Episode 40 – White House & Congress Reach Deal, PSA & Bosch Diesel Hybrid, SEAT Hits 98 Grams

December 10th, 2008 at 12:00pm

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Congress and the White House reach a deal on a bailout bill but a vote could still hit a snag in the Senate. Peugeot and Bosch team up to develop a four-wheel-drive diesel hybrid. SEAT comes out with a car that emits only 98 grams of CO2. All that and more, plus John answers viewer questions about the price of oil and GM’s decision to focus on Buick instead of Saturn in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Congress and the White House reach a deal on a bailout bill. Peugeot and Bosch team up for a diesel hybrid. And SEAT comes out with a car that hits only 98 grams of CO2.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, December 10, 2008. And now, the news.

We’re inching ever close to a bridge loan for the Big Three. The White House and Congressional leaders have agreed on the legislation they want to bring to a vote. In fact, the vote in the U.S. House will likely come today, where the votes are there to approve it. The real test will be in the Senate where passage is somewhat uncertain because a number of conservative Republicans are lined up against a bailout.

Next step is to choose a car czar to oversee the government’s restructuring of the industry. GM and Chrysler will get $15 billion to tide them over until the end of the first quarter when they will both need more money. And they’ll probably get it if and when the car czar approves their restructuring plans. The question now is if the car czar will get the legal authority to allow the Big Three to walk away from most of their obligations to creditors, dealers and the UAW. If they can do that, you’re going to see a dramatic and rapid downsizing that is going to get rid of a lot of historical baggage.

What are the most popular car colors in the world? White, for the second straight year according to DuPont. Black follows in second. Dupont says color preferences are starting to converge around the world. Colors like white, black and silver still lead but colors like blue and red are on the rise across the globe.

PSA and Bosch are teaming up to develop diesel hybrids. Bosch will supply PSA, the parent company of Peugeot and Citroen, with electric motors and power electronics for PSA’s four-wheel-drive diesel hybrid, which is targeted to hit the market in 2011.

Spanish automaker SEAT has updated the “Ecomotive” version of its Ibiza hatchback. WardsAuto.com reports that the car is powered by an 80-horsepower diesel engine that’s been specially tuned for better efficiency. They also cut weight and tweaked the aerodynamics. All the work paid off, the Ibiza Ecomotive only releases 98 grams of CO2 per kilometer.

GM Vice Chairman Bob Lutz is spouting off again, but politicians better listen to what he’s saying. He points out a big flaw in the auto bailout package in an e-mail to Ward ‘s Auto World. He writes that the “green” cars the Feds want the Big Three to build will be practically unsellable with gas at only $1.50 or $2.00 a gallon. If automakers build a bunch of small cars that nobody buys, they’re going to lose a fortune because they’ll have to practically give them away. And that’s not going to solve any of the industry’s problems.

Coming up next, it’s time for You Said It!

And now it’s time for some of your feedback.

We get a lot of letters and comments from you every week that we post on our website and I’ve taken the time to highlight a couple of them here.

Stan Doane wrote in to say: John, You said last year that oil would be $25 a barrel in the future. I thought you were nuts but it looks like you are going to be right! How did you know?

Actually Stan, two and a half years ago I said oil would hit $30 a barrel again. I based that on the fact that rampant speculation had driven prices way above a sustainable market cost. Also, every sharp run-up in oil prices (1975, 1980, and 1991) has been followed by a global recession followed by a collapse in oil prices.

And Pedro Fernandez wrote in again to ask: John, is GM losing its mind? Getting rid of Saturn and keeping Buick? Saturn has a better portfolio than all. What’s your view?

You’re right Pedro, Saturn does have the most handsome line-up of vehicles in the industry, and it attracts more import buyers than any other GM brand by far. But Buick is a smash success in China so by keeping Buick, GM will have far more sales volume with that brand. Also, Buick was the founding cornerstone of General Motors over 100 years ago, and it would be awfully hard for GM to let that heritage go.

Remember, we have a trivia contest going for anyone who wants to enter. Can you identify who made this concept car? I know it’s a tough one but if you think you can come up with an answer, drop us a line, and we’ll pick a name at random from everyone who enters. The winner will get some nice Autoline items, and we’ll announce the winner here on Friday.

Anyway, that’s it for today’s show. Thanks for watching, we’ll see you tomorrow.

15 Comments to “Episode 40 – White House & Congress Reach Deal, PSA & Bosch Diesel Hybrid, SEAT Hits 98 Grams”

  1. bob betz Says:

    hi there
    lutz is dead on with his recent comments,eventhough he has stated these facts in the past. he is the brightest bulb in detroit but im afraid the bike path party will grind him into submission.

  2. Jude Says:

    John,

    Re: Buick v. Saturn,

    Saturn’s product line has grown to 5 (very fresh) models, but sales are still only 70% of their peak in the ’90s, when Saturn was selling just one car: the S-Series.

    Now, the reason sales haven’t grown despite the big ad campaigns and the new model influx is because GM tried to move Saturn upmarket, and away from its somewhat progressive cheap car image. People just aren’t used to looking for a $35k 8-passenger crossover, or even a $28k well equipped midsize sedan at a Saturn dealer – much less not being able to negotiate the price they pay at that price point. And there are serious questions as to whether or not Saturn has EVER made money for GM. It’s sure cost them a pile of it for 20 years.

    Buick, as you said, is massive in China. And as you said, it was the cornerstone of the founding of GM. But there are two other factors you forgot to mention:

    1) Buick HAS to be making money, even with its low sales, for GM. The LaCrosse is based on a platform in its 22nd season. The Lucerne’s is in its 18th. So the bulk of those vehicles’ engineering and manufacturing costs has long since been amortized. And the Enclave has to have a nice, fat profit margin, too. Plus, it’s selling well.

    2) Buick’s average buyer age in the US has plunged from the upper 60s a decade ago, to the low-mid 50s. That’s Toyota territory. So if GM continues to build quality Buicks, with beautiful styling, and premium attributes, they’ll continue to do well.

    Buick is best positioned to be GM’s mid-priced brand. And they could have a bright future offering Euro-sourced small cars (Corsa, Astra, Zafira), but with Buick exterior/interior styling, Quiettuning, etc., and justify selling them at the higher price point the European platforms would command, as “premium small cars”. That is a hot segment. They can take the Vue, as well, from Saturn, and re-skin it, making it a little brother to the Enclave. And the new Invicta/LaCrosse looks to be a promising design, as well.

    GM can change Buick from a good thing, to an extremely successful thing. Saturn has too much baggage (tiny dealer network, lingering low-cost image, and no-haggle pricing hampering sales on more expensive models) to be workable in the near or mid-term.

    GM keeping Buick in lieu of Saturn is the right decision for GM.

  3. steve salis Says:

    The biggish 3 need to go into bankruptcy and the UAW needs to be dissolved. Their cultures need to change (at least in the US). Have you noticed that they seem to do OK where the UAW isn’t involved. They say you have to hit rock bottom before you can make drastic changes for the better. Let them bottom out.

    Based on results, everything the UAW and the biggish 3 have done for the last 30+ years has been designed to reap short term gains at the expense of being competitive in the future. There are many like me who will never buy a car built by the UAW. They do not deserve to be supported.

    The UAW and the biggish 3 will never be competitive, their cultures simply cannot compare to the best.

    I have and will continue to buy cars built in the US by hard working non-militant, non-UAW Americans who are managed by innovative, clever Americans with the help of the Asians.

    With the big three gone, cars will be still be built here. Sure their badges will be different. However, they will be better, their builders, both mgt. and labor will be more secure and for the first time in decades we can be proud of the vehicles built here.

  4. Les Odgers Says:

    It’s hard to argue with Steve Salis above. Whereas I think executive compensation has gone even more out of whack than UAW compensation, one begets the other and the leaders in overcompensation are the executives.

  5. Les Odgers Says:

    Saturn isn’t what it used to be. All their vehicles had special plastic bodies for reduced damage from parking lot rash, etc. and to be easily replaced. Now Saturn is just another brand like Buick but w/o the heritage or the quality reputation that Buick has enjoyed for over ten years! It’s interesting that Buick got better mileage with the 3.8L Series II V-6 than any Saturn in the same size category because Saturn used a Opel built vehicle that got 4 MPG freeway less than the Buick did and the Buick had more room. And the Buick was less expensive to insure, so I bought the Buick Regal LS in 1999 when I planned all along to buy a Saturn, but the Saturn just didn’t measure up in any way. Saturn also still have the bulbous turn signal stalk that isn’t ergonomically thought out well…Nit picky point, but one never-the-less.

  6. Les Odgers Says:

    One last thing…Why GMC?

  7. Les Odgers Says:

    And one more… Oil won’t go to $25, unless the global economy totally tanks. In the prior turn downs like ’80-’82 there was no China or India consumption so-to-speak. I think we’ve hit at or near bottom now, at about $40. I always knew that $147 oil was speculation, that’s why I bought airline stock this summer and did quite well on it. Now I’m buying some oil company stocks because long term they will go up.

  8. pedro Fernandez Says:

    John: remember Olds was also a founding member and they went bye bye and nobody misses it, even though at during a long time Cutlass and 88 and 98 were big sellers. As for the Bob Lutz comment, he’s right. Now that gas is going down, people will start buying and driving the “monsters” again. But Mr Lutz the vicious cycle has to stop and the U.S. has to get in line with the rest of the world and stop wasting so much oil driving oversized gas guzzlers, let’s face it, you don’t really need a Hummer to take a trip down to the mall. A smaller more efficient car will do it for a lot less. Maybe we should adapt the European way of taxing vehicles by how much gas they use, and congress needs to increase the CAFE standards.

  9. Thomas Says:

    I understand what Bob Lutz was saying. How about making small cars that everyone loves to drive and buy no matter the gas is $1.50 a gallon or $4.50 a gallon. Honda and Toyota did that with their Civics and Corollas. Not that we are asking the big three to stop making SUVs. I think they need to rebalance their product portfolios and focus on products that are appealling to the mass during good times and bad. And for sake of everyone, will the big three fire all their short sighted executives and put some innovative thinkers in the executives positions. We don’t need more overpaid, under-talented corporate yes men to control the future of millions of American workers.

    Well, my comments are only relevant if they survive this crisis.

  10. jason willis Says:

    i miss your show on speed. why is it the big 3 bailout? when only 2 are getting money?

  11. MUHAMMAD RAFI Says:

    I would be OK with the Big 3 bailout as long as the Big 3 bosses resign. That will be the only way these companies will have a chance to start over and compete. And I also think that if GM wants to reduce a number of its brands, then GMC should be on top of their list. Most GMC trucks and vans are also built under Chevy and it just doesn’t make economic sense to have two brands making the same kind of vehicles.

  12. JIm Thykeson Says:

    John, Buick sells down here in Florida quite well. The Lucerne and Enclave are everything that brand is supposed to reflect; style, quality, and refinement. The Lucerne gives up nothing when compared to Avalon, and the Enclave is a jewel reminding one of Toyota’s Lexus 470. If a down-sizing is due for Buick jettison the Lacrosse, as it only is a small version of the Lucerne.

  13. Mark Says:

    Hmmm,

    An Auto Czar who understands the Industry intimately, is up on the latest technologies, unbiased, smart, articulate, plays nice with others (in public), but can get a point across and drive industry forward with best practices…Sounds like we need a John McElroy to me.

    I can’t possibly think of a person who would be better suited or better qualified!

    What about it John?

  14. John Says:

    Way to suck up to the host Mark!

  15. Elenka Says:

    You are so talant righter, your blog is very interesting!