Tuesday, August 30, 2016

SATURN - FALLEN STAR

The Saturn star began to rise in 1983, when GM Chairman Roger Smith told the world that GM would launch a brand new ‘non-division’ of the corporation!

In 1991 Roger (2nd from right) and suits in shirtsleeves, celebrated the launch of Job One.

1991 Saturn 'S' series
The Saturn S Series sedan debuted, amidst much hollering from GM that Saturn was an independent company, with its own corporate structure, its own cars and its own dedicated plant in Spring Hill, Tennessee.




It would have ‘nothing to do’ with GM, and would set its own financial and production targets, establish its own dealer network, and sell its cars to an entirely new audience – the US consumer who liked Japanese cars, but preferred to buy a home-grown American product!

There was supposed to be an SUV, it did not materialize until much later, and by 2000 it had replaced the initial model, with the L Series (right).

Vue (top), Outlook (bottom)
The Vue SUV arrived in 2003, and was followed a few years later by the Saturn Outlook. The Vue built on an original platform, but the Outlook used an Opel platform.

By 2004, when the L Series was withdrawn from sale due to a host of problems, GM had begun to ‘get involved’, and Saturn's independence from GM was disappearing, fast!

Saturn Aura




A new sedan, the Aura, was built on the Opel/Vauxhall Vectra platform; and GM had started to get worried about the survival of its ‘non division’.

It had been wildly unprofitable from the start, and it was unsustainable. The USD$5 billion setup cost was seriously exceeded, and by 2000 Saturn was losing $3,000 on every model it sold!

By 2005 it was all over Rover! The workers’ union, the UAW, dissolved its pact with GM, and the Spring Hill plant began building GMC trucks, and GM began to hunt around for a buyer for its ailing Saturn spin-off.


Amazingly, in 2006 Saturn launched a sports car – the Saturn Sky. This was a BLP (a Bob Lutz Program), based on the Pontiac Solstice roadster. But it failed to ignite buyers, who already had woken up to the fact the Saturn was not in fact ‘nothing to do’ with GM; but was a total GM idea – which had been poorly conceived, and badly executed.

GM thought it had a deal with Roger Penske to take Saturn off its hands, which had the billionaire buying the Saturn division; but contracting a third party to build the cars and maintain manufacturing operations.

The third party turned out to be the Renault-Nissan Alliance; but after a quick look at the books, and the current model lineup, the Alliance said ‘no way’ José! At that stage, Roger Penske has picked up his billions and left town. Smart man that Penske!

By 2010 the Saturn star was falling, rapidly! It was Goodnight Irene!

Saturn was a brave (foolish?) idea, prosecuted by a giant corporation that ultimately was unable to follow through on its own business model.

It certainly didn’t brighten the day for GM shareholders!

The true cost of the Saturn failure is buried in GM’s filing for bankruptcy in June 2009 when all the existing GM assets were acquired by a ‘New GM’ company, and many of the old corporation’s debts were ‘retired’ (aka unpaid!).


The ‘Old GM’ had debt of USD$95 billion and 91,000 employees; while the ‘New GM’ began life with USD$17 billion of debt, 68,500 employees and four less brands, one of which was Saturn – the Fallen Star.

Saturday, August 27, 2016

INFINITI'S BADGE BAMBOOZLER

Nissan's upmarket brand, Infiniti, has taken a bold move signing with Mercedes-Benz to produce a range of new models based entirely on designs direct from Stuttgart!

The first fruit of this deal is the Infiniti Q30, five door hatchback - and if you think it looks slightly familiar, wonder no more. It's a re-skinned Mercedes-Benz GL A!



However, rather than lambast Nissan, I applaud the commonsense.  The move gives Infiniti a lower-priced entry for its small range of models on sale in Australia, without the overwhelming costs of developing a whole new car line from scratch.

Later there'll be a 4WD model, called QX 30. In Australia Infiniti will offer 1.6L and 2.0L petrol engines; and a 2.1L diesel - all with 7-speed Dual Clutch gearbox. The Q30 is FWD, and the QX 30 will be AWD.

Step inside and you'll see a cohesive blend of bits from the Benz parts bin, and some unique touches by Nissan. The optional Bose sound system, for one. That's a must.



This Infiniti looks stylish, makes good sense and is well priced from AUD$38,900 to AUD$54,000 - and I think Infiniti dealers will do well with this car.



Friday, August 26, 2016

LUNCH WITH GIANTS

During my almost 40 years of working with, and around cars, I have been fortunate to forge strong bonds of friendship with some great people, both in Australia and around the world.

My career as an automotive journalist began with a few years of freelance writing, then I joined MODERN MOTOR magazine as assistant editor, becoming the Editor in the early 70s. In that time my special group of friends included some of the ‘giants’ of Australian automotive journalism.

After I joined the car industry in 1977 I ensured that I maintained those strong links with this special group of friends, and in 1984 we arranged to all meet together above the offices of British CAR magazine, in Earl’s Court, London.

Recently trawling through my photo archives I came across a photograph celebrating the meeting on October 15,1984. Fortunately we have only lost two of our group.

 My friends in this group all went on to establish themselves in the highest echelons of automotive journalism. I want to take this opportunity to celebrate their achievements, and pay a tribute to my friends.

Left to right, the group includes:

PETER ROBINSON – A legendary journalist who is a lifelong car enthusiast, expert on automotive developments, and for 17 years was the Editor of Australia’s finest monthly motor magazine, WHEELS. Between 1987 and 2005 he lived near Milan, Italy, and was the European Editor for AUTOCAR, and WHEELS. He then returned to Australia to author a book, also writing a column for WHEELS, and he retired in 2014.

GAVIN GREEN – Gavin is the son of another famous Aussie automotive journalist, and television commentator, Evan Green. Gavin’s automotive journalism career began when I gave him his first writing assignment for MODERN MOTOR in 1975. He moved to Britain in 1981 as a freelance writer, becoming Deputy Editor at CAR in 1984, then Editor of CAR  from 1987 until 1992. Between 1992 and 2002 he was PR Director for Ford of Britain, and then Land Rover. In 2002, he was appointed Head of Automotive Editorial at Redwood Publishing. He now contributes to CAR and British Airways' Inflight magazine.

DAVID ROBERTSON – Sadly, we lost Scots-born Davy in a jetski accident in 1993. He emigrated from Scotland to Australia with his Scots wife Jean, and joined the Sydney Morning Herald daily newspaper, becoming its automotive editor. After which he wrote for WHEELS and THE BULLETIN. At the time of his passing he was Editor of MODERN MOTOR. He was a fine writer with a highly respected volume of work.

PHIL SCOTT – Phil’s career included a long period working in the Australian car industry for Australia’s biggest and most successful car importer at the time. He joined the Sydney Morning Herald newspaper, later becoming a feature writer for the Sunday Sun-Herald. He later became editor of WHEELS magazine between 1987 and 1995. He was then appointed auto editor for the Sydney Morning Herald, a job he held until 1999, when he was appointed Managing Editor of the newspaper. In 2002 he became the Managing Director and Publisher-in-Chief of the Mens’ and Specialist magazine group for Australian Consolidated Press, the publisher of WHEELS, and more than 50 other magazine titles.

STEVE CROPLEY – Born a long way west of Sydney, in Broken Hill, and moved to Sydney in 1973 to join WHEELS, and SPORTS CAR WORLD. In 1978 he moved to Britain to join the staff of CAR magazine, becoming the Editor from 1981-1988. He then moved to Haymarket Publishing in 1991, the publishers of AUTOCAR and WHAT CAR?. Steve is now Editor-in-Chief of Haymarket’s flagship automotive titles.

MEL NICHOLS – Mel began his career on a small newspaper in northern Tasmania. In 1970 he moved to Sydney, as Deputy Editor of WHEELS. Then he edited SPORTS CAR WORLD from 1972-73, until he departed to the UK to freelance. He joined CAR magazine as Editor from 1974-1981. He ran a contract publishing house from 1981-85, started REVIEW, an arts magazine in 1986, then in 1987 he joined Haymarket Publishing as Editorial Director of all Haymarket Publishing Consumer Media, until 2009.

JOHN CRAWFORD – Yours truly, smiling broadly because I was so very pleased to be able to time a business trip to London with this august gathering of my friends and peers, all of whom I admire greatly, and value their friendship highly.

BILL TUCKEY – Bill was the colossus of  Australian automotive journalism. He was Editor of WHEELS from 1963-1968, but throughout his life he mentored and influenced generations of younger auto journalists who followed his path. Bill joined ad agency George Patterson for a few years, and worked on the GM-Holden account, keeping the flame of motor sport alive through the Holden Dealer Racing Team. He was much more than a journalist, he was a writer. His words were full of humour, insight, information and wisdom, and occasionally invective if there were things about a car he thought were all wrong.

Tragically, he passed away from a stroke in 2016. Bill’s life and career was colorful, to say the least.

IAN FRASER – Like many in this group, Ian wrote for WHEELS magazine, eventually taking over as Editor of both WHEELS and SPORTS CAR WORLD, before moving to Britain in 1970, and in company with partners acquired CAR magazine for £5000 in 1974. He continued as Managing Director until 1989, when the magazine was sold to Rupert Murdoch. He is retired and now lives in Garboldisham, Norfolk.

To a large degree, the writing style of all the men in this photo was inspired by Bill Tuckey. All of them, with the exception of David Robertson and myself, went on to then influence generations of budding automotive writers, from their editorship of, and contributions to CAR magazine.

They had a kindred spirit in one of America’s finest automotive writers, David E. Davis, Jnr., who had been Editor of CAR AND DRIVER, and later went on to establish AUTOMOBILE magazine, adopting the editorial approach of CAR.
I had the good fortune to also be close
 friends with David E. Davis, Jnr
here photographed by me in Scotland
at the launch of the Bentley
Continental GT.

David E had separately, but concurrently developed an almost classic literary approach to car journalism similar to CAR, which set a high standard in the USA

CAR owes its irreverent, cheeky and sharp writing style to another Aussie, the Founding Editor, Douglas Blain. Blain took over from George Bishop as Editor of Britain’s SMALL CAR magazine in 1963, before changing its name to CAR in 1965; and eventually opened its doors to most of the men in my photo.

Douglas (another Tasmanian) had been hired at 20 by Ian Fraser, then Editor of WHEELS and SPORTS CAR WORLD, because of his maverick, but mature writing style. Consequently, it was Doug Blain, who later convinced his former editor, Fraser, to join him in London in 1970, to advance the standards and style of CAR.

So the circle of influence, from Bill Tuckey, Douglas Blain, David E. Davis, Jnr. and all of those in this photo, has been completed – endowing the world of automotive journalism with a style of writing that fast became the standard for aspiring young journalists just starting their careers in automotive writing, including a young Jeremy Clarkson, who soaked up the pages of CAR from the age of 16.

Thursday, August 25, 2016

WHAT PRICE PARTICIPATION?

Australia has a population of just 24 million people, occupying a land mass about the same size of the 48 contiguous American states.

New vehicle sales number around one million annually; but the automotive market is populated by 67 different brands!


In a rational world, this situation makes no sense at all. Already we have witnessed the shutdown of indigenous car-making. The last cars made from scratch will roll off the production lines by the end of 2017.

So Australia will import every vehicle to be sold, and those 67 different marques will continue to battle for oxygen, in a very crowded market. This makes Australia a wonderful place to observe at a macro level, the financial functioning of an intense and volatile car market.

A quick glance at official registrations reveals just how tenuous a grip some brands have in this very competitive market.
The French brand Citroen is a good example. The company enjoys a market share of just 0.1%; and its highline DS4 model sold just three cars in July, with a total of 35 sold for the year-to-date.




I know Citroen’s head office in Paris is a long way away from Australia, but the internet delivers the monthly sales numbers less than 24 hours after the statistics are compiled, and they must make for a chilly sales meeting at the end of each month. How can this position be profitable? Citroen’s position is simply unsustainable, but yet, it persists.

The fact is, Citroen loses bucketloads of cash every month it decides to remain in a market, where sales of passenger cars this year (YTD July) have diminished by 3.3%; and SUV sales increased by 3.5%.

Citroen, by the way, is not alone, every carmaker has models which don’t pay their way.

One of those is Honda which has been importing cars into Australia since the late 60s; and at the end of July most of its models (Accord, CRV, Jazz, City and Odyssey) lost ground, with just two models (Civic sedan and HRV crossover) increasing sales.


Across the Pacific the head office of Fiat Chrysler Automobiles in Auburn Hills, Michigan, must be hoping things will turn around for its Jeep marque. The 4x4 SUV brand is the only nameplate which makes money for FCA Australia, and after being shrouded in recalls, and product failures, Jeep needs a shot in the arm.

Compared to 2014, its 2015 sales fell 20%; and year to date in 2016 Jeep sales are down a staggering 52%. Jeep’s biggest seller, and potential money-maker, the Grand Cherokee, is down 47% so far this year!

All of the companies are talking tough, announcing new strategies to combat falling sales, and putting on a brave face at the end of each month.

How long some of these companies can afford to subsidise keeping a money-losing car brand or a model line in business is anyone’s guess, but given the scale of the dollars involved, and the multiplier effect for every month you keep a money-losing operation going, it is quite staggering.

Then you have companies, which are seeing good progress with boosting sales, after massive investments in product quality and features.

To take two examples, Mazda and Jaguar. Mazda has just launched its 2017 Mazda 3, which features a high-cost piece of expensive handling tech, called G-Vectoring control;

and Jaguar has just completed the launch of its new XF, which means all its major product lines are now based on very expensive aluminium-intensive platforms.




The global car industry continues to maintain positive trajectory overall, but there are times when you have to stop and ask if the profit margins are keeping pace with the costs.

A huge element of boosting sales is all about conquesting from other brands, as opposed to attracting new buyers to your products.

Thus, conquesting costs big in terms of marketing dollars, and in the USA marketing cost analysis show companies can spend between USD$3K and $4K per unit to attract buyers, with marketing schemes and discounts.

And of course, every dollar of discounting shreds the profit margins.

In addition, there’s now a big focus on improving the customer experience at the dealerships, and car companies are wearing much of the cost of those improvements. Like Ford Australia's loan car scheme.


Then there’s shifting technology. Just as the internal combustion engine reaches the peak of its efficiency, around the corner there's an imperative to invest in research and development for hybrid cars, battery electric cars and fuel cell vehicles. It never ends!


So, you see it’s not easy running a car company. It’s bit like trying to keep all the plates spinning, so it’s very interesting, sitting on the sidelines watching this stage act.