2004 New York Show: Final Words

April 12, 2004


2004 New York Auto Show Index (4/5/04)

 

No News That 1-Series is Delayed

2005 BMW 1-Series

2005 BMW 1-Series

Recent news reports about the “delay” of BMW’s 1-Series to the U.S. give a false impression that the hatchback 1-Series launching in Europe this fall was ever intended for U.S. shores. In fact, BMW chairman Helmut Panke and U.S. marketing chief Jim McDowell said a year ago that the hatchback would not see U.S. daylight. Those comments were reported in TCC in 2003. Panke last week said that one of three designs for the second 1-Series design are still being discussed on the management board, and that the winning design will definitely be shipped to the U.S. When asked, Panke took only five seconds to mention the 318ti hatchback launched in the mid-1990s, a car that hit the U.S. with a thud despite BMW’s rising sales. “The U.S. simply does not hold hatchbacks, five-doors in high esteem.” Hmmmmmm. How do you account for the MINI’s success, a car whose upper price points are comparable to what BMW envisions for the 1-Series? “Reality is different for the BMW brand and the MINI brand,” says Panke.

Things are getting ugly!

The sudden shift in exchange rates is leading import manufacturers to scramble for cover. When the dollar bought 1.2 Euros and 125 yen, it meant big profits for manufacturers like Toyota, Volkswagen and Jaguar. Now the situation has reversed and looks likely to get even worse, lamented Infiniti General Manager Mark Igo. “It always gets ugly when you get below 100 yen to the dollar.” But importers insist they won’t raise prices to compensate — for now, anyway.

Nissan Needs a Starter car

Count Nissan among the companies who think it needs a model line to combat Hyundai and Kia in the $9,000-$13,000 segment. Ford, too, is trying to make a case for a model line below the Focus. Nissan thinks it needs some pizzazz below its entry-level Sentra model. “We have much younger customers than a lot of companies...certainly younger than Toyota,” said Nissan product development chief Jack Collins. Collins says it favors finding a model it will sell under the Nissan brand, not following the lead of Toyota’s Scion brand. Scion is a separate brand with a separate showroom at Toyota dealerships. Nissan has previously looked at selling its Micra small car in the U.S. as a kind of “cheaper MINI,” but a business case couldn’t be made for the car, which is sold in Asia and Europe.

J learns his math

There was a lot of talk about the return of rear-wheel-drive in New York, but it took only a quick tour of the Jacob Javits Centerto realize that the real news is the boom in luxury cars coming equipped with all-wheel drive. “You just have to put two and two together t realize,” explained Ford’s design czar, J Mays, “that if you don’t have all-wheel drive (at least) as an option, you’re not in the game.”

 

Retro remains

There’s been a lot of talk about the demise of “retro” styling, especially with the lackluster reception given the hotly promoted Ford Thunderbird. But it’s anything but played out in favor of new styling fads, asserted a testy Mays. “I didn’t know you had to have one or the other,” he said, adding that “I was under the understanding that it would be a better place if people had more choice in the marketplace.” As to the soon-to-arrive Mustang, Mays had some second thoughts about what to call it. Forget retro, he explained, noting, “We call it old school.”

 

Ford Hybrid Plans Beyond Ford; Volvo Hybrid Coming?

Ford has now announced plans for three gas-electric hybrid vehicles — the Ford Escape, Mercury Mariner, and the Ford compact sedan formerly known as Futura. Ford lost a legal challenge from Pep Boys over use of the name. But how about Volvo? Given Volvo’s fatter profit margins and the European demand for fuel-efficient vehicles, doesn’t Volvo make sense for a hybrid? “Absolutely,” says Volvo’s U.S. chief Vic Doolan. “I’d love to have a gas-electric hybrid and we are looking at it.” The car Doolan would like to see it in? He pointed to the XC90 SUV. Ford’s current hybrid system wouldn’t be sufficient for the XC90 weight. But Ford CEO Bill Ford says he is confident the second generation gas-electric hybrid system will be sufficient for Ford — and thus Volvo? — mid-sized SUVs.

Detroit Show Doolan

Detroit Show Doolan

 

All Hail Vic's Hair!

Doolan, with one of the better senses of humor in the business, traded barbs about his well-known coif with comedian/actor Jim Belushi Wednesday night at the Volvo For Life Awards honoring everyday heroes. Belushi said Doolan was heroic for having the guts to get his silver hair cut like he does. Doolan responded that his hair stylist saves all his hair for men’s hairpieces, and that he would be pleased to make a contribution to Belushi’s thinning pate.

 

Low Expectations Met for Saab 9-7X

Expectations were low at the Saab introduction of the Saab 9-7X last week. After all, even Saab and GM insiders have said for over a year that adaptation of the Chevy TrailBlazer for a Saab was not Saab’s first choice, but a compromise to get an SUV, any SUV, into Saab’s lineup. The interior of the 9-7X was appropriately upgraded from the Chevy and GMC SUVs, and angled toward the driver like Saab’s cockpit style IPs in other models. But the wood on the dash, shifter, and steering wheel looked like a lift straight out of the TrailBlazer — more Home Depot paneling than European-style maple or eucalyptus wood. It’s just a prototype, journalists were told. The prototype wood interiors on concept cars like the Saturn VUE and Pontiac Solstice were gorgeous, bordering on fine studio furniture. Given the healthy dose of skepticism about the TrailBlazer-Saab, wouldn’t it have made more sense for GM-Saab designers to have spent an extra few hundred dollars to make the interior of the prototype gorgeous to generate some positive chatter?

 

Ford PR in Spin Cycle Over Chief's Gassy Remarks

Ford’s public relations staff was in high spin mode last week after wire reports following a briefing with Bill Ford indicated that the chairman favored a 50-cent gas tax boost. Bill Ford told reporters that he favored a gas-tax increase and tax incentives to drive consumer interest in gas-electric hybrids and other fuel-efficient vehicles. He lamented that a $3000 tax credit for gas-electric hybrids is caught up in the Bush Administration’s energy bill that didn’t pass in Congress. Though Ford has advocated a 50-cent gas tax increase in the past with reporters, his comments were viewed by him and Ford staff as an implied endorsement of Democratic presidential hopeful John Kerry who has in past years advocated a 50-cent gas tax add-on. Kerry does not currently advocate the tax boost, explaining that timing of such a tax would be bad given rising gas prices, the formerly jobless economic recovery, rising deficits and the Bush tax cuts that in his opinion favor the wealthy. One Ford PR staffer who had been calling reporters to spin Ford’s comments said, “I told them the horse was out of the barn on this one and they should let it go, but it’s politics.”

 

GM Equal Opportunity Advertiser

A look at the Federal Election Commission database shows that GM’s top brass contribute far more money to Republicans than Democrats. But they aren't afraid of supporting liberal media. Driving away from New York Javits Center, I tuned in to the new liberal radio network Air America. In between mostly public service and political ads was an ad for GM’s OnStar. The ad mentioned many of the vehicles on which OnStar is available, the last vehicle on the list being the Hummer H2. Immediately following the ad was an ad for Fenton Communications, a PR firm that specializes in liberal causes and organizations, including Arianna Huffington’s anti-SUV campaign. Good for GM for not avoiding controversial programming, and for mixing it up with opposing viewpoints.

 

Potholes ahead

Gerd Klauss

Gerd Klauss

“We had a little bit of a bumpy start,” said Volkswagen of America’s CEO, Gerd  Klauss, describing the automaker’s sales problems. In March, VW dealers moved 21,311 cars and light trucks, compared with 26,183 during the same month last year. For the year to date, the automaker has now been passed in the marketplace by the South Korean carmaker, Kia. Volkswagen has finally entered the incentives game, with givebacks averaging about $2000 a vehicle.

 

Germany, Can You Hear Me Now? VW Needs Radio Help

Volkswagen’s new chief Len Hunt says he is an unabashed fan and champion of Volkswagen’s Phaeton sedan. But he admits the company needs to convince Germans that AM radio is important to would-be buyers of the luxe car. AM reception in the Volkswagens continues to be lousy, he says. “I told them that baseball, football, basketball and hockey broadcasts are all on AM radio, as is sports talk radio, and our male customers especially all want to be able to listen to the games. Public radio, too, in some markets is on AM.” It’s one of Hunt’s many new battles as head of the VW brand in the U.S.

 

The SUV is dead, part XXVII

Rising gas prices, increasing political pressures, eco-terrorists. There seem to be all sorts of reasons why folks keep predicting the death of the sport-utility vehicle. So far, to mangle the words of Mark Twain, reports of the demise of the SUV have been greatly exaggerated. But California auto analyst Dan Gorrell says there’s one reason why the bubble really might burst. “There is that factor where if you see everyone doing (or driving) the same thing, maybe it’s time to move on to the next big thing.”

 

A new angle on an old problem

How do you dig Land Rover out of the industry cellar when it comes to automotive quality? “The only way they look good is when you take the page and turn it upside down,” lamented Mark Fields, head of Ford Motor Co.’s Premier Automotive Group. Despite its problem, the quality-conscious U.S. is expected to become Land Rover’s biggest market next year.

 

It certainly would be for him, anyway

“We’re still convinced incentives are the worst thing you can do for a luxury brand,” declared Peter Schwarzenbauer, president of Porsche Cars North America. They hurt residuals, in particular, and brand value overall, he explained. But they can also pose a problem for Porsche executives, as well. His predecessor, Fred Schwab, found his long career hitting an abrupt end last year when he decided to try incentives to move excess stocks of the Boxster without first getting approval from Porsche AG CEO Wendelin Wiedeking.

 

iDrive, uDrive

“When you’re out on the freeway, you can’t just push the reset button. Cars have to be reliable,” said Helmut Panke, chairman of BMW AG, which has been tweaking its iDrive concept and introducing it to other new models in its line-up.

 

Too much choice?

By various counts, there’ll be anywhere from 70 to 95 new or significantly updated products introduced this year. Sounds great, you might say, but not everyone agrees. It may be reaching the point of paralysis, cautions Nissan’s marketing chief, Steve Wilhite. “The difficulty” consumers face, he said, “is how do you make sense out of it all?” For manufacturers, it’s a problem, as well, trying to get a new product to stand out in the clutter.

 

Does Pontiac Have Shingles?

Walking around the Pontiac stand with some DaimlerChrysler executives, comments about the roof on the G6 sedan due out this fall were flying. “It looks like a bundle of shingles blown to hell by the wind,” said one. “I shudder to think about the quality issues they are going to have,” said another. The G6 has a four-panel sunroof system. Each panel retracts on top of one another not unlike shingles, and stick up a couple inches from the roof when the sunroof is opened up.

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