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Episode 460 – GM Files IPO Paperwork, Kia POP Concept, VW Bringing Phaeton Back To U.S.

August 19th, 2010 at 12:00pm

Runtime 6:33

GM filed the paperwork yesterday to become a publicly traded company again.  Kia released a handful of photos of its latest concept vehicle, called the POP, before its debut at the Paris Motor Show.  Volkswagen is bringing its Phaeton luxury car back to the U.S.  All that and more, plus a look at a Chinese bus concept that drives over the road and above traffic.

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This is Autoline Daily for August 19, 2010. And now, the news.

TURNING IOU INTO IPO
As long expected, GM filed the paperwork yesterday to become a publicly traded company again, probably later this year. The document GM filed is over 700 pages long, laying out the strengths and weaknesses at the company. But it does not give any indication of how much money the company plans to raise or what the price of the stock will be. That’ll come later. So, should you buy GM stock when it starts trading again? Here’s a word to the wise. The Wall Street Journal points out that GM’s European operations need billions for restructuring, and that GM’s pension fund us under funded to the tune of $27 billion.

SUZUKI ON THE BRINK
Suzuki is in deep trouble in the American market. Suzuki’s sales are down close to 50 percent compared to a year ago, and now Bloomberg reports that 42 of Suzuki’s dealers have simply stopped selling cars. That’s out of 310 dealerships. Even the Suzuki Kizashi, a pretty decent compact car that was supposed to turn the company around has turned out to be a sales dud. To draw more attention to the car Suzuki and Road & Track magazine heavily modified a Kizashi and got it to go 203 miles an hour at the Bonneville Salt Flats. I give them an A for effort, but I think Suzuki could be on its last legs in the American market.

NOW FIXING ALL MAKES, ALL MODELS
Here’s an interesting trend. In order to bring in more business, some dealerships are now servicing all makes and models, not just the ones the dealership sells. According to Ward’s, these dealers argue that a technician has the skill to fix any vehicle and they can easily get data or other specialty parts from independent sources. One Honda dealer is also offering customers the choice of either a genuine Honda part or an aftermarket part when doing repairs. The dealer found that he could get more business this way since most customers don’t want to pay for the OEM part and would go elsewhere to have the part fixed.

KIA POP CONCEPT (subscription required)
Automakers are gearing-up for the Paris Motor Show which kicks-off late next month.  Expect a flurry of teaser photos and early reveals in the coming weeks.  One of the first automakers to tip their hand is Kia.  Ward’s reports that the South-Korean car-builder released a handful of pictures of its latest concept, called the POP.  It’s a wild looking two-door, three-seat electric vehicle with an overall length of just three meters.  Check out those oval-shaped window cutouts!  It features a panoramic clear roof and a bulging rear hatch. I’m sure we’ll get more details in the coming weeks.

PHAETON COMING BACK TO U.S.
How does that old saying go?  If at first you don’t succeed, try, try again?  According to Bloomberg, Volkswagen plans to reintroduce its Phaeton luxury car in the U.S.  The high-dollar sedan was pulled from the market back in 2006 after it failed to meet sales expectations.  So, why is the company making such an expensive gamble again?  The U.S. is one of the most profitable markets in the world – especially for luxury cars – and the Phaeton could help VW achieve its goal of tripling its share by 2018.  Unfortunately, its global performance last year was not very encouraging.  Sales were down 27 percent to 4,500 cars.  Now, the company just restyled the Phaeton, and the updated version went on sale in Europe last June, but will that be enough to woo American buyers?  Here’s some my Autoline Insight. Bringing back the Phaeton could allow Audi to move further up-market, allowing it to pull ahead of archrivals Mercedes and BMW.

Traffic jams are turning into a major headache in China, but one company has come up with an amazing idea of how to overcome the problem. Well, maybe it’s not so amazing. In fact, maybe it’s stupid. We’ll show you what we’re talking about, right after this.

CHINA’S 3-D FAST BUS
With car sales booming in China, traffic jams are becoming a big problem, and it’s only going to get worse. But one company has a very unique solution to help alleviate the problem. According to Gasgoo, the Shenzhen Huashi Future Parking Equipment Company, is building what it calls the 3-D Fast Bus which will literally drive over traffic.

The vehicle carries passengers 14 feet above street-level and can run on rails built in the road or wheels programmed to stay on the lines on the road. The bus can move up to 1,200 passengers while traffic passes through underneath.

The bus will use lasers and ultrasound to alert drivers when it’s getting close. It’s electrically powered by both solar panels and batteries which would recharge at each station.

The company says each vehicle costs about $4 million to manufacture. Sounds pricey, except that the up-front costs are about one-tenth of a subway system. And while this seems like science fiction, the company says construction on a six-mile test run will start at the end of the year and that a 75-mile stretch is scheduled to begin construction next year.

However, government officials say a contract is still being negotiated and is likely one to two years away from beginning. Other experts say this is a hare-brained scheme that will be impossible to pull-off because there’s no way you can avoid accidents with cars running under busses.

And that is it for today’s report on the top news in the global auto industry. Thanks for watching, we’ll see you tomorrow.

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26 Comments to “Episode 460 – GM Files IPO Paperwork, Kia POP Concept, VW Bringing Phaeton Back To U.S.”

  1. tj Martin Says:

    Oh Gee Whiz isn’t that cute . KIA is showing an electric Hamster Wheel at the Paris Motor Show to give a thrill to all those precocious Gerbils and Hamsters that give a ( ___ )

    Let me guess . It comes with an Automated Food Pellet Feeder and a Hanging Water Bottle as well as a Life Time Supply of Cedar Wood Chips . Food Pellets and Cleaning Services not included .

    What next ? KIA’s very own Hamster Tube Track to drive them on ?

  2. tj Martin Says:

    And to the Volkswagen Audi Group . Leave the Phaeton where it belongs . In our distant and rapidly ( for those of us that weren’t foolish enough to buy one and are now stuck with the thing ) fading memories .

    It was overpriced Dreck then ( VW mechanics absolutely hate the car . See the Phaeton Forums ) And it will be overpriced dreck now .

  3. dcars Says:

    Is Mitsubishi following Suzuki out the door? The latest news is they don’t have anything thats selling either. Come to think of it, VW holds a very small percentage of the market too.

  4. Chuck Grenci Says:

    Word to China: Build the subway.

  5. Kit Gerhart Says:

    A lot of the purpose of the Phaeton in the first place, was to be a high-end luxury car that didn’t scream “I’m rich” in the way an S-Class, 7 Series, or A-8 do. Functionally, the original Phaeton competed well in every way with the “big name” German luxury cars. I suspect the new one will too. The trouble is, Americans who buy high-end luxury cars new probably want to scream “I’m rich,” and the VW dealers in the US have a terrible reputation, even in selling and servicing Golfs and Jettas.

    If they offer a diesel in the Phaeton, they will have an advantage over the other “big Germans” which might help sell a few cars.

  6. Kit Gerhart Says:

    VW has a small market share in the US, but has some good products, like TDI Golf and Jetta that no one else competes with in the US. Also, they will soon have the new, downgraded Passat from the Tennessee plant that is intended to compete with Camry, et. al. With any luck at all for VW, that car will greatly increase their sales in North America.

  7. SpicyMatzahBall Says:

    I really don’t get why VW doesn’t badge the Phaeton as an Audi in the U.S. American buyers don’t want to spend that kind of money for the prestige of driving a VW.

    The Chinese bus thingy is a great idea, but seriously, that’s not gonna work. On a recent trip to Beijing, i saw how bad traffic is. Part of the problem is that every time there’s any type of traffic accident, even small fender benders, the cars involved stay right where they are until the police show up and take a report. And there are plenty of fender benders. If the edge of one lane is blocked for a half hour because of an accident, that fancy bus thingy (and everyone on it) are gonna be stuck right there with it. Oh yeah, and i’m hugely skeptical whether the roads can support the weight of those buses for long term… they better strongly consider rail.

  8. HyundaiSmoke Says:

    Kit I saw a report not too long ago saying New Phaeton would be a $55K car just like the Equus. A $30K price cut would help.

    The Pop=weird design that plays on futurism yet tests out technology such as the upgraded EV system from that i10 ev.

  9. tj Martin Says:

    Kit Gerhart ;

    Seriously you need to take a good long hard look at the Phaeton Forums and Blogs . More often than not its a VW Mechanic screaming about how bad the cars are , complicated to work on and how long it takes to get parts from VW .

    Also VW’s reputation of late is one of unreliability and a complete lack of cooperation on behalf of VW/Audi USA to resolve problems . This is not just the US VW/Audi owners opinions but worldwide . From the Antipodes to the UK/EU

    So sure the Phaeton was a Bargain Basement Bentley Continental in disguise . But if it doesn’t work ( and neither does the Bentley ) loses value at fantastic rates ( if you want one I promise you can afford a used one of any spec ) What kind of a bargain is that ?

    Seriously VW needs to leave the Phaeton in the closet . It is, as was the Maybeck dead weight from the get go .

  10. tj Martin Says:

    HyundaiSmoke ;

    When will you get it thru your little head that NO ONE copies Hyundai or follows any of their moves in the business . Its Hyundai ( along with their next of kin KIA ) that does ALL the copying and following of everyone else’s cars and business strategies .

    Tell you what there HS . I’ll make you a little Gentleman’s wager here . I’ll bet you that Equus winds up an even bigger failure in the US than the Phaeton was . May even turn into the Straw that Breaks Hyundai’s back .

  11. tj Martin Says:

    Kit Gerhart ;

    Yes , if I’m going to dole out $80K or more for a car you’re darn right I want something other than bland looks and a VW badge on the nose for my money .

    Call me a Car Snob if you must but a VW badge on an $80K car with bloated Passat looks is ludicrous !

    And then there is that reliability issue .

  12. dcars Says:

    It’s hard for me to believe that down grading a Passat will make it as good as a Camry/Accord/Malibu/Sonata/Fusion. I don’t think the over priced Passat is as good as it’s competition now. A cheapen version of the Passat won’t cut it.

  13. Puremoose Says:

    Hi .John
    Great show last night from Woodward Ave.
    Liked the Mustang and new 95 Saab.
    Keep up the good work

  14. Kit Gerhart Says:

    tj Martin Says:
    August 19th, 2010 at 2:42 pm

    “Kit Gerhart ;
    Seriously you need to take a good long hard look at the Phaeton Forums and Blogs . More often than not its a VW Mechanic screaming about how bad the cars are , complicated to work on and how long it takes to get parts from VW .”

    What I was referring to was multiple road tests a few years ago saying that the Phaeton matched or beat the S and 7 in most catagories that would be important in a luxury car. If the car is unreliable, and the dealers and no one else can fix them, it doesn’t make any difference how good the car is, if it rarely works properly.

  15. Kit Gerhart Says:

    dcars Says:
    August 19th, 2010 at 3:19 pm

    ” don’t think the over priced Passat is as good as it’s competition now. A cheapen version of the Passat won’t cut it”

    The interior of a Passat is much nicer than that of Camry and Accord, and most people like the DSG used in some versions.

    If they “downgrade” the interior of the new car too much, they will lose a major advantage they now have over the Asians. Also, the Passat has better chassis dynamics than the Asians, and they need to keep it that way.

  16. Kit Gerhart Says:

    tj Martin Says:
    August 19th, 2010 at 2:56 pm

    “Yes , if I’m going to dole out $80K or more for a car you’re darn right I want something other than bland looks and a VW badge on the nose for my money”

    For the Phaeton to succeed in its return to the US, the reliability and dealer service need to improve. Of course, many MB’s and BMW’s don’t have such great reliability records either, but the dealers have much better reputations than VW.

    If VW can make improvements in those areas, it comes down to how much a three pointed star is worth. Is it worth 20K? 30K? It is to some people. I wouldn’t buy any of these cars new, and if you wait a few years, the three pointed star or Roundel gets much cheaper.

  17. tj Martin Says:

    Kit Gerhart ;

    No arguments from me on any of your later points . If ( and thats a big if ) VW could make the Phaeton reliable as well as give it a more distinctive look ( rather than its current bloated Passat looks ) and kept the price below its M-B and BMW competitors I’d agree . The extra cash for a Pointed Star or a Roundel wouldn’t be worth it .

    On depreciation though the Phaeton has both its competitors beat ( in the wrong way )

    This Spring when I was considering trading the MINI up to something a bit larger and luxurious I took a long hard look at used Phaetons ( before reading the reports that is ) Sure there was the occasional barely discounted used ones which one imagines was some poor soul totally up side down on his/her lease/ financing and desperate for cash , but for the most part the cars are available for less than 25% of the original purchase price .

    So for me at least VW has a very long uphill road to hoe before they can ever be considered legitimate as a Luxury maker regardless of owning Bentley/Audi.

    FYI; As you’ve probably gathered from my previous posts I’ve kept the MINI . No regrets either

  18. mike g Says:

    Great car or POS … The Phaeton makes no sense to me. If it does sell well, it is likely to eat into Audi sales. On the other hand, if they keep it as bland and as ugly as it is, it will just hurt VW’s bottom line.

    For what it’s worth I also believe Hy/Kia borrows too much from other companies. They don’t look really offensive though and they’re dirt cheap (probably subsidized by the SK gov.) so they sell well as a result.

  19. HyundaiSmoke Says:

    LMAO Tj,

    So you must have not seen the Wards report talking about how VWAG is scared of Hyundai especially in North America, and how they now consider Hyundai/KIA as a direct competitor?

    Please, like a lower priced Jetta with leather is going to compete with a Corolla with Motel 6 curtain seat Cloth. We all know what Jetta is really out against GM, FoMoCo, and Hyundai/KIA (KIA Forte, Cough, Cough). VW VS Toyota, except on the durability standpoint VW Spanks Toyota.

    They need a real challenge, like KIA.

    tj, unlike how it is in Europe VW is not GOD here and never will be. However, Hyundai could be GOD in America like VWAG is in Europe.

    One day HKAG will sell as many Elantras/Fortes and Accents/Souls/Rios/Velosters in America as VWAG sells Golfs, A1s, Polos, Sciroccos, A3s, GTIs in Europe.

    Hyundai in Europe is like VWAG here in America, a brand that has a small audience and will probably be never be nothing more than that.

    In VWs case in America it was rightly earned with their current day shitbox Hyundai Excel like durability, but in Hyundai’s case in Europe you guys are just being Xenophobic, and rather buy an Overpriced POS PSA or VWAG car.

    The Europeans only beat Hyundai on the premium aspects of cars, but that will change too in the future.

    I had enough of you Euro Snobs, and I love how this Underdog Hyundai/KIA are taking Europe’s best and beating their benchmarks while charging Toyota and Honda prices at that too LMAO. :D

    -That Accent will be better than an A Class.
    -That Elantra will be better than a Jetta.
    -That Sonata is better than a CC and a better value than C-Class.
    -That Veloster will be better than a Scirocco. It will be America’s Scirocco.
    -Azera will nuke your precious 3 series.
    -Genesis is eqivalent and superior than 5 series on quite a few aspects. One of them being value for money.
    -Equus will make S-Class look like an old Clod.
    -Gen Coupe is a superior Value to 1 series.

    Tj please stop with the outdated Euro Snob rhetoric. Considering how you Europeans have been harsh to Hyundai it is YOU who deserve ALL of the wrath of the New Hyundai. Americans and Japanese had their fun, but at least they had the good sense to see the threat years ago. They took us seriously more than you guys did.

    Its YOU guys who need AND DESERVE an Asskicking by Hyundai!!!

    I dislike American and Japanese cars, but Euro Cars with their glorified Toyota Looks, and their snobbery from brands and owners REALLY pisses me off!!! With the way Euro cars have looked over the past 15 years, YOU HAVE NOTHING TO BE SNOBS ABOUT!!! When we tried to copy Euro Cars we got laughed at, but when we have better style everybody shuts up.

    Hey all of those years of ragging on Hyundai, and you didnt think there wouldnt be any hard feelings? The Europeans were the worst at it, and for that it is the Europeans who deserve the full wrath of the new Hyundai.

  20. Nick Stevens Says:

    How does that old saying go? If at first you don’t succeed, try, try again?

    NO, John, you missed the rest of it:

    “..Then QUIT. No sense making a damn fool of yourself any more!”

    The Phaeton’s biggest problem is that it has the scarlet letters “VW” on its forehead!!!!

    WHat effing sense does it make to have a 5,000++ lb BENTLEY, NOT a 3,500 lb PASSAT CLONE, that is made in the same glass factory in Dresden that the Bentley is made, and sell it as a VW? Even if it was called an AUDI it would not make any sense.

    No wonder the Phaeton tanked everywhere in the world, but especially in the US.

  21. Nick Stevens Says:

    “Here’s some my Autoline Insight. Bringing back the Phaeton could allow Audi to move further up-market, allowing it to pull ahead of archrivals Mercedes and BMW.”

    Try again John. The above made ZERO sense when the Paeton initially flunked, and it will make zero sense today, UNLESS they DO NOT BRING BACK the Phaeton, BUT A SMALLER CHEAPER LESS OBESE version, which will NOT be built in the bentley factory in Dresden and will NOT cost a fortune.

  22. Nick Stevens Says:

    “multiple road tests a few years ago saying that the Phaeton matched or beat the S and 7 in most catagories ”

    Oh really? Get serious. How could this obese 5,000 lbs+ pig best the S or the 7 or even the far lighter 8? In the 100k+ W12 version only?

  23. dan9867 Says:

    The GM pension fund is not under-funded by 27 billions like stated in today’s Autoline Daily.
    GM is under-funded by 12.3 billion…not 27 billions

    http://www.nytimes.com/2010/04/07/business/07cars.html

  24. Kit Gerhart Says:

    Nick Stevens Says:
    August 20th, 2010 at 4:14 am

    “multiple road tests a few years ago saying that the Phaeton matched or beat the S and 7 in most catagories ”

    Oh really? Get serious. How could this obese 5,000 lbs+ pig best the S or the 7 or even the far lighter 8? In the 100k+ W12 version only?”"

    It’s been a few years since I read the tests, but areas where the VW would have equaled or beat the S and 7 would be ride, quietness, seat comfort, etc. As far as performance, it would take the W12 to compete with the 8 cylinder S and 7, and the obese Phaeton would get really lousy gas mileage compared to the others.

    When the Phaeton was introduced, I remember Piech having some theory as to why the car made sense, but it still doesn’t make sense to me. The only way it would make sense would be if they could make a car that would drive as well as sn S or 7, but didn’t have all the gadgets, I-drive type controls, etc., and would sell for substantially less than the “big boys.” They would need to dump the mandatory AWD. Unless something has changed with the re-introduction, that is not going to happen, and the VW will still be obese, at 500-800 pounds heavier than the MB and BMW.

  25. Nick Stevens Says:

    As hard as they may try, people do not buy $85,000 VWs. They don’t even buy $70,000 Toyotas or Hondas. That’s why they have Acura and LExus respectively.

  26. JT Lambert Says:

    Just a reminder that when any US company goes UNDER with a PENSION PLAN of which is usually UNION LABOR,the OBLIGATION of PAYOUT of benefits is rolled to the US TREASURY.Now how much of the taxes coming into the Treasury is from UNION LABOR?Non union taxes are paying UNION BENEFITS that STOCK held Cos DUCKED in bankruptcy.I PROPOSE that STOCK HOLDERS of certificates of a Co be held LIABLE for all losses[Not us tax payers].WAKE UP AMERICA