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Taurus SHO – Super High Output – and More

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The Ford Taurus SHO returns after a decade’s absence from the American auto scene. Formerly Yamaha engines provided the power for the SHO, but today Ford’s new EcoBoost powertrain technology provides the power. EcoBoost in Taurus form includes twin turbochargers and gasoline direct injection. Still with a heavily beefed up 3.5L V6, EcoBoost bumps up power from 263-horsepower to 365-horsepower in the SHO. Torque grows from 249 lb-ft to 350 lb-ft. And rated fuel economy stays the same.
I guarantee that EcoBoost will never meet its rated fuel economy. It’s just too much fun to stay on the throttle.


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Silverstone: The Beginning and End of Formula One

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silverstone-F1.jpgOn May 13, 1950, the first ever (modern era) Formula One Championship Grand Prix was won by Giuseppe Farina in an Alfa Romeo-dominated event in which the Italian manufacturer cruised to a 1-2-3 finish. Luigi Fagioli and British driver Reg Parnell filled the remaining podium positions. The circuit was a WWII bomber airfield called Silverstone. The circuit has been a part of Formula One since that time, although races have, on occasion been run at other Britich tracks. This weekend, Silverstone hosted its last Grand Prix, and in addition to the race, manufacturers and the governing body announced they are going their separate ways as well. And so, Silverstone may go down in history marking the beginning and in some respects, the end of an era in modern motorsport.


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Bankruptcy Makes Americans Skeptical of GM and Chrysler

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A just-completed national survey shows American consumers are skeptical of the U.S. government’s involvement in the auto industry, with 81 percent of respondents agreeing that the faster the government gets out of the auto business, the better.
Following General Motors’ Chapter 11 bankruptcy announcement last week, automotive research and analysis firm AutoPacific conducted an online survey regarding government involvement in the auto industry. Highlights from this survey of more than 900 U.S. consumers include:
• Eighty-one percent of the respondents AGREE that the faster the government gets out of the auto business, the better.


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GM's Chips Begin to Fall – HUMMER and Saturn Sold

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General Motors’ June 1 bankruptcy declaration was quickly followed by the announced sale of HUMMER to China’s Sichuan Tengzhong Heavy Industrial Machinery Company (June 2) and Saturn to Roger Penske’s Penske Automotive Group (June 5). Having the futures of both of these brands out from under the General Motors umbrella can give many American dealerships and their communities cause for celebration.
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Job #1 at Ford: Debt Reduction

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Ford-dealership.jpgIn the midst of ongoing media attention aimed at the auto industry in general and the Detroit “Big Three” specifically, some positive and important news emerged this week as Ford announced it had reduced its debt load by just under $10 billion dollars. The Detroit automaker said it was spending $2.4 billion in cash, in addition to 468 million shares to improve its balance sheet and distance it from federal aid.
The news is seen as important, because buyers are reluctant to step off the sidelines, even with incentives and greatly reduced pricing. A just-completed AutoPacific online survey showed that buyers are disappointed by automakers taking bailout funds and that Ford tops their choice options in U.S. vehicles, in part due to its ability to avoid an Uncle Sam handout. The same survey respondents indicated they were unlikely to purchase vehicles from either GM or Chrysler.


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Does Bailout Money End Up Killing GM?

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It’s been a busy weekend. President Obama is preparing his speech to the country about the future needs of automakers. And, before the dawn breaks on Monday, it’s already being reported that GM boss Rick Wagoner is done. According to sources within GM and quoted by mainstream media, CEO Rick Wagoner will step down at the request of the Obama administration. Does Wagner leaving improve GM’s chances for survival, or was the self-inflicted damage back in November, combined with taking money from the Feds the ultimate undoing of the nation’s largest automaker?


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Ford Fiesta Poised for USA Launch in 2010

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We got the opportunity to briefly drive the new Ford Fiesta in Port Hueneme in anticipation of Ford’s “Fiesta Movement” program where they will place 100 5-door Fiestas with influential Millennium drivers. Millennium means they were born between 1979 and 1985 and influential means that they have over 500 Facebook friends and thousands of followers on Twitter. To get qualified participants – or “agents” as Ford is referring to them – Ford held a contest on their website. There were about 3,300 applicants. Since all 100 of these European Fiestas will have manual transmissions we hope Ford screened for ability to shift and clutch.
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The Fiesta has been on sale in Europe since August 2008 and about 117,000 have been sold to date. With the assistance of the EPA, Ford has been able to bring in 145 into the states for testing and evaluation purposes. The 45 not in the Fiesta Movement program will be used for other drive duties. Those have automatic transmissions.
During the short drive we were able to form some conclusions…
Fast A-Pillars: The styling of the Fiesta is great – using Ford’s European “kinetic” design language. But, the styling comes with a price. Getting into the front seats is tough because the A-Pillar is so fast. The Fiesta is another car that you have to think about how to get in without injuring yourself.
Shin Warmer: The left side of the console gets so hot that it is objectionable. “Shin Burner” may be a better term than “Shin Warmer”. This is an issue that needs to be addressed prior to launch in the USA.
Lacks Peposity: A small high image B-Car… certainly personified by the Fiesta… needs to be “peppy”. The 1.6L 4-cylinder engine has 118 horsepower and, frankly, it feels like less. AutoPacific happens to be evaluating a Scion xD now as well. It is a 1.8L 4-cylinder with 128 horsepower with an automatic transmission. The Scion auto feels much better than the Fiesta with a manual. Very surprising.
Ford’s powertrain plan includes an EcoBoost version of the Fiesta, but, hopefully, Fiesta’s performance can be enhanced prior to its launch in the USA so you won’t have to spring for EcoBoost to get sparkling performance.


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Let the SHO begin!

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Taurus-SHO.jpgCool. That’s what I said aloud when I took a look at the new 2010 Ford Taurus when it was unveiled a few months ago. Awesome! That’s what I’m saying today, because Ford is going to offer a Super High Output (SHO) version of the Taurus, and that’s good news for everyone.
Ford’s being super smart about this too, combining performance with a more economically and ecologically accountable powerplant, production materials, and marketing. A dear friend of mine had a 1989 Taurus SHO and for its time, it was a hot sedan. Quick, tight, fun, and also affordable. I would be surprised if he isn’t near the front of the line when the car goes on sale this July.


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AutoPacific White Paper: Impact of Atomization on the American Auto Industry

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Atomization Causes Car Makers to Lose, Not Gain, Focus
Definition of Atomization: Adding new, incremental car and light truck nameplates to more accurately hit customer target needs, wants and desires, resulting in increased overall sales.
Over the past decade, AutoPacific has been monitoring and evaluating the impact and rationale behind the automotive industry’s rampant atomization. With annual industry sales in the 16- to 17-million unit range, it appeared that carmakers could profitably continue to add models more closely targeted to specific buyers–if they could keep development costs, manufacturing costs and marketing costs in line. In other words, carmakers needed to make a profit while selling a lower volume of cars or trucks per nameplate. Since 2004, we have cautioned that atomization was shifting the battleground from product development to product marketing.
With 2007 showing more models and fewer industry sales, the industry became unstable. By the end of 2008, with the industry selling at a 10-million per year rate, sales per nameplate cratered. 2009 promises to be even more dire.
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Background: More and more new car and light truck models are being added to manufacturer lineups each year, the phenomenon AutoPacific defines as atomization. This rapid addition of nameplates to the American auto industry is a result of auto product strategists and marketers attempting to provide products targeted at much more finely defined product niches. Consumers prefer more and more focused products, and today’s automotive consumer research can identify exactly what those consumers want. Current product development techniques allow vehicles to be developed more quickly and efficiently than in the past. The conclusion has been to develop a vehicle targeted at each identified buyer group.
The risks in adopting this strategy are numerous, chief among them making profitability much more difficult to achieve. When sales of cars and light trucks remain constant and the number of models increases, the sales per nameplate must decrease. This means a vehicle has to be profitable at a lower volume. In down sales years, like 2007 and 2008, sales per nameplate drop precipitously and profitability becomes nearly impossible.
AutoPacific’s Industry Analysis office shows that 2008 was the worst year in decades for sales per nameplate and 2009 promises to be worse. Why should manufacturers care about sales per nameplate? Higher sales per nameplate usually mean that the vehicle is popular and profitable. Lower sales per nameplate often indicate the vehicle is struggling to sell manufacturer projected volumes and grasping at profitability. Industry-wide, in 2008 nearly every nameplate saw lower sales and presumably lower profits.
At the previous industry peak, in 2000 when sales hit 17.3 million units, there were 208 car and light-truck nameplates sold in the United States. This indicated an average volume of slightly more than 83,000 units per nameplate. In 2008, when sales were 13.2 million units, there were 285 nameplates, dropping the average volume to only 46,300 units sold per nameplate. This was a whopping 36,700-unit deterioration (~44%) in the sales volume per nameplate. In just one year – from the end of 2007 through 2008 – sales per nameplate fell over 10,000 units.
In 2008 sales volume in 2008 fell dramatically. In the first half of 2008, spiking fuel prices drove buyers away from high-profit pickup trucks and traditional sport utility vehicles. These were followed by housing, stock market and credit crises. By mid-September there was a belated recognition that the United States has been in a recession since December 2007. These factors led to sales slowing to a trickle from September 15 through the end of 2008.
In the past, the industry grew dependent on sales driven by desire – emotion. Today, most new vehicle buyers buy out of necessity. Their old car needs too many repairs to keep running. Their old car has too many miles on it. They need a vehicle that gets better fuel economy. Their old car was stolen.
Sales Per Nameplate
During the 1990s, a good year for car and light truck sales was 15 million units. By early in the first decade of the 2000s, growing use of incentives caused the industry to expect 17 million sales per year. Companies began adding more and more nameplates to take advantage of these robust sales numbers and to target their customers more closely. But while more nameplates were being added, the market softened. Many models were left exposed to lower demand, and at a time when marketing dollars for incentives and advertising also dried out.
Future Viability May Depend on Surgically Removing Nameplates: As sales per nameplate in 2009 are projected to fall precipitously at forecast sales levels (11.5-million units), manufacturers must attack their offerings to maintain viable and profitable sales for each nameplate. Using a simplistic method of dropping nameplates and losing ALL their volume, for General Motors to get its sales per nameplate back to healthy levels they would have to drop 23 nameplates and 4 brands. Chrysler would have to drop one brand and at least 5 nameplates. More on that later.
This analysis is simplistic but leads to very rational conclusions…
Conclusion #1: There is a strong correlation between sales per nameplate and profitability. With the exception of premium luxury brands, those manufacturers with higher sales per nameplate tend to be more profitable and viable. While the era of pursuing every niche was exciting and might have been supportable in a 16-million to 17-million sales year, it is very, very tough to feed niche models in soft sales years like 2008 and 2009.
Conclusion #2: The customer rarely benefits from additional models. Many badge-engineered models do not result in enough incremental sales to justify their existence. So, why do they exist? These redundant badge-engineered vehicles exist to populate the sales lots of dealers who are themselves no longer necessary. Think Chevrolet Cobalt and Pontiac G5; Ford Fusion and Mercury Milan; Chrysler Sebring and Dodge Avenger.
Conclusion #3: Reducing nameplates means reducing brands (among the Detroit Big Three). Reducing nameplates means eliminating dealers. Both require a serious reorganization of the DB3 including eliminating nameplates, reducing the number of dealers, eliminating assembly capacity, reducing hourly and salaried headcount, restructuring union wage agreements. These actions likely cannot happen without bankruptcy of one or more of the DB3. Since “bankruptcy” is such a taboo word in Detroit perhaps the Car Czar can be given bankruptcy-like powers to be able to implement the necessary actions without referring to those actions as a “bankruptcy”.
Conclusion #4: These reductions WILL happen over time. The MARKET WILL force it. The very viability of the Detroit Big 3 is at stake.


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2009 NAIAS: Cadillac Converj

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GM’s 2009 Sunday press conference packed a powerful punch, with several production vehicles and a hint of what a Cadillac based on the Chevrolet Volt architecture might look like. Introduced by Bob Lutz himself, the Cadillac Converj is likely to see light of day as a production vehicle down the road, though Cadillac is also just as likely to find an alphanumeric name. Though Cadillac did not specify launch timing, a logical expectation would be that the vehicle arrive about 2013MY.
Aside from distinctive Cadillac styling, the Converj gave GM a chance to discuss the next stage for their Voltec system (the new corporate name for their range-extended electric vehicle powertrain archicture). The 161HP Converj is, like Volt, a front-drive application, though a two-door coupe with seating for four.

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Perhaps the current concerns about fuel efficiency, the allure of an ultra-cool-sounding powertrain, and the fact that Cadillac styling is strong across the range will be strong enough for the Cadillac brand to support an entry-level product like this, but the brand’s history with brand cloning and small, front-drive entries is not good. Remember Catera? Cimarron?
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In the meantime, follow the jump for the official Cadillac details and a few more photos.


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