Buick’s “glimpse” of its 2010 LaCrosse reflects business as usual

August 25, 2008
GM's Official 2010 Buick LaCrosse "Glimpse"

You’re looking at the first official “glimpse” of Buick’s 2010 LaCrosse. This picture was intended to excite journalists — the thinking was that it shows that the LaCrosse looks like the Invicta show car.

Sorry guys. All it indicates to me is that the Buick boys are still asleep at the wheel. What I see is more vanilla than desert at a retirement home dining hall.

As a guy who was brought home from the hospital in a Buick Special Convertible and had a Buick LeSabre as his first car, I say this to Buick: I’ve been in the Hyundai Genesis and it simply is a better Buick than anything Buick has on showrooms or in the pipeline.

If this is all you Buick product managers have to excite us, you might as well save on the PR and marketing costs and just throw the LaCrosse at the dealers and hope enough old folks buy them to justify the brand not going the way of Oldsmobile.

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On the Green at Pebble: Lexus LF-A Supercar

August 16, 2008
The beautiful Lexus LF-A

The beautiful Lexus LF-A

Lexus LF-A

Lexus LF-A

Lexus LF-A Interior

Lexus LF-A Interior


A 5-liter V10 that sounds like an F1 engine, beautiful lines and Lexus build quality. Anyone in the market for a usable supercar needs to seriously consider a Lexus when it debuts. Just one thing: forget the white interior.


Rolls-Royce Pininfarina Hyperion Unveiled at Pebble Beach

August 16, 2008
Pininfarina Rolls-Royce Hyperion

Pininfarina Rolls-Royce Hyperion

Your day to oil the Hyperion's wood is wednesday

Your day to oil the Hyperion's wood is wednesday

Last night the Four Wheel Drift team was invited to witness the unveiling hosted by Goodings at Pebble Beach of the latest bespoke car from Pininfarina, the Hyperion.  Based on a Rolls-Royce, it is an enormous two-seat convertible. 

Body lines definitely find some common inspiration with those found on Pininfarina-designed 612 and 599 Ferraris. Interesting touches include two opening teak doors directly in front of the windscreen (for cargo storage.) 

Without seeing it in person, it is hard to grasp the scale of the vehicle.  It’s has a 128-inch wheelbase and is about six inches longer overall than a BMW 750Li.  The driver appears to be sitting where rear-seats would be in a normal car, delivering the classic long-hood, short-rear proportions of Rolls-Royces of the 1920s and 1930s.

Reception of the car was quite positive, indicating Pininfarina’s team, led by Special Project Director Paolo Garella, did a superlative job.

I stood with BMW design boss Chris Bangle when the sheet was pulled. I asked the good-humored guru of style if it “passed the Bangle test”.

With a big smile, Chris replied “it’s good…for Pininfarina”, then proceeded to point out the best viewing angle (front 3/4) and nice touches on the car.


Spotted: 2010 Hyundai Genesis Coupe At Pebble Beach!

August 13, 2008

Hyundai Genesis Coupe Prototype

When covering all the happenings here at Pebble Beach, you’re on the lookout for new cars and prototypes.  Today I noticed a Hyundai Genesis Coupe prototype sitting with a production Genesis Sedan parked off to the side of the Blackhawk Exposition.

hyundai genesis coupe rear

hyundai genesis coupe rear

One thing is for certain: this is by far the prettiest car Hyundai has ever produced.  Hell, I’ll go on record saying it will be one of the most beautiful cars offered period when it is offered in showrooms.  Everyone who walked by (and we’re talking about people who can afford to drop six and seven figures on things with four wheels) thought it was downright perfect in proportions.  Everyone was stunned to see the “H” badge!

Hopefully the great design will be backed by performance (courtesy of a six cylinder engine, rear-wheel-drive

 and independent suspension) and build/engineering quality of equal caliber.


The Numbers Don’t Lie: Car Model Success Versus Failure

August 11, 2008

As a former marketing guy, I love to analyze sales and production results. Once per month I get to witness how reality and perception take very different paths.

Advertising and PR firms have gotten pretty good at manipulating not only the consumers, but also the media. Too many automotive journalists today seem to have no use for data or patience for analysis…and therefore are quick to talk about the success of a particular model without seeing the numbers that could support or contradict the message.

Here are a few cars that are less successful than what the manufacturers or media would have you believe:

Audi A8/S8: Audi is a favorite of enthusiasts, especially among the journalists at some of the major publications. The A8 and its higher-performance S8 platform-mate get so many glowing reviews as the ultimate executive sedans that people often cite how successful the line is. Evidently, everyone has been watching the film “Ronin” over and over on cable rather than looking at the statistics, because Audi’s A8/S8 team is an absolute sales bust! Through July, the A8 and S8 have combined for a scant 1633 units in 2008. In comparison, the much-derided BMW 7-Series (in its last year before a significant update) delivered 2942 units in July alone!

2005-Present Ford Mustang: I’m bringing this up again – “retro” has done as much for Ford’s pony as Brian Bosworth did for the Seattle Seahawks. I’ve had plenty of smart, educated, well-informed car people jump down my throat on this one, only to retract their statements when hearing the statistics about how the current generation of Mustang simply isn’t outselling its predecessor.

The figures don’t lie: In July 2008, the Mustang delivered 10,711 units (almost equal to 2007) and is hitting 65,764 units for the year, off 25 percent from 2007 levels. The current generation had 160,975 units delivered in 2005, 166,530 in 2006 and 134,626 in 2007. This equates to a total of 527,895 units, and averages to 147,320 units per model year.

The Mustang’s previous generation, which was widely considered just a rather poor styling update had the following results: 166,915 in 1999, 173,676 in 2000, 169,198 in 2001, 138,356 in 2002 140,350 in 2003, and 129,858 in the last year before the widely-publicized launch of the new platform. This total of 918,353 units averages out to 153,059 per model year, which includes the recession periods of 2000, 2001 and early 2002.

While the current Ford Mustang tickles the eyes of those old enough to have been of driving age in the 1960s (the ones that drive BMW, Lexus and Mercedes vehicles now), Honda’s Civic – a car targeted at the Mustang’s core demographic saw continued average growth and expansion.

Chrysler 300C: It’s been “Car of the Year” and has been the darling of the NASCAR set, but the 300 has only been a sales success on Chrysler’s own internal scale. At 3818 units delivered in July and 43,832 over 2008, it’s performing worse than the Jeep Grand Cherokee. Even last year it was basically neck-and-neck with the Grand Cherokee, which is basically a 4WD niche vehicle. For all the hype over the 300, it has never came close to getting within a couple hundred-thousand units of Camry or Accord, and seems to have less staying power than an 80-year-old with an empty bottle of Cialis.

But just to show that this all isn’t a new phenomenon:

Acura Integra and Honda Prelude – Did you realize that the darling of the import-tuner group sold just around 25,000 units annually? Still, this was about 2.5 times the number of Preludes sold each year in 1999 and 2000. Honda/Acura, as well as plenty of publications, still cite how successful these models were at selling in mass quantities. I just wonder how seemingly every last one of these cars seemed to survive so that they can fly down the road behind my house at 2AM with their coffee-can exhausts waking up the neighborhood.


Ten Things I Hate About The Toyota Prius

August 4, 2008

I’m not going to sugarcoat it…I’ve never liked the Prius. Aside from good gas mileage, it is a lousy car. Here are the ten things I hate about the Toyota Prius:

1) It’s too small for a family: There is absolutely no possible way that I could own one and transport my two young daughters. With the seat moved into position to accommodate my 6’4” frame, the only things that will fit in the back seat are groceries.

2) It’s ugly: U-G-L-Y it ain’t got no alibi, it’s ugly, yeah it’s ugly. I understand that beauty is in the eye of the beholder, but this beholder thinks that the proportions are all off. The Prius is as pretty as that daughter of your mother’s friend who isn’t married despite her “great personality”.

3) It’s loud inside: An amazing thing – when you take all the sound deadening material out, a car becomes really frigging loud at speed. A Prius seems to transmit more road noise to the cockpit than a 60’s Corvette with warped bias-ply tires. I’d hate to go cross country in one.

4) It’s uncomfortable: The seats are lousy and even in the rearmost position, there’s not enough room to extend my left leg into a position that doesn’t hurt after fifteen minutes.

5) The traction control can’t be disarmed: This is actually a problem with most Toyotas. Try taking a Prius up a snowy or icy incline, and you’ll find that the power cuts out the second the wheels start to spin. The only way a Prius makes it up a snowy hill is on a tow strap behind an old Land Rover.

6) There’s no secured storage area: This is a problem with hatchbacks, but the Prius’ expansive use of glass means that everything you own is on display. So much for bringing along anything like a laptop.

7) They handle poorly: Small, soft tires and numb steering translate to a car that is totally out of its element on winding back-country roads. The Prius is about as fun as two hours in an emergency room waiting area. It’s certainly one of the least entertaining cars made today.

8) They are SLOW: We’re talking four seconds slower to 60 mph than a Toyota Avalon sedan! Entering a highway in one can be downright dangerous, especially if there is a passenger and some luggage.

9) They are cheaply made: The interior materials are hard and shiny. The seats are of low-grade cloth. The paint is so cheap and thin that it makes 1950s British cars look like Pebble Beach Concours restorations. Paint on a Prius can chip from a bug splatting on the hood.

10) The fuel economy isn’t that great for the price: For all the technology and hype, the Prius isn’t any better than imports from the early 1980s. One certainly must take into consideration that cars today have 800-pounds of extra weight required to meet safety standards, but for a car that has mpg as its main focus, the Prius doesn’t do significantly better than top-tier non hybrids. When you factor in the additional cost of a Prius, you’d have to drive quite a bit in the city to make up the difference against some traditional gas-powered vehicles.

Given the ten things I hate about Prius, I’m fine not owning one. I do understand why people have bought them…perceived economy, image, a personal mission to “do the right thing”. This all just stands as a slap in the face to the automakers, because really any of the manufacturers could have built something better had they exhibited any vision. With only one good hybrid choice, though, the market went sprinting towards the Prius.

Indeed, when a better mousetrap comes from another manufacturer in the next year or two, the Prius lovers will realize that the cars they adore so much just aren’t as good as they thought!


GM Earnings and the need for KY Jelly

August 1, 2008

The automakers are declaring second quarter earnings. Some have been good, others have been bad…GM’s statement should have been emailed out with a coupon for a free tube of KY Jelly.

GM Reports Preliminary Second Quarter Financial Results

Adjusted net loss of $6.3 billion, reported net loss of $15.5 billion
Results impacted by $9.1 billion of predominantly non-cash special items
Sales records set in three of four regions
Q2 liquidity position of $21 billion, plus credit lines of additional $5 billion
Second Quarter
2008 2007* O /(U) 2007
Revenue (bils.): $38.2 $46.7 $(8.5)
Adjusted automotive earnings before tax (bils.): $(4.0) $1.0 $(5.0)
Reported automotive earnings before tax (bils.): $(9.1) $0.8 $(9.9)
Adjusted net income (bils.): $(6.3) $1.3 $(7.6)
Reported net income (bils.): $(15.5) $0.8 $(16.3)
Reported earnings per share (diluted): $(27.33) $1.37 $(28.70)
Adjusted operating cash flow (bils): $(3.6) $1.1 $(4.7)
* 2007 figures reflect continuing operations

DETROIT – General Motors (NYSE: GM) today announced its financial results for the second quarter of 2008, which include significant charges and special items. The reported net loss was $15.5 billion or $27.33 per share for the second quarter, including these charges and special items, compared with net income from continuing operations of $784 million or $1.37 per share in the second quarter of 2007. On an adjusted basis, GM posted a net loss of $6.3 billion or $11.21 per share, compared with net income from continuing operations of $1.3 billion or $2.29 per share in the same period last year.

GM previously announced that it anticipated a significant second quarter loss, driven in large part by costs associated with the American Axle and local U.S. strikes, and charges related to the successful U.S. hourly attrition program, actions to reduce North American truck capacity, Delphi and other matters. The operating and liquidity actions announced on July 15 contemplated weak second quarter results and a continued unfavorable U.S. environment. The company has outlined a strong cadence of product, powertrain, capacity and liquidity actions over the past 60 days, to realign the business with current U.S. economic and auto market conditions, and position the company for profitable global growth.

Some of those actions include cessation of production at four truck plants, shift reductions at two truck plants, the addition of shifts at two car plants, announcement of the new Chevrolet global small car program and next generation Chevrolet Aveo compact car, introduction of a high-efficiency 4-cylinder engine for U.S. application, salaried headcount reductions and compensation actions, deferral of certain payments to the UAW VEBA, suspension of the dividend on common stock, reductions in sales and marketing budgets, the strategic review of the Hummer brand and production funding approval for the Chevrolet Volt extended range electric vehicle.

“As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting rapidly to the challenges facing the U.S. economy and auto market, and we continue to take the aggressive steps necessary to transform our U.S. operations,” said GM Chairman and CEO Rick Wagoner. “We have the right plan for GM, driven by great products, building strong brands, fuel-economy technology leadership and taking full advantage of global growth opportunities.”

GM’s second quarter results were primarily driven by several factors: significant losses in GM North America (GMNA) due to continuing U.S. industry volume declines and shifts in vehicle mix, the long strike at American Axle and large lease-related charges; a number of special charges associated with GM’s ongoing restructuring actions; continued losses at GMAC Financial Services (GMAC) and updated estimates regarding recoveries and expectations of assumed benefit obligations in the Delphi bankruptcy.

GM recorded $9.1 billion of special items, predominantly non-cash in nature for the current quarter or near-term periods, which include:

$3.3 billion relating to the 2008 GMNA hourly special attrition program
$2.8 billion adjustment to the Delphi reserve
$1.1 billion GMNA restructuring and capacity related costs
$1.3 billion impairment of GM’s equity interest in GMAC
$340 million Canadian Auto Workers contract-related accounting charges
$197 million related to settlement of the strike at American Axle
Details on these and all other special items are in the financial highlights section of this release.

In addition, the GMNA adjusted net income results reflect a $1.6 billion charge related to lower residual values for off-lease vehicles. The total impact of declining residual values in GM’s second quarter earnings was $2.0 billion, including impairments of lease assets at both GMAC and GM.

Revenue for the second quarter was $38.2 billion, down from $46.7 billion in the year-ago quarter, which is more than accounted for by the decline in GMNA revenues. Combined revenues for the GM Europe (GME), GM Asia Pacific (GMAP) and GM Latin America, Africa and Middle East (GMLAAM) regions were $20.8 billion, up $1.7 billion over the same period 2007.

GM reports its automotive operations and regional results on an earnings-before-tax basis, with taxes reported on a total corporate basis.

GM Automotive Operations

The second quarter adjusted automotive loss of $4.0 billion ($9.1 billion reported) reflects the losses in GMNA driven largely by volume declines including the impact of the American Axle and local strikes as well as adjustments to lease vehicle residual reserves. In addition, GMAP results were negatively impacted by adjustments relating to hedge accounting. The losses were partially offset by exceptionally strong performance in the GMLAAM region and continued profitability in GME. The loss compares with adjusted automotive earnings from continuing operations of $1 billion in the second quarter of 2007 (reported earnings of $803 million).

GM sold 2.29 million vehicles worldwide in the second quarter, down 5 percent year over year. Sales in GMNA were down 20 percent, or 236,000 units versus the year-ago period, while sales outside of North America grew by 10 percent or 116,000 units. A record 65 percent of GM unit sales for the second quarter were outside the United States. Global market share was 12.3 percent, down 0.9 percent due to weakness in North America.

GMNA

Second Quarter

2008
2007
‘08 O/(U) ‘07

Revenue (bils.)
$19.8
$29.7
$(9.9)

Adjusted Earnings Before Tax
$(4.4) bil.
$92 mil.
$(4.5) bil.

Reported Earnings Before Tax
$(9.3) bil.
$(88) mil.
$(9.2) bil.

GM Market Share
20.2%
22.7%
(2.5) p.p.

GMNA revenue for the second quarter was $19.8 billion, down from $29.7 billion in the year-ago period. The decline was largely attributable to a markedly weaker U.S. auto market and lost production due to the work stoppage at American Axle, and at several GM facilities in May and June. Although volume overall was down 20 percent, some of GM’s most recently launched cars and crossovers continue to sell especially well, including the Chevrolet Malibu and Cadillac CTS, up 113 percent and 33 percent, respectively, over the year-ago period.

GMNA adjusted results reflect significantly lower volume resulting from overall industry deterioration, continued dealer stock reductions, the negative impact of industry segment shifts, model/option mix and an increase to lease vehicle residual reserves related to declining residual values. The results also reflect favorable structural and net material cost performance and pension/OPEB/manufacturing savings.

GME

Second Quarter

2008
2007
‘08 O/(U) ‘07

Revenue (bils.)
$10.6
$9.5
$1.1

Adjusted Earnings Before Tax (mils.)
$99
$345
$(246)

Reported Earnings Before Tax (mils.)
$20
$315
$(295)

GM Market Share
9.4%
9.4%
0 p.p

GME achieved record second-quarter sales of 590,000 units, driven by 48 percent sales growth in Russia and exceptional performance of the Chevrolet brand, which saw a 19 percent increase in sales to 137,000 units and record market share of 2.2 percent in the second quarter. Material and structural cost performance improved during the quarter. However, unfavorable exchange rates and an economic slowdown in key markets including Spain, Italy and the U.K. had a significant impact on earnings.

GMLAAM

Second Quarter

2008
2007
‘08 O/(U) ‘07

Revenue (bils.)
$5.1
$4.3
$.8

Adjusted Earnings Before Tax (mils.)
$445
$296
$149

Reported Earnings Before Tax (mils.)
$445
$296
$149

GM Market Share
17.5%
16.8%
0.7p.p.

Improved mix, net pricing and material cost performance along with strong sales performance in key markets helped GMLAAM to improve its year-over-year earnings before tax by over 50 percent, to $445 million. Volume for the region was up nearly 18 percent over 2007, and quarterly sales records were set in Brazil, Chile, Egypt and North Africa.

GMAP

Second Quarter

2008
2007
‘08 O/(U) ‘07

Revenue (bils.)
$5.2
$5.3
$(.1)

Adjusted Earnings Before Tax (mils.)
$(65)
$294
$(359)

Reported Earnings Before Tax (mils.)
$(163)
$280
$(443)

GM Market Share
7%
6.7%
0.3 p.p.

The second quarter earnings for GMAP reflect a $285 million pretax accounting charge related to adjusting prior FAS133 hedge accounting, partially offset by gains in India and Thailand, and improved operating performance at Australia’s Holden.

GMAC

On a standalone basis, GMAC reported a net loss of $2.5 billion for the second quarter 2008. Affecting results were continuing large losses at Residential Capital, LLC (ResCap) related to asset sales, valuation adjustments and loan loss provisions, as well as a $716 million pre-tax impairment of lease assets in the automotive finance business as a result of lower used vehicle prices, particularly for SUVs. These items were partially offset by profitable results in the insurance and international auto finance businesses. GM reported an adjusted loss of $1.2 billion for the quarter attributable to GMAC, as a result of its 49 percent equity interest.

Following a first quarter impairment against its investment in GMAC, GM conducted further analysis in the second quarter to determine if additional impairments were required based on current fair value estimates. Factors considered include continued deterioration in the mortgage and consumer credit markets and a more challenging North American automotive financing environment. As a result, GM recorded impairment charges totaling $1.3 billion against its common and preferred equity interests in GMAC.

Cash and Liquidity

Reflecting the non-cash nature of many of the charges recorded in GM’s reported second-quarter results, cash, marketable securities, and readily-available assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust totaled $21.0 billion on June 30, 2008, down from $23.9 billion on March 31, 2008. The change in liquidity reflects negative adjusted operating cash flow of $3.6 billion in the second quarter 2008, driven primarily by weaker results in GMNA. As of June 30, including undrawn, committed U.S. credit facilities of approximately $5 billion, GM has access to approximately $26 billion in liquidity. In July, GM provided notice to draw $1 billion under its secured revolving loan facility.

As announced on July 15, GM is taking operating and related actions to improve cash flow by approximately $10 billion through the end of 2009. In addition, the company has outlined plans to raise approximately $5 billion through capital markets activities and asset sales (See related news release). GM is confident that these initiatives, along with its current cash position and $4-5 billion of committed U.S. credit lines, will provide the company with ample liquidity to meet its operational needs through 2009.

Results for the second quarter of 2008 are preliminary and may be revised prior to the filing of GM’s quarterly Form 10-Q in August.

In all fairness, this is nothing we didn’t expect. Still, the Volt can’t get here quickly enough!