[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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