AD #1463 – Cadillac Moves Headquarters, UAW Negotiations 101, Tires Made From Shrubs

September 23rd, 2014 at 12:00pm

Runtime: 7:19

- Cadillac Moves Its Headquarters
- Cadillac Names New Head of American Sales
- UAW Negotiations 101
- Bridgestone’s Sustainable Tires
- Colorado/Canyon EPA Ratings
- You Said It!

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Cadillac is moving to the Big Apple, horse trading on the next UAW contract, and how Tesla is outselling every other luxury sedan in its price range.

IT’S A HELL OF A TOWN
In a move to give its luxury brand far more autonomy, GM is moving its Cadillac headquarters from Detroit to New York city. In a statement, GM’s president  Dan Ammann said, “We are creating Cadillac as a very clear division, and it will be far more self-sufficient and autonomous. We will not have the Cadillac business fragmented across all the functions that exist today.” Cadillac also named Jim Brunnel, 59, to head up is sales operations in the American market. Bunnell currently is Vice President Chevrolet and Cadillac Europe Sales. Brunnel will have to act fast to stop the drop in Cadillac’s sales and we expect to hear of specific steps of how they plan to start moving the metal any moment now.

UAW NEGOTIATIONS 101
Next summer the UAW will legally be able to go on strike against GM and Chrysler, and will negotiate a new contract with Ford. So what will the top negotiating topics be? Here’s my Autoline Insight. The UAW would love to get rid of two-tier wages, where new hires are paid less than long-time line workers. At the same time, GM, Ford and Chrysler would love to get out from under their pension liabilities for UAW workers. So, let’s make a deal! The Detroit Three would have to buy an annuity from an investment company to pay for those pensions, or give workers a lump-sum payment. GM already did this with its white-collar workers. But first the automakers would have to overfund their pensions, which are currently underfunded. That could cost them billions of dollars, but it would remove a lot of economic uncertainty. Wall Street hates how pension liabilities fluctuate with market swings and interest rate changes. But in the long run getting rid of their pension liabilities would save billions, and that could boost their stock prices. Of course, they need the UAW to agree to this sort of change, and I’ll bet it would, if the car companies agreed to get rid of those two-tier wages. Negotiations for a new labor contract start next summer and I can’t wait to see what both sides throw on the table.

SUSTAINABLE TIRES
In the future the tires we drive on may no longer be made from rubber and oil. Bridgestone just opened a new research center in Arizona that will focus on extracting rubber from guayule shrubs. It’s native to southwestern U.S. states and northern Mexico and the properties of guayule rubber are almost identical to natural rubber from rubber trees. This initiative is part of Bridgestone’s long-term vision of manufacturing products from raw materials that are fully renewable and sustainable by 2050.

GM MID-SIZE TRUCKS GET 27 MPG
As the Chevy Colorado and GMC Canyon start rolling out to dealers, we’re learning about the their fuel economy ratings. The 4-cylinder engine, 2-wheel drive and 6-speed automatic gets 20 miles-per-gallon in the city, 27 on the highway and 22 mpg combined. Those numbers drop slightly with 4-wheel drive. The V6 gets an EPA-estimated 26 mpg on the highway. The diesel engine will be available as a 2016 model and we won’t get its ratings until closer to launch. But if you want to learn more about these trucks make sure you tune into Autoline After Hours this Thursday, when we’ll have some of the top executives in charge of developing and bringing those trucks to market. If you’d like to pose a question to them, shoot an email to viewermail@autoline.tv

Engine Trans. Drive EPA Fuel Economy Estimates
City Highway Combined
200-hp 2.5L I-4 with direct fuel injection and continuously variable valve timing 6-speed automatic 2WD 20 27 22
4×4 19 25 21
6-speed manual 2WD 19 26 22

Coming up next, its time for You Said It!

We got a great letter from GM Veteran who points out that Tesla is doing a whole lot better when you compare its sales to other full size sedans that are priced between $80,000 and $120,000 in the US market.

Model Sales Segment Share
Tesla Model S 16,830 36.1%
M-B S Class 15,006 32.2%
BMW 7-Series 5,784 12.4%
Lexus LS 5,336 11.5%
Audi A8/S8 3,573 7.7%
Total 46,529

In fact, the Tesla Model S outsells every other sedan in this price range. And by the way, this includes sales of the new Mercedes S-Class, so Tesla is doing a fantastic job of capturing upscale buyers. And Thanks GM Veteran for pointing this out to us.

HtG has been thinking about Sergio Marchionne firing Luca de Montezemolo ast Ferrari. “One wonders what the power logic would be today if Ferrari’s cars were winning in F1. Would Marchionne have been able to dislodge a triumphant Montezemolo? (consider Italy’s politics and the Tifosi)” Well HtG, as I’ve said all along, I think this is about business, not Formula One championships. I believe Marchionne thinks he can get another $2 billion out of Ferrari, with production increases and an IPO, and he didn’t want a boss at Ferrari fighting him every step of the way. So I think Marchionne would have done this even if Ferrari was winning the constructor’s championship and Fernando Alonzo was on top of the point standings.

TangoR34 wants to know, “What’s the difference between 3D printing and rapid prototyping? The principle looks the same.” You’re exactly right, Tango34. 3D printing and rapid prototyping are the same thing. In fact, in the early days of this technology it was also called stereo lithography. But 3D printing is the name that really captured the public’s attention.

David Lopez WorldCitizen asks, “Why is it that manufacturers are still using Lead/Acid batteries? why don’t they switch to Lithium Ion?” That’s an easy one David. Cost. Lithium ion batteries cost significantly more than lead acid ones. Also, there is some interesting R&D work going on to greatly increase the capacity of lead acid batteries so they could be around for a long time to come.

Thanks for all you letters and comments we truly like getting them all. But that wraps up today’s show, thanks for watching and please tune in tomorrow.

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44 Comments to “AD #1463 – Cadillac Moves Headquarters, UAW Negotiations 101, Tires Made From Shrubs”

  1. HtG Says:

    How about a contest for where Cadillac will get office space? Every part of NYC is not like the others, so it’s an interesting decision.

    Park Ave or Freedom Tower

  2. DH Says:

    It amuses me to see reporters get excited about 24mpg in the Dodge Hellcat or 27mpg in these new trucks. When I spend $30,000 or more on a car, I don’t care about saving money on gasoline.

    If I did have a desire to save cash, I would have bought a 15-20,000 dollar car and saved my money directly.

    This is why I often make the argument, when someone says, “I want to save money,” they should steer clear of the Prius or Civic or Fusion hybrids. In the longterm you will save MORE money buying a base Corolla or Civic or Fusion, because they are almost 10,000 cheaper than their hybrid cousins. IMHO :-)

  3. G.A.Branigan Says:

    The new Colorado has some questionable shortcomings: Interior color choices=black or gray.The Z71 pkg,which is what I want,only black with crummy looking blue seat inserts.It looks like crap,in fact,it looks like cheap crap ala the past Colorados.No autotac for the colorado,yet the canyon gets it= fail.Skid plates for the Z71 4×4??? It doesn’t say on the website,at least I haven’t found it yet.They only say one plate for the transfer case.The gmc also offers a brown,(Dune) interior that really looks nice,too bad the truck looks hideous with that oversized front end.Why is chevy getting the short end of the stick?

  4. C-Tech Says:

    As OEM’s fight to save weight, I wonder if the luxury models which used more accessories (power) will see li-ion batteries? The costs could be more easily absorbed. After seeing several Mercedes Benz models using 2 lead-acid batteries, it seems to make sense to use a single li-ion battery.

  5. Kit Gerhart Says:

    2,
    I agree that people who buy Challenger Hellcat, and most people who buy any pickup don’t care much about saving money on fuel.

    As far as certain hybrids, it’s a different story. A Prius costs about $5K more than than the most comparable Corolla, but from a couple reports I’ve read, when they are 5 years old, you get most of that money back in resale value. Then, there is the fact that the Prius, being a liftback, is a much more utilitarian car than the Corolla sold in the U.S. As far as fuel savings, it depends. If you do a lot of stop and go driving, the Prius could save you close to $1000 a year. With a typical mix of driving, the Prius would save about $400 compared to a Corolla.

    While the price difference between a hybrid and non-hybrid Camry or Fusion is substantially less than $10K, I’d go with the non-hybrid in either of those. I’d never save enough gas to justify the price difference, and even more important to me, unlike with the Prius vs Corolla, the hybrid Fusion and Camry are less utilitarian, because they lose the fold down back seat.

  6. Kit Gerhart Says:

    A friend who is retired from the auto battery business recently told me he expects batteries for regular cars to be li-ion within a few years. They keep getting cheaper, while lead acid batteries are getting more expensive, and the lithium batteries would save significant weight in the car. Also, a lithium battery would be physically smaller, making placement int he car easier.

  7. Kit Gerhart Says:

    4, Are some current, or recent Benzes using two lead-acid batteries? I remember a college room mate having a 60′s diesel with two batteries, and he needed to take the batteries inside overnight in the winter, if he wanted it to start. That Benz used two batteries for a different reason that current ones would.

  8. pedro fernandez Says:

    Why do manufacturers seem to think everyone just wants black interiors? I have seen some non-black ones lately that have been very nice and attractive, seems that the interior designers have just gotten lazy.

  9. puremoose Says:

    years ago there was a lot of talk about 24 volt batteries.will we ever see them in cars?

  10. Kit Gerhart Says:

    8, Might the lack of interior color choice be partly to limit all choice, so people will buy cars off the lot, rather than ordering them?

  11. Bradley Says:

    Other than a headline, I am not sure how HQ’n a business in the most expensive city means better cars.

    Oh wait…the executives wanted to move to NYC.

  12. HtG Says:

    8 so many dark grey interiors these days, Pedro. I saw it throughout the NY Show; with metal borders around main dash elements. It’s pretty handsome, simpler to produce, and hides dirt well. Of course, I’ll be ordering my Ferrari 599 GTB with medium tan interior with green dashboard and exterior. I can’t wait

  13. Chuck Grenci Says:

    There is another draw-back to Li ion batteries (if being used for cranking/starting an engine) and that is cold weather performance. Below about 35 degrees F. there is reduced output of power; CCA would take on a whole new meaning. I gleaned this tidbit from my motorcycle forum in which replacement batteries of Li ion (of the same amperage rating as the lead/acid kind) couldn’t ‘cut the mustard’ when the chill was on. Some solutions/suggestions were to turn on a power draw to warm the internals of the Li ion (before attempting to crank the engine), and another, was to use a more higher rated amperage than specified for lead/acid. Maybe some of these problems have been resolved (of late) but this was the buzz a year or two ago.

  14. pedro fernandez Says:

    Sorry guys, but black interiors are good for taxi and police cars, but come on, otherwise why so dreary?

  15. HtG Says:

    Seen the exteriors these days? It’s like people don’t like cars, want to fit in, dealers want fast turnover( as Kit implied), and resale. I prefer the light tan interior of the Versa, and ignore the black of the Civic, which I indeed did ‘settle for.’

  16. Kit Gerhart Says:

    My Prius has a light tan interior, and my MINI had black. You can actually get some color in MINI interiors, but you run the price up quickly.

    My ’89 Caravan has a blue interior. I still like it, for being low rent as typical for ’80′s cars.

    The ’96 Corvette is dark green, with a grey interior. I would have ordered tan, which was available. You still have some choice of interior color in Corvettes. White with red interior is a good combination.

  17. Kit Gerhart Says:

    16, The MINI HAS black. I still have the car.

  18. pedro fernandez Says:

    This black thing began with the German cars and then spread throughout.

  19. Jack Hundertmark Says:

    Ref #9 – Actually about 6-8 years ago there was significant buzz about 40V electrical systems down the road. This seems to have fallen by the wayside with the cost & complexity (necessary to step down to 12V for many accessories such as bulbs, existing motors, etc).

  20. HtG Says:

    Caddy Relo

    Is it a certainty that Caddy will move to NYC proper? Why not Greenwich or Stamford CT? Why not White Plains NY? Short Hills NJ?

    These are places where potential owners and their vibes live, too. Yes, I understand the plan is to get volume sales by going big in China.

    Every think of picking up the phone, John? Inappropriate? (hey, I think about calling some people sometimes, but think better of it.)

  21. pedro fernandez Says:

    Yep, they could move near NY and still claim they’re NY-based, just look at the Jets/Giants.

  22. HtG Says:

    Pepsico is in Purchase NY on the border with CT. That’s a marketing company if I ever saw one. And where’s BMW HQ? Woodcliff Lake NJ

    https://www.google.com/maps/place/BMW+NA+Eastern+Region,+Training/@41.029314,-74.072954,12z/data=!4m2!3m1!1s0x0:0x4c3b7fc40e6df959

    Moving HQ seems to be Johann deNysschen’s way, you read The Daily Kanban

  23. HtG Says:

    Daily Kanban link

    http://dailykanban.com/2014/08/21/will-cadillac-defect-detroit-and-take-manhattan/

  24. HtG Says:

    20 come on, Pedro. Manhattan is the City. (we’re not LA around here)

  25. HtG Says:

    Something the interned didn’t burp up yet; Heineken beer is HQ’d in White Plains NY. Heineken is Dutch and JdeN is from South Africa.

    Some big office towers in White Plains.

    See? See? ;)

  26. HtG Says:

    erff!!!

    Meant to write, “Something the internet didn’t burp up yet…”

  27. pedro fernandez Says:

    HtG NY Giants, NY Jets, where do they play? New Joersey!

  28. HtG Says:

    Joisey

  29. HtG Says:

    Let’s not lose sight of the big picture, Pedro. New York needs to put down New Jersey at every opportunity.

  30. pedro fernandez Says:

    #27 thanks for the correction. I guess they blame the place where they play for their recent failures?

  31. HtG Says:

    recent failures, Pedro? I’m a recovering Jets fan. Since Richard Todd and Joe Walton. Lord what decades of hurt.

  32. Kit Gerhart Says:

    24, I thought Heineken was based in Amsterdam, and the beer was laced with cannabis like Coors from Colorado. How disappointing.

  33. HtG Says:

    Kit, did I ever tell you about the time on a train in Holland when a young family moved several seats away from me and my buddy because we might not have been so exemplary in demeanor? Like effed up? Like, what’s up with those intersecting railroad tracks? Yes, it’s true, and don’t just blame the cannabis.

    (it’s many years ago kids. Don’t do drugs)

  34. Ziggy Says:

    What a lame move by Cadillac (literally). Like moving to NYC will solve anything. To play off an old saying “It’s the product, dummy!” and moving to the Big Apple won’t make one stitch of difference other than drive the cost of doing business way up (have you ever priced the rent per square foot in NYC? Astronomical). When was the last time a move like this actually made any positive difference? Yeah, I couldn’t think of one either.

  35. C-Tech Says:

    Antoine de la Mothe Cadillac and Henry Leland probably would not approve of the move to N.Y.C. (SoHo I heard).

  36. C-Tech Says:

    Kit, the Mercedes SL coupe and convertible and some of the E-class models use 2 batteries in the gas engine models.

  37. Kit Gerhart Says:

    33, I don’t think moving to NYC will help Cadillac much, but their problem is more than the product. They have some very good product in the CTS and ATS. The biggest thing wrong with those cars is that they have CUE, except for a base model ATS. They need to get rid of that system, or make it optional. Ford seems to be coming around on MyFordTouch with the new Mustang. The new ‘Stang doesn’t have it, or at least you can get the car with real knobs and buttons for the radio and HVAC.

    As we all know, Cadillac has a pricing problem. They need to undercut the Germans to even get people to check out the cars.

  38. HtG Says:

    I think JdeN has said that Caddy will stick with the premium pricing strategy and wait for the volume to come. China is where they’re looking for big sales, more so than in the US. (if I understand the strategy) It kind of an event when I see a Cadillac. Driving behind a CTS coupe is pretty neat. (just me?)

  39. Jim Thykeson Says:

    Conservatives would like nothing more than to finish off the union by busting their pensions. These are the same guys who are firing teachers, laying off cops and firefighters, taking away their pensions, trying to destroy their health benefits, forced wage reductions, shortened work hrs. There is a redistribution of wealth, and its not the one preached about over on Fox! This one is about destroying workers for the benefit of the ‘investment-class’, and this one is for real.

  40. Brett Says:

    #38

    Agree completely!

  41. Kit Gerhart Says:

    38, 39 Me too.

    37, I think the CTS Coupe looks good too. The ATS Coupe will be out soon, and will be interesting. The CTS Coupe is still the old version, but I don’t know how much longer it will go.

  42. DH Says:

    Liberal-democrats would like nothing more than to finish off freedom by getting everyone dependent on government. These are the same guys who are protecting lazy (or child-abusing) teachers from being fired, arming cops and firefighters with military weapons, encouraging them to abuse citizens with force (or in some cases: rape), replacing a working Pro-choice health system with one run by a government monopoly (which encourages doctors to save money by Not offering treatment to people over 80).

    Plus devaluation of the dollar which reduces the workers’ saved 401K’s to near-nothing. Today’s dollar is only 50% the purchasing power of what is was in 1990. Liberal spending policies (like a teen with a credit card) are devaluing citizen’s hard-earned savings.
    .

  43. Kit Gerhart Says:

    42, We need REAL government funded healthcare, Medicare for everyone. Obamacare, formerly Romneycare is an overly complex compromise that is little better than the old status quo.

    BTW, Medicare has an administrative cost of 3-4%, while private health insurance is about 20%. Who says the private sector is so efficient at everything?

  44. Hunter Says:

    The Tesla Model S isn’t really a large luxury sedan. It has a passenger volume that is even slightly lower than mid size luxury sedans like the BMW 5 Series and Mercedes E Class. The EPA classifies it as a full size sedan because it has a combined passenger and cargo volume of 120ft3. It meets that standard only because it’s a hatchback and has 26ft3 of cargo compared to 12-14ft3 for either the mid or full sized non-hatchback competition. The Audi A7 has the same passenger volume(94ft3) and only 25ft3 of cargo and is classified as a mid size sedan.

    The Model S is priced like a full size luxury sedan due to the high cost of its EV powertrain.