Autoblog

SIX QUARTERS TO DOOMSDAY

2010 is shaping up to be a pivotal year in the American auto industry. From a product standpoint there will be a lot of interesting hardware in showrooms, including range-extending EVs, plug-in hybrids, clean diesels, pure electrics, and flex-fuel vehicles running on cellulosic ethanol. But it's also shaping up to be the year when the domestic industry will have to deal with its greatest challenge ever.

In short, the "Big Three" are running out of money, and running out fast. At its present spending rate, General Motors will burn through almost all the cash it has in the next 6 quarters. Ford can hold out a little bit longer. And Chrysler? Well, who the hell knows what's going on there?

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

TELL THE FEDS TO FREEZE THE REGS!

Every day Chrysler LLC builds Euro-spec versions of the Chrysler 300 at its assembly plant in Canada, bolts a V6 diesel engine into most of them, and ships them off to Europe. That diesel 300 gets better fuel economy, over 30 mpg, than all the other vehicles in Chrysler's U.S. showrooms. But it's against the law for Chrysler to sell that car in America.

Right now Ford and General Motors are trying to figure out how to bring many of their fuel-efficient European models to the U.S. and manufacture them here. They'd love to do it immediately, but it will take them several years to modify, test and validate those designs before they can meet U.S. regulations. Until they do, it's illegal to sell those cars in America.

Anybody else out there agree with me that this is crazy? Let's let automakers bring their fuel efficient European cars over here immediately. As long as a car meets the Euro 5 emission regulations and the latest European NCAP safety standards, we ought to let them build those vehicles in the U.S. with no other modifications.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

THE AMAZING SHRINKING CAR MARKET

As car sales continue to spiral downward, some product planners in the industry are beginning to ask the unthinkable: is the American car market going to shrink permanently?

They are starting to consider the possibility that the days of selling 17 million new vehicles every year are over, and that going forward the American auto market is going to be smaller.

There are a number of reasons why product planners are beginning to contemplate this possibility, but the two biggest causes are the high cost of oil and the skyrocketing costs of regulations. Amazingly, even though raw material costs are soaring at rates never seen in a century, the car companies say that pales in comparison to cost pressures they're grappling with due to CAFE, the California CO2 standard, and upcoming safety standards.

Whatever the cause, if, and I emphasize if, the U.S. car market is indeed going to be smaller in the future, that would have a drastic and painful impact on the manufacturing base in the country.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

My Bone To Pick With T. Boone Pickens

Billionaire oil tycoon T. Boone Pickens rocked the automotive and energy industries this week with a bold plan to drastically reduce America's dependence on imported oil. His plan, in case you missed it, is to build massive wind farms to produce electricity, and to stop making electricity from natural gas. Then he wants to divert that natural gas to be used in cars and trucks.

Doing so, Pickens argues, would allow the U.S. to reduce its use of imported oil by 30 percent. Natural gas proponents point out that it burns far cleaner than gasoline, that we have abundant domestic reserves, and that depending on where you live, it sells at the equivalent of $1.50 for a gallon of gasoline.

Mr. Pickens may know a lot about the oil and gas industry. But getting people to buy cars that can run on natural gas may not be as easy as he thinks.

HEY GM, BRING BACK THE EV1

A decade ago General Motors put one of the coolest cars of all time on the road, the EV1. While there were a number of hard-core EV enthusiasts who became passionately committed to the car, it never caught on with the masses. But that was then and this is now. GM should seriously consider putting the EV1 back into production.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

HOW MANY BRANDS ARE TOO MANY?

With gas prices soaring and SUV sales sinking, General Motors just put its HUMMER brand under "strategic review." That's generally the term used when a company is getting ready to dump a brand. And that begs the question, how many brands does a car company really need?

There are a number of companies that have multiple brands, like GM (Chevrolet, Pontiac, Buick, Cadillac, GMC, Saab, Saturn, Opel, Holden, Vauxhaul), Ford (Ford, Lincoln, Mercury, Volvo), Fiat (Fiat, Alfa Romeo, Lancia, Ferrari, Maserati) and Volkswagen (VW, Audi, Seat, Skoda, Lamborghini, Bentley, Bugatti). Some of these brands are strong and successful. Some are not.

The big, successful automakers these days seem to have only two brands, a mass market brand and a luxury one. That's the model Toyota, Honda, and Nissan are following. And that sure seems to be the business model that will work best for the foreseeable future.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

FORD'S AMBITIOUS MAKE-OVER

It could be the most dramatic retooling effort since the early days of World War II, when Detroit earned its nick name as the Arsenal of Democracy. Word leaked out yesterday that Ford is calling its plant managers and top union leaders to the company's headquarters in Dearborn, Michigan to debrief them on an ambitious plan to revamp its manufacturing plants. Ford wants a crash program to change over many of its truck plants to produce fuel-efficient passenger cars.

The urgency conveyed by this development (the company will not yet officially confirm it) is due to the surge in gasoline and diesel prices that have decimated truck sales. Never has there been seen such a dramatic shift in customer demand in such a short period of time. Last month sales for the Detroit Three absolutely collapsed, and when sales are tallied for this month, the carnage is going to be worse.

Realizing that any delay could permanently cripple the company, Ford's CEO Alan Mullaly decided to embark on a bold effort to achieve a rapid change over. Hence, the unprecedented call to bring all the plant managers and top union reps together for an emergency meeting.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

CAR PRICES ARE SET TO SOAR

Thanks to sky high gasoline prices, most people are reeling from the cost of driving their cars. But that was just the first jolt. Now we're going to see a big jump in the cost of buying cars, both new and used.

Why am I so sure car prices are going up? Easy. All you have to do is look at the cost of the materials needed to make a car.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

FIRST-HAND LOOK AT FORD'S ECO-BOOST TECHNOLOGY

I just spent a day at Ford's proving grounds driving a number of vehicles that use Eco-boost technology, which is the centerpiece of the company's strategy to improve fuel economy. I wish I could tell you more about my driving impressions of these Fords, but all that information is embargoed for now. What I can say is that the Eco-boost technology works impressively well.

However, while the technology works well, I wonder how well Ford's strategy will work. That's because this technology does not really improve the fuel economy of an engine. It merely allows the company to use a smaller engine in place a bigger one. And sure enough, across almost the entire rev-range, an Eco-boost engine produces more torque than naturally aspirated engines that are at least one liter larger.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

WHY USE BATTERIES IF FLYWHEELS WILL DO?

Formula One could be on to something big. Next year all teams will be allowed to capture the energy that their cars produce under braking, and then re-use that energy at opportune moments, like passing on a straight.

It's really a hybrid system, but they don't call it that. They call it a Kinetic Energy Recovery System (KERS).

The best part of the new regulations is that they do not specify what kind of regenerative energy system the teams have to use. It seems pretty likely that Toyota and Honda will go with a battery-electric hybrid system, since that's the kind of technology they sell in their showrooms. But Formula One is also going to become the testing grounds for a completely different kind of hybrid system that does not use batteries.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.