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?

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.