Autoblog

HOW MANY BRANDS ARE TOO MANY?

With gas prices soaring and SUV sales sinking, General Motors just put its HUMMER brand under "strategic review." That's generally the term used when a company is getting ready to dump a brand. And that begs the question, how many brands does a car company really need?

There are a number of companies that have multiple brands, like GM (Chevrolet, Pontiac, Buick, Cadillac, GMC, Saab, Saturn, Opel, Holden, Vauxhaul), Ford (Ford, Lincoln, Mercury, Volvo), Fiat (Fiat, Alfa Romeo, Lancia, Ferrari, Maserati) and Volkswagen (VW, Audi, Seat, Skoda, Lamborghini, Bentley, Bugatti). Some of these brands are strong and successful. Some are not.

The big, successful automakers these days seem to have only two brands, a mass market brand and a luxury one. That's the model Toyota, Honda, and Nissan are following. And that sure seems to be the business model that will work best for the foreseeable future.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

THE BIG THREE COLLAPSE

Ooof! May sales were like a punch in the stomach, especially to the Detroit Three. It's been nearly three decades since we've seen their sales collapse so dramatically.

Last month the annualized sales rate of the American market, including all automakers, fell to only 14.2 million units. That means if sales keep on going like they did in May, the industry will only sell 14.2 million units this year. Remember, as recently as 2006 this industry sold over 17 million.

That drop off of nearly 3 million vehicles translates into the equivalent loss of:
12 assembly plants
6 engine plants
6 transmission plants
5 stamping plants
Dozens and dozens of component plants

That also translates into an estimated loss of about 65,000 jobs. In only two years time!

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

FIRST-HAND LOOK AT FORD'S ECO-BOOST TECHNOLOGY

I just spent a day at Ford's proving grounds driving a number of vehicles that use Eco-boost technology, which is the centerpiece of the company's strategy to improve fuel economy. I wish I could tell you more about my driving impressions of these Fords, but all that information is embargoed for now. What I can say is that the Eco-boost technology works impressively well.

However, while the technology works well, I wonder how well Ford's strategy will work. That's because this technology does not really improve the fuel economy of an engine. It merely allows the company to use a smaller engine in place a bigger one. And sure enough, across almost the entire rev-range, an Eco-boost engine produces more torque than naturally aspirated engines that are at least one liter larger.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

WHY USE BATTERIES IF FLYWHEELS WILL DO?

Formula One could be on to something big. Next year all teams will be allowed to capture the energy that their cars produce under braking, and then re-use that energy at opportune moments, like passing on a straight.

It's really a hybrid system, but they don't call it that. They call it a Kinetic Energy Recovery System (KERS).

The best part of the new regulations is that they do not specify what kind of regenerative energy system the teams have to use. It seems pretty likely that Toyota and Honda will go with a battery-electric hybrid system, since that's the kind of technology they sell in their showrooms. But Formula One is also going to become the testing grounds for a completely different kind of hybrid system that does not use batteries.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

Click for more Dodge Challenger SRT-8 pics from John McElroy's drive

A couple of weeks back I wrote a bit about the new Dodge Challenger SRT-8. But to honor the embargo that the Public Relations people put on driving impressions, I had to hold the best stuff until now. And man, was it worth the wait!

Despite a sagging economy, sinking car sales and soaring gas prices, the SRT-8 version of the Challenger is going to do just fine. That, despite the fact it only averages 15 mpg and costs $40,000. No worries, mate, it's the other numbers that are going to sell this car.

Check 'em out:
0-60 mph: 4.9 seconds
¼ mile: 13.7 seconds
0-100-0 mph: under 17 seconds
60-0 mph: 110 feet

When it comes to top speed, the SRT people have had the car up to 170 mph, but that was on an oval. Since the Challenger is not speed-limited in any way except for its aerodynamic drag, they believe that out on the Salt Flats it will go even faster.

Click here to continue reading after the jump.


John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

R.I.P. DODGE VIPER

A few blogs back I wrote about how Chrysler is going to combine its three brands and start eliminating overlapping models. The idea is to have Dodge concentrate on trucks and work-utilities, with Chrysler exclusively selling cars, and Jeep offering only SUV-based Jeeps.

It's a bold plan, but a risky one. And while I see the logic in what they're trying to achieve, I don't agree with parts of it. Specifically, I wrote in my blog that no matter what happens, they ought to keep the Dodge Viper. Well, so much for my opinion. The word just leaked out that the Viper is going to get the axe.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to finish reading this week's editorial.

John McElroy is host of the TV program "Autoline Detroit". Every week he'll bring his unique insights as an auto industry insider to Autoblog readers.

THE MONEYED TYCOONS OF THE UAW
By John McElroy

I gotta believe Karl Marx is spinning in his grave. Can you imagine the captains of capitalism handing tens of billions of dollars over to labor? For free? It's enough to make a Communist lose all hope for class warfare!

Yet, as part of a deal to get rid of all their health care bills for retired hourly workers, Detroit automakers are going to make the UAW richer than it ever dreamed possible. They're creating a VEBA, or Voluntary Employee Beneficiaries Agreement, which is a gigantic fund that will be used to pay all those health care bills.

The payoff for the car companies is that they can take all those future obligations off their books. That will immediately reduce their debts, improve their credit ratings and let them borrow at lower interest rates. It will also save the automakers billions every year, allowing them to drop some of it to the bottom line, and a lot more of it into developing new cars and trucks-something that Detroit desperately needs to do.

But before they get there they'll have to hand over something like $60 billion to the United Auto Workers union. And that's where it gets interesting.