Steve Parker Motoring / The Car Nut

EXCLUSIVE! MAJOR DEALER GROUP TO SELL FISKER KARMA HYBRID

(Computer-enhanced styling study of Fisker's extended-range plug-in hybrid Karma S hardtop convertible).

It's the kind of positive image and auto industry credibility which no new car company could possibly afford to buy, but only hope to develop over decades.

But we've learned exclusively that one of the nation's largest auto dealer groups has been signed by Fisker Automotive to carry their sedan and hardtop convertible Karma plug-in hybrid models, which will use an extended-range gasoline/electric hybrid system similar to that developed by General Motors for their Chevrolet Volt and Euro-market Opel Ampera.

And the young carmaker says achieving 100 mpg with Karma is not out of the question.

According to industry journal Automotive News, the influential Ron Tonkin Automotive Group owns some 15 dealerships in and around the Portland, OR area. AN says it is the #81 dealership group in the US with 2007 sales of almost 23,000 new, used and fleet cars and trucks for $466 million. Tonkin will be Fisker's exclusive Oregon state dealership.

Unlike many of the megadealer groups which have been created through complicated finance deals by Wall Street firms in recent years, Tonkin started the company on his own with a single Chevrolet dealership in 1960 and still has control over the now-vast company. Tonkin, a former president of the National Automobile Dealers Association (NADA), has among his stores the nation's oldest Ferrari and Maserati factory-franchised dealerships.

Tonkin's MotoCorsa store sells Ducati, Aprilia and MV Augusta motorcycles. I know him; he's a sporty guy.

From Southern California through the "smile belt" through Phoenix, Dallas to Miami and north to Atlanta, Asian models have been king of the car world for some time. However, travel just 100 miles north of Los Angeles, on the coast to Santa Barbara and continuing through San Francisco, Portland and Seattle, and the automotive sporting and racing aesthetic is Euro-oriented, much more like that found in America's Northeast.
(Fisker Karma at least year's Detroit Auto Show).

That's one big reason there are no large paved oval race tracks from north of the Los Angeles basin to the Canadian border; only serious road racing courses. NASCAR has tried for years to build an oval track in Washington state, but has been refused by local governments every time.

Tonkin's been right before; he's hoping, nay, expecting to hit yet another home run with Fisker. Tonkin is that great eternal optimist like all successful car dealers (and salespeople of all kinds) who must by nature be positive and enthusiastic, never-say-die men and women; keep in mind he was president of the nation's major car dealer organization, NADA. He is a super-salesman, tempered with the mind to have known a sure thing or two when he was first to see it coming.

According to Tonkin, the Fisker factory has received orders for 931 Karmas.

Henrik Fisker, a former designer for BMW, Ford and Aston Martin says each Karma, both the four-door, four-seat sedan and two-door, four-seat hardtop convertible S model, will be built to each customers' specifications.

OBAMA TO CARMAKERS: "TOUGH LOVE"

(A year-or-so ago, Chrysler sponsored a contest called, "What can you Hemi?" This trike was one of the winning entries ...).

If a hallmark of a great leader is to challenge those around him or her to achieve what they never could before, while encouraging them along the way, Detroit and the world's carmakers might yet propose President Barack Obama be crowned King of the World.

Or not.

The Detroit News reports that President Barack Obama yesterday ordered the Environmental Protection Agency to reconsider whether California and 13 other states should have the right to impose their own tailpipe emissions standards, a proposal which the Bush administration had not given serious consideration.

Obama also directed the Transportation Department to set an increase in federal fuel efficiency standards for the 2011 model year, as required by a 2007 energy law, but will delay setting 2012-2015 requirements.
(Henrik Fisker, a veteran European car designer who has worked for BMW, Aston Martin and Ford, says he's soon to go into production with this EV, called Karma, seen at its introduction at last year's Detroit Auto Show; Fisker has also been involved with Tesla, another EV-maker).

Rather than instituting new standards immediately by Executive Order, Obama's actions gives some breathing (and perhaps negotiating) room to domestic and foreign carmakers already consumed with the financial meltdown and the collapse of the US car and truck market, the world's largest.

And as Ken Bensinger and Jim Tankersley wrote in today’s Los Angeles Times, lawmakers and environmentalists said the president's actions paved the way to development of a national carbon standard for automobiles.

 

Such a standard already is in force in Europe and Japan. Crafting a national rule would please environmentalists, but surprisingly could also satisfy the automobile industry, which has argued that trying to comply with a California greenhouse gas rule in addition to a federal mileage standard would be cumbersome and costly.

The worldwide auto industry, without fail, has complained, griped, bitched, cried, whined and lobbied - lots of lobbying - about every single safety and environmental advance mandated of it by government, from seat belts to "soft" dashboards and airbags, from unleaded gas to CAFÉ standards and 5-mile-an-hour bumpers.
(This 2004 V8-powered Nissan Titan is typical of products from some import carmakers who, along with the Detroit Three, hopped on the SUV/truck bandwagon and are now agonizingly reappraising their decisions to move away from cars).

The auto industry, like all businesses, does not want to spend one penny more than it absolutely must.

Washington is now set to finalize perhaps the greatest leap forward in emissions and fuel economy standards in history during an economic melt-down which has brought American, European and Asian carmakers to their financial knees.

White House: Move up CAFE regs; Execs: Higher gas tax needed; Hybrid sales falter

("Test mule" for Toyota's 2010 plug-in hybrid as seen in Detroit; the new, third-generation 2010 Prius and the current model will be sold side-by-side at dealers as a sales defense against Honda's eagerly-awaited, all-new Insight hybrid).

From the ever-increasing "promises kept" department: Edmunds.com reports that Ray LaHood, the former Illinois GOP congressman who was picked by President Obama to serve as Secretary of Transportation, told the Senate Commerce Committee this week that Mr. Obama "won't have to push me very hard" to get his Department of Transportation to increase corporate average fuel economy, the CAFE standards, beyond the 35 mpg level approved by Congress in 2007.

LaHood made the comment as he was promising the committee he'd do all he can to get the first fuel economy rules in place by April 1, 2009, the deadline for implementing the initial phase of the new CAFE standards for 2011 model year cars and trucks.

Automakers selling vehicles in the US must improve average fuel economy by 25 percent between the 2011 and 2015 model years, with the increase to 35 miles per gallon to come by the 2020 model year.

George W. Bush, though, was so busy relaxing existing air pollution standards, opening public lands and offshore areas to oil drilling and granting some pardons as he left office that the development of any realistic enforcement plan for these CAFE regulations was left completely to the new administration.
(Barney in his lap, no shoulder harness; yep, he's a lawbreaker. To quote, of all people, Gerald Ford, "Our long national nightmare is over").

LaHood's appointment in a Democratic administration is keeping with Bush's appointment of former California Congressman Norman Yoshio Mineta, a Democrat, to the same Transportation Secretary position in his White House.

Three other things happened the past few days which I never thought I'd see:

First, Toyota offering zero percent financing and rebates on several models.

Second, in a CNBC interview, General Motors product czar Bob Lutz, the man who, in previous gigs, helped create the BMW 3-series and gave the go-ahead for gas-guzzlers including the Dodge Viper and Plymouth Prowler, calling for higher gasoline taxes. "I don't want to be the first car company executive to go on-the-record calling for higher gas taxes," he told CNBC's Phil LeBeau, but conceded low gasoline prices are a problem for an industry trying to quickly develop high-mileage vehicles.

A peculiarly-American form of amnesia means the lower the price of gas, the fewer high-mpg vehicles are sold.

Finally this week, Mike Jackson, who for many years ran operations in North America for Mercedes-Benz, and is now the CEO of gigantic retailer AutoNation, joined Lutz's call.

CHRYSLER IS OFF-SHORED - AGAIN

(American World Driving Champion Phil Hill piloting his Ferrari GP car in the 1961 Belgian Grand Prix; Fiat owns Ferrari, as well as Alfa Romeo, Lancia and Maserati).

On the same day our new 47-year old president took his oath and spoke of "renewing America" and re-establishing our leadership in the world, the 84-year old Chrysler Corporation, once an American icon of engineering and manufacturing, announced the second off-shoring of the company, this time in a "global strategic alliance" with Italy's gigantic and quasi-governmental carmaker Fiat.

What's the deal worth? Nothing; Fiat isn't paying a single lira or penny for their chunk of Chrysler; it's a deal they couldn't refuse (but which still must be approved by the US government).
(This Ferrari California, as seen at the 2008 Paris Auto Show, has a push-button hardtop convertible; Ferrari is owned by Fiat).

Fiat, founded in 1899 in Turin, is Italy's largest manufacturing group and owns and makes its eponymous cars as well as the Alfa Romeo, Lancia, Ferrari and Maserati brands, and has interests in other carmakers and auto parts suppliers. As mentioned, Fiat is a quasi-governmental organization, which means the Italian government always stands ready to back-up their "automotive division."

In fact, the former head of the Ferrari Formula One team and top executive of Fiat, Luca de Montezemolo, is expected to someday be named Prime Minister of Italy (seems they name a new one every year or so). I've had the great pleasure of dining with Montezemolo a few times, and in his $5,000 Italian suits and a beautiful woman on each arm, he is the very epitome of the chief executive of a European high-performance carmaker. Enzo Ferrari himself would be proud.
(Luca de Montezemolo with Ferrari's 7-time World Champion of Driving Michael Schumacher, the world's highest-paid athlete; unlike Jerry Seinfeld, who is a knowledgeable Porsche fanatic, Montezemolo apparently doesn't mind wearing a "puffy shirt").

Fiat's hope is to eventually sell their brands in the US and Canada; the company had been in the US for decades, but ongoing and well-known poor quality plus the many millions Fiat would have had to spend to meet new US emissions requirements, saw the company finally pack-up and leave in 1984 ("that great Italian car quality" wasn't a common phrase in the US then).

The deal, the companies say, provides Chrysler access to "competitive, fuel-efficient vehicle platforms, powertrain and components," while Fiat will receive a distribution network in "key growth markets" as well as "substantial cost savings opportunities." If anyone knows any "key growth markets" in the car world, please let me know.

Chrysler's first gift to Fiat is allowing them to be in charge of submitting the company's viability plan to the US Treasury by March 31.

If the company makes and sells their super-popular Cinquecento, the "500," which was born decades back as the Italian version of the Mini-Cooper, the company could enjoy some success here.
(Fiat executives Luca deMeo (l) and Sergio Marchionne introduce the 2010 "500").

A year from now, Fiat will have the choice to take another 20% of Chrysler, giving the Italian company majority ownership.

FIVE THINGS MR. OBAMA MUST SAY ABOUT DETROIT - AND FAST

In all the excitement over the inauguration, it's important to keep in mind how serious are the trials and tribulations affecting the Detroit Three's hundreds of thousands of employees, including those of their supplier companies and dealerships.

The past few days brought the worst possible news: For nine years starting in 1999, the US car and truck sales market was almost 17 million vehicles a year. Now, General Motors has cut its 2009 U.S. industrywide sales estimates to 10.5 million vehicles amid "continued uncertainty over the timing of an industry rebound."

This downgraded change of 2009 sales estimates (carmakers had been estimating sales of 11 million or a bit more) means GM will have to restructure the company to break even at a lower level of sales, something nearly impossible given their current costs. If GM is right, this means Chrysler will almost certainly cease to exist by year's end, and Ford's position is made even more untenable.
(GM's South Korean division, Daewoo, engineered and is selling a model called Lacetti in that country, and the Chevrolet Cruze is due to be a high-mileage variant of the car for the US market; money woos have GM saying there are no real guarantees on any new products).

At this point, as far as congress is concerned, it seems the best car company is the one busy firing the most workers.

While General Motors and Chrysler both remain on life support (and Ford has also been talking with the government about a credit line or loan), the car and truck business around the world is not doing much better than Detroit.

Honda is extending factory-closings in Europe, Toyota and Nissan are both showing red ink, huge suppliers like Johnson Controls are showing their first losses in decades and a big German supplier company, Mitec, has done what's always been rare: gotten into a public fight with Ford over contracts cancelled by the Dearborn-based carmaker. GM announced today that their Saab division will be farmed-out as a separate company (don't look for it to last too long), Sweden says there's no government help coming for their two home carmakers, Volvo or Saab, and Chrysler Financial just got a $1.5 billion federal loan so it can finance any customers who might want to buy one of their cars; let me know if anyone hears of that actually happening.
(Things don't look good for Swedish carmaker Saab).

MR. OBAMA'S NEW RIDE - FIRST OFFICIAL LOOK

(Democratic President Franklin Delano Roosevelt, on the right in the rear seat, sits in the first specially-ordered and -modified limousine for any US president, a 1939 Lincoln K-model; sitting next to him is, I believe, then-outgoing President Herbert Hoover  - FDR defeated the Great Depression {the first one, not Bush 43's}, won WW II by defeating our enemies in Europe and the Pacific; created the Manhattan Project which built the world's first atomic bombs; won election an unprecedented and never-to-be-repeated four times {a relatively new Constitutional amendment prevents it, thanks to scared Republicans}; he named the car the Sunshine Special; he loved that the people could see him in the car; a childhood bout with polio kept FDR in braces and crutches during his life as president, so then-still new cars, planes and trains ... and ships ... were critical to his success).

The newest presidential limousine was officially scheduled to make its debut on Inauguration Day, but it appears that it might have been used Saturday night to carry the Obama family to Blair House when their 137-mile, day-long train journey from Philadelphia ended at Union Station in Washington, DC. Call it a "dry run" for Tuesday afternoon.

I base that on my spotting what appeared to be new-tech LED taillights on the Caddy, which was parked just a few feet from the "Georgia 300" Pullman train car in which the Obamas and Bidens had ridden. Incidentally, Georgia 300 was used as a support car in 1992 by George H.W. Bush during his campaign.
(The new Cadillac Presidential Limousine, used first by Barack Obama).

Now, thanks to Detroit News reporter David Shapardson, we now know a bit more about the new "2009 Cadillac Presidential Limousine" (official moniker) which President Barack Obama and family will ride to their new address on Tuesday afternoon.

General Motors recently delivered the new limousine to the Secret Service, replacing the 2006 model Cadillac DTS presidential limousine that President George W. Bush has used (and which will be farmed-out to other parts of the country and world as needed).

And you can bet the Secret Service has been driving the stuffing out of it from the moment they got the keys. Anyone who has been lucky enough to take evasive driving courses at facilities where the police, FBI and Secret Service train, as I have, knows there's nothing quite like the thrill of performing what's known as a "reverse 180 degree turn performed within a limited space," a high-speed maneuver in which the driver forces a vehicle to turn around in almost its own length, and get headed in another direction. Pronto.

FIVE SCARIEST DETROIT AUTO SHOW MOMENTS - 2009

(No it's not from the Detroit Show, but it's damn scary - A Chrysler Imperial concept at the 2006 Los Angeles Auto Show; Lest we forget!).

1- "North American Car and Truck of the Year"

In yet another automotive advertising-supported "best-of award," some 50 "journalists" picked two vehicles as the best of 2009: The 2009 Hyundai Genesis sedan (best car), which comes with either a 3.8-liter V6 making mileage between 18 and 27 mpg, or a 4.2-liter V8 achieving between 17 and 25mpg. Interestingly, the 2010 Genesis will be available with two DOHC V8's and one DOHC V6, as well as a turbocharged four-banger (no mpg figures yet).
(Here it is - North America's Car of the Year, South Korea's Hyundai Genesis!).

The best truck is (shockingly!) the 2009 Ford F-150 pickup, available with three different V8's offering between 14mpg in-town to 20mpg highway depending on the engine chosen.

According to MOTOR TREND, "Runners-up for the car award were the Volkswagen Jetta TDI and Ford Flex, while the F-150 beat out the redesigned Dodge Ram and Mercedes-Benz ML320 Bluetec in the truck category."

America is the world's biggest automotive market, yet offers very little in the way of independent analysis and car, truck or motorcycle testing. Apart from this blog and my other sites and Consumer Reports (which has made several embarrassing mistakes in their automotive judgments), it's nearly impossible for Americans to find opinion from anyone without a vested-interest in the industry's ongoing success.

2- GM, FORD, CHRYSLER WILL NOT ATTEND TOKYO MOTOR SHOW; SHOW ITSELF MAY BE CANCELLED

Yesterday, the Detroit Three announced they were dropping out of the 2009 Tokyo Motor Show, certainly the biggest, most-inventive and frankly eager and fun car show in the world; like the Stuttgart show, it's so big it's held only every other year. Japanese food is much better and healthier than German repasts, though.
(Me at the most-recent Tokyo Motor Show - We want to go back later this year).

Today, word out of Tokyo is that the show itself, the country's most-important industrial and societal exhibition, may very well be cancelled for 2009.

At this point, all bets are off.

If it's true that "product is king" in the car business, how will people get excited if there's no new product to see at the world's crucial auto shows?

I've been visiting the Tokyo show for over 20 years; I'll miss it.

EVEN AFTER $14 BILLION IN TARP CASH, DETROIT REMAINS ON LIFE-SUPPORT

(Ford's 2010 Mustang Shelby GT500 will boast 540 horsepower and 510 lb.ft of torque along with a new gearbox. Aggressive new exterior design features new functional details, such as the hood extractor to remove heat from the engine and "Gurney Flap" spoiler to tune rear downforce; if and when Ford asks for Washington loan money, this is the first thing Congress will throw in their face, and they'll have a point - Is this what Ford needs to be promoting in today's economy?). 

 

During the second-round three-ring congressional circus "starring" the CEOs of the Detroit Three and the head of the UAW, there was a lot of talk about General Motors not being able to make it until the end of 2008 without immediate support (read: money) from Washington.

Well, somehow, they made it.

And they managed to make it without receiving one cent in government money until after the new year had begun, when they were lent $4 billion, as was Chrysler (Ford remains officially on the bailout sidelines, but is still pushing for a TARP "line of credit" if they need it, which they probably will).

Industry journal Automotive News reported on its website Tuesday this week that, "GM is slated to get another $5.4 billion on Jan. 16. GM would get another $4 billion on Feb. 17 if Congress authorizes additional federal loans."

Chrysler is not scheduled for anymore bailout loans.
(GM CEO Rick Wagoner demonstrates what he'd like to do to male members of Congress, as his VP, Bob Lutz, looks on approvingly; these two have become the Bush and Cheney of the car world, with Wagoner the young, calm, sober CEO from the company's finance side, not given to memorable sound bites, and Lutz the product expert, the hot rod king and Wagoner's wiser, scheming, arrogant elder, but saddled with a troublesome mouth).

So how has GM already received $10 billion?

The $4 billion loan-out (sub for "bail-out") is not the only TARP money benefiting GM.

The Treasury Department also just injected $5 billion directly into GMAC, GM's captive finance arm, in exchange for stock. And TARP gave GM another $1 billion to invest in GMAC, needed so GMAC could receive a bank charter necessary for them to tap TARP funds.

GMAC not only markets financial products for consumers (they were heavy into home mortgages, too), they also help GM franchise dealers finance their wholesale purchases of GM cars and trucks (aka "floorplanning") for their showrooms. So it's a good bet that most, if not all, of the $6 billion GMAC has received from Washington is going to end up, one way or another, in GM's coffers.
(A Tesla EV Roadster at their Los Angeles dealership; very small carmakers might own their dealerships, but for the majors, franchise laws make that almost impossible; GMAC is the major finance company between GM's factories and its dealers, and between the dealers and car-buyers; nice, cozy set-up, no?).

To spur new-car sales, after getting the billions, GMAC lowered the FICO score threshold for financing GM customers from 700 to 620. Still pretty high these days, when tens of millions of Americans - and probably many more - are behind on their bills.

2008 SALES FIGURES; EVEN WORSE THAN IMAGINED

(This Nissan GTR race car seen in Tokyo shows-off the car to its advantage; the economy has slowed GTR sales and even though only 1,500 are promised for the US its first year, a California dealer is inviting the public to "come see it," making one think there may be plenty to go-around, after all; not exactly what Nissan had in mind).

Monday brought three conference calls, each about an hour, with executives from each of the Detroit Three announcing, dissecting and, most of all, spinning, their final 2008 full-year sales figures, as Wall Street-type industry analysts and reporters ranging from outlets including the Associated Press to Motor Trend, from Automotive News to the Huffington Post (your loyal poster) took notes and could ask questions.

Auto industry sales numbers can be as skillfully sliced, diced and presented for consumption as easily as my favorite TV pitchman, Vince, demonstrates his newest kitchen gadget.

How did the day go? Well, the only non-loser in the US in 2008 was Subaru, with a 0.3% sales increase. They sold 491 more cars in 2008 than 2007.

Outside of Fuji Heavy Industries' car-making division (see above, Subaru), the 2008 numbers were negative and, well, miserable.
(Subaru's WRX World Rally racer under the control of the late World Rally Champion, Scotland's Colin McRae. Subaru was the only carmaker in the US to see a sales increase in 2008).

General Motors, Ford, American Honda and Toyota USA all reported declines of more than 31% in December; Chrysler experienced a plummeting 53.1% drop when comparing December 2008 and 2007 sales.

For all of 2008, BMW dropped 9.7%, Daimler (Mercedes, Smart and Maybach) fell 1.5% , Isuzu lost 33% and Mitsubishi, 24.6%. Nissan was down 10.9%, Porsche had an even 25% loss and Volkswagen sank 4.4%.

Officially, the US auto industry just ended its worst year since 1992.

All the conferences were a bit like the end of the Wizard of Oz, when the curtain is pulled back to reveal the Wizard as all-too-human; that's because, thanks to the recent Congressional hearings, the entire world now knows much of what's wrong in America's carmaking capitol.
(A Maybach, really an outrageously elongated and outfitted version of the Mercedes-Benz S-class for about $300,0000 more. Even mighty Daimler, including Smart, saw a drop in sales last year).

BOTTOM LINE: 2008 SALES PROBABLY WORST SINCE 1974

(A very rare and good-looking 1948 Pontiac woodie heads into the Southern California sunset on I-10 near Palm Springs --- There was a time Detroit knew what Americans wanted to buy; and that's what they built - www.SteveParker.com photo).

With holiday season here and gone, Detroit and DC are getting back to work. Time for a quick news round-up before things go crazy again. At least the Ford family's Detroit Lions aren't playing again until later this year.

All major automakers will release December and full-year 2008 sales data this Monday, January 4th. We'll post that information with our own analysis as soon as it becomes available, and we'll be looking forward to seeing your thoughts, too.
(GM's 2008 holiday card; if you don't work in the car business, where else would you see this?).

Ford's highly-respected chief analyst, George Pipas, told industry journal Automotive News he expects industry-wide December US auto sales to drop by about 35 percent from December, 2007, with no sign of a turnaround in the first quarter of 2009.

Pipas said 2008 calendar year sales figures will be around 13.2 million, down at least 3 million from 2007's 16.2 million.

The average vehicle price in 2008 was $27,958. A 3 million unit drop translates into an almost $84 billion loss.
(Have "lower" gas prices spurred sales of big trucks and SUVs again? Monday's sales figures will tell all - www.SteveParker.com photo).

Every carmaker selling cars and trucks in the US, whether they're headquartered in Highland Park or Stuttgart, Seoul or Tokyo, already feel the battering effect of these downward slides, as do all their suppliers. So will all their dealerships and their employees. And on and on and ...

The only other time the industry has seen a 3-million (or more) unit plunge was following the 1974 oil shortage.

There is some possible good news, though. On a full-year basis, Ford's Pipas said, 2008 is on track to become the first year since 2000 that passenger cars outsold light trucks (pickups, minivans and SUVs) in the United States.
(Porsche's first four-door, the Panamera, is due in the US in 2010. Slow US sales will seriously hurt Porsche, which sells more than 25% of their annual vehicle production in the US, possibly slowing the scheduled arrival of new vehicles from the company).