Why Ford, Nissan and GM Shouldn’t Go Nuts With Small Cars

Would you buy a Nissan subcompact like the March/Micra replacement? Would you buy that Nissan subcompact with a three-cylinder engine and CVT?

You might remember that Nissan revealed details of its new V-Platform for the b-segment just before the 2009 Tokyo Motor Show. It announced plans to build two models off the V-Platform in North America beginning in early 2011. Production of V-Platform models (Nissan has three, so far) will begin in March 2010, with the growth markets, China, India and Thailand leading the way.

We’re likely to get four-door hatchback and sedan variants, just like the 2011 Ford Fiesta set for launch early next year. We probably won’t get the 1.0- to 1.3-liter three-cylinder engines with a compact new CVT, all designed specifically for the Nissan V-Platform. When I asked about that engine, Nissan hinted to U.S. motoring journalists that we’ll get four cylinders, instead.

Yes, the U.S. is ready for smaller cars. But let’s not get carried away. The three-banger designed expressly for the V-Platform will make way for a four-banger here. We’ll give up a bit of fuel economy for decent highway power, even if it costs Nissan more money to fit a non-specific four-cylinder engine.

This gets to the heart of a news item I wrote recently about Ford’s small-car problem. I suggested that small-car growth in the U.S. might not be as easy as “One Ford” expects. (General Motors, too, says the c-segment will replace the d-segment as our predominant size class in the coming decade, but its first volley, the 2011 Chevy Cruze, is on the large side of the c-segment.) In Western Europe, the c-segment — compacts — are big in the same way the c/d- and d-segments are here, with a higher level of equipment and interior quality helping justify their higher stickers.

Many of you jumped on that story. Ford, you believe, will have hits on their hands with the 2011 Fiesta and all-new Focus.

Perhaps. If the Focus is as good as we expect, it could challenge the bestsellers in the segment, the Honda Civic and Toyota Corolla. There are two important factors to keep in mind:

1. Camry still outsells Corolla, and Accord still outsells Civic. Even last year, when spiking gasoline prices spurred small cars sales during the summer, Honda sold 33,000 more Accords than Civics. Toyota sold 78,000 more Camrys than Corollas and Matrixes.

2. The 2011 “global” Focus will cost Ford much more to build than the ‘10 North American Focus. That makes it harder for Ford to make a profit on it in the U.S.

I have no doubt that Ford will raise the base price on the ‘11 Focus by only a few dollars, though you can bet we’ll see more options and packages to push up the price for a fully loaded Focus. And that will help push up the average transaction price (ATP) of a new Focus.

Focus cannot be the profit-maker for Ford in North America that it is for Ford of Europe. If Ford dares to raise the price to reflect what looks to be a world-class compact, it will lose sales here to its own Fusion. The Focus C-Max MPV is even more problematic, because Chrysler can discount its minivans to about $20,000, when necessary.

The Fiesta will have to come in with a base price below the new Focus. While it may resonate with a good number of young people and “new urbanites,” consider that Toyota sold more than four-times as many Camrys as Yarises last year, and Honda sold more than four-and-one-half times as many Accords as Fits. So far this year, Daimler’s smart continues to lose sales compared with ‘08. Even Cash for Clunkers didn’t help that tiny brand.

Of course, gas prices will go up. Analysts figure that $4-$5/gallon gas will become “normal” in a few years. New Corporate Average Fuel Economy standards will kick in for 2012, and that will force all automakers to eek out more mileage from all sizes of cars and trucks. The rebound in midsize cars, compared with compact and subcompact cars when gas prices came back down a bit — keeping in mind that sales of all segments has dropped disastrously in the last year — suggests this will be the dominant size category for some time to come.

I prefer b- and c-segment cars, and most of you do, too. The average American doesn’t like to give up the comforts, though, that he or she believes makes this country a uniquely prosperous place to live. Otherwise, imposing higher federal gasoline taxes, instead of higher CAFE standards, would be much easier, politically. The burden won’t be on the average American driver to downsize. It will be on the automakers to build more fuel-efficient midsize cars.

The 2009 Infiniti G37 Sedan, an AutoWeek Drivers Log:

EDITORIAL ASSISTANT JONATHAN WONG: In this class, the BMW 3-series has lived with a target on its back for years.

Toyota’s Floor Mat Fix — Our Tundra Zip Tie Experience

How do you prevent possible catastrophe in 3.8 million vehicles? With 3 cent zip ties.

Last week, we took delivery Toyota’s 2010 Tundra work truck and noticed a couple of interesting things beyond the lively new 4.6-liter V-8 and lack of power windows and door locks. In the driver’s foot well were two clear plastic zip ties conspicuously linking the floor mat to the front seat base legs.

Now, if you haven’t heard the hubbub regarding Toyota’s recent 3.8 million vehicle recall, here is the short version: Prompted by reports of unintended acceleration due to floor mats interfering with gas pedal operation — including a particularly tragic fatal accident involving a CHP officer and his family — the National Highway Transportation Authority (NHTSA) issued a Consumer Safety Alert strongly recommending owners of certain Toyota and Lexus models remove their driver-side floor mats.

Toyota followed up with its own Consumer Safety Advisory that advocated essentially the same thing and recommended courses of action in case of unintended acceleration.

The company subsequently issued a recall of all 3.8 million affected vehicles and instructed dealers to apply the same retrofit to all new models. The fix? Punching two holes in the lower, rear-facing edge of the driver’s side floor mat and threading two nylon, self-locking wire ties (aka zip ties) through them and around the front legs of the seat base.

Does it work? Absolutely. With zip ties in place, the floor mat will not slide forward beyond the few millimeters of give provided by the sturdy plastic loops. In fact, the mat is now impossible to remove from the foot well without the aid of a sharp pair of scissors.

Toyota adds a simple printed tag to the inboard zip tie that states:

* Please ensure floor mat is secured with retaining straps

* Do NOT stack floor mat over another

The second recommendation is particularly noteworthy as the high profile accident involving the CHP office was allegedly caused by, among other things, a non standard floor mat possibly covering accelerator. Clearly, if you drive any of the affected vehicles, you’ll want to be very careful about what you’ve got underfoot.

If you look closely at the photos, you’ll see that while our Tundra floor mat is zip tied down, the original method of securing the mat has not been utilized. That is, the two grommeted holes are not attached by the floor mounted plastic hooks. This is our fault. After attempting to clean the strapped-in floor mat, photographer Brian Vance forgot to thread the hooks back into the grommets. After we shot these photos, I made sure the Tundra was in full compliance, which revealed another interesting point: getting the Tundra’s floor mat hooked in correctly takes a bit of doing (zip ties notwithstanding). What does this mean? A possible contradiction; Toyota’s original system does work but may also be inherently flawed.

When hooked in correctly the Tundra’s mat isn’t going anywhere — zip ties or otherwise — but getting it in this position takes a bit of doing. The hooks rotate off axis and need to be aligned just so, before the mat can be slid into place. Granted, it is not brain surgery, but possibly just enough of a barrier for those who are mechanically disinclined, lazy, or simply in a hurry. After all, have you ever beat out your floor mats at the gas station and simply thrown them back on the floor and sped off without a second thought?

Now the obvious question is, what should Toyota do as a permanent solution? Clearly, the zip ties are only a temporary fix, because while functional, they are ugly and inelegant in the extreme. In the Tundra work truck, with its black plastic finishes and gray vinyl surfaces, they don’t look so out of place, but I shudder to think what this work around looks like in Mom’s ES350. I wonder if those dealers are at least color matching (!) the zip ties to the carpet or interior. Any Lexus owners that have had the recall work done, I’d like to hear your comments on how it went and if their solution varies at all from what we’ve described here.

Given the severity of the recall, which unfortunately involves the loss of lives and probably hefty financial settlements to come, you can bet Toyota engineers are working around the clock on a better solution. My gut feeling is that whatever they come up with should utilize an attachment system that is both easy to install but exceptionally difficult to remove.

Scion SEMA Preview Night

Scion SEMA preview night - Kogi tacos, Singha beer + more!

BMW Active Hybrid 7 combines mean and green:

Hybrid powertrains save fuel. But the added cost means that they only begin to make financial sense if applied to luxury models, which typically attract well-to-do customers for whom fuel efficiency is not an overriding priority.

2010 BMW X1: New SUV hits the road in Europe, is set for 2011 U.S. debut:

BMW has been spectacular in its reinvention during the past decade.

The 2009 Honda Pilot Touring, an AutoWeek Drivers Log:

COPY EDITOR CYNTHIA L. OROSCO: The Pilot was a champ for running errands and a short trip to Ohio over the weekend.

"Sweet Life Geely Drive" Behind Ford’s Plans to Sell Volvo

“Sweet Life Geely Drive” is the tagline for the Shanghai-based automaker that Ford Motor Company identified Wednesday as its “preferred buyer” for Volvo. The Swedish automaker has been on the block for some time, so why now? Since Ford has acknowledged it needs the money and will sell its single remaining automaker purchase after unloading Aston Martin, Jaguar, Land Rover and controlling interest in Mazda, General Motors has found buyers for Saab, Hummer and Opel (more on that one, later) and nearly sold Saturn.

For one, Ford Motor needs the cash. While it stands alone as the only of the Detroit Three that didn’t take government loan guarantees (it couldn’t, without the Ford family giving up control), its stock languishes around $2 per share, Standard & Poor lowered its credit rating to “selective default” last spring and United Auto Worker locals are rejecting a union leadership deal to give the automaker the same sort of breaks that GM and Chrysler enjoyed prior to their bankruptcies.

No, Ford hasn’t taken government money, but the primary lender in Ford’s $23-odd billion second mortgage (the one that included hocking the company right up to the Blue Oval), Citigroup, has granted very favorable interest rates. One source describes Citi’s credit line to Ford as “hyper-low interest.”

Even with interest rates very close to zero and revenue and profit margins up from the depths of the Lehman Brothers collapse, Ford needs the cash it didn’t get from the federal government.

Another explanation for renewed interest in selling Volvo to Geely is that Ford has had time to vet the Chinese automaker. It’s listed on the Hong Kong stock exchange, meaning Geely is an “independent” Chinese automaker, not directly run by the government. There has been some talk lately of China consolidating its burgeoning auto industry, with Shanghai Automotive Industries (SAIC), builder of Buicks, leading Shanghai-based automakers and Beijing Automotive Industries (BAIC), minority shareholder in Saab’s new investor, leading that city’s automakers. Under this scenario, smaller automakers, some of which build fewer than 1,000 cars annually, could become parts suppliers.

Geely began making refrigerators in 1986, but didn’t enter the car biz until 2002. It was the first Chinese automaker to display cars at the North American International Auto Show, in Detroit, in 2008.

Ford has much at stake here: the Volvo S60/S80 platform serves as a basis for the Ford Taurus, Flex and upcoming unibody Explorer, and the Lincoln MKS and MKT. Volvo’s five-cylinder engine is an optional engine in the European Focus (for now).

“Any prospective sale would have to ensure that Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement our core One Ford strategy,” Ford executive veep and chief financial officer Lewis Booth said, in a prepared statement.

Ford adds that while it “would continue to cooperate with Volvo in several areas after a possible sale,” it “does not intend to retain a shareholding in Volvo.”

Already, a Swedish engineers’ union has raised questions about Geely as a preferred bidder.

Ford and Geely won’t reach a deal quickly, not before the end of the year. In normal times, Ford would calculate what it paid for Volvo, plus additional investment, minus revenues for the sale price, to try to recoup its investment. These are not normal times, otherwise Volvo, despite the high cost of building cars in Sweden, might be the one acquisition Ford would like to retain. (Rumor is that Geely has offered a bit less than $2 billion for Volvo. Ford is said to have wanted at least $2.5 billion.)

Which brings us back to GM’s Opel, where a sale of majority interest in the company to Magna International now is on-hold. It’s pretty clear that GM would like to hold on to the European operation it has owned since 1927, but that scenario has clear disadvantages.

Foremost is that German labor union IG Metall has said it won’t give GM the same labor cost-cutting deal it has promised new owners Magna and Russia’s Sberbank. Second is that GM is getting beat up in the German press, and politicians there aren’t friendly to letting the deal fall apart. GM clearly has a much-improved balance sheet since its bankruptcy, and might find the cash to keep Opel/Vauxhall going on its own, and it’s balancing those disadvantages against the problems of dealing with Russian-run Sberbank and automaker GAZ, the ultimate beneficiary of this deal. No doubt GM’s negotiations with a Russian automaker is about as easy as Ford’s negotiations with a Chinese automaker.

What We Can Learn From Northwest Airlines

Yesterday, the FAA revoked the licenses of the two Northwest pilots who were doodling on their laptops instead of — literally — flying their own plane.  In case you haven’t been following this story, last Wednesday, Timothy Cheney and Richard Cole were piloting a NWA Airbus A320 from San Diego to Minneapolis-St. Paul airport.  The plane was on autopilot, the two got busy on their laptops, and overshot their destination by nearly 200 miles.  They spun a U-turn, and fortunately, landed safely at their original destination. 

They maintained radio silence for an hour and a half, and had no idea where they were.  The FAA investigated, took swift action, and thankfully pulled these clowns out of the cockpit forever before anyone was killed.  The FAA said they were “on a frolic of their own.”  I was listening on the radio to the reaction of a flight protocol expert, who said (something to the effect of) “It’s not unusual to be doing other things while the plane is on high altitude cruise.  You check your flight plan, check the weather at your arrival destination, get a quick meal, and such.  But you have to maintain abject awareness of every aspect of the flight, and remain in constructive control of the aircraft.  That’s where these pilots failed miserably.”  I couldn’t agree more.

So why then is it OK to roll down the road while texting and emailing?  Crashing your car while doing so might not kill hundreds of people as it would in a major plane wreck, but it could still kill a handful or more.  The key words in the message above are “awareness” and “control.”  The FAA cited these pilots for not being aware and in control of their plane while it was traveling 600 or so miles an hour.  A driver who is not aware, and not in control, of the situation while driving 60 is just as dangerous.

I realize I’m preaching to the choir here; if you are on this site, you’re likely an enthusiast, or at least a capable driver who gets it, pays attention, and enjoys doing so.  But if you know someone who is still texting, emailing, or driving with the phone to their head (not to mention all the other distractions that minimize their awareness and ability to control their vehicle), please remind them of the Northwest pilots’ story.  Unfortunately, the DMV can’t jump into their cars and pull their licenses. 

2010 Bentley Continental Supersports: You’ll want to drive this car yourself:

When we first tested a Bentley Continental GT in 2003, we said it was a real game changer for Bentley.