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.

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.

Initial quality, low production help.

You only have to go back a few years when the Ford Taurus was a fleet favorite and a cheap used car for people looking for a midsize sedan. 2009 and earlier model year Tauruses seemed to be a dime a dozen; their resale value sunk accordingly.

Limited Production

But, Ford wasn’t about to let past practices dictate what it wanted to gain from the 2010 Ford Taurus, an all-new full-size sedan. Instead of mass producing a car and offering it for fleet duty and thereby killing its resale value, Ford is satisfied with keeping production in line with demand.

The result? A much higher resale value. In fact, Ford sales the 2010 resale value is up by 39 percent over the previous generation 2009 model or $7100. Importantly, the 2010 Taurus has a $2500 premium over the Toyota Avalon, one of its chief competitors.

Resale Values

Resale value isn’t something a lot of consumers think about when buying a new car, but they should. If you plan to keep your car for five years and trade it in for a new model when your time with it is up, you want to get the most for your used car possible. Consumers are often stunned when they learn that their beloved ride isn’t worth all that much, often driven down in price because that model is a fleet favorite.

In addition to limiting production of the 2010 Ford Taurus, the automaker says that the new model also benefits from much higher quality levels.

Initial Quality

Commenting about the Taurus, Steve Ling, manager, Ford North American Car Marketing said, “When you talk about quality, it’s not just ‘Things Gone Wrong’ but ‘Things Gone Right. That’s very important because Things Gone Right are what attract customers to the showroom.” Ling noted that the Taurus ranks highest in the full car segment for initial quality according o the J.D. Power and Associates 2010 Initial Quality Study. Kelley Blue Book (kbb.com) has given the Taurus similar recognition.

Ford also credits the vehicle’s dashing design and leading-edge technology with helping to keep the value of the Taurus up.  SYNC, blind spot information system, and voice activated navigation are among the technologies available with the Ford Taurus.

Source: Ford Motor Company

See Also — First Drive: Ford Taurus SHO ‘n Tell

Indian and Korean automakers to team up.

Mahindra – the India automaker and eventual pickup truck retailer in the U.S. through Global Vehicles (GV) – and Ssangyong – the unpronounceable bottomfeeding car brand in South Korea – are in discussions to allow Mahindra to take a controlling stake in Ssangyong Motor Company.

Chinese Connection

The Korean automaker is bankrupt and no longer under the control of China’s SAIC Motor Corporation and is in need of a suitor to keep its operation going. Mahindra has been identified by as the preferred bidder for Ssangyong with a preliminary agreement expected to be signed by the end of this month. A contract for sale is expected to be signed in November.

Mahindra has been trying to raise its global visibility for several years entering into an agreement in September 2006 with GV to sell its pickup trucks in the United States. However, the reports that GV is suing Mahindra to get the Indian company to follow through on its promise to make its trucks available to GV’s dealer network by the end of 2010. GV alleges Mahindra has breached its contract and is attempting to keep Mahindra from working with another distributor.

In April, Mahindra bought out Renault SA’s stake in an Indian car-making venture. Mahindra trails Tata Motors in the burgeoning home market; the Renault acquisition allows Mahindra to expand its capacity. In May, Mahindra took a 55 percent stake in Reva Electric Car Co., a closely-held Bangalore company in a bid to harness technology for alternative-energy vehicles.

Ugly Rodius

Ssangyong’s strength lies in its distribution network including access to the Russian market as well as its technology. In , The Auto Writer shared details about Ssangyong’s woes and published a picture of the Ssangyong Rodius S, perhaps the ugliest vehicle in the world. Word of advice for Mahindra: work on your styling before exporting anything remotely like the Rodius to the American market. Ugh.

Ssangyong is truly a small time player in the global car market having produced just 43,881 vehicles including 26,190 exports in the first seven months of this year. Mahindra plans to keep Ssangyong separate, to be run by local managers.

General Motors surged to profitability in the second quarter of 2010, making $1.3 billion on $33.2 billion in revenue.  The return to profitability reached in the first quarter follows several years of multi-billion dollar losses which resulted in GM’s 2009 bankruptcy and restructuring.

GM made its announcement at a 7:30 news conference this morning, timed to beat the opening of the stock market.

“I am pleased with our progress on achieving our business objectives,” said Chris Liddell, vice chairman and chief financial officer. “We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow.”

Credit Lines

In addition to its improved financial picture, GM recently secured $5 billion in funding to support its operation. According to The New York Times, J.P. Morgan Chase and Stanley Morgan are among the financial institutions providing a credit line to General Motors.

In April, GM announced the repayment of $6.7 billion in government loans. GM owes another $50 billion to American and Canadian taxpayers, the health care plan managed by the United Auto Workers union and former bondholders. Together, their share share of GM ownership is 60.8 percent, funds that may only be recouped when the automaker follows through with an Initial Public Offering (IPO). That offering may come as soon as 2011.

Leaner Automaker

GM has managed to turn a profit because the company is smaller and leaner than the bloated entity it once was.  Four brands are gone — Pontiac, Saab, Saturn and Hummer — with the remaining four brands selling more cars this year than the eight brands sold last year. In the United States, Chevrolet sales comprise about 70 percent of that mix with Cadillac, Buick and GMC garnering the remainder.

The Ford Motor Company continues to be the most profitable of the Detroit 3, reporting a $2.6 billion profit in the second quarter. Chrysler continues to lose money, but they’ve narrowed their losses considerably.

With the Jeep Grand Cherokee and heavy duty Ram pickups now available for sale, Chrysler could turn a profit before the year is out. Chrysler’s relationship with Fiat is expected to begin to pay dividends too when the Fiat 500 is sold through select Chrysler dealerships beginning later this year.

New Product

New product has helped fuel interest in General Motors as the automaker recently completed its Cadillac CTS portfolio by adding a coupe and is introducing its all new compact sedan, the Chevrolet Cruze, across the United States and Canada this September.

Source: GM Corp.

The Fiat 500 will be sold via select Chrysler dealerships.

Joined at the hip with Fiat AG, the Chrysler Group, LLC has the responsibility for marketing Fiat products in America including the popular Fiat 500 subcompact scheduled to show up stateside before the year is out.

Fiat Experience

But Chrysler has more than enough Chrysler dealers to handle these cars and will be limiting who sells these vehicles. On August 30, Chrysler will be holding and event — Fiat Experience — to outline its Fiat plans with about 600 invited Chrysler dealers. Those dealers, from 41 states and 119 markets will be learn about Chrysler’s plans and be able to apply for the rights to sell Fiats in September with Chrysler deciding by early October who will market the brand.

Even though there are just a few months between dealer acceptance and product launch, Chrysler will not allow dealers to show the Fiat 500 next to Chrysler products with the expectation that as the brand grows dedicated space for Fiat products will be developed.

“The requirements for Fiat are straightforward: separate sales and display at launch, transitioning to a full dealership facility as the volume grows,” said Peter Grady, Chrysler Group’s Vice President of Network Development and Fleet. “Our goal is to establish a retail network appropriately sized to serve the market opportunity.”

No Market

Alaska, Vermont, New Hampshire, South Carolina and the Dakotas are states who will not see Fiat dealerships, at least from the onset. However, with Chrysler actively looking at large metro areas for Fiat, Charlotte covers much of South Carolina while Vermont Fiat lovers can travel to Springfield, MA if they want their Italian ride.

The first Fiat 500 models to be sold stateside are the hatchback, built at Chrysler’s Toluca, Mexico facility. Follow up models will include a convertible and four-door hatchback.

Alfa Romeo

Motor Trends reports that winning Chrysler dealerships may also get the chance to sell the Alfa Romeo brand when it hits the market in 2012 or they may get additional Fiat models if the brand catches on.

In any case, dealers will at least have the Fiat 500 to sell regardless of how things shake out over the coming years, a boutique car some have compared to the MINI Cooper and Volkswagen Beetle, at least in visual appeal.

Invited Chrysler dealers were notified by email on Monday. The invitation came from Grady and Laura Soave, Head of Fiat North America.

Source and Photo: Chrysler Group, LLC

GM prepares to fend off the Hyundai Equus

For as long as anyone can remember the Cadillac brand has stood for large luxury sedans, big on girth and featuring pillowy-soft rides. In recent years GM has been pouring its resources into its CTS portfolio, developing sedans, wagons and coupes for this European-styled sedan.

Product Changes

Concept Cadillac XTS Platinum Sedan

Yes, we still have the bloated Escalade and the large front wheel drive DTS to consider, but those vehicles aren’t likely to be around much longer or at least in their present form. The Escalade might eventually be remade into a Buick Enclave-like crossover while the DTS will join the STS in the model graveyard in the sky.

In the short run, a slightly larger sedan than the CTS will show up for the 2012 model year. Dubbed XTS, the vehicle has made its auto show rounds and has gone through the usual scrutiny by automotive critics who haven’t decided whether they like the car or not. No matter, the XTS or whatever it will be called, will be underpinned by the same platform powering the Buick LaCrosse. A 3.0-liter V6 seems likely with talk of a hybrid version too.

Big Cadillac

But, that still leaves Cadillac without a large sedan as the DTS’ days are numbered. We know that GM is looking at a compact Cadillac to slot below the CTS (ATS?) and the SRX will continue as the standard crossover for the brand. Personally, I can’t see General Motors voluntarily ceding a single sale to Hyundai when the BMW 7-Series size Hyundai Equus debuts later this year. That car could poach DTS sales and would, in my opinion, replace the DTS altogether as the livery car of choice if Cadillac abandoned the full sized sedan segment.

No fear, Ed is here. Ed Whitacre, that is.

According to Auto Week, GM’s CEO has greenlighted the production of a brand spanking new full sized, rear wheel drive Cadillac to compete against the likes of the Mercedes S-Class, Audi A8 and the BMW 7-Series. Yes, the Hyundai Equus too. That car might be based on a stretched version of the Sigma platform or at least borrows some of its parts. All wheel drive could be optional and, depending on GM’s fuel economy needs, might possibly include a hybrid model.

Model Change

Autoweek says that the new sedan would show up for the 2014 model year, two years after the DTS is discontinued. I doubt that scenario will unfold especially as the Hyundai Equus gains traction. Look for GM to extend the DTS out for an additional two years and introduce the all new sedan immediately thereafter.

Photo Credit: GM Corp.

No, I’m not heading off to Russia for the Moscow International Auto Salon (MIAS 2010) later this month, but I have to say if there is an auto show venue I’d be interested in attending, then Russia just may be the place to go.  I’m fascinated by Russian history and would include a stop in St. Petersburg to see the Hermitage as well.

The International Organization of Motor Vehicle Manufacturers (OICA) now includes the Moscow show on its Calendar of International Exhibitions, giving the MIAS much needed visibility. Shows in Detroit, New York, Los Angeles, Barcelona, Paris, Frankfurt, Geneva and elsewhere. Quite a feat for a newer show, but given the strength of the Russian car buying market, it is an appropriate move.

VW Amarok makes its Russian debut this month.

This year’s show will be held once again at the Crocus Expo International Exposition Center and will begin on August 27 and run through September 5. Press days will be August 25 and 26, with several international automobile debuts of note including:

Toyota Highlander — Popular in the states, the next generation Highlander crossover will be previewed to the world in Moscow.  The model hasn’t been sold in Russia yet, but it will go on sale there this fall. Autoblog reports that we’ll likely see what is coming our way when the model is officially rolled out later this month.

Volkswagen Polo – The sedan version of the Polo will make its global debut in Moscow according to egmCarTech. The car has been specially developed for the Russian market and is powered by a 1.6-liter four cylinder gas engine.  The engine will be paired with a five-speed manual or six-speed automatic transmission.

Ford Mondeo — Yes, I know the Ford Motor Company has already unveiled its next generation Mondeo ahead of the Moscow show, but its official debut will take place in Russia. The 2011 Ford Mondeo is a nip/tuck midcycle upgrade with Ford’s 2.0-liter four cylinder engine making its Mondeo debut.

Volkswagen Amarok — Volkswagen will be debuting its new Amorak pickup truck, a vehicle already on sale in Brazil and elsewhere. We aren’t likely to see the truck in North America, at least for now. That many change if this Honda Ridgeline type vehicle catches on globally.

Other vehicles expected to be shown at the Moscow show includes an extended line of Jeep models, an updated Range Rover with new V-8 diesel engine, the European premier for the Subaru WRX STI, the Russian version of the Suzuki Kizashi, and the global premier of a C segment Hyundai concept car.

Jacked vehicles and the thieves who love them

Despite all of its bling, the Cadillac Escalade remains a popular target of thieves. I stand corrected: thanks to its bling, your Escalade has a good chance of being the target of car thieves.

HLDI List

The Highway Loss Data Institute (HLDI), an affiliate of the Insurance Institute for Highway Safety, published its list of high insurance claims due to theft and the 2007-2009 Cadillac Escalade finished first. This despite being a perennial gas hog or rolling living room on wheels.

The HLDI report revealed that run of the mill family sedans and eco-friendly cars were not on the top of the list of cars stolen. Joining the Escalade were the Dodge Charger with HEMI engine, Infiniti G37 and the Ford F-250 crew cab. With the Ford truck I suppose rival construction crews were the culprits!

Claim Payments

The size of the claim payments and the rate at which claims are filed are two factors the HLDI considers when ranking specific models. Not surprisingly, large pickup trucks and SUVs cost insurers the most to replace. The Escalade has the cursed distinction for being the worst ranked in overall theft losses in six of the past seven HLDI reports. All four versions of the Escalade (base, hybrid, ESV and EXT) top the HLDI list, with yearly average losses more than seven times the average for all passenger vehicles.

For example, the Escalade four wheel drive EXT has the highest theft losses of all, with $146 in theft payments per insured vehicle year. Compare that to the $14 average theft payments per year for all passenger vehicles. The Escalade, by the way, yields some of the biggest claims with one in four topping out above $40,000.

Other Models

The Corvette Z06 is also loved by car thieves as are most big work trucks including the Dodge Ram 3500, Chevrolet Silverado 1500 and Ford F-250 and F-350 models. Thieves seem to be attracted to the tools and cargo they carry as much as the trucks themselves.

Thieves generally avoided any vehicle offering little in the way of razzle dazzle, bypassing the Toyota Prius, Saturn VUE, Volvo S80 and Nissan Murano among others. Clearly, if someone is going to jack a car they aren’t thinking about what the family might need or how they can do their part to be environmentally responsible.

The HLDI survey covered 2007-2009 model year vehicles only.

Source: Insurance Institute for Highway Safety