(GM EV1s in a parking lot at a General Motors facility in Burbank, CA, waiting, as it were, to meet their maker. The cars were produced between 1996 and 1999 and 2,234 of them were leased through Saturn dealers and Southern Company,a public utility power provider. In 2003, GM sent flatbed trucks to find all their EV1s, which were eventually destroyed, save for a few given to universities and probably some for museums, too. The repossessions created a firestorm of negative publicity for GM. Even a successful feature film, "Who Killed the Electric Car?" was produced about the EV1 story. Some believe that GM's intention for this first electric vehicle produced by a major auto-maker in the modern era, was for it to fail in the marketplace, proving that the technology was not yet ready for public consumption. Others now say they believe that GM's announced plug-in hybrid, the Chevrolet Volt, might be headed down the same path; we hope not).
Now that the government has called for increases in fuel mileage for the car-makers, the Detroit Three and several of the captive imports (overseas companies which have factories in this country) have started their predictable litany of complaints.
When John McCain’s (former) economic advisor Phil Gramm last week called America “a nation of whiners,” the first thing which came to my mind were car company executives.
Here’s what the government wants: that automakers achieve a 25% increase in fuel economy from the 2011 to 2015 model years.
Why and how do we find ourselves in this situation, where American companies seem decades behind their Euro and Asian competitors? This story goes way back. The early 1970s were bad times for American car-makers. First, the Environmental Protection Agency was created, and for the first time, car companies had to meet specific mileage and emissions standards to be able to sell in this country.
Those years also saw the first oil shortages, and Americans were, for the first time, found themselves waiting in line for gas and they didn’t like it. (Ford's Ka has been a hot product and best-seller in Europe for almost a decade; so, where is the US version of this car?).
As if the EPA’s creation and oil shortages weren’t bad enough as far as the Detroit Three were concerned, 
there was an even bigger problem on the horizon. European and Japanese imports were getting their first serious footholds in the American car market, the world’s largest. Many of these new, interesting cars and trucks had been developed in places where gas and diesel had always been relatively expensive, and they were immediately attractive to US buyers.
All this created problems for car-makers. But that was almost 40 years ago, which seems enough time for all of the Detroit manufacturers to develop cars to not only meet government-mandated goals, but even better them. (The Smart car, sold in Europe for several years, has had several aftermarket performance companies make engine, exterior and interior kits for the popular mini-car. This one is from Brabus, a German parts-maker; we think Americans would love a car decked-out like this).
Those 1970's imports were also making most of the products from Detroit seem old and boring. Snazzy new imported cars not only met the EPA goals, they often came with more standard features than Detroit offered (rear window defoggers and side-mounted mirrors, for two examples, which were then options on most of Detroit’s cars, if available at all).
Click below to read more about the future product we might expect from the Detroit Three and what obstacles there might be to these all-new cars and trucks.
The most important lesson of those years for Detroit: That it’s a lot easier, much faster and even less expensive, to upsize cars and trucks than to downsize them. (Chrysler made a K-car limousine in the mid-1980s, and many of them were put into service for Kirk Kerkorian's MGM Grand Hotel in Las Vegas for airport pick-ups and taking their big gamblers to and fro; it was short-lived, though, and not very popular. Kerkorian is a best friend and occasional business partner of Lee Iacocca, head of Chrysler in those years).
Upsizing, making bigger cars out of smaller ones, had become a new kind of luxury for the imports. Detroit, on the other hand, spent the 1970s, ‘80s and much of the ‘90s trying to fit two pounds of car into a one-pound box.
By the way, if you ever wondered why your US-made car from those years was pretty bad, this is why. Not only did they have to put those two pounds into that funny, new 1/2-size box, Detroit also had to make quantum leaps in computer technology so their new cars could perform the mileage and emissions magic which the EPA, and, more and more, the public was demanding. Niceties like good looks, comfort, reliability, controls which worked and gauges that informed and a long service life were just not in the cards in Detroit Three products from those days. (The 1969 Pontiac GTO Judge model reflected the 'pop-art' and Peter Max-type styles of the period; it was also an answer to Dodge's Road Runner; "Dodge had a cartoon car and Pontiac needed one, too," Jim Wangers, marketing chief for the original GTO told me).
In fact, the computer diagnostics which we’ve come to expect on our cars were initially utilized by GM on
Cadillac assembly lines. At the end of the line, a secret combination of button-pushing on the air conditioning and radio controls would bring up “error codes” on the radio info screen before that car left the line. They were getting something right, though, in trying to deliver a problem-free product to their dealers and ultimately, their long-suffering consumers. This was a big change from the past, when it was said that the American public did the final million miles of road-testing for GM, and GM execs, when talking about their dealers, would try to figure out how many cars they could “shove down their throats.”
In May of 1998, Daimler “merged” with Chrysler, paying over $36 billion for the honor. It wasn’t too bad an idea, really; Daimler wanted to learn how to build small cars, and Chrysler would get instant access to a worldwide dealership body. Of course the fact that one of the top small car experts at Chrysler left the company right after the merger should have been a warning to everyone involved.
Things seemed so good at the time that Daimler boss Juergen Schrempp said the merger creates ''the world's leading automotive company for the 21st century ... one that will set the pace in the next millennium''. It was stated by both parties at the time that no Chrysler parts would ever find their way into a Mercedes, nor would Mercedes parts ever be found on a Chrysler. That promise didn’t last too long; one example, the 2001 Chrysler Crossfire, one of the failed products of the ill-fated merger, mated a modified C-class Mercedes engine compartment, a pre-2003 SLK platform and Mercedes S-Class rear linkages. And the Chrysler didn’t even get the very cool automatic hardtop convertible for which SLK was best-known. Dodge’s Sprinter van was just a re-badged Mercedes Sprinter. (Chrysler's Crossfire was the best Mercedes SLK you could buy, but Crossfire didn't get that very cool hardtop convertible which the SLK had; Chrysler and Mercedes swapped parts after their 'merger,' something the heads of both companies said would never happen).
Schrempp left the company in 2005 because Daimler stock was tanking since the merger. And Chrysler’s stockholders, diehards and enthusiasts got some measure of satisfaction when a class-action 2003 lawsuit filed by Chrysler investors against Daimler, which said the so-called merger was nothing more than a takeover of Chrysler by Daimler was settled in favor of the Chrysler side for $300 million.
In August, 2007, Cerberus, a Wall Street investment firm which is named for a mythical three-headed dog which guards the gates of hell, bought Chrysler back from Daimler for $7.4 billion, an incredible reversal of fortunes.
Cerberus hired Jim Press, formerly the highest-ranking American at Toyota, to work on future products. Good, solid, smart move. But what a lot of people have had trouble figuring out is why Cerberus hired who they did as the company’s head. Bob Nardelli was the CEO of Home Depot when, in January, 2008, his own board of directors fired him for overseeing a huge drop in that company’s value. Now he’s running Chrysler, a fellow with no car experience outside of probably buying a new Town Car every year and having his set of golf clubs transferred from the old car’s trunk to the new one’s. (The current star of the show, Toyota's blockbuster Prius will be built in the US starting late in 2010; some models will have rooftop solar panels to power the car's air conditioning system).
Still, after covering this industry for nearly four decades, I have to ask why, after almost 40 years of doing
battle with the imports, is Detroit still not able to offer even a reasonable number of gas/electric hybrids?
Frankly, over these many years of being constantly “Wowed!” by the imports, I’ve wound up being kind of embarrassed about the Detroit Three (formerly the Big Three). They are still saying, “Well, you just wait until next year!” so often that occasionally I have to do a check and try to remember if I’m writing about the Chicago Cubs or the Chrysler Corporation …
Imports ranging from Toyota to Nissan to Mercedes Audi, BMW and VW have all stated their intention, to some degree, of trying to offer at least one green version of every car and truck they sell in America. When will Detroit at least say the same, establish that as a target?
The good news from Detroit: GM stock is under $10. Might never see it that low again … or maybe as high. But if the company prospers around the world, there still could be money to be made for savvy (and rich) investors. (Currently Ford's biggest passenger car, the Taurus was called the '500' when it first debuted, but would-be buyers didn't know what a 500 was, because it was bigger and more expensive than the 'old' Taurus. So Ford brought back the Taurus name, though they never should have gotten rid of it, and is hoping for better sales. Still, though, no hybrid car of any kind from Ford apart from their Escape SUV).
Ford is under $4 (can’t believe I’m writing that), but sophisticated rich guy Kirk Kerkorian is buying that company’s stock as if his life depends on it. The Las Vegas hotel magnate and investor has been using his Tracinda Corporation to buy another $20,000,000 worth of Ford, upping his ownership stake in the company to as high as 5.6%. He already owns huge amounts of GM stock, and when his friend Lido Iacocca was running Chrysler, Kerkorian was a trusted advisor and supporter.
Bob Lutz, General Motors Vice Chairman of Global Product Development, is a Swiss-born 76-year old former high-ranking Ford, BMW and Chrysler executive. He gave the go-ahead for some of Chrysler’s decidedly non-green but “aspirational” products like the Dodge Viper V10-powered race car for the street and the Plymouth (remember them?) Prowler faux hot rod. He also headed up battery-maker Exide from 1998 to 2002, so must have some appreciation for EVs. Well, you’d think so, at least. (Two views of Lutz: GM VP Bob Lutz introducing the Chevy Volt, the plug-in hybrid GM says will be available in 2010; Below, Lutz intro's the 'new' 2004 Pontiac GTO; both introductions had taken place at the Detroit Auto Show).
Today, he’s the main public proponent of getting Volt built by 2010. Lutz, a former Marine, likes to buy,
restore and fly surplus jet fighters. A man’s man, as they used to say. Recently, though, both Lutz and GM seem to have backed away from the original promise of Volt.
Not a few people think that GM built their original electric car, the EV1, which was leased through Saturn dealers, with its failure in mind. Skeptical people wonder if GM wanted to prove to the public that EVs were not viable, but the public response to GM’s recall (and destruction) of all EV1s was terribly negative for the company and even a feature film, “Who Killed the Electric Car?” about EV1’s life and death proved popular at the box office, kind of like the next edition of Michael Moore’s now-classic “Roger and Me.”
Some have said GM plans to sell a total of 200,000 Volts, at most, over five years of production. That works out to about 40,000 a year; Chevrolet sells nearly that many Corvettes. Honda and Toyota both sell around 400,000 Accords and Camrys every year in the US, ten times the volume GM might be planning for the Volt, if indeed it gets built and makes it to dealers in the first place.
This country must determine that it’s going to get off oil and develop new fuels, new engines, new cars and trucks, vehicles not yet dreamed-of even ten years ago. Unless we approach it with the same resolve shown in the Manhattan Project during WW II, and Apollo, which put two Americans on the moon (and got them back) less than a decade after the goal was set, the Detroit Three will go out of business, or downsize tremendously, in this country.
Now that’s not necessarily a big deal to stockholders (for GM and Ford; Chrysler is now privately held) because both companies are making money overseas; Ford has traditionally be strong in Europe and GM sells more Buicks in China than they do in the US.
However, putting a million ... yes, a million ... people out of their jobs isn’t going to do this country, or the world, any good at all.
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