Monday, September 29, 2008

Reaction to the Volt Launch

The year was 1972. Then Motorola R&D Chief Martin Cooper told designer Rudy Krolopp that they had to have a portable cell phone prototype in six weeks. Rudy’s response?

What the hell’s a portable cell phone?”

Ten years and $100 million dollars later, they launched their phone, the $3,995 DynaTac 8000x, affectionately dubbed “the brick.” If only the wealthy could afford it, and calls were a dollar a minute (staggeringly steep in 1983), some critics said it was too expensive to buy, too expensive to use, and the range wasn’t what they would have liked.

So what exactly, was the point?

25 years later, cellular phones would be nearly ubiquitous worldwide, with millions of consumers ditching their traditional home landline phones for their cells (me included).

Fast forward to September 16, 2008: GM unveiled the world’s first extended-range electric vehicle, the Volt, to a curious and sometimes puzzled press corp. Some reporters noted that it likely would be expensive to buy and the electric-only range wasn’t what they would have liked.

Sound familiar?

I wasn’t surprised when people questioned the yet-to-be-announced but oft-speculated $40K price tag. After all, $40K is well above the median price for a new car in this country, and the Volt is a compact, four-passenger car. Even with the $7,500 dollar tax credit, it’s a lot of money for a compact, but not unheard of for tremendous performance (e.g. BMW 135i, Audi A3 3.2).

But I was surprised to see some folks miss the point by citing the Chevy Cruze as being the far more significant car to roll out in 2010. Their argument is that it will be affordable to mostly everyone (relative to the Volt), and therefore it will save more fuel overall as more people are able to buy it (#/units sold x mpg increase = total fuel saved).

Don’t get me wrong, I think the Cruze will be great, and I’ve posted earlier on the virtues of turbocharging everything on this site. The Cruze will be marginally bigger than a the Cobalt, but its 1.4 liter gas turbo will push fuel efficiency into extremely competitive territory; interestingly the Cruze and Volt will share a common body structure, known in GM circles as Delta II. But is the Cruze really more significant than the Volt?

If the future of the auto industry ended in December 2010, this view would stand to reason. But the difference in interpretation of the significance between the view of some and GM is the long-term implications of the Volt, and its ability to begin to write a new chapter in the annals of energy and personal transportation. GM’s Frank Weber and Larry Burns made a very compelling case, and if you missed it, here it is in a nutshell:

· GM extensively studied the range issue, and found that the forty-mile range from the battery is the sweet spot for most U.S. consumers. Roughly 80 percent of drivers could commute without using a drop of gasoline;

· In the next iteration of the Volt, the electric-only range would still be forty miles, the aim will be to reduce size, mass and cost from the battery pack (keep Motorola’s “brick” in mind), which will bring down the cost of the car;

· For the next iteration, and subsequent extended-range electric vehicles, stir and repeat.

I thought they made this pretty clear. Thoughtful people ought to agree that the implications for weaning ourselves off oil for personal transportation are staggering . . . no, not by 2010, but neither will it take fifty years (keeping in the mind the adoption/development curve of the cell phone).

As I wrote after watching the unveiling of the production Volt, I think the Volt will be remembered in coming years as much for what it will represent—the all-too-rare game-changer ushering in the electrification of the automobile and the overcoming of our complete reliance on diminishing oil reserves for personal transportation. GM is one of our clients, but I still really believe this.

As Burns pointed out, by 2030, two-thirds of the world’s population will live in cities where vehicle speeds average 12-13 miles per hour. Using the tech represented in the Volt, close to none of these would need gas or diesel to drive around town. No gas. No diesel. No idling. Think about it.

Agree? Disagree? I'd love to hear what people think about this.

Thursday, September 25, 2008

Volt Scores Big $7,500 Tax Credit

The verdict is in: the Volt will qualify for a $7,500 tax credit, as reported by Dave Kiley over at BusinessWeek. While $10K would have been better (the Li-Ion battery pack alone has been estimated to cost this much), $7,500 helps GM put generation one extended range hybrids into the hands of consumers.

This is a big deal, especially for people in upper-middle and higher income brackets. If it were simply a deduction, it would mean a lot less. For the difference between the two, read Kiplinger’s explanation here.

In other Volt news, I have a post going up on the GMnext blog soon about how so many journalists missed the big picture last Tuesday on the Volt’s coming out party.

Thursday, September 18, 2008

Report from the Volt unveil . . . very interesting

If you haven’t heard, the production version of the Volt was officially unveiled as part of the GM Centennial celebration. I spent the day with reporters obeserving their observations.

If you want to know what it was like to be there in person, and gleans some offhand media reactions, read the post following the CEO's here.

Thursday, September 11, 2008

The Craziest Car I Ever Drove

As an auto flack, my job occassionally gives me the opportunity to drive really cool, new and interesting cars. I've driven fuel cell vehicles (very quiet), a ton of turbodiesels unavailable for sale in North America (but a few are here, I helped Honeywell petition EPA for the waivers to register them here), Australian gas turbo Fords, the EV1 in DC in the late 1990s when I with USCAR, but none can top the utterly ridiculous vehicle here.

I few years ago, a client wanted to see his Delahaye featured in AutoWeek. I wanted to be published in a car magazine, as this was my dream all through college. We both lucked out. The owner, all round cool car nut with the means to have a warehouse full of cars, Gordon Wangers of AMCI/Jim Wangers fame, told me a few years ago that the car had been traded.
Here is the brief report on driving a 70-year-old, now $400,000 LeMans winner in rush hour traffic:

Driving the 1937 Delahaye Type 135M Drophead Coupe

Kill CAFE Rules and Save Taxpayers $25 billlion

In a thought-provoking opinion piece yesterday, this Wall Street Journal article by Holman Jenkins offers a novel—and to my mind theoretically (but not politically) practical way of saving taxpayers $25 billion+ dollars in Federal loan guarantees:

"For a sum small compared to their revenues but large in relation to their market caps, the Detroit auto makers were all over the two conventions. Their lobbyists had something to sell -- a plea for $50 billion in federal loans. Congress practically owes us this money, Ford, GM and Chrysler argue -- because Congress slammed us with new fuel mileage mandates that will cost us $100 billion to meet.

John McCain caved. The White House is in the process of caving. Barack Obama didn't need to cave. But before rushing to pass the legislation, there's an easy way to save $50 billion or whatever part of these loans wouldn't be paid back: Just repeal the fuel economy rules."

To note: I say in my title here that it's $25 billion, the Journal quotes $50 billion. Smart $ is on the former.

The corollary, according to this classic by my favorite contemporary economist, Greg Mankiw from Harvard, is that rather than burden the OEMs and consumers with CAFE rules that just don’t work, is to permenently raise fuel taxes above where they are now. The following from Mankiw is a must read:

Raise the Gas Tax

Wednesday, September 10, 2008

For Auto Supplier PR Executives

Can your PR agency explain what this picture is and how every component here works? We can because we work for manufacturer of both the variable geometry turbo and the engine manufacturer.

Our shop in Detroit is a curious bunch. We run the gamut from former Chicago-based consumer marketing PR-types to more B2B auto technology/policy industy PR strategists (I fall into the latter).
Interestingly, our growth n the last five years has been built primarily on getting ahead of the curve on using social media (i.e. the internet) to creatively engage consumers for companies, but we've also added clients on the more traditional auto supplier B2B side of the house . . . the difference being that Weber Shandwick is more global than most of our clients, let alone our competition, and having capabilities worldwide is a quickly growing need as the supply base continues to consolidate. Here's us in a nutshell:

Where Should the OEMs Be Placing Big Bets?

Why is GM spending billions on “far-out” technology like extended-range hybrid vehicles in the midst of such industry and market turmoil? Because the global trends that are shaping the industry—and society—demand that leaders lead.

This "leaders lead" talk doesn’t jive much right with auto cognoscenti because GM has had a tough time as of late (but let's be clear: so has pretty much everyone else, including Toyota, whose coronation may put on hold in light of lowered sales/revenue forecasts). Early indications are that the industrialized West is sliding into a low-to-now growth period; next year could be some really tough sledding for mature markets with emerging markets still keeping the lights on.

But those trends are alarming, and in spite of tremendous pressure to shoot the moon with the next product cycle, GM, along a few others, are looking well beyond the current market downturn and next product cycle.

In the following link from the GMnext blog, click on the presentation at the bottom that shows why the big picture includes much bigger issues than today's credit crunch, housing decline. If intelligent people don’t find the global trends frightening, we may all be in big trouble.

Feeling Gravity's Pull

Tuesday, September 9, 2008

Autoextremist: PR Won't Work for Detroit?

The ever delicate and nuanced Peter DeLorenzo essentially says to Detroit OEMs: Give up on your PR efforts . . . you lost the image war. As usual, his reasoning is on very solid ground, the idea being that amazing products will help cure what ails GM, Ford and Chrysler. That's right. But he's wrong (sorry Peter).

But to say that communications and marketing just don't/won't work is folly. I offer as Exhibit A a brand that makes high-quality, reliable, intrinsically good products, but doesn't communicate its value very effectively as measured by sales . . . Acura.

Mercedes-Benz, on the other hand, outsold Acura in August, as they do most months/years, but hasn't remotely approached Acura's reliability in recent years. I'm aware the reliability is but one reason people buy cars (especially luxury cars that no one needs); design, performance, resale, et al. all count too. But when you ask most real people what is meant by a "good" car, they'll say "high quality" or "reliable."

Sorry to say this Peter, but the brand still counts for something, and Mercedes proves the point. And brand is another word for the intangibles. Some of those intangibles are not consciously communicated, and not all can be helped by PR and marketing, no argument.

But I fully appreciate and mostly agree with the spirit and direction of Delorenzo's rant. Autoextremist has always been a provocative, thoughtful read and product, product, product is still the automotive equavalent of location, location, location.

Monday, September 8, 2008

Should Tier 1 Auto Suppliers Blog?

At this point, I don't see why, but convince me otherwise. Here are a few of my reasons:
  1. Their customers are too few. Suppliers talk to a fairly short list of engineering, planning and purchasing people. Traditional PR works better unless . . .
  2. You're a massive supplier capable of actually affecting (i.e. have lots of $ to spend) consumer demand for a particular technology. ABS brakes, which were lobbied behind (and if front of) the scenes with NHTSA, and diesels (jury is still out, diesels are great but not inexpensive) are two that come to mind from Christmas Past and Present.
  3. Unless you've got a highly differentiated product, and can hope to own a category like safety, fuel economy or in-car entertainment, you won't be able to convince enough consumers that your site is worth going to several times a week, or more.

Would love to hear what you think.

Wednesday, September 3, 2008

How Do Blogs Work in Automotive?

Simple: talk about stuff that real people care about. Like turbocharged Camaros, for instance:

Turbo Camaro . . . Why Not Turbocharge Everything?

Success with this particular post was fairly modest, but it's a good reminder that a. it bears repeating, companies can't really control the conversation--and shouldn't try to; and b. people are still really, really sensitive to engine cylinder count in this country (in Europe, average specific power output is something like 80 hp/liter, in the U.S., it's . . . less), but this may be changing with the volitity of gas prices.

Can they work? The anwer is yes . . . as demonstrated by der ├╝berblog that isn't just a model for corporate blogs in auto, but corporate blogs period:
GM Fastlane. Of course, GM is a Weber Shandwick client; no, we didn't come up with Fastlane; and no, we don't always drink the Kool Aid because our job is help counsel companies on how things will be perceived by, again, real people, which GM is doing a better job of and has for the last several years. Yes I really think so . . .

The "Efficacy Cycle" of the Press Release, Part I

When I got my start in public relations, I worked for USCAR, a very interesting technology consortium made up of engineers and R&D types on loan from Chrysler, GM and Ford, whose job it was to collaboratively research advanced technologies in the pre-competitive stage of development. Most recently, USCAR’s battery consortium made some news by awarding $8.2 million to a batter suppler to further develop lithium ion batteries.

Back then, we were issuing several releases per year, and going the normal route of pitching individual reporters at the key automotive trades, as well as issuing on the auto list of PRNewswire. This being in the earlier days of the Internet, online pickup was modest.

By 2000 or so, many PR practicioners, including me, were growing wary of the avalance of releases issued by companies of various size and importance, and many became, for lack of a better term, anti-release. The idea was: the more you said, the less they remembered, and worse, your credibility could be harmed if editors and reporters kept getting inundated with inane, non-news releases from companies starving for attention and coverage. We felt a certain pride—and still do—by having the nominal fortitude to tell clients, “Regrettably, that’s not news, don’t do a release on that.”

Today, the pendulum has swung back, and not entirely for the right reasons. One client recently had their IR folks audit their company vs. competitors, and one of the metrics was “# of releases.” One, but not all, of the reasons this mattered was that as auto blogs, news sites, etc. developed this nearly unquenchable appetitite for content (especially video, but that’s another story), releases were getting “picked up” online, and these hits “counted” towards media coverage targets, and boosted share of voice (Factiva’s definition is as good as any). But the IR guys seemed interested not just in the resulting coverage, but just the raw volume of releases issued as a surrogate for “media” activity.

The implicit debate, of course, isn’t limited to automotive, but it just happens to be top of mine these days for some of our auto clients. I’d love to hear what you think though, whether you’re inside or outside of auto.

Tuesday, September 2, 2008

It All Started with a '68 Camaro . . .

In 1989, I went into debt to the tune of $2,900 in order to buy a canary yellow, "ten-footer" '68 Camaro (you know, looked wicked from ten feet away) during my senior year of high school in Lake Orion, Michigan. The guy I bought it from worked in a now-forgotten Corvette speed shop in Troy, and had done Wendy (that's what I called her, named after The Descendents' remake of the Beach Boys classic of the same title) the great service of swapping out her peashooter 250 c.i. straight-six for the hi-po Corvette engine from 1979, the 220-hp L-82. Don't knock the QuadraJet (had an iguana named Q-Jet; you could say I was pretty well-obessessed with small block Chevys).

I loved Wendy . . .and so did the little kids across the street, who started a club that met under my parents' bushes to argue about the coolest cars, known as the Hot Rod Club, and wait for me as came home from school everyday. While other kids got trips or big checks for graduation, I got a new exhaust, including headers that didn't really fit right because they were for the automatic . . . and I had the Saginaw three-speed stick shift (you know where first gear is normally? That was reverse). I grew up in a GM family. I've loved cars all my life, and have had a few good ones (1993 Beretta GTZ, yes really and a 1997 M3 Coupe) and a few less so (1980 CJ-7 when I lived in Colorado).

Some years later, both Wendy and Q-Jet were shipped to my cousins in Indy.
Wendy was completely rebuilt and later sold. Q-Jet, well, was not.

Fast forward nearly twenty years. Today, I co-manage a growing automotive practice at Weber Shandwick, one of the biggest PR firms in the world. I'm launching this blog to lend some (hopefully) unique color commentary on the fast-changing automotive industry in which we live and work (when you live in Detroit, you do live the auto industry, some of us more than others). I hope you enjoy, and maybe even find something here of interest for you. So buckle up (have to say this because my Dad a safety czar of sorts) and have fun.