May 20th, 2011 at 11:45am
The Obama Administration has dropped its idea of handing out letter grades to vehicles based on their fuel economy. J.D. Power says that car sales in May will drop. It forecasts the SAAR at just 11.9 million units which was previously at 13 million units. Auto supplier TRW just introduced an airbag that’s installed in the roof which replaces the passenger airbag mounted in the instrument panel. All that and more, plus a preview of Autoline Detroit with Paul Mascarenas, the Chief Technology Officer of the Ford Motor Company.
This is Autoline Daily for May 20, 2011. And now, the news.
VEHICLE LETTER GRADE IDEA DROPPED (subscription required)
The auto industry dodged a bullet as the Obama Administration dropped the idea of handing out letter grades to vehicles based on their fuel economy. The idea was to make it like a report card, but a vehicle would only get an “A” if it was a hybrid or electric car. The Wall Street Journal reports that the Administration concluded that handing out letter grades was “very subjective.” Here’s my interpretation. That means there was no fair and impartial way of awarding grades. Let me give you an example. Let’s say you have a young family and need a minivan. It would have likely only earned a “C,” under the government proposal, even if it was the most efficient minivan available. And even though on a people-per-mile-per-gallon basis, it would be more efficient than most hybrids. Thank goodness the Administration dropped this idea. People don’t need the government to tell them if the fuel economy of a vehicle is good or not. They just need to read the label.
CHRYSLER BORROWING TO PAY OFF LOANS
Chrysler is raising enough money to pay off its loans to the U.S. and Canadian governments. Those loans came with sky-high interest rates, 14 percent in the U.S., 20 percent in Canada. To pay them off, Chrysler is borrowing money at lower rates from commercial loaners, and it is issuing bonds. But as Bloomberg points out, bond investors haven’t forgotten that they lost everything they invested in the company before its bankruptcy. So they are demanding an 8.25 percent yield on the new bonds. That’s a lot lower than what Chrysler is paying now, but Ford’s latest bonds only pay 5 percent. Even so, it could save Chrysler a couple of hundred million dollars a year in interest payments.
CAR SALES DROP IN MAY
New-vehicle sales in the U.S. have been accelerating all year, but according to J.D. Power, they may be losing steam in May. So far this month the forecasting firm estimates the SAAR at just 11.9 million units! This is a dramatic drop from the previous three months where it hit 13 million. We know fuel prices are up which is certainly playing a role in this, plus some models have limited availability due to parts shortages from Japan. But one analyst at Edmunds.com thinks a lack of incentives is causing the drop. He said aside from the Toyota Prius, there are NO other models that are unavailable right now.
TRW’s ROOF AIRBAG
Oh no, not another airbag! Auto supplier TRW just introduced an airbag that’s installed in the roof. But don’t worry, it actually replaces the passenger airbag that is mounted in the instrument panel. This new system allows for improved interior design flexibility because the dashboard doesn’t need to be developed to deploy an airbag and that also helps to save cost. TRW says it can be used in different types of vehicles and that it already has a production contract with a European automaker, but didn’t say which one.
NISSAN & CUMMINS DEVELOP DIESEL FOR TITAN
Truck lovers rejoice! Your wildest dreams may be coming true. According to PickupTrucks.com, Nissan and Cummins have teamed up to develop a four-cylinder diesel engine for the Titan. Now get this: the average fuel economy target is 28 miles per gallon while meeting the Tier 2, Bin 2 emissions standard. WOW! The engine displaces 2.8 liters and output could be 220 horsepower with 380 pound-feet of torque. One interesting feature: it uses steel pistons instead of aluminum, to handle high cylinder pressures and allow for a shorter stroke, which keeps the physical size of the engine down. The U.S. Department of Energy contributed some $15 million to help fund this $30 million project. It’s scheduled to run through September of 2014 when the next-generation Titan is expected to debut.
ZHONGXING HAPPY REBELS USE ITS TRUCK
Speaking of pickup trucks . . . After civil war broke out in Libya, Chinese automaker Zhongxing Auto was worried about how it would affect selling pickup trucks in the country. It sells more pickup trucks there than anyone else. But now the company is almost thrilled about the conflict. According to China Auto Web, Libyan rebels are using Zhongxing’s GrandTiger pickup truck to fight Muamar Ghadaffi’s forces. The company is amazed to see all the exposure the pickup truck is getting from images beamed all over the world. It hopes the GrandTiger pickup truck will be seen as one tough pickup truck. The company even posted a message on its website essentially bragging that its pickup trucks are battle tested. And it boasts that instead of the ubiquitous Toyota Hilux, and I quote, “the pickups employed in the Libyan war mostly came from Zhongxing.” It’s crazy. Seventy years ago there were Tiger tanks rolling across the Libyan desert. Now, there’s GrandTiger pickup trucks.
Ford came under a lot of criticism for its My Ford Touch system. Consumer Reports really tore into it. So what’s Ford doing about it? That’s up next.
THIS WEEK ON AUTOLINE
Paul Mascarenas is the Chief Technology Officer of the Ford Motor Company. That puts him in charge of all R&D and the company’s science labs. He’s my guest on Autoline Detroit this weekend, and in the following clip we asked him what the company is doing about its My Ford Touch system that has been heavily criticized.
You can see that entire interview right now on our website, AutolineDetroit.tv. And by the way, Mark Phelan from the Detroit Free Press and Lindsay Brooke from Automotive Engineering magazine are also on the show.
And don’t forget to check out RoundAbout . . . tonight! The show starts at 6:30 p.m. Eastern Time, 3:30 Pacific. As always, it’s a fun way to start the weekend and we hope you check it out.
And that’s today’s report on the top news in the global automotive industry. Thanks for watching, we’ll see you Monday.