Mark Phelan: European woes hurt Chrysler pipeline
By Mark Phelan
Free Press Auto Critic
Make no mistake about this: Chrysler would not exist today without Fiat. Chrysler owes its existence to the technology, talent, charisma and cash Fiat provided during the Great Recession.
(The bottom line is this, Mark Phelan is correct. CERBERUS stripped Chrysler by throwing away the Chrysler Engineering Library and firing 65% of Chrysler’s total staff. This made certain Chrysler could not survive on its own and would have to be taken over by GM. Trouble was GM changed their mind leaving CERBERUS stuck with an auto company they had knowingly crippled beyond repair as a self-sustaining entity. Fiat was the only company willing to step in and pick up the pieces with an influx of needed people and product. This was on the condition that CERBERUS got nothing and Fiat could basically just take over Chrysler by funding it’s retirees medical costs in share increments. Chrysler will survive this delay because of less competition from GM which is being run into the ground by their CEO Akerson. But as soon as Fiat buys all of the healthcare VEBA shares, Fiat will then have access to Chrysler’s pile of cash. I hope Chrysler gets it’s share of money because they are supplying all of Fiats profits and one does not want to kill the goose that lays the golden eggs.–Ed Meyer)
But last week, Chrysler-Fiat CEO Sergio Marchionne had to admit the ambitious new-model plan he laid out in 2009 for Chrysler, Dodge, Jeep, Ram and SRT will suffer as Europe’s debt crisis hammers Fiat.
Suffer is a relative term, of course. Neither Chrysler nor any of the vehicles it will introduce over the next five years would exist if not for Fiat, but Chrysler was going to get more cars, crossovers and trucks faster before the European debt crisis gutted Fiat’s new-model plan.
This is a blow to Chrysler. The automaker has already proven more resilient than I expected, but keeping aging models like the 200 and Jeep Compass on the market will hurt.
The fast rollout of a brace of new vehicles might have reshaped the brands’ images. Instead, Chrysler can hope for a brief buzz from introducing fewer new cars and trucks over a longer period than it wanted. Not the best way to build momentum and boost the profile of an automaker that’s fallen off many buyers’ shopping lists.
Unlike the ugly reign of DaimlerChrysler, this is not a case of foreign bosses who undervalue or actively undermine Chrysler. Fiat is committed to its American business. Chrysler has access to its best and brightest management and engineering, two considerable assets.
The problem is that Fiat is struggling desperately as European sales hit 30-year lows. The deterioration of Europe’s market has been worse than even the smartest and best-informed foresaw. Marchionne scoffed last summer when I asked whether Fiat’s problems could delay the new Chrysler vehicles.
That was then. This is now. Here are the ex-new Chryslers:
• A pair of small cars the Chrysler brand expected this year has been axed.
• Two small Dodges due this year have also been eliminated.
• The replacement for the Chrysler 200 sedan intended for 2013 has been shoved back to 2014.
• The small crossover Fiat was going to build for Jeep is delayed a year, to 2014.
• A small commercial van for Ram promised for 2012 slips to 2014. Ram promises two more new models in 2016.
• The replacements expected for the Chrysler and Dodge minivans have been pushed back from an expected 2014 until 2015. Another Dodge and two new Chryslers should debut in 2015 and ’16.
• The Jeep Grand Wagoneer luxury SUV expected next year slips to 2015. Another new model, maybe the Patriot replacement, is due then, with two more in 2016.
In all, Chrysler Group promises 12 new vehicles in 2015 and ’16. The Fiat and Alfa Romeo brands plan another dozen new vehicles in 2015 and ’16, after — you guessed it — minimal action between then and now.
“A lot can change between now and 2016, and nobody’s predicting Europe’s going to get better anytime soon,” Dave Sullivan of consultant AutoPacific said.
So what can we expect from Chrysler Group this year? The cupboard’s not quite bare. The replacement for the Jeep Liberty — possibly in line to resurrect the hallowed Cherokee name — arrives this spring. The Jeep Grand Cherokee gets welcome new features, including a powerful and fuel-efficient V6 diesel and an eight-speed automatic transmission. Ram will add a couple of UPS-style large commercial vans while Fiat adds the 500L crossover.
Still, Chrysler dealers must go from expecting a flood of new vehicles timed to cash in on the sales recovery this year to hoping this product plan survives longer than the last one.
Contact: Mark Phelan at 313-222-6731 or at email@example.com.
With Chrysler and Lancia merged into a single unit in Europe, it is impossible to tell what “true Chrysler” sales are; but the two brands together sold 93,264 cars and minivans over the year, down from 103,157 in 2011. The biggest Lancia sellers are the Ypsilon and Delta, with Thema, Voyager, and Flavia occupying a minor role. Fiat Freemont most likely outsold all the Chrysler-based Lancias combined, with room to spare.
Jeep had a decent year given the rough European economy; the brand was now handled entirely by Fiat, and most likely enjoyed some additional success by its now established separation from Daimler distribution. Europeans bought 28,263 Jeeps for 2012, a small number but much higher than the 23,742 sold in 2011. Overall, Jeep has a 0.2% share in Europe, putting it on par with Lexus and Jaguar. Chrysler, Lancia, and Jeep together had a lower market share than Jaguar Land Rover, Seat, Dacia, Chevrolet, or Mini alone. The upcoming B-Jeep, gas-mileage improvements for Grand Cherokee, and the upcoming Liberty/Cherokee should bolster Jeep’s position for 2013-14.
Chrysler Group sale rose again in January, though this time, instead of leading the pack, Chrysler was in the middle of the Detroit 3 automakers, thanks to a 21.3% surge in Ford sales for the month. Toyota’s gain was even larger, at 26.6%. Chrysler’s 16.4% gain easily outdistanced Honda’s 12.8% and it kept Chrysler with a firm grip on fourth place among the major automakers. General Motors sales were up 15.9% as it maintained the top spot.
Toyota is pushing hard on Ford for second place. At the end of the month, the top Japanese automaker was just 8,138 sales behind the blue oval.
With double-digit improvements from all three companies, the Detroit share of the market rose in January, hitting 45.8% of total light vehicle sales.
Passenger cars were the growth drivers for Chrysler in January: Car sales accounted for 36.8% of all Chrysler group sales, down from December’s 42.3% but well ahead of the 28.5% from last January. The Dodge Avenger rocketed from 51st to 28th in the overall rankings and was one of the top 20 car models.
Dodge was the hot division in January. In addition to the Avenger’s success, the Journey posted a 93.5% leap, jumping from 66th in the standings a year ago to 38th last month. The Dart continues to outsell its fellow newbies from 2012 and was among the top 20% of light vehicles by sales in January.
While it had the big winners, Dodge also had the big loser in January: the Dodge Grand Caravan. After a big December, Caravan sales went right off a cliff, falling 64.9% in a month. Even compared to last January, sales were down 38.7% as the Caravan finished a record-low fifth in the minivan segment, behind the Toyota Sienna, Honda Odyssey, Chrysler Town & Country and the new Mazda CX-5.
Chrysler continues to be the best-selling American upscale brand and the 300 remains the top premium sedan from the Detroit automakers. With General Motors planning to move Buick upscale, it would be nice to see the folks in Auburn Hills build and expand on what they have.
Jeep’s stumble was entirely due to the retirement of the Liberty. Factoring out the Liberty, Jeep brand sales would have been in the black by 13.7% led by 30-plus-percent advances in sales of the Belvidere duo, the Compass and Patriot. Grand Cherokee sales were soft in January, but the same was true in January 2012 when the Grand Cherokee ended the month in the red.
Fiat continues to be a credible player in the small car market, again beating the Mini Cooper’s car models, Toyota’s Scion Line and the Mazda2. The new 500L looks good and should be a major boost for Fiat brand sales when it arrives. With a good dealer base in place, the L should be spared some of the growing pains the Cinquecento experienced during its introduction to the U.S. market.
The Ram pickup’s drop from eighth to ninth in the rankings was due to a 75.2% surge in sales of the Honda Accord, which went from 16th to fourth in the standings. Other small drops, such as the Grand Cherokee’s four-spot decline, were also driven by a lot of changes in the pecking order, especially at the top.
|Chrysler Group January U.S. Sales, by Volume|
|Rank 2013||Rank 2012||Brand & Model||Jan-13||Jan-12||change|
|25||21||Jeep Grand Cherokee||11,065||10,683||3.6%|
|46||274 (tie)||Dodge Dart||7,154||0||N/A|
|52||53||Chrysler Town & Country||6,525||5,637||15.8%|
|64||31||Dodge Grand Caravan||4,965||8,094||-38.7%|
|120||41||Jeep Liberty (Disc.)||2,035||6,825||-70.2%|
|196||203||Ram Cargo van||513||406||26.4%|
|260 (tie)||143||Dodge Caliber (Disc.)||13||1,149||-98.9%|
|271 (tie)||142||Dodge Nitro (Disc.)||0||1,159||-100.0%|
|271 (tie)||260 (tie)||Dodge Viper (Disc,)||0||20||-100.0%|
|271 (tie)||225||Ram Dakota (Disc)||0||155||-100.0%|
|Chart © 2013 Allpar LLC. Data source: Manufacturer reported sales.|
Ford, GM seeking app ideas that enhance driving
Automakers invite developers’ ideas
By Nathan Bomey
Detroit General Motors and Ford took a page out of Apple’s book, or smartphone, when at the past month’s Consumer Electronics Show they invited outside software developers to create applications for their vehicles.
How this generates revenue is not yet clear. For Apple, third-party apps are a significant source of profits.
The consumer electronics giant keeps 30% of app sales and gives 70% back to developers. Apple has booked $5 billion in revenue since launching the App Store in 2008.
General Motors North America President Mark Reuss said in an interview that the automaker would be willing to share revenue with app makers.
“Yeah, for sure,” he said. “There’s got to be a reason why they would want to do it. We’re in it to satisfy the customer first and make money while we try to do it.”
The decision by GM and Ford to ask app makers to help was symbolically significant because it recognized vehicles can be better with the help of software that will be more creative if done by independent developers.
“We’re a car company, we’re not an app company,” Reuss said.
Automakers must strike a delicate balance by offering interesting apps while avoiding the sensory overload that troubles safety advocates and distracted-driving watchdogs.
GM signaled a willingness to consider apps like iHeartRadio’s streaming application or the Weather Channel, while Ford is already offering apps like Glympse, which shares a person’s location, and the on-demand music service Rhapsody.
Safety comes first
Carmakers need to avoid the temptation to turn the car into a “smartphone on wheels,” said Thilo Koslowski of technology research firm Gartner.
Koslowski said the auto industry should focus on encouraging the development of apps that “enhance the driving experience.”
“This is not going to be an app store like Apple has,” he said. “Having Facebook in the car, having Twitter capabilities in the car, isn’t really all that useful.”
Auto industry executives view connectivity as essential for reaching millennials — those born between 1980 and 2000 — who see their smartphones as crucial to their lifestyle.
In a McKinsey study released last month, 83% of 18-to-39-year-olds said they would be willing to pay for in-car access to the Internet.
Of all drivers, 35% use their smartphones while driving, the study found. Within that group, 68% use their phones for navigation, 39% for text-messaging and 31% access the Internet, social networks, e-mail or apps.
“The car presents an all-new opportunity for developers, especially the millennial market, and we’re looking forward to seeing what results,” said Hau Thai-Tang, Ford vice president of engineering and global product development.
But Koslowski said carmakers shouldn’t confuse a desire for digital connectivity with a desire for car-based apps.
“There’s one huge competitor to any automotive company trying to attract apps in the car and that’s the smartphone,” he said.
GM and Ford have provided the technical specifications to developers to make apps that can work in a vehicle. Once apps start rolling in, they’ll examine the offerings closely to decide whether to offer them.
Apple similarly signs off on outside apps before enabling them to be downloaded to the iPhone, iPad or iPod.
GM said it would welcome a wide range of ideas, but it’s particularly interested in apps that deliver information about the vehicle to the driver. For example, an app could analyze vehicle performance to deliver recommendations on how to maximize the vehicle’s fuel economy through an optimal route.
The apps would be delivered through existing infotainment systems such as Chrysler’s Uconnect, the Cadillac User Experience or MyFord Touch.
“I want to find the next parking spot while I’m driving into the city, I want to get the latest map updates — those kinds of things consumers are looking for,” Koslowski said.
The number of ideas offered will depend on how much automakers are willing to pay. Their biggest challenge is the mathematical fact that smartphones outnumber cars worldwide by 169.2 million to 80 million, according to 2012 data compiled by Gartner. Only a small fraction of those 80 million cars and trucks are new enough to offer touch-screen technology.
Another unanswered question is: Will consumers pay for apps in the car?
“The scale that an automobile manufacturer has will never be as attractive as what some of these smartphone platforms have,” Koslowski said.
Nonetheless, app development presents automakers an opportunity to differentiate themselves from their competitors.
Right now, most vehicles with an infotainment system have just a few applications, such as navigation, weather data or perhaps online music streaming.
The more automakers focus on informing drivers about the condition and performance of the car, the more successful the software will be, Koslowski said.
For example, applications can act like constant car mechanics.
“Remote diagnostics will be a given in the future,” he said. “Every vehicle that has connectivity will tell you if a part needs to be replaced.”
Contact Nathan Bomey: 313-223-4743 or firstname.lastname@example.org
Hagerty Insurance releases annual list of future classic car predictions
Detroit Free Press Staff and News Services
After the recent unveilings of new vehicles at the North American International Auto Show, Hagerty Insurance, the Traverse City-based insurer of classic automobiles, has released its annual list of future classics — cars that collectors will covet 20 years from now.
The rule is that those selected must be a mass-produced vehicle available for sale as a 2013 model with an MSRP of less than $100,000. Special consideration was given to newly launched versions not appearing on previous Hagerty Hot Lists.
Here they are, with starting prices:
• SRT Viper ($97,395)
• Chevrolet Corvette Convertible 427 ($75,925)
• Audi RS5 ($68,900)
• Porsche Cayman S ($63,800)
• Chevrolet Camaro ZL1 Convertible ($59,545)
• Tesla Model S ($58,570)
• Mini John Cooper Works GP ($39,950)
• Subaru BRZ ($25,495) • Ford Focus ST ($23,700)
Siri to speak in Hondas
Apple’s Siri voice-command system is going to be doing the talking in Hondas.
Honda says that the intelligent assistant on Apple iPhone 4S and 5 smartphones is going to be part of its 2013 Accord and Acura ILX and RDX. General Motors announced recently that Siri is coming to Chevrolet. Honda will use it in what it calls “Eyes Free” mode, designed so drivers don’t have to look down at their infotainment units to use Siri.
“iPhone has become so integral to people’s lives that they continue to use them in their vehicles,” said Vicki Poponi, assistant vice president of automobile product planning for Honda’s U.S. unit, in a statement.
On iPhones, a user pushes a button, then can perform many functions with voice commands — such as getting directions. The latest deal shows Honda is being aggressive about bringing the feature to cars.
Revved up what’s hot and what’s not in autos
February 3, 2013
Revved: Profit-sharing checks given to UAW members at Ford ($8,300) and Chrysler ($2,250). GM workers will be looking for a nice payment.
Revved: January auto sales climb for automakers. Good start for the new year.
Stalled: One of Lincoln’s Super Bowl ads already is panned. Will it look better when surrounded by football?
Ways to make driving easier, safer born at BMW idea factory
By Dan Nakaso
San Jose Mercury News
Engineer Klaus Heller plugs in an ActiveE electric 1-series coupe at BMW’s research lab, the Group Technology Office, in Mountain View, California. (Gary Reyes/San Jose Mercury News/MCT)
Those iPod and iPhone adapters that are now standard equipment in nearly every modern car were born out of a “what if” idea by BMW engineers in Silicon Valley in 2003.
Then in 2007 they teamed with another Silicon Valley giant, Google, to send information from drivers’ computers to their cars’ navigation systems, eliminating the need for drivers to program their cars with driving directions they had already looked up at home or in the office.
The experience of drivers, whether in the cockpit during an emergency, or at home letting a computer decide the best time to recharge an electrical vehicle, remains the focus of engineers at the automobile think tank officially known as the BMW Group Technology Office USA.
Today, every major car manufacturer has followed BMW in setting up its own research-and-development offices in the heart of Silicon Valley to soak up ideas and partner with big and small tech companies to develop innovations that will make driving safer or just more fun.
In March, Ford Motor Co. became the latest carmaker to open its Silicon Valley research office, in Palo Alto. But Dirk Rossberg, a German who runs the BMW Group Technology Office USA, is quick to point out that BMW started it all.
“Daimler is here. Honda is here, Toyota is here, Nissan, Peugeot, GM, Ford — all the companies,” he said. “But we were the first.”
Rossberg and his staff are stingy about revealing details about the really cool stuff they’re working on. They wouldn’t even allow this newspaper a glimpse of the open-space workroom that takes up the entire second story of their 13,000-square-foot idea factory, which is tightly controlled by locked doors.
But the few ideas they would share offer the promise to make driving safer, more convenient and, for electric vehicle owners, cheaper.
For instance they continue to rewrite algorithms to fine-tune existing vehicle-sensing technology that could let drivers know when a pedestrian is crossing in front, or notify the driver when a vehicle ahead suddenly brakes hard.
“The driver is always in control, of course,” Rossberg said. “But the car will tell you that something’s going on ahead and might even start braking.”
And engineers are looking at ways to funnel all of the data collected on every Internet user so their vehicles will make suggestions on where to stop or even shop.
“Say you’re driving from Los Angeles to San Francisco and your car knows that you normally take a coffee break every three hours,” Rossberg said. “You just passed a nice coffee place that’s five stars on Yelp and there won’t be another coffee stop for 50 miles. So it will recommend stopping here. Or your car knows that you’ve been looking on the Internet for television sets but your credit card says you haven’t bought one yet. So it may point out a store with the cheapest price. This is part of the future.”
BMW’s engineers in Mountain View also continue to retool existing speech recognition and “gesture recognition” software and hardware that will let drivers fiddle with their audio, phone and navigational gadgets more efficiently and, hopefully, safer.
And they’re looking at electrical vehicles from at least two different perspectives.
One team of engineers is writing code for a smart home system that can be programmed to charge an EV only when there’s little energy demand on the home grid, such as the middle of the night when most lights and appliances are off.
Another group is looking at how to reuse old EV batteries once they’ve outlived the rest of the vehicle.
BMW’s Mountain View engineers built a shed in the employee parking lot that houses dozens of old EV batteries that store energy from a solar panel array. The 30 kilowatts of stored energy reduce BMW’s peak demand on the Peninsula power grid while saving hundreds of dollars every month on the building’s energy bill, said Pete Dempster, one of BMW’s sustainable mobility engineers.
The EV batteries in the shed also contain enough power during a blackout to run “emergency lights and critical devices for a couple of days,” said Klaus Heller, BMW’s senior advanced technology engineer in Mountain View.
Eventually, the BMW engineers hope to develop techniques and systems that will allow everyday EV drivers to lower their home energy bills while lessening their demands on the power grid, which will help everyone.
“We’re not just looking at lower energy costs,” Dempster said, “but other things that will benefit society.”
BMW opened its original Palo Alto office in November 1998 with a handful of engineers and the rough idea that it needed to establish a beachhead in the birthplace of tech ideas.
After moving to a larger, two-story office building, garage and workshop in Mountain View in March 2011, the staff has since grown to 30 people who follow a freethinking, free-flowing work ethic that’s more like a Silicon Valley startup than BMW’s massive, 10,000-employee research-and-development operation back at headquarters in Germany, Rossberg said.
BMW’s Silicon Valley-based engineers come and go at all hours of the day and night. The parking lot includes a barbecue and a basketball hoop for engineers to blow off stress or simply noodle on an idea.
“The culture in this office is unlike Munich,” Rossberg said. “We have very flexible work schedules and very flexible thinking. If you figure out that a topic is not working, we shut it down and move on very fast. It’s a huge advantage.”
M&A outlook for global auto industry weakens, survey says
U.S., China, and Germany still offer opportunities
Vince Bond Jr. Automotive News — February 3, 2013 – 10:31 am ET
Due to a lack of confidence in the global business environment, the percentage of automotive companies planning to pursue acquisitions within a year fell to 19 percent, according to an Ernst & Young survey.
That’s the lowest point in the Capital Confidence Barometer’s two-and-a-half-year history after dropping 20 percentage points from the year before.
Auto companies still expecting to make moves are treading more cautiously, or looking to complete “smaller, less transformative deals” in an uncertain climate, according to the survey, whose results released last month were largely based on responses from supplier executives.
Some of the leading factors behind the uncertainty include “credit markets that aren’t particularly strong” in Europe and the U.S. along with the looming fiscal cliff in the U.S when the survey was taken last August and September, said Jim Carter, Americas Automotive Industry Leader for Transaction Advisory Services at Ernst & Young.
“That level of desire to complete an acquisition is lower than I would have expected,” Carter said in an interview last month. “There is still tightness in the liquidity in the equity and debt markets in automotive. I think that is likely impacting desire to do M&A.”
A panel of more than 1,500 executives, including 188 in the automotive sector, from companies in 41 countries were surveyed last August and September. Approximately 754 of them held CEO, CFO or other C-level positions.
Carter said the automotive results were a “cyclical response” to what was happening at the time, so he expects M&A activity to become more enticing for companies going forward with encouraging signs coming from the Chinese, German and the U.S. markets.
Not all segments of the auto industry have shown such a bearish outlook on global acquisitions.
Last month, Houston-based retailer Group 1 Automotive Inc. announced plans to acquire one of Brazil’s largest auto dealership groups.
The dealerships — 21 franchises representing eight brands in Sao Paulo and markets in the neighboring state of Parana — are expected to generate approximately $650 million in estimated annual revenues, Group 1 said.
The purchase price includes approximately $47.4 million in cash, 1.45 million shares of Group 1 common stock priced at $60.77 a share, and the assumption of about $62 million of debt. Analysts said more dealer acquisitions could be expected.
“We are now bullish on the acquisitions outlook, driven by a more stable political and economic environment and supported by recent activity in the industry,” Brett Hoselton, a KeyBanc analyst in Cleveland, wrote in a Jan. 22 report.
The strong auto markets in the United States and China may also yield M&A activity in the coming months.
Automakers moved 14.49 million light vehicles in the U.S. in 2012, the most since 2007, and sales of passenger and commercial vehicles in China are expected to rise 8 percent in 2013 to 21 million — up from 19.4 million last year, according to General Motors.
“We do expect more M&A in the future. I don’t think the negative trend that exists currently is necessarily indicative of the future trend,” Carter said. “Germany has been performing well; the U.S. market has performed well; China has performed well. If that trend continues, you’ll see more companies with broader appetites to do M&A.”
Tough global climate
But according to the survey, economic malaise in Europe impacted business for 90 percent of respondents.
With the ongoing Eurozone crisis and slowed growth in emerging markets, more than 60 percent of auto executives expect the global economic downturn to continue for another one or two years.
The report says many companies will focus on bottom line improvements in this environment.
Ernst & Young cited emergency financial maneuvers by the U.S. Federal Reserve and the European Central Bank as key moments that show urgency among policymakers.
“The willingness to do M&A has been impacted. Some companies’ growth plans in terms of where they want to invest their capital globally has been impacted by the Eurozone crisis. It certainly has impacted confidence around the sector,” Carter said.
But things aren’t all bad in Europe.
Germany was considered the top automotive sector investment destination among respondents.
Carter said Germany is a desired market because it’s an engineering and technology-focused country that’s home to leading OEM’s such as Audi, Mercedes-Benz, BMW and Volkswagen.
“That makes it attractive in terms of suppliers wanting to invest in Germany to get access to their customers,” Carter said. “Those OEMs that exist in those markets are attractive to our domestic suppliers and other global suppliers.”
Philip Nussel, David Phillips and Bloomberg contributed to this report.
You can reach Vince Bond Jr. at email@example.com.
January 28th, 2013 12:03 PM║ Posted By: John Pennington ║ Permalink ║ Schools: Alabama, Arkansas, Auburn, Florida, Georgia, Kentucky, LSU, Mississippi State, Missouri, Ole Miss, South Carolina, Tennessee, Texas A&M, Vanderbilt
U.S. Gun Deaths Since Sandy Hook Top 1,280
Eleven hours earlier, Sincere Smith had woken up to Christmas — the first that he was old enough to appreciate. His father remembered their last morning well -– his son ripping through wrapping paper, squealing with delight with each new gift — his first bike, a bright toy barn.