Episode 683 – Fuel-Economy Fight, Daimler Merging smart and Mercedes, City Safety Success

July 19th, 2011 at 12:01pm

Runtime: 9:37

The White House and automakers are warming up for a big fight over where the next round of fuel-economy standards should be set.  Daimler is merging smart and Mercedes-Benz dealerships.  Is it trying to recreate BMW’s success when it introduced the new MINI?  According to the Highway Loss Data Institute, Volvo’s City Safety system on the XC60 SUV has dramatically reduced insurance claims.  All that and more, plus a look at Hyundai’s updated Genesis sedan.


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This is Autoline Daily for July 19, 2011. And here’s what’s happening in the auto industry right now.

The White House and automakers are warming up for a big fight over where the next round of fuel-economy standards should be set. Steven Chu, the U.S. Secretary of Energy, was in Detroit yesterday to talk up battery developments for electric cars. That’s because the Obama Administration is counting heavily on electric cars to meet its proposed CAFE standard of 56.2 miles per gallon. But even Secretary Chu admits there’s only a 50-50 chance batteries will be plentiful and affordable by 2021. And he’s an optimist! There has been a slew of slowdowns and cancellations in the EV world lately. JCI wants to back out of its battery joint venture with Saft. Renault has delayed construction of its battery plant in France. And there are rumors Nissan will delay building EVs and batteries in the U.S. Secretary Chu also visited battery maker A123’s plant in the Detroit area to celebrate them hiring their 1,000th employee. So far the Department of Energy has granted $249 million to A123 to make batteries in Michigan. That means it has cost $249,000 to create each of those jobs. Now, that cost may drop over time, but it certainly calls into question whether electric cars will be cost effective any time soon.

Daimler’s smart brand is going nowhere, but that isn’t stopping the company from pushing forward.  Building on what Roger Penske and his team did, it’s merging smart dealerships into Mercedes-Benz dealerships.  We tracked down Ernest Lieb, the President and CEO of MB USA at the 2012 M-Class launch by a river in Montana last week and here’s the latest.

Sounds like Mercedes is trying to do what BMW did with MINI, that is, create a desirable AND profitable sub-brand. But we don’t see that happening until smart gets its new products based on a platform from Renault.

A new study from the Highway Loss Data Institute says the Volvo XC60 gets into fewer low-speed crashes than competitors thanks to the company’s new crash-avoidance system called City Safety. HLDI analysts compared insurance claims for the 2010 XC60 with City Safety to midsize luxury SUVs and other Volvos. They found insurance claims were down 27 percent compared to other midsize SUVs. Claims for injuries were down by half. City Safety helps drivers avoid low-speed crashes by using an infrared laser to monitor the area in front of the vehicle when traveling at speeds of about two to 19 miles an hour. The car will automatically put on the brakes to prevent a crash if the driver doesn’t react.

To cut down traffic jams in Midtown Manhattan, the city installed electronic sensors and cameras in a 110-block area so technicians can regulate traffic. The technology will allow traffic engineers to identify congested areas and control traffic lights to free up traffic. The system only cost $1.6 million to install. I love this idea. Instead of leaving it up to individual motorists, controlling traffic flow as a system will have a dramatic improvement that will also improve fuel economy and reduce accidents.

One would-be Norwegian carnapper found out the hard that way nothin’ runs like a Deere.  Autoblog reports the man in question tried to snag himself a Mercedes-Benz E-Class, but a nearby farmer caught wind of the illicit activity and put his tractor-mounted forklift to good use.  The steel skids impaled the front of the car, and some quick hydraulic action had the Benz airborne.  Tourists got everything on video.  What I don’t understand is why the crook sat in the driver’s seat until the Scandinavian constabulary arrived!  I guess it doesn’t take a Ph.D. to be a thief.  Remember kids, crime doesn’t pay!

Hyundai just introduced the latest version of its luxury sedan, the Genesis. The 2012 model has been upgraded and has more features. Seamus McElroy filed this report.

The 2012 model features a refreshed design and improved engines.

Direct injection is added to the 3.8-liter V-6, boosting its output 15 percent to 333 horsepower. And thanks to other improvements its fuel economy is slightly better too. The Genesis is still offered with a 4.6-liter V-8 (17/26MPG). But new for 2012 is a 5.0-liter V-8 with direct injection, available on the new R-Spec model. This is the most powerful Hyundai engine ever, with 429 horsepower. Fuel economy for this engine is 16 MPG in the city and 25 on the highway. Also new under the hood is an eight-speed automatic transmission developed in-house by Hyundai.

As I mentioned, a new model, called the R-spec, is added to the lineup. In addition to the new 5.0 liter V-8, it also has its own unique touches.

The R-Spec isn’t all that’s new. The standard Genesis also features an updated exterior.

The 2012 Genesis is also available with a number of safety features including electronic stability control, eight airbags, active head restraints and a newly developed lane departure warning system.

The starting price for the V-6 is just over $35,000.  The 4.6-liter V-8 starts at just over $45,000, and the R-Spec with the 5.0-liter V-8 is just over $47,000.

Thanks for that report Seamus.

Did you know that Henry Ford actually started the $5 day back in 1913, not because he was a benevolent visionary, but because the turnover at his factories was so high, he needed to bribe workers to stay on the job? The moving assembly line created such an alienating working environment that people hated to work in the plants. So is there an alternative to the moving assembly line? That’s the topic on Autoline After Hours with former GM employee and author, Tom Crumm. His book, “What Is Good For General Motors?” proposes a new way to make cars. Join me and the Autoextremist, Peter De Lorenzo, for the best insider discussion this Thursday night on AAH.

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

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog and WardsAuto.com

37 Comments to “Episode 683 – Fuel-Economy Fight, Daimler Merging smart and Mercedes, City Safety Success”

  1. pedro fernandez Says:

    If they’re really serious about increasing mpg standards, then allow high mpg cars to come in from abroad and increase tax on gas to encourage people to buy such cars and stop pussy-footing around with numbers and BS.

  2. MJB Says:

    I’d be interested to know how the insurance claim is handled for that E-series Merc that was nearly nabbed.

    I mean, being that there were forklift punctures made in the front facia and all. (at least, it appeared at first glance that the tractor impliment impailed the front facia of the car)

    I also would like to know what that thief thought he was going to accomplish by continually flooring the gas. It didn’t look like the wheels were spinning backward.

  3. Lex Says:

    NYC will now be able to capture on video and ticket traffic violators who enter the 110 blocks covered under the New MANHATTAN TRAFFIC MANAGEMENT Department. This system may have costed NYC $1.6 million to install, but it will generate millions of dollars in revenues for the foreseeible future. Big Brother Bloomberg is Watching!

    Roger Penske is trying to salvage as much as possible out of his investment in Smart. You can’t blame the guy. Hopefully the new Smarts will be more desirable and competitive!

    If Smart’s new vehicles built by Renault do not turn a profit then Mercedes Benz should think about allowing Roger to bring decontented Mercedes Benz A & B Class vehicles into the USA. He would be able to compete directly against BMW’s Mini Cooper Line-up. This might prove very interesting.

    Best of Luck Roger Penske.

  4. Ed Says:

    As far as electric / hybrid etc. I see nothing in the close future that can compete with some type of diesel/hybrid. It is powerful , plentiful , efficient, and relatively simple to repair by currently trained service people. There may be some esoteric technology coming, but right now and for the next 5 to 10 years nothing can touch it. Ed

  5. Dale Leonard-Lakewood,Oh Says:

    I think they should stick a M-B badge on the hood of the Smart and put it in the trunk of an “S” Class and eliminate the space saver spare.

  6. Jon M Says:

    Before Daimler tries recreating BMW’s success with the Mini by merging Mercedes and (not so) Smart dealerships, they should consider this: Cozy Coupes appeal to the kiddies, not to cash carrying, credit established grown-ups. First fire the Little Tikes designers, and then try mimicking BMW’s dealer networking strategy. After all, in case Daimler hasn’t noticed—and judging by their latest idea, they haven’t—cutesy attracts children, fun to drive and attractive sells cars.

  7. Kit Gerhart Says:

    Whatever Daimler does with marketing, etc. for smart, the place to begin if they want to resurrect the brand is to PUT A DECENT TRANSMISSION in the smart. Everyone who has driven one says they same thing, but after 10 years, they still don’t get the message. Offer a manual, or a CVT, or a DECENT automatic, torque converter or otherwise, but the current single clutch torque-converterless automatic remains as dreadful as ever.

  8. HtG Says:

    Here’s a long article from EEtimes on a novel battery. Electron laden fuel flows through a reactor that extracts electrons, with the hope of greater energy density and lower costs. Don’t let tj catch you reading this.


  9. pedro fernandez Says:

    Either those cops are too civilized or the American cops are too rough, if this had occurred here, the perpetrator would have been yanked out, thrown to the ground, have his head stepped on and have his arms jerked behind his back and cuffed. Or tazed.

  10. sam zuech Says:

    Nice info-mercial on the Genesis, we will see
    future reports on Bridgestone tires and dow betamate adhesives?

  11. dcars Says:

    #3 Lex, I live very close to Canada and M&B’s smaller vehicles are on our roads all the time. I’m impressed. It seems like an easy answer to their problem, just bring those vehicles to the us and call them something different than M&B?????

  12. Julius Lambert Says:

    There has always been a misconseption in history as to WHO implamented thr $5/day.It was actually Henrys partner James Couzen.Henry tried to kill it but could not.J Couzen went into politics later ,and is the FATHER of Social Security,even though Rosevelt got credit for that also.Check out Ed Wallace@wheels570@sbcglobal.net.Ed has the SKINNEY on this subject.GOODAY

  13. HtG Says:

    Hey Pedro, here’s a AAA piece on how Red Light cameras work in Nassau County NY. From the August issue. There’s also a link at the end to some awesome stupid driver videos


  14. Kit Gerhart Says:

    While M-B sells the B-Class in Canada, the rest of their offerings are as restricted as in the US, or nearly so. There’s no C-Class wagon. The E-Class wagon is sold only with the 3.5 gas engine and mandatory 4WD, no 4 cylinder diesel E- or C-Class, etc.

    Mercedes Benz North America takes great pains to keep the brand “exclusive,” as it were, by refusing to import any number of good products, some of which are even appealing to me.

    As far as the B-Class, whether they sold it as a Mercedes like in the rest of the world, or under a different name, it might be a hard sell in the US for what it would have to go for, probably over $30K base. It’s a 4 cylinder, front drive hatchback, bigger than a VW Golf, but not by a lot. In most of the world, it is sold as a Mercedes, and with both gas and diesel engines. In Canada it’s sold only with two gas engines, turbo and non-turbo 2 liter units. I like the car, but wouldn’t want to pay the price, especially given its mediocre fuel economy with the gas engines.

  15. pedro fernandez Says:

    Her in So Fla many communities are regretting ever installing those cameras, it is costing municipalities a pretty penny in court costs due to all the challenges presented by those who have gotten the tickets and most of the time the cases are dismissed, so no fine is ever collected, the fact that they’re removing them shows that it was not a safety issue like they claim but another way of collecting money from citizens.

  16. HtG Says:

    But Nassau says 85% get paid. Maybe Nassau does a better job of screening.

  17. Kit Gerhart Says:

    I’ll find out the latest on the red light cameras in my part of Florida in a few weeks, but I know there have been a number of challenges. In my area, it was intended as a money maker, for sure, but is also a safety issue. Way too many people were running red lights, and there have been pedestrians hit at crosswalks by red light runners, when the pedestrians had the “walk” light. I hope the cameras stay, as long as they “stay honest” with them. At the ones I’m familiar with, they have not shortened the yellows, and “cut you some slack” when right turning on red.

  18. pedro fernandez Says:

    Different laws HtG, here you have the right to face your accuser which is why if a cop does not show to trial, the judge will dismiss the case. Many cases are dismissed on technicalities since the camera can not 1)show up in court nor 2) speak.

  19. pedro fernandez Says:

    Here in So. Fla being a pedestrian is as dangerous as it is in Kabul.

  20. HtG Says:

    @18 I got busted for a red light a couple of years ago, and fought it just so the officer would have to get pulled off the street to come to court. I and the town attorney and the cop all had one of those little meetings in the hall, as the judge waited and a film of the ‘case’ was being prepared. We settled. I didn’t want to risk the points. I can be a d*ck sometimes when necessary.

  21. cwolf Says:

    IMO, Obama is between a rock and a hard place when it comes to milage standards. Pumping cash into EV and battery developement is creating much needed jobs and is a first step forward in addressing oil issue concerns,but as John Mc stated, at a high cost at present. I’m sure the demand is less than he had expected. At the other end of the rope are efforts by the manufacturer and union to exclude trucks from the standard and righteously so. Any attempts to meet the target would be costly and rather evident to being near impossible. Therfore,I predict one of the few ways Obama can save face and, simutaneously, passify those on the left and right, would be to try to exclude trucks from the total average completely,which I believe will be unacceptable, or to calculate the number using a proportioned weighted average. For sure, some calculating method will be invented!

  22. cwolf Says:

    @ MJB: Read your yesterdays comment, so thought I would clarify my use of “rich and/or wealthy”, to pertain to those who diligenty try to escape taxes or pay none at all. A simplified corp. tax structure is sorely needed, minus the loop-holes,even at a lower percentage perhaps. That is,as long as profits made abroad are not hidden and tax is recieved. Also, any company recieving gov’t money would have to either invest it in the USA or its use would benifit the US and not another foreign country. Secondly, your comment makes one believe that everyone who is wealthy is a business owner; And we both know this not to be true. Therefore, it is only just and moral for these people to give a little more…because they can afford it with little sacrifice and the benificial deductions currently earmarked does absolutely nothing for the betterment of their community,state or country. My wifes and my combined incomes places us in a higher tax bracket and the advissor says we are within the top 10%, so I guess, we are rich! But we don’t feel it ,nor live the style. What we are, without hesitation, is blessed and blessed again to to be able to give that little more that others cannot.

  23. XA351GT Says:

    Holy Sh*t a $47K Hyundai that’s not the Equoos . What the hell happened to building affordable cars Hyundai? Did you follow everyone else’s lead and figure that if you put a high enough price tag on it people will think it’s a better car than it is? 429 HP from a 5.0L is pretty impressive though , that’s in Boss 302 range. just wonder how well it will hang together if someone flogs the snot out of it.

  24. XA351GT Says:

    Pushing EVs is like pushing a rope . It’s going no where. Until someone makes one that’s cheap , has the range of a gas powered car it will be a hard sell. “Sorry I’m late Boss I had to wait 3 hours for my car to charge ,because the wife didn’t plug it in when she got home”. Yeah we’ll see how well that goes over. We do need a alternative to oil ,but I can’t see EVs being anything ,but a financial boondoggle for taxpayers. They gov has spent how much so far on EVs and their manufacturers? How many cars are actually being sold and used on a daily basis.? Break that down dollar for dollar and I bet it’s staggering.

  25. John Says:

    FYI via NYT:

    News Analysis

    “We’re Spent”

    Published: July 16, 2011

    “The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago — and 10 years ago was 2001, when the country was in recession. ”


  26. John Says:

    FYI via NYT pt2 :

    July 18, 2011, 2:02 pm

    “Looking Inside the Consumer Bust”


    “There are three reasons, though, why it’s a mistake to read this chart as saying there has not been a consumer bust. ”


  27. Kit Gerhart Says:

    re #23,
    The Genesis R-spec is a bargain at $47K, if it is reliable. This car competes with German cars and Lexi that go for $15-20 K more. Heck, people pay 47K for V6 turbo Ford Tauruses.

    Of course, the real bargain of Genesises is the base 6 cyl. version which, by most acounts, competes well with German cars that cost $20K more.

  28. Jim Says:

    Please correct me if I am wrong but didn’t the tax payers of this country through obamas BS give Nissan Renault 1.3 billion dollars to build batteries in Michigan for the leafs.I know they had only asked for 600 million but obama using coal fired emmisions friendly power plants to make zero emmissions cars run gave them more. Now Nissan says no batteries here well where in the hell is the US taxpayer gift you should have never got in the first place.

  29. Kit Gerhart Says:

    …but the Bush-Cheney torture regime invaded Iraq at a cost of almost a trillion dollars and counting, and many tens of thousands of deaths. If Obama overpaid for a battery project in Michigan, it was certainly small change in comparison.

  30. HtG Says:

    come on boys, Bill and Rachel like to come here to get away from all that.

  31. pedro fernandez Says:

    re #28, but of course, people are losing their jobs left and right and those who have one are always skeptical if they’ll be working there much longer. If there’s any $$ left over, I would think they’d rather go on vacation and keep their current vehicle for a while longer (indefinitely)

  32. John Says:

    FYI via Bloomberg:

    “Misery Index at 28-Year High on Jobless Rise: Chart of the Day ”

    “The Misery Index stands at 12.8, the highest in 28 years. Consumer sentiment slumped in July to the lowest level in more than two years, a report from Thomson Reuters/University of Michigan showed last week. The Bloomberg Consumer Comfort Index is lower than it was at the start of the year. ”



  33. John Says:



  34. pedro fernandez Says:

    Well, you all voted for change, change in you pockets, that is.

  35. MJB Says:


    You’ve got that right, Pedro. That guy would be sucking gravel while being read his rights.


    I agree, cwolf, many of the ‘wealthy’ are indeed blessed to be so. And, yes, not all those who are wealthy got there by the sweat of their own brow. Additionally, I really don’t have a problem with the wealthy paying a bit larger percentage of their income in taxes. This has been the norm for a very long time in this country. And, yes, it’s only right. I’ll agree that it’s even fair – to a degree.

    My issue comes with those who see no problem with perpetual, disproportionately large increases in the taxation of the wealthy. Yes, they have much more than they will ever need. But many of them (not all, but many) earned that money honestly. I know it ‘feels’ fair to take from the rich and give to the poor. But taking anything that another man has earned is wrong no matter how it’s sliced. And when money is demanded (via taxation) from a group that never even benefits from that which they are being taxed for, that’s amounts to ‘taking’.

    Just like money is ‘taken’ from us in the form of higher auto ins. rates due to all the uninsured motorist totaling cars every year.

  36. Kit Gerhart Says:

    re #35

    “My issue comes with those who see no problem with perpetual, disproportionately large increases in the taxation of the wealthy.”

    The thing is, that is the EXACT OPPOSITE of what is happening. For years, tax rates for the wealthy have been getting lower and lower. Meanwhile, the disparity of wealth between rich and poor is widening at a rapid rate.

  37. MJB Says:

    Perhaps I don’t have all the facts, but it was my assumption that (over the past several years) the only “lowering” of taxes on the wealthy was the relief setup by Bush 2 that is either due to expire soon or has just recently.

    Other than that, I’m curious as to other lowering to which you are refering?

    The thing is that nobody ever pays attention to how much the wealthy get taxed. They only speak up when taxes are reduced for the wealthy. Regardless of any recent reductions, they have always paid far more than their fare share. This fact cannot be disputed. So what’s wrong with them getting a break too?

    Reminds me of how it’s only the smart kids that get picked on in school. And for what exactly? Being smart.