[DeTomaso] NPC - Interesting Analysis on the Future of the Auto Industry

Dick Koch arkoch at earthlink.net
Tue May 5 19:54:26 EDT 2009


*Pontiac Is Dead; Is The Corvette Next?
*
*What Detroit Will Build (and Won't) In Its Next Chapter
*
*by Rex Roy | AOL Autos
*
Posted: 29 April 2009
 
 
 
In remarks made in March about the auto industry, President Obama said, 
"We cannot, we must not, and we will not let our auto industry simply 
vanish." This is positive news for many, but it may actually signal the 
end of the consumer-driven American automotive industry.
 
 

*Gallery: Pontiacs We'll Never Forget* 
<http://autos.aol.com/gallery/pontiac-all-time>
Depending on how active the Obama administration chooses to be regarding 
the operation of General Motors <http://autos.aol.com/car-GMC-az/>  and 
Chrysler <http://autos.aol.com/car-Chrysler-az/>  (the government 
already forced out GM CEO Rick Wagoner), bureaucrats may restrict the 
types of cars these two manufacturers sell in the post bail out future. 
Government leaders such as Nancy Pelosi have already voiced the opinion 
that Americans should drive smaller, more efficient vehicles. Conditions 
on the bail out funds may be the vehicle used to force GM and Chrysler 
to build only what Washington wants them to build. Additionally, 
changing emissions regulations will force Ford Motor Company and other 
producers to follow suit.

More information will surface, so it is too soon to accurately predict 
what GM and Chrysler may look like when they emerge from the Obama 
team's restructuring program. However, one can assess and offer educated 
conjecture about how President Obama's actions may affect the cars 
arriving in showrooms of the future.
*Cleaner Cars
*
Bureaucrats want Detroit to build cleaner cars. Because facts don't 
generally make good sound bites, politicians and regulators do not 
highlight the fact that every new car and light truck in sold in the 
U.S. run nearly emissions free once the engines have warmed to operating 
temperature. Current regulations already mandate exhaust emissions so 
clean that in U.S. cities experiencing heavy pollution days (think L.A. 
in August), the gases leaving a new passenger vehicle's tailpipe are 
cleaner than the air entering the engine.

So what do politicians really mean when they talk about "cleaner cars?" 
It's all about carbon dioxide emissions. Environmentalists have 
convinced enough members of enough different government bodies that C02 
emissions must come down to combat alleged global climate change. 
President Obama believes that man-made C02 is dangerous.

Avoiding ongoing arguments regarding man-made C02 emissions and its 
impact on climate change (whether it is major or non-existent), because 
of a Supreme Court ruling during the Bush administration, C02 can be 
regulated by the Environmental Protection Agency. New regulations are 
expected to begin impacting vehicles as soon as the 2011 model year.

With current technology, the only way to lower C02 emissions is for 
vehicles to consume less carbon-based fuel; gasoline, diesel fuel, 
natural gas, liquid propane, and coal-generated electricity.
 
*More Fuel-Efficient Cars
*
Currently, government mileage targets are 35 mpg by 2020. The Obama 
administration may change this goal and increase the mpg even further. 
In general, meeting the "35" rule mandates small, lightweight vehicles 
with small, highly-efficient engines.

Expect more use of high-strength, light-weight steels such as boron. 
Ford <http://autos.aol.com/car-Ford-az/>  already uses boron in its 2009 
F-Series <http://autos.aol.com/cars-Ford-F_150-2009/overview>  pickup to 
save weight while maintaining crash protection capabilities. More exotic 
and expensive materials such as carbon fiber will expand from use on 
exotic sports cars to more mainstream applications.

Regarding engines, manufacturers will attain more efficiency from 
smaller internal combustion engines. Technologies that contribute to 
added mileage include direct injection, variable valve timing, and 
auto-stop engines. High-performance models will utilize forced-induction 
such as turbocharging or supercharging. Diesel engines could also see 
expanded use (now that clean-burning diesels are available), but further 
tightening of C02 emissions could rule out this choice altogether.

The availability of hybrid powertrains will also expand considerably to 
include more vehicles and classes of vehicle. Some manufacturers have 
already announced long-range plans that show hybrid editions of every 
model offered. Types of hybrids will also expand beyond the current 
mild-hybrid (characterized by the Chevrolet Malibu Hybrid 
<http://autos.aol.com/cars-Chevrolet-Malibu+Hybrid-2009/overview> ), 
single-mode hybrids (Toyota Prius 
<http://autos.aol.com/cars-Toyota-Prius-2010/overview>  and Ford Fusion 
Hybrid <http://autos.aol.com/cars-Ford-Fusion+Hybrid-2010/overview> ), 
and dual-mode hybrids (GM full-size trucks and SUVs). These hybrid types 
are parallel hybrid designs where both the gasoline engine and electric 
motors directly power the wheels. The upcoming Chevrolet Volt is a 
series hybrid; the Volt's electric motor provides acceleration while its 
on-board gasoline engine is used only to charge the batteries. Plus-in 
charging for hybrids is also just over the horizon.

The common trait with these new C02-reducing techniques is higher cost. 
Tomorrow's more efficient cars and trucks will be more expensive.
*Disappearing Cars
*
In a move largely seen as giving in to Washington, General Motors 
recently closed it High Performance Vehicles division. The HPV team was 
largely responsible for GM's most exciting cars including the Cadillac 
CTS-V <http://autos.aol.com/cars-Cadillac-CTS_V-2009/overview>  and the 
Chevrolet Corvette ZR1 
<http://autos.aol.com/cars-Chevrolet-Corvette-2009-ZR1__2dr_Coupe/overview> 
.

Bureaucrats have little use for performance-oriented V-8 powered cars, 
so don't expect cars like the Chevy Corvette 
<http://autos.aol.com/cars-Chevrolet-Corvette-2009/overview> , Dodge 
Viper <http://autos.aol.com/cars-Dodge-Viper-2009/overview> , Chevrolet 
Camaro SS 
<http://autos.aol.com/cars-Chevrolet-Camaro-2010-1SS__2dr_Coupe/overview> 
, or Dodge Challenger R/T 
<http://autos.aol.com/cars-Dodge-Challenger-2009-R_T__2dr_Coupe/overview> 
 to survive long term. Their survival is no longer tied to customer 
demand, but to the demands of the government that now controls the 
product portfolios and development dollars at GM and Chrysler. Recently, 
GM announced it was killing its Pontiac 
<http://autos.aol.com/car-Pontiac-az/>  brand, a concept that seemed to 
define performance all by itself some decades ago. Now that brand is gone.

Ford Motor Company will also likely be affected. New emissions 
regulations may keep future V-8 editions of the Mustang 
<http://autos.aol.com/cars-Ford-Mustang-2010/overview>  in the barn.

According to John Wolkonowicz, Senior Analyst at HIS Global Insight, 
"With Obama's plan, everything changes in the domestic automotive world. 
The government will be able to dictate what General Motors and Chrysler 
can sell. Washington believes it knows what Americans should drive, and 
this bail out gives them the means to dramatically change the market." 
Wolkonowicz sees the potential for a significant narrowing of choice in 
the automotive market. He says, "With the power given them by the bail 
out, the government can simply mandate certain classes of cars and 
trucks out of existence, regardless of whether they are popular with 
American drivers or not."

After studying the government's response to GM's survival plan, 
Wolkonowicz believes that the only way for GM to secure government funds 
will be to become even smaller than they had proposed. The analyst 
expects GM to shrink to just two divisions, Cadillac 
<http://autos.aol.com/car-Cadillac-az/>  and Chevrolet 
<http://autos.aol.com/car-Chevrolet-az/> . Buick 
<http://autos.aol.com/car-Buick-az/> , Pontiac 
<http://autos.aol.com/car-Pontiac-az/> , GMC 
<http://autos.aol.com/car-GMC-az/> , Saturn 
<http://autos.aol.com/car-Saturn-az/> , and HUMMER 
<http://autos.aol.com/car-HUMMER-az/>  will all cease to exist.
 

*Gallery: Pontiacs We'll Never Forget* 
<http://autos.aol.com/gallery/pontiac-all-time>
While GM will soldier on in its smaller form, Wolkonowicz doesn't expect 
Chrysler to survive in its current form, even with news that Fiat has 
agreed to a broad partnership. If Wolkonowicz is wrong, the Fiat 
connection would provide Chrysler with needed small car vehicle 
platforms, but the fate of vehicles such as the Dodge Charger 
<http://autos.aol.com/cars-Dodge-Charger-2009/overview>  and Chrysler 
300 <http://autos.aol.com/cars-Chrysler-300-2009/overview>  doesn't look 
good.
*Who Is At The Wheel?
*
This new age of government oversight in the automotive industry may 
progress using one of two strategies. The first path continues the 
current practice of setting regulations and then allowing manufacturers 
to meet those regulations. This allows manufacturers a high degree of 
flexibility in how they react while developing vehicles consumers want 
to drive.

However, the essential takeover of GM and Chrysler signals a more active 
role that will likely dramatically change the way the automakers do 
business. This second scenario removes the consumer from the auto 
manufacturing equation. Customer demand is directly superseded by 
political interest in ecology and energy policy. In other words, 
manufacturers will only sell vehicles the government allows them to sell.

Even with ever-present worries of fuel prices, some 70-percent of the 
orders for Chevrolet's all-new 2010 Camaro 
<http://autos.aol.com/cars-Chevrolet-Camaro-2010/overview>  are for the 
V-8 edition that produces over 400 horsepower (while achieving up to 25 
mpg on the highway). Clearly, American drivers want what they want. The 
question is whether that matches what the U.S. government will want 
Detroit to build.



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