Wednesday, October 29, 2008

Requiem for Pontiac

Another cyst erupted on the ailing corpus of Southeastern Michigan.
The hospital my brother Bryan and I were born in closed yesterday. It used to be called Pontiac General. 800 or so people lost their jobs. Poor people who already have a tough time getting medical care will now find it harder to transport themselves to a hospital. Meanwhile, new hospitals are spring up like mushrooms after a hard rain on the fertile soils of the affluent outer ring communities like West Bloomfield and Gross Pointe.

Just as stock markets rise and fall over regular intervals, just as human beings are born, live their lives and die, this year has really questioned my fundamental belief in this area. Pontiac isn’t in Detroit, it’s roughly 20 miles away but they have a lot in common. Pontiac holds a special, bittersweet place in my heart, and not just because I was born there or raised fifteen minutes north of the city in Lake Orion (I think they’re calling that Orion Township now, but no one did when I was there).

I went to high school there for two years at Pontiac Catholic. It’s now called Notre Dame Prep. I’m told it's good now. In 1988, I lead a minor defection of some of the brightest Lake Orion students back to Lake Orion’s public high school (Go Dragons) after my sophmore year there because the teachers were too busy with discipline issues: fights, coke dealers, thuggery, and the like. I got called to the principal’s office a month or so before the end of school. I thought I was in trouble for something dumb I did or said. Rather, he pled that I would convince the Chris Bzdoks of the world to not leave. I told him he failed us and that I was becoming dumber at his school. I was.

Pontiac saw a minor resurgence in the late 1980s and 1990s for having one street with a bunch of hipster bars on it. Like downtown Detroit, it was a cool area that comprised about one percent of the land mass, and yet people had the shortsightedness/gall to call it a “comeback,” meanwhile four blocks away from these tiny enclaves of bars and restaurants were endless blocks of decreptitude and shamefully abysmal high school graduation rates. 20 years later, Pontiac, regrettably, is mostly still an insolvent dump. North Oakland Medical Center's closing downtown is another sign of the same.

Notice that I don’t say “Michigan” is failing. Even though the current recession is hammering the entire country, the West side of the State is not faring anywhere nearly as poorly as the Detroit region. Hell, people in Kalamazoo can send their kids to college for free. How crazy is that . . . free college at any public university or college in the State.

I want to be optimistic about this region. The people here are really nice for the most part. Homes are affordable. There’s a ton of recreational opportunity, our parks are good, and we have the best city water in the U.S. (really, try the tap water everywhere that you go). But our enemployment rate is the worst in the country, our anchor industry is getting absolutely smoked right now, and many smart, affluent young people are leaving in droves (no, make that Civics) for places like Chicago, North Carolina, Arizona, Texas, etc.

Maybe North Oakland Medical Center closing means nothing. But in its dying, I know for certain that my children will not and cannot be born there.

To end on a lighter note, my dear mother Patricia shared a room with another young mother from Pontiac who also had just given birth. My Mom said, “So what did you name your baby?”
Stunned, my Mom said, “Oh . . .”
“Yes, well, I heard the doctor say that name and I thought it sounded pretty.”

I guess it could have been worse.

Tuesday, October 28, 2008

So Why Is Chyrsler in Trouble?

So why is Chrysler really in trouble? Gas prices, credit crunches and the lack of cash to buy their cars outright (some people still do this; I for one have never had a car payment aside from the $2,900 Tom Terry loaned me in February 1989 for my ’68 Camaro) have hurt plenty.

The bigger reason, aside from Jeep and the (mini)vans: their cars are just not good. How are they not good? In the 1990s, at least they looked good, even if they weren’t terribly reliable and depreciated faster than the stick of gum you put in your mouth. Ok, the 300 was a hit. But if ever a car was a total ripoff of another design, the 300C is it (of a Bentley).

I don’t feel good saying so. I grew up near Auburn Hills, and I want no harm to come to even more people of Southeastern Michigan. But the subject that just gets danced around here in Motown, but is taken for granted essentially everywhere in the country, is that Chrysler doesn’t make great product. Sorry.

Take a look at this article and accompanying list. I show it to illustrate not any particular model of the “Ten Cars Nobody Would Miss if they Vanished”, but the number of Chrysler products on it (interestingly, the Lucerne which is mentioned as a car that should go away was purchased recently by my parents who drive back and forth from Boyne country to Sun City and back every year—they love it. Yeah, they’re in their mid 60s, but guess what, so are tens of millions of other Americans too, and if you look at the list, you’ll see Lucerne isn’t down that much this year).

Among the domestics, Ford and Chevy have developed some extremely competitive products lately. You can shop a Fusion, a Camry, an Accord and a Malibu and personal preference and aesthetics will inform your decision as much as presumed reliability, etc.

But can you really put the Avenger in that category? It’s like looking a three-legged dog: you could love it and give it a home, but you’d always be feel sad for it. And for the owner.

So here's one way out: the Michigan Ecomomic Development Corporation works with State funds to turn Auburn Hills into the lithium-ion Capitol of the world.
How? No clue, but there's a lot of smart guys up there, we have a ton of research universities within one hundred miles that could join forces to supply brain power, and unlike products like the Avenger, the entire world will be clamouring for high-energy, high-power batteries in huge numbers within a decade. Jennifer Granholm, how about you do that with my tax increase?

Thursday, October 16, 2008

Will GM Buy Chrysler?

GM absorbs Chrysler? Desperate times call for desperate measures, and with the Cerberus gang looking to make some money from their acquisition of Chrysler from Daimler a year ago, Cerberus certainly has an incentive to cut their losses.

But what about GM? The Detroit News’ Daniel Howes does a good job of going into why this might not be a crazy as it sounds in the story above.

My brother and I were talking yesterday about this, and asked if it was true that Chrysler's Auburn Hills HQ was designed in the 1990s so that it could turned into a should Chrysler vacate the premises. I assured him that it could . . . but Oakland County would be devastated by such a loss, so what retailers would sign leases there, especially with Somerset five minutes away?

Monday, October 13, 2008

A Tale of Two Launches

My colleagues and I at work have been arguing for a few years that the days of the big, splashy, event-driven new car launches should probably be relegated to the dustbin of auto PR practice.

For decades, automakers have flown cadres of journalists to expensive locales replete with ribbons of billard-ball smooth road surfaces (southern Spain seems to destination favorite). The reason we think this model is dying is fairly simple: the number of impressions (# of stories written x the number of times those stories are read/seen) doesn’t justify the huge cost, nor is there any tremendous body of evidence that proves that the kind of coverage you earn is much better.
What matters most these days, not shockingly, is the product.

There was a time when marketers could hope to wine and dine journalists into good reviews by appealing to their wanderlust/go-somewhere-warm self-interest , but with the internet trading on its ability to speak truth to power, journalists have an even greater incentive to be very forthcoming and candid about their impressions on new cars. For the most part, they are pretty fair.

In other support for our thesis, Dave Kiley at BusinessWeek weighs in on two recent launches, and gives another reason to keep it local:

"When Ford introduces an all-new F-Series pickup truck to media this month, it is holding the event at a local hotel and its own Romeo, MI proving ground. That may not sound like a big deal. But when Ford launched the Edge SUV in 2007, it flew reporters from all over the country to San Francisco. Mind you…I like this idea, as I often find it a pain in the neck to arrange to go to the West coast just to hear speeches and drive cars that I could drive just as well in Michigan."

His entire post can be read here.

Thursday, October 9, 2008

The Future of Turbodiesels (and Gas Turbos)

Everyday on my way to work, John McElroy’s Automotive Insight story runs at 6:53 a.m. on WWJ newsradio 950AM here in Detroit. John has covered the auto industry forever, and knows automotive like no one else in the world. Today's story, which can be heard here, points out that diesel penetration in Europe has fallen back below 50 percent for the first time in a while, and after talking to automakers, John concludes that diesels have probably topped out, and will likely continue to slowly decline.

He notes that this is happening just as all of the German OEMs introduce 50-state diesels here in the U.S. (for the last several years, most diesels were only compliant with emissions regs in 45 states, the oddballs being California and four Northeastern states that follow California Air Resources Board tailpipe standards).

McElroy’s conclusion is that the prospects for widespread diesel adoption in mainstream passenger cars in the U.S. are less than what they were even one year ago, and that diesels will likely remain in the realm of luxury cars in the U.S. where buyers won’t mind higher fuel costs.

My take: this presumes that diesel will continue to cost more than gasoline. Until September 2004, this wasn’t the case. I’ve no indication that this will reverse course anytime soon, but it’s still necessary for this argument to hold water. Although I just paid $3.17/gallon to fill up my car this morning, but there are so many scenarios whereby crude prices could shoot back up in the next 24 months, I don’t know that I’d make a long-term bet on cheaper oil . . .

If you haven’t driven a modern diesel, like VW and Audi’s TDI vehicles, or the monster BMW 330d with a proper Getrag six-speed manual, I can tell you that they are astounding to drive. Driven back to back with gas engines of the same displacement in the same cars is a night and day experience.

Still, John may be on to something here, at least in Europe. Or not. One of my clients, Honeywell Turbo Technologies, has been suggesting that diesels will continue to grow, albeit slowly, through 2012. But in an interesting twist. They contend that while turbodiesels will grow, the real action is in gasoline turbo-equipped vehicles (e.g. EcoBoost and GM’s 1.4 turbo in the Chevy Cruze). Between 2007 and 2012, Honeywell says that gas turbos will triple their share of the global passenger vehicle market.

Still, if regulations in Europe and the U.S. continue their slide toward zero tailpipe emissions, especially of NOx and PM (soot), the cost of meeting these regs--and the subsequent decrease in diesel's efficiency advantage (plugging up those exhaust streams hurts efficiency), John may be right after all.

Monday, October 6, 2008

The Electrified Car Continuum: Volt vs. Insight

If the Chevy Volt is what’s next, the new Honda Insight is what’s now. While the stock market and new car sales are tanking, the end of the decade is shaping up to be the most interesting time for powertrain geeks and new car buyers since, well, in a while.

The Volt and the new Insight can rightly be seen as bookends to the “electrified car” continuum over the next few years; the Insight is essentially the 1.3 liter mild hybrid already found in the Civic Hybrid. Unlike the Prius, which can run on electricity alone up to low speeds, the Insight’s gas engine will always power the car with assist from a small electrical motor. The Volt, of course, will run with no gas at all up to forty miles, afterwhich a small (but interestingly, bigger than the Insight’s) 1.4 liter engine charges the battery.

In the future, all automakers will likely offer a broad spectrum of efficient technologies, possibly in the same car, as it the case today in Europe: the entry level models of many B- and C-class cars use small, inexpensive gas motors, while the top of the range typically sports a high-tech, direct-injection turbodiesels.

And this is where I think it gets really interesting . . .how will the “low-end” of the mild hybrids (e.g. Insight-like) compete with the “high end” of the advanced “traditional” powertrains like turbodiesels? Today, at least in Europe, the diesels win by an enormous margin.

The turbodiesels are typically much torquier and more efficient than the mild hybrids, but as Honda comes out with a $19K starting price on the Insight, the turbodiesels might feel added pressure to continue to take cost out. To say nothing of the surge in advanced gas turbos . . .

Powertrain geeks and greenies rejoice, ‘cause these are the good old days.