is all about the future and what's Next for the company, complete with an hyper-intensive Internet-fueled communication effort that will feature everything just short of massive group hugs around the globe by the time it's all over. All well and good, I suppose, as GM is obsessed with convincing the world that they are indeed hip enough to understand, but I question an effort that ignores history. Especially a history as rich as GM's.
Ford got their celebration right, with a creative blend of old with the new, while GM seems overly desperate to forget about what got them to this point. You know what they say about people who choose to ignore history, and in GM's case I have a foreboding sense of deja vu about this so-called "Next" centennial effort.
Starting with the fact that last week CEO Rick Wagoner, in the midst of talking about GM's Centennial, waffled about the timing of the Chevrolet Volt, GM's potential world-beater of a plug-in hybrid electric car that is slated for 2010 as a 2011 model. GM is mounting an all-hands-on-deck effort for the Volt led by chief product guru Bob Lutz, with the best and the brightest the company has to offer present and accounted for on the project. But Wagoner's statement, in which he implied that the 2010 target date was a hoped for goal but that they couldn't guarantee it, sent up an unexpected red flag that made me wince.
Why? In the bad old days of GM, the hype was always stronger than the products, and GM got crucified - and deservedly so - for conducting their business that way. But now, with such excellent products as the Cadillac CTS, Buick Enclave, Chevrolet Malibu, Chevrolet Corvette, Saturn Aura and Tahoe 2 Mode Hybrid here and others on the way, I thought GM was finally out of the premature hype game once and for all. But the fact that they've featured the Volt in actual advertising (which I deem to be a crucial mistake) and basically are revolving their entire Green strategy around the car - while starting to be vague on the timing - well, that adds up to a heaping, steaming bowl of Not Good in my estimation.
If this is truly the "Next" GM, then they better get their house in order, starting with the managing of their product message in a manner that's consistent with what they're actually able to deliver to market. This is a show me/prove it to me business now with no room for error and zero room for hype that can't be backed up. The skeptics out there in the world are just itching to come down hard on GM if this Volt project doesn't measure up or if it falls short of its mark. And believe me, I will be the first one to double-barrel GM if they blow this one.
As for Wagoner’s speech to the Consumer Electronics Show yesterday in Las Vegas, in which he touted GM’s future product philosophy as being one filled with electronic wonders and devices that will get between the driver and the act of driving – for the drivers’ benefit and for safety’s sake, of course – I am beyond underwhelmed. Robo cars and gee-whiz electronics for electronics' sake do not suggest a visionary future to me. It does suggest, however, that GM is starting to focus on the wrong things again.
Besides the fact that electronic "nannies" have an obvious downside - on one hand they can make average drivers somewhat better, but on the other they can be oppressive irritants that actually remove the driver from the equation - if GM's future product platform revolves around creating a rolling electronic think pad masquerading as an automobile, then they're in danger of embarking on a journey that will ultimately destroy all the new product gains they've made in the last few years.
Great cars and trucks result from a focused consistency in product philosophy and an unwavering commitment to excellence in design, engineering, performance, overall operating efficiency and quality - all of the things that GM seems to have finally figured out of late after wandering around lost in the desert for the previous 25 years.
But if GM actually believes that they can hang their hat on electronics alone, no matter how advanced and futuristic or wonderful they might be - in place of fundamental product integrity - I'm not buying it in the least.
GM is walking a very fine line here. It's one thing to embrace the future with a sense of wonderment and discovery; it's quite another to become overly dependent on systems that forcibly remove a driver from the act of driving whenever it's deemed convenient.
At this point "GMNext" sounds like a giant not so much to me until proven otherwise.
Let's get back to the fact that this is issue 427 of Autoextremist.com. The number "427" has always been magical here in the Motor City. In the 60s, a 427 cubic inch V-8 was the go-fast ingredient that powered everything from low-profile "sleeper" family sedans to blistering fast Corvettes and Cobras - and a field full of NASCAR stockers to boot. Even today, a 427 cubic inch V-8 lives and breathes in the brilliant Corvette Z06, standing as the last link to a bygone era.
And bygone era it is, as the automakers that compete in the North American market slowly but surely gear up for the new fuel economy regulations that will transform this nation's fleet for good. As if to emphatically underscore this transformation, GM announced last week that it had canceled plans to build a new double overhead-cam gasoline V-8 for its luxury cars that was scheduled for production in its Tonawanda, N.Y., engine facility beginning in 2009. Word is that this new engine was truly spectacular - delivering an outstanding combination of power, torque, smoothness and overall operating efficiency that rivaled anything out there in the automotive world. Now, it's only the first visible casualty in what will become a long line of fundamental changes as the automakers wrestle with the reality of these new fuel economy standards.
V-8s in luxury sedans and sports cars will fade away except in the most exotic of applications, replaced by direct-injection V-6 and super-clean diesel engines. For example, the new direct-injected V-6 in the 2008 Cadillac CTS (which develops 304HP) will become the biggest engine available in a Cadillac by 2010. Gasoline V-8s in general will gradually be replaced by diesels, especially in full-size trucks and SUVs (ironically the Tonawanda plant will get to build GM's all-new 4.5-liter diesel V-8 engine that will see production in 2010). And V-6 engines will give way to 4-cylinders whenever possible. These changes will filter throughout every segment and manufacturer vehicle lineup across the industry, with engines getting smaller and the choices we're used to becoming far more limited in scope.
Speaking of history, this point in time reminds me so much of the early 70s it's uncanny. Back then, it was the switch to unleaded fuel, catalytic converters and the recalculation of horsepower ratings that sent the auto industry into a tailspin. That was followed by gasoline supply shortages (both real and imagined) and new fuel economy standards, turning the business upside down. The nadir of it all for me was when Chevrolet actually called a Camaro with 165 "net" horsepower a Z-28.
The future for the automobile business looked grim back then, a bleak landscape for regular motorists and enthusiasts alike. But as we well know now, the automakers learned to do wonderfully creative things with their engines and drivetrains, using computers to transform the way that our cars and trucks were designed, engineered and built. And we ended up embarking on a new Golden Age of motoring that would culminate in the spectacular automobiles we have available to us today - the finest the world has ever seen.
While we bask in the glory of these outstanding machines at almost every price point right now, in the coming few years we will be reminded at virtually every turn that as we transition from the Horsepower Era to the Reduced Expectations Era - our vehicles will gradually have the excitement factor dialed out of them.
Will we see the same magnitude of technical breakthroughs that will allow the industry to eventually transcend these new standards and build desirable vehicles again? At least desirable in the sense of genuine driving enjoyment, without having the electronic crusade removing the driver from the equation altogether? I believe we will. But the transition is going to be exceedingly painful before we get there, because the reality of the situation is such that things will have to get worse before they're able to get better again.
The same can also be said for this nation's domestic automobile industry in 2008. Things are going to get even worse before they can get better again.
It's just inevitable.
Thanks for listening, see you next Wednesday.