Collecting the Cars that Flint Would Love to Forget

A 1974 Honda Civic. (Photo courtesy of Subcompact Culture.)

Here's a car trend that's not likely to be embraced by your average Flintoid anytime soon. Richard S. Chang of The New York Times reports:

When Japanese cars and trucks began arriving in the United States in earnest during the 1970s, they were widely seen as disposable.

Reliable, maybe. Future classics? Not likely.

But in the past decade, those bargain-price models from the ’70s and ’80s have been revisited by a generation of enthusiasts who grew up riding in the back seats.

“For many like myself, it’s nostalgic,” said Jun Imai, a 36-year-old designer at the Hot Wheels division of Mattel, where he directed the styling for die-cast models of two 1970s-vintage Nissans released last year.

A Tale of Two Types of Truck Owners

Toyota has cleaned the Big Three's clock in just about every category except one...pickup trucks. Jeff Green and Alan Ohnsman of Bloomberg Business explain why:

"The Big Three successfully beat back the Toyota incursion into the pickup market," says Brian Johnson, a Barclays (BCS) auto analyst who in 2007 predicted the Japanese company's success. "We had expected Toyota would do what they did with cars and take over the market. Their share gains have been frustratingly slow."

One reason: Toyota's full-size Tundra, which starts at $23,455, attracts a different type of buyer, data from Nielsen Claritas show. Toyota truck owners are 38 percent more likely to fly on business than typical drivers, and they lean toward hobbies like backpacking and mountain biking. Buyers of big pickups from GM, Ford, and Chrysler, however, are more likely to own a rifle to hunt than a bike to ride. Because that group of traditional truck buyers is so much larger, the Big Three has retained more than 90 percent of large pickup sales. It's a particularly lucrative win: Pickup profits range from $9,000 to $13,000 per vehicle, vs. $5,000 per car, Johnson said.

The cool response that Toyota—the world's largest auto company and America's largest producer of cars—has received to its big pickups has sent market researchers sifting through sales data for demographic and psychographic clues to the causes of its disappointing performance. They found that GM and Ford truck owners, for instance, are more likely to dine at Cracker Barrel (CBRL) restaurants, have dial-up Internet, and use the paper Yellow Pages, according to purchase data from Nielsen Claritas.

A much higher share of buyers of Toyota's big pickup dine at steakhouses, shop online, own golf clubs, and subscribe to magazines like Runner's World, the Nielsen data show. "Toyota planned for a [truck] market that really didn't exist," says Alan L. Baum, an auto analyst at Baum & Associates. "They just didn't hit a chord with buyers. It was almost comical."

Stories that Flint could have used about 20 years ago

Are we living in some kind of bizarre parallel automotive universe? Here are the leads from two stories on today's The New York Times homepage:

General Motors said Tuesday that United States sales rose 11.5 percent in February, including a 32.2 percent gain for the four brands it is keeping: Buick, Cadillac, Chevrolet and GMC.

And...

Toyota has recalled six million cars in the United States over concerns about sudden acceleration. But an analysis of government documents shows that many Toyota Camrys built before 2007, which were not subject to recalls, have been linked to a comparable number of speed-control problems as recalled Camrys.

Toyota and Congressional Hearings

Abraham Alberto, left, with two of his children Lilia and Douglas stands in his party store holding a memorial poster for his wife, Guadalupe Alberto, who was killed when the 2005 Toyota Camry she was driving crashed in Flint. (Photo courtesy of MSNBC)

Much like Tiger Woods, it now appears Toyota's image doesn't quite match reality. Peter Whoriskey and Kimberly Kindy of the Washington Post report on three deadly crashes involving Toyota's, including one that occurred in Flint:

But in each of those three fatal episodes, the car involved was a 2005 Toyota Camry, a model that the company has indicated is free of the acceleration defects: It has not been recalled for either the sticky pedal or the floor mat interference.

"This raises a huge red flag," said Clarence Ditlow, director of the Center for Auto Safety.

He and other safety advocates have their own suspicions, aroused by a history of glitchy behavior in the electronics that control Toyota's engines.

"Many unintended accelerations do not appear to be explained by floor mats and sticky pedals," said Rep. Henry A. Waxman (D-Calif.), who is holding the Tuesday hearing on the recalls. "One of the key questions we will ask at the hearing is whether electronic defects could be responsible."

Toyota officials declined to comment on the cases because they are in litigation.

Toyota Quality Control

Hmmm, perhaps now is the time for G.M. to grab back some of its market share.

Ken Thomas of the Associated Press reports:

Toyota suspended U.S. sales of some of its most popular vehicles — including the best-selling car in America, the Camry — to fix sticking gas pedals that could make the cars accelerate without warning.

In another blow to the world's No. 1 automaker, Toyota Motor Corp. said Tuesday it would halt some production at six assembly plants beginning the week of Feb. 1 "to assess and coordinate activities."

Counting Cars

Anyone interested in a little anecdotal, totally unscientific auto industry research? Today when I was walking from my office at a Silicon Valley university to the train that would carry me very slowly back to San Francisco, I decided to count the number of American-made cars entering the campus through the main entrance. Those of you partial to "Made in America" t-shirts won't like the results. I thought it was going to be a shutout until an ancient, repainted Caprice Classic rolled into campus to make it 23-1.

That was worse than I thought, although most of the cars were probably owned by students in the night MBA program clearly partial to BMW's, so I decided to count cars in the Caltrain parking lot. Again, bad news for American automakers — 19-1 with a single Chevy truck. And yes, at this point I'm beginning to look very suspicious as I wander around the lot shaking my head and counting on my fingers.

When I get back to SF, I take a stroll down my block and it is another near shutout with a single new Ford Focus competing with 16 foreign cars. And the Focus is owned by neighbors whose other car is an Audi. There's even an old Alfa Romeo sedan on my street, proving that San Franciscans will buy an unreliable Italian car before they'll consider buying American.

I'm not questioning anyone's choices. After all, I drive a 1990 Camry that's been stolen and, unfortunately, returned three times. But the tabulations make me wonder what the count is in other parts of the country.

So if you feel like it, head out on the street and give me some numbers along with your location.

Buy American...Even If It's Made in Canada

Now for something from the I'm-not-quite-sure-what-the-point-is category...

The Detroit News, which is on the verge of going out of business, reports that many Obama administration officials are just like most other Americans — they prefer foreign to domestic when it comes to cars.

Of course, figuring out what counts as an "American" car these days ain't easy. As UM-Flint's Mark J. Perry points out, several American cars, including the Buick Lacrosse and the Chevy Impala, are made by UAW workers in Canada. "What about the 2008 Honda Pilot and Honda Civics," he asks, "built in the U.S. with higher domestic content (70%) than the 2008 Dodge Ram (68%) and the Michigan-built Ford Mustang (65%)?" And don't forget about the cars that sound foreign, like the Mitsubishi Galant and the Toyota Corolla, that are often made by UAW workers in the U.S.

It's all a little confusing. Unless, like me, you've got a 1990 Camry that's paid off and a San Francisco-sized mortgage. I'm not paralyzed by choice. I'm broke.

UPDATE: An insider at one of the Big Three points out that there's a big difference between "Made in America" and "Assembled in America."

The distinction that is being made about what is "Made in America" is a subtle one. More accurate for many foreign nameplates with factories here is "Assembled in America". A significant part of the cost of a vehicle is in the assembly process (i.e. the factory workers who make $40-60K per year and use that money to buy things in their communities). An equally significant piece of the cost structure are the support functions that also help build middle class neighborhoods in Flint and Detroit. These are the engineering, purchasing, finance, and IT functions just to name a few. Thousands of these folks work for the auto companies and these jobs go away when volume drops just like the factory jobs. One of the differences between a foreign company and an American company is that these jobs - thousands of them - are here in the US - not in Japan, or China, or Korea. Some of these companies may have a design center here and there but the vast bulk of their support groups are in their home country. So saying that a Japanese car assembled at a factory here in the US is just as American as a Chevy or Ford assembled in the US is not correct. The dollars traded within our communities by employees and families of the Detroit Three far exceed those traded by factory workers of foreign nameplates.

Think about this for a minute. One day, when the volume and demand return for auto purchases again, every car company in the world will be making money. When profits are made, people get raises and maybe even bonuses. The support employees right up to the mid level managers may get a modest bonus in a good year - say $3 - 6K. They may use that money to build a new deck, put on a roof, replace the windows on their house, take a vacation - you name it - the point is they put that money back into the economy. The big guys with the bigger paychecks put more back into the economy and often donate more as well. Nearly 100% of the cultural centers in Flint and Detroit are due to the generosity from the folks who helped create great wealth from the auto industry.

So when Toyota makes money, where does that wealth go? Right back to Japan.

Where a car is assembled is not the only measure of what constitutes "Made in America" and I would argue that the wealth and support of the US economy by a foreign car assembled in the US is dwarfed by an American car company assembling a car anywhere in north America. Think about that next time you want to justify your support of the US economy by purchasing a Honda assembled in Ohio.

How Bad Is It?

Even Toyota is losing money.

Rooting for the Competition

Not only does God favor a loan for the Big Three, but the Japanese automakers are praying that none of the American companies folds.

Yuri Kageyama of The Associated Press reports:

"But now as GM and the entire U.S. auto industry teeter on the brink of collapse, Toyota and other Japanese carmakers are hardly rejoicing. They say the bankruptcy of any of Detroit's Big Three would spell serious trouble for them as well.

"Should that happen, 'the damage to our business is certain to be tremendous,' Toyota Motor Corp. spokesman Hideaki Homma told The Associated Press on Monday. 'The conditions for the U.S. auto market are extremely tough right now, and any additional negative is sure to make things worse.'

"One major problem is that Japanese carmakers in the U.S. share many of the same parts suppliers. If a Detroit automaker were to collapse, suppliers would likely follow, setting off a chain reaction that could would wreak havoc for Japanese production in the U.S., a vital market."

Republican Senators from the South, are you listening? Probably not.

Thanks to Jim Holbel for finding this one.

Hybrid Sales: See the Problem?

Chart via hybridcars.com

Economic Crisis Brings Us All Together

Suddenly, Japan feels some of Michigan's pain.

The Wall Street Journal reports:

"In Nagoya, a nearby city that is also largely dependent on Toyota, there's been a fivefold increase in distressed businesses seeking emergency government loans to stay afloat, according to a new report by the local chamber of commerce. Sales at major department stores in Nagoya dropped 8.7 percent in September, the largest decline among 10 major cities in Japan, the report said.

"The Aichi Prefectural government, which depends on Toyota for about one-quarter of corporate-tax revenue, is projecting a 100 billion yen ($1.05 billion) shortfall in tax revenue, its first in 15 years.

"Toyota City businesses that rely on a healthy auto industry are feeling the pinch. 'Everyone is concerned,' said Yoshiyuki Takahashi, 51 years old, manager of ERA Realty in Toyota City. Property sales are down and vacancies are rising in weekly apartments for temporary workers as Toyota and its suppliers scale back."

GM: Unpopular at home

It's time for the auto industry's second quarter numbers to come out, and you know what that means — big losses for G.M.

Bill Vlasic of The New York Times reports:

"The General Motors Corporation reported a stunning second-quarter loss of $15.5 billion on Friday because of a dramatic decline in United States sales and charges for job cuts, plant closings and the falling value of trucks and sport utility vehicles.

"G.M., the largest American automaker, said it lost $6.3 billion on operations in the quarter that ended June 30, and its worldwide revenues fell 18 percent.

"But the company’s overall loss was inflated by $9.1 billion in special charges that included $3.3 billion for buyouts of hourly workers and $2.8 billion related to the bankruptcy filing of its former parts unit, the Delphi Corporation.

"The dismal earnings reflected the impact of steadily falling vehicles sales in the overall United States market, and a huge shift by consumers away from the trucks and S.U.V.’s that were once G.M.’s most profitable vehicles."

And once again, it's the North American market that is really dragging down the automaker born and raised in Flint. A look at G.M.'s Second Quarter Earnings Report shows that things aren't quite so bad in the rest of the world:

"GM sold 2.29 million vehicles worldwide in the second quarter, down 5 percent year over year. Sales in GM [North America] were down 20 percent, or 236,000 units versus the year-ago period, while sales outside of North America grew by 10 percent or 116,000 units. A record 65 percent of GM unit sales for the second quarter were outside the United States. Global market share was 12.3 percent, down 0.9 percent due to weakness in North America."

If it makes you feel any better, the Japanese automakers are experiencing a similar trend, albeit without the catastrophic losses. Earlier this year, Jalopnik.com reported that sales of Japanese cars in Japan reached a 35 year low in 2007.

"The trend has been blamed on everything from wage stagnation to high price of ownership to population gentrification. Some of the year over year numbers are pretty shocking, Toyota was down 6%, Nissan fell 9.7%, and Daihatsu plummeted almost 50%."

Of course, the Japanese market is a lot smaller than the North American market.

June swoon

Nick Bunkley of The New York Times reports on the dismal June auto sales figures:

"Sales fell 28 percent at the Ford Motor Company, 21.4 percent at the Toyota Motor Company and 18.2 percent at General Motors in June, the worst month yet in a miserable year for the automobile industry."

GM's Brilliant Strategy

GM clearly has no shortage of problems, but one of the most enduring and idiotic is the corporation's insistence on creating various models that are basically identical and having them compete against each other for buyers and GM marketing money. As The Wall Street Journal
explains:

For example, GM has four mass-market midsize sedans. The Chevy Malibu is backed by a ubiquitous ad campaign and is a top-seller. Meanwhile, the Buick LaCrosse, Pontiac G6 and Saturn Aura have struggled to build the awareness and recognition needed to compete. Toyota Motor Corp. has one model to compete with those offerings -- the Camry -- and last year it alone outsold GM's four models, 473,308 to 386,024.

A year ago the Aura was named "Car of the Year" at the North American International Auto Show in Detroit, but now, with Malibu marketing in full swing, Saturn dealers are struggling to move the Aura. In some parts of the country dealers are offering rebates and 0% financing on the car. Mr. Maguire said he had to line up an Aura financing package on his own because GM's marketing support for the car wasn't boosting sales enough.

Pontiac could run into a similar problem this year when it introduces a new rear-wheel-drive sedan, the G8. Although it is Pontiac's most important launch since 2004, GM marketing barely mentions the car.

Even when GM does spend on its smaller brands, it often sees little return. In past years, television ads have promoted Saab's sports cars as "born from jets," but in 2007 Saab dealers sold just 32,711 vehicles -- not much more than a single month of sales for the Camry or Honda Motor Co.'s Accord.

We're #2...maybe

The Wall Street Journal, and everybody else, is reporting that Toyota has tied, or even surpassed, General Motors as the world's top automaker

GM on Wednesday said it sold 9,369,524 vehicles globally in 2007, up 3% from a year earlier, according to preliminary sales figures. Toyota said earlier this month it sold 9.37 million vehicles last year, but hasn't yet announced a more-precise figure.

GM's Electric Dreams

With the Detroit auto show in full swing, Toyota announced plans to develop a plug-in hybrid-electric vehicle with a lithium-ion battery before 2010. This is bad news for General Motors, which is allegedly planning to introduce its own lithium-ion hybrid, the Chevrolet Volt, around the same time and build it in Detroit.

I say "allegedly" because GM doesn't have a great track record on promoting electric vehicles, and GM execs have already started fudging on if the Volt will actually be in production by the 2010 target date.

The sad tale of how GM developed and then crushed — literally — their electric EV1 is chronicled in the 2006 film Who Killed the Electric Car. According to Wikipedia:

"A large part of the film accounts for GM's efforts to demonstrate to California that there was no demand for their product, and then to take back every EV1 and dispose of them. A few were disabled and given to museums and universities, but almost all were found to have been crushed; GM never responded to the EV drivers' offer to pay the residual lease value ($1.9 million was offered for the remaining 78 cars in Burbank before they were crushed). Several activists are shown being arrested in the protest that attempted to block the GM car carriers taking the remaining EV1s off to be crushed.

"The film explores some of the reasons that the auto and oil industries worked to kill off the electric car. Wally Rippel is shown explaining that the oil companies were afraid of losing out on trillions in potential profit from their transportation fuel monopoly over the coming decades, while the auto companies were afraid of losses over the next six months of EV production."

Once you watch this movie, you'll find it hard to believe that GM will ever beat Toyota at the electric car game.