Monday, January 16, 2017

Donald, stop meddling in the workings of the Global Auto Industry!

Ed Garten sent me this note on Monday morning: 

Perhaps automotive historian Dr. John Heitmann should give President Donald Trump a phone call and explain the auto industry to him?


BEIJING — In his latest criticism of what he sees as unfair trade, Donald J. Trump has taken aim at German cars. Why, the president-elect asked a German newspaper, do so many well-heeled drivers in New York drive a Mercedes-Benz, while Germans buy so few Chevrolets?

The last time I was in Leipzig, Germany (summer, 2015), I passed by the Chevrolet dealer quite often as it was close to the Brat and Thuringer sausage  shack where I often got my lunch. The Chevy dealer was about the loneliest place on the planet. Or at least in Eastern Germany, where there are plenty of lonely places!

The problem is that cars still have meaning for many of the people who drive them.  And my sense is that many Germans want to buy German cars.  Nothing wrong with that, considering that until recently GM did not stand for quality. Now GM could market their cars under the Opel brand, which would result in some German sales. Let's face it, GM is a faceless corporation that squashed SAAB, a proud European make.  Why let them get away with that in Germany, anyway?

Mercedes stands for excellence and accomplishment -- that is why Americans like to drive cars with the three pointed star -- along with the idea that they are nice cars.  The Bow-Tie on the grill to me stands for "average," not excellent or achieving!  You want to be average -- in looks, mental capabilities, earning power or potential, or anything else?

Do hot and desirable women drive Chevys or Mercedes and BMWs? At least in your mind?

Trump, coming from a German background (not Swiss, as he would like us to think), should know that you can't tell a German anything without some push-back. So he is going to dictate the global auto industry?  Maybe here and there, but he won't last for long doing that. It is like pissing in the wind, and we know want that leads to!

Friday, January 13, 2017

Porsche 911 GT3 R at Bathhurst, 12 Hour, Australia, February 5, 2017

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The race car equipped with the ultra-modern, four-litre, flat-six engine featuring direct fuel injection is campaigned by the Australian Walkinshaw GT3 squad with factory-backing from Porsche Motorsport. In addition, other customer teams field Porsche vehicles on the 6.213-kilometre Mount Panorama Circuit. The Bathurst 12 Hour is one of the most spectacular sports car races and marks the start of the Intercontinental GT Challenge season.
The Mount Panorama Circuit, located in a picturesque region about three hours drive inland from Sydney, is a public road for most of the year. The challenging racetrack in the foothills of the Blue Mountains features 23 corners with a 174-metre vertical difference between the highest and lowest point. The steepest grade is 16 percent. One of the peculiarities of the world famous 12-hour classic in the state of New South Wales is that the start takes place in the dark at 5.45 in the morning.

911 GT3 R celebrated many successes in international racing series

The 911 GT3 R was designed by Porsche for worldwide GT3 series on the basis of the 911 GT3 RS production sports car. The vehicle is characterised by uncompromising lightweight design, better aerodynamic efficiency, lower fuel consumption and improved driveability. Already in its 2016 maiden season, the 911 GT3 R celebrated many successes in international racing series, for example in the IMSA SportsCar Championship, the World Challenge, the ADAC GT Masters as well as the VLN Long Distance Championship Nürburgring on the demanding Nordschleife.

Why the Porsche 911 is Special


My 1971 911T targa

Legend, myth, icon – for generations, the car that has left the Zuffenhausen plant bearing the moniker of the 911 is a success story that carries many names. But what has made it such a special automobile since 1964? Why do its devotees speak of it in almost hallowed terms?
It was 1992 when I saw a Porsche 911 at my front door for the first time. It looked incredible. Dark grey, gleaming in the sun, and with those large rims and the brake discs clicking quietly underneath. I almost touched the fan grill of the engine cover with my nose as the 911 burned into me. My shin felt the force of the exhaust pipe. But my head also felt this car – and my heart. I felt it deep in my heart.

The Porsche 911 is an incredibly intense experience

There are countless stories like mine that connect people with the Porsche 911. Because there is not just one story that describes this car. Rather, everyone has their own personal connection to it: Some were captivated by it from childhood, when they gazed upon a 911 for the first time. Others had never even seen it – only heard about it. And anyone who sat in the driver's seat could not fail to fall in love with the car. But why?
Probably because the Porsche 911 is an incredibly intense experience. It is a dynamic car, but not without compromise; it is suitable for everyday driving. It is wonderfully small and compact, but it also has space for the kids. It is not exotic and certainly no prima donna; instead, it is almost discreet and unassuming.

Interplay of steering, shifting, acceleration, braking and sound

And because it has embodied all of these traits since 1964, every 911 seems immediately familiar. It starts with the arrangement of the seats, steering wheel and the other important control elements. Everything feels solid and secure in your hand. It is all about taking aim and hitting the targets. It is intuitive, like being blindfolded. There are no distractions; you can concentrate fully on driving and on the wonderful feeling of the 911.
The multitude of fine details are crafted with a precision that allows them to come together and create a piece of utterly flawless design. It is this interplay of steering, shifting, acceleration, braking and sound that never loses focus and concentration – the factory in Zuffenhausen seems to employ a philharmonic orchestra rather than engineers. That’s because their interpretations are not just unique; by making small changes, they can also completely transform a model.

Being one with the car – that is the 911 feeling

But whichever one you choose–whether a perfect, high-speed new model or a characteristic older version–there is one thing that never changes: You are the conductor. You have an immediate connection with the 911. You are a part of the experience. And it is precisely this feeling of being one with the car that makes it so special. For me, that is the 911 feeling.

Monday, January 9, 2017

Mercedes Outsells BMW in 2016!

By Edward Taylor and Ilona Wissenbach
STUTTGART, Germany (Reuters) - Mercedes-Benz sales overtook BMW last year for the first time in more than a decade, a feat achieved, ironically, only after parent company Daimler stopped chasing market share and focused on making stylish high-tech cars.
On Monday, Bavaria-based BMW said it sold 2,003,359 cars in 2016, less than the 2,083,888 by Stuttgart-based Mercedes. BMW had outsold Mercedes every year since 2005.
The achievement is a coup for Daimler Chief Executive Dieter Zetsche, who struggled to revive the company following a messy divorce from mass-market brand Chrysler in 2007. Less than four years ago, Zetsche faced restive shareholders, worried Daimler was lagging BMW and Volkswagen's Audi brand.
"We had some deficits, cost and quality problems. Design was not top-notch. And with Chrysler we were no longer a pure premium carmaker," Zetsche told Reuters in an interview late in 2016 in his office at Daimler's headquarters.
Zetsche has presided over a renaissance in the design and technology of Mercedes vehicles, refocused the company on technological excellence and autonomous driving instead of short-term sales goals, and adapted the entrepreneurial mindset of Silicon Valley to the traditionally risk averse culture of Stuttgart.
Daimler is also preparing for a new era when the auto industry's business model moves beyond manufacturing and selling cars to luring customers interested in pay-per-minute transport solutions provided by self-driving cars.
At the company's 125th anniversary in 2011 - a year when Audi sales overtook those of Mercedes, pushing it into third place - Zetsche forecast his improvements would make Mercedes the best-selling luxury carmaker by 2020.
"Since then we worked hard and today we are leading or among the leaders when it comes to innovation, quality, design and security," Zetsche said.
Daimler traditionalists were shocked by the volume forecast, fearing that selling too many vehicles could dilute the exclusivity of their cars and reduce the appeal of the Mercedes brand in the long run.
But consumer electronics companies such as Apple had already proven the pull of their brands did not suffer with increased sales volumes.
Daniel Binns a managing director at branding agency Interbrand, said advances in technology have made a product's scarcity less of a selling point.
"I've got it and you haven't, is what used to make premium. Now it is much more about having a better quality experience. So much of what defines an experience to the current generation is about what the technology delivers. The autonomous vehicle is the pinnacle of that," he said.
The overhaul of Mercedes began in earnest in May 2013 with the launch of a new flagship S-class. To burnish its credentials as a technology leader, Mercedes developed a prototype version which drove around 100 kilometres (62 miles) autonomously the same year.
Rather than designing a limousine which appealed mainly to rear seat passengers, the new S-Class featured large digital display screens on the dashboard, a deliberate attempt to appeal to a younger, driver-focused audience.
The same youthful design approach was used for the new C-Class and E-class designs, which are now the company's big sellers.
To counter the threat from Audi, Zetsche appointed a young designer, Gorden Wagener, to head up Mercedes design. He introduced an elegant and sporty style to spruce up Stuttgart's Teutonic limousines. Mercedes cars were also equipped with state-of-the-art digital display technology, luring smartphone savvy customers.
It was a change for Mercedes where engineers always believed they were producing the best cars in the world, but measured quality mainly using technical or engineering criteria, a strategy which often led to powerful cars with expensive and complex technical innovations.
Today, Mercedes-Benz follows its motto "the best or nothing" by thinking about whether customers would notice or benefit from a new technological innovation, and by benchmarking the brand against competitors, Zetsche said.
Mercedes also revived the Maybach brand, a marque targeting the ultra-luxury sector which the company had stopped making after the prior bespoke design failed to gain traction, leading the car to sell only 200 times in its final year of production.
Since Maybach's latest revival in February 2015, Daimler has sold 15,000 cars.
"The rewards we are reaping today are the logical consequence of careful preparation," Zetsche said.
(Editing by Georgina Prodhan, Alexandra Hudson and Mark Potter)

Sunday, January 8, 2017

The American Automobile Industry: The Most Enduring Obama Legacy and the 2009 Bailout



Currently, the Obama legacy is being assessed by pundits from both the right and the left.  Whatever the case in terms of race relations, the economy, and the Mideast including Syria, Iraq, and Afghanistan, one thing cannot be denied. Under his leadership, the collapse of the American Automobile Industry was averted.  Had Mitt Romney been in charge, bankruptcy and all the uncertainty associated with it would have transpired. Bankruptcy lawyers would have gotten rich, workers would have been thrown out of work. And those advocates of the free market would have been assuaged.  Perhaps the most important of all manufacturing  sectors was given a second chance.  And so at a critical time the federal government did what it does best -- protect the interests of all Americans, including workers.  Here is an historical account of what happened, taken from an upcoming 2nd edition of my The Automobile and  American Life book.

The Great Recession, the G.M. and Chrysler Bankruptcies of 2007-2009, and Recovery
            The Great Recession, with its foreclosures, personal bankruptcies, lost jobs, and closed automobile assembly factories, started with a slowing of auto sales after a banner year in 2005, during which almost 17.5 cars and light trucks were sold (see table). Afterwards, a foreboding trend reappeared, one that the American industry had experienced during the late 1950s, and the late 1970s and early 1980s -- the remarkable rise in the sale of “pure” imports.  These vehicles were not cars made at the transplants, and they increased significantly from 19.7 percent in 2005 to 26.1 percent in 2008.72 Concurrently, credit tightened. Since some 90% of all automobile purchases were made with loans – that development also contributed to a marked decline in U.S. production.72  $4.00 per gallon gasoline prices also caused a drop in consumer confidence. It turned out to be a perfect economic storm directed at a fragile industry. In 2007, prior to the steep downturn, union pension and healthcare costs as well as post-employment benefits were addressed with the formation of a voluntary trust employee benefits association that also provided for a lower entry wage of $14.20 per hour for up to 20% of the UAW workforce. But it was too little a cost-saving measure, too late.
By the end of 2008 the Detroit Three were running out of cash and G.M. and Chrysler faced imminent bankruptcy. The outgoing Bush administration, led by Treasury Secretary Hank Paulson, responded with a Troubled Asset Relief Program (TARP) loan. A stopgap, it kept the threatened firms alive, and acted as an important bridge between the outgoing Bush and incoming Obama administrations. In the meantime, massive job losses followed. Automobile assembly plants employment dropped from 185,800 to 123,400 and in parts plants from 607,710 to 413, 500. By 2009 only 10.6 million American-made units were sold, and recovery to 2005 levels did not occur until 2015.
After President Obama took office, a taskforce at the Department of Treasury was created with bankers Steven Rattner and Ron Bloom emerging as its leaders. Congress proved as ineffectual as auto industry leaders in reaching a compromise agreement. Conservatives wanted the industry – and especially organized labor – to pay a price for a government bailout, while liberal legislators favored a more lenient approach given the huge economic and social ramifications if the industry were to fail. In the end, both G.M. and Chrysler went through managed bankruptcies. G.M. was forced into bankruptcy with a 61% taxpayer ownership. G.M. also had a new chairman and four new board members who were appointed by the federal government. To allay consumer fears, the government backed warranties and President Obama created the Cash–for-Clunkers program to stimulate demand. Ed Whitacre, formerly at AT&T, was persuaded to come out of retirement to head G.M., followed 9 months later by Dan Akerson, formerly CEO at Nextel and then the Carlyle Group.  Ford, securing a credit line during the first half of 2008, avoided government intervention in their business operations, and since 2011 has recovered nicely with annual profits ranging between $6.2 and $8.3 billion. Chrysler recovered but now is under the control of the Italian car company, Fiat. 
G.M. has endured several crises since 2009, including one involving a faulty ignition switch.  It thrives, in part because of its operations in China, where its Buicks are preferred as desirable vehicles, along with Audis and Porsches.  Geographically, the post-Great Recession U.S. industry now has two areas of concentration within the I-65 and I-75 corridor.  Above US 30, cutting east to west between Ohio, Indiana, and Illinois, the auto assembly scene is dominated by the Detroit Three and suppliers; below it are the transplants with their headquarters in Japan, Korea, and Germany.

From the perspective of organized labor, the UAW is no longer what it once was, neither in the sense of its power during the 1950s or its obvious weaknesses after the mid-1970s.  In 2015 industry analysts Joel Cutcher-Gershenfeld, Dan Brooks, and Martin Mulloy concluded, “The UAW transitioned from a union that primarily threatens to withhold labor to one that primarily enables work. Union brings expertise to discussions of quality, safety, productive and preventative maintenance, workforce development, and team based operations.”73 In sum, the UAW has experienced a new role and resurgence by finding purpose in a new business environment.