The Auto Writer

Ha! Got your attention!

I thought I’d use something controversial in my title today in a bid to attract attention. But, the title does have some truth to it, borne out recently in the way Mahindra & Mahindra has handled its relationship with Global Vehicles U.S.A., Inc. (GV), its American distributor.

What's stopping Mahindra?

That account has Mahindra unilaterally cancelling its agreement with GV, just weeks after receiving EPA approval to sell its diesel-powered pickup trucks in the United States. Mahindra’s debut has been delayed several times with GV initiating a lawsuit this year in a UK court to protect its interest as sole distributor. Apparently, the Indians didn’t appreciate the legal action, summarily dumping GV as a result.

Now the Indians are about to be schooled in US jurisprudence with the lesson being that actions do have consequences – legal and financial.

I’m not sure who is Mahindra’s legal representative, but they absolutely need to eliminate the following press note that is still sitting on their website:

“Mahindra’s relationship with Global Vehicles Inc (GV) has ended, the agreement dated 26th September 2006 between Mahindra and GV having terminated.”

That terse statement is all the legal fodder GV requires in their quest to stop Mahindra. I’ve been reading some Indian press reports of Mahindra’s action with one reporter indicating that the relationship is over and that Mahindra will settle with GV and take over its dealer network.

Not so fast – it isn’t that easy, especially if GV doesn’t want the relationship to end, and particularly after investing time and millions of dollars to establish it. Keep in mind that GV was not informed about Mahindra’s decision directly – like everyone else, they read it on Mahindra’s website. That tells you that the relationship between Mahindra and GV is strained, likely to delay by months, perhaps years the introduction of Mahindra’s trucks to the United States.

There is a very real possibility that Mahindra will never sell its passenger vehicles in the United States due to legal delays which will allow its competitors to come out with their own diesel-powered responses. You’ve read it here!

Let’s move beyond Mahindra and focus on why other foreign automakers have a tough time gaining a foothold in the profitable US market. Yes, Toyota, Honda, Nissan and others are firmly entrenched here, having had years of preparation to do so, but a number of makes are absent including Chinese vehicles, Renault, Peugeot and, until this December, Fiat.

We’ve seen other brands vanish over the years including Isuzu, Daewoo, Daihatsu and Yugo, with a good chance that Suzuki will follow if its sales continue to slide. The American market is a tough one — very competitive and highly regulated.

It is those federal regulations which keeps some manufacturers away. Regulations involving crash testing, emissions, air bags and, thanks to Toyota’s massive PR blunder, black boxes and brake overrides and whatever else Congress deems important.

I didn’t say anything about fuel economy which means that any manufacturer wanting to sell cars here better be green or they’ll be gone. You can have the perfect car, but if your fleet average falls far short of 35.5 mpg for 2016, don’t bother to jump in.

I’m not against all federal regulations, but it does have its cost. I think that is one reason why Mahindra’s approval has taken so long as it has had to spend extra time readying its trucks for federal scrutiny and American consumption. Besides, they’re jumping in when the market is depressed making it all the more difficult for any unknown manufacturer to succeed.

The global auto industry is consolidating which means that we’re likely to see fewer makes sold in the United States over the long term although boutique brands such as Coda Automotive, Fisker, Tesla and Carbon Motors may find their niche. Those niches usually come with a price such as federal and state grants and tax abatements for building cars few of us can afford or perhaps even want.

Automotive Promotional Items Auto Insurance

By Matt Keegan

The auto industry is mired in a slump, but you wouldn’t know that judging by the rosy PR releases and financial statements released over the past few months. 11 million annual sales may be the “new reality” but it isn’t good for this country which needs strong automotive and housing sales to help it rebound.

Ford and General Motors are profitable while Chrysler’s losses have been minimized and seem manageable. Other automakers are reporting positive press with Hyundai-Kia looking as if nothing will stop them.

It is easy to look at the entire global auto industry through a narrow lense, in this case American glasses with a particular emphasis on what is happening in the United States only. That is to be expected, because understanding what is going on around the world can be difficult to figure out much less nail down.

Sales remain strong in emerging markets such as China, India, Brazil and parts of Africa. Europe is flat as are Canada, Japan and the United States. Ford and GM are making far more money overseas than they are in the US, but that does not mean the American market is not important to them too.

This is the home market and having Toyota as the best-selling brand in America seems wrong, at least to people who still believe in the flag, apple pie and Chevrolet (or Ford). Perhaps even Dodge.

Despite its own battles with runaway cars and floor mats, Toyota isn’t about to cede its position stateside without a fight. However, if sales begin to move up, even to 14 million units annually, that represents 2-3 million customers who are sitting on the sidelines now. People who will look at what Toyota, Honda, Ford and Chevy are selling in addition to Nissan, Volkswagen, Hyundai, Dodge, Kia, and the rest.

My vantage point as an automotive writer has me rubbing shoulders frequently with the average American car shopper. Through my neighbors, kids’ soccer friends, their school, church and other outlets, I can gauge what people are buying or at least considering.

That’s important, because no matter what the automotive press has to say about a car company or a particular model, consumers will make up their own minds, often basing their purchases on something besides the press patter.

My comments here have nothing to do with the global industry nor am I considering, at least directly, the fortunes of companies who are not part of the Detroit 3. To that end, the following is my take on these three automakers and what consumers are seeing in them right now:

Ford Motor Company — They’ve managed to escape bankruptcy and a huge government bail out. Those points alone have set Ford apart from GM and Chrysler, very important in the eyes of some.

No one I know seems upset that Mercury is going away; more often than not I’ve heard people say, “I thought Ford shut Mercury down years ago.”

The Ford brand is hot with lots of new and refreshed models for the choosing. People seem to be aware that the Fiesta is here and the new Taurus, updated Fusion and Mustang, and the F-Series continue to receive a lot of praise. Lincoln? That brand is receiving some chatter, though it is oftentimes about its radical styling than making a purchase.

General Motors Company — What’s not to like about Chevrolet? That’s good, because there are enough Pontiac and Saturn fans who will be looking at a Chevy before they consider the other surviving GM brands.

The Camaro has served nicely as a halo model, attracting interest in the brand and showing everyone that Chevrolet is here to play and to stay. I’m starting to get some positive buzz about the Cruze, but most of the talk about the Volt seems disparaging: it is too expensive for the average buyer. Or it will be available in limited markets. Or the technology doesn’t interest them.

Cadillac fans are thrilled with the CTS portfolio and the SRX, but beyond that there isn’t too much excitement in the brand. That means GM has a lot to work on in order to elevate its luxury marque.

Buick’s place is still unclear, not much more visible than Mercury is to Ford. Lots of thirty-something parents consider Buick to be granny’s brand and need convincing that Buick does have a future and products they like. As far as GMC goes, I think it’ll manage just fine as the trim level difference to Chevrolet trucks.

Chrysler Group — Surviving yet another near death experience, Chrysler is finally getting some positive buzz for its all-new Jeep Grand Cherokee. And that buzz is deserved: this Jeep solves much of its past problems including cabin materials and rear-seating, making it a strong competitor in its field.

The Ram trucks continue to remain popular, though I’ve heard enough times from fans that separating Ram from Dodge was just plain dumb. The Dodge Challenger continues to receive raves while others are waiting to see the changes coming to the Charger. Smaller Dodges would help too; let’s see what Fiat has in store for the brand.

Chrysler’s minivans remain competitive though they’ve clearly been outclassed in recent years by the Honda Odyssey and Toyota Sienna. Odyssey sales are now tops, though Chrysler still builds more minivans than anyone else. The next refresh or all-new minivan needs to score big if Chrysler is to remain viable in the segment they founded more than a quarter a century ago.

A lot of people want to buy American though some remain bothered by the federal bail outs of GM and Chrysler. I wasn’t thrilled about that either, but I’ve managed to embrace a “what is done is done” mentality. GM is working diligently to distance itself from its recent past; an IPO can help change some perceptions though the reality remains that taxpayers still have a huge vested interest in the automaker.

That’s it for this week — have a good one!

Photo: General Motors Company

Nope, I’m not shutting down The Auto Writer, founded by me in February 2006. I have too much invested in this site to let it twist in the wind, with lots of traffic stopping by daily, particularly people who are reading some of my more popular archived posts.

What I am doing is changing this site’s purpose, removing it as my flagship automotive blog. Instead of daily updates here, you’ll find those updates on Auto Trends, launched by me as a companion to this site in April 2008.

Both of these sites are doing well, but I don’t have the time to maintain two of them. Plus, I’ve been wanting to publish more feature length articles online which is the direction I’m going to take with this site. Instead of regular updates, you’ll be able to find a once weekly detailed article here. That will give me time to complete my research including interviews, new product reviews and related industry news.

I’ve been tweaking Auto Trends behind the scenes since the year started and have amended my policy to accept guest posts from time to time. In addition, I’m exploring another angle, one that will raise the site’s visibility further. Thanks to your ongoing support I’m able to continue what I do which includes my automotive columnist work for two print magazines and other projects.

Look for a once weekly feature article to appear here by Wednesday or Thursday of next week.  It has been a good ride so far, so let’s continue down that road.