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Episode 170 – PSA to Post Big Loss, Retooling Loans Awarded, Four Banger Buick

June 23rd, 2009 at 12:00pm

Runtime 6:14

Peugeot-Citroen says European sales may drop as much as 12 percent and that it may lose up to $3 billion. Ford, Nissan and Tesla are set to get loans from the government to help them build green cars. GM announced the 2010 Buick LaCrosse will be available with a four-cylinder engine. All that and more, plus a look at the latest J.D. Power Initial Quality Survey.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Peugeot-Citroen expects a big loss. Ford, Nissan and Tesla to get government money for green cars. And we get new details on the new Buick Lacrosse.

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

This is Autoline Daily for Tuesday, June 23, 2009. And now, the news.

PSA, the parent company of French automakers Peugeot and Citroen, and the second largest automaker in Europe won’t escape the downturn in the industry this year. According to Bloomberg, the company said European sales may drop as much as 12 percent and that it may lose up to 2 billion euros or about $3 billion. And in related news, Nissan confirmed at its shareholder meeting earlier in Japan today that it is posting a 230 billion yen net loss for its last fiscal year. That’s about $2.3 billion. Nissan also expects a 10 percent drop in sales this year as well.

According to the AP, Ford, Nissan and Tesla are set to get loans from the U.S. Energy Department. The money comes from a $25 billion fund set aside to help automakers retool their plants to build greener vehicles. Ford has asked for $11 billion in total while Tesla is requesting $450 million. Nissan has not officially announced how much it’s asking for, but yesterday we reported that rumor has it the company is seeking around half a billion dollars. GM requested more than $10 billion, and Chrysler $6 billion, and when you add it all up, they’ve all asked for $28 billion, when only $25 billion is available.

We just learned more details on the new Buick Lacrosse. It will offer two different V6s that produce over 254 horsepower, but it’s also going to be available with a 2.4-liter four-cylinder engine with direct fuel injection. Mated to a six-speed automatic transmission it should deliver about 20 miles per gallon in the city and 30 on the highway, that’s 11.6 to 7.8 l/100 km. The base V6 version of the car starts at nearly $28,000 and is aimed at the Acura TL, Lexus ES 350 and Lincoln MKZ.

And speaking of Buick, Autoblog has spy photos of a Buick-version of the Opel Astra have been snapped as it undergoes testing on the Nürburgring in Germany. Under the camouflage you can clearly see the brand’s trademark grill and curvaceous lines. Inside, it looks like the Astra’s new interior has been carried over. It’s unlikely that this car will ever be sold in the U.S.; China will likely be home for this compact Buick.

Yesterday the U.S. government launched a website to help consumers understand the cash-for-clunkers bill. The website, www.cars.gov, explains the process for turning in an old car for a more fuel efficient one and also encourages people to call dealers to see if they qualify for the program. Even though Congress passed the bill last week, it still needs President Obama’s signature to go into effect, so it could be another month before we see it in action.

Coming up next, a look at the latest J.D. Power IQS study, we’ll be back right after this.

J.D. Power came out yesterday with its Initial Quality Survey, or IQS, which received quite a bit of coverage from the U.S. media, but we didn’t report on that and here’s why. I was one of the first automotive journalists to ever report on this report back in the early 1980s. And for nearly 30 years now, the headline has always been the same, American automakers make improvements, but Toyota is still the best. Also, the quality of cars has improved so much that they’re almost identical. For example, Toyota was rated at 101 problems per 100 cars. Ford was rated at 102. That means a difference of only one problem per 100 cars. So to find the difference between any one Ford or Toyota you need to divide by 100. That means the typical Ford has 0.01 more defects than a Toyota, and only 0.02 more than a Honda. Can you even measure a fraction of a defect?

Worse yet, every few years J.D. Power changes its survey, so you can’t compare the latest survey to one that came out, say, 5 years ago. I think this is done to be able to keep selling surveys. After all, if I’m an automaker who is only a fraction of a defect better or worse than my competition, why buy the latest survey?

My biggest problem with all the attention the IQS survey gets is that it only measures quality after the first 90 days of ownership. C’mon, everything should work for the first three months. I put more credence in J.D. Power’s Vehicle Dependability Survey, which measures quality after three years of ownership, and we’ll see those results later in the year.

Well, that wraps up this show, but don’t forget to tune in Thursday night for another edition of Autoline After Hours. Join me, Jason Vines and Peter De Lorenzo for a no holds-barred, off-the-cuffs discussion about everything automotive. The show starts at 7:00 p.m. Eastern time on our website. Don’t miss it. Anyway, thanks for watching, we’ll see you tomorrow.

34 Comments to “Episode 170 – PSA to Post Big Loss, Retooling Loans Awarded, Four Banger Buick”

  1. pedro Fernandez Says:

    A 4 cyl. Buick Lacrossse sounds like a bad idea, its all about power to weight ratio. Remember the 4 cyl. Dodge Caravan, Toyota Previa etal. These end up wasting more gas cause they’re underpowered and the engine has to work harder. Now that small Buick would really be a nice addition to the lineup but of course, we don’t get it here. Bad decisions all over again.

  2. jim Says:

    If it were a 4 cylinder with a turbo, that would be interesting.

  3. Tony Gray Says:

    Intercom buzzes. “John, there is a Rocco and Nunzio from JD Power to see you.”

  4. G.A.Branigan Says:

    I have never put ANY credence in the JD Powers bla bla bla.It doen’t mean a thing.When I’m interested in a certain vehicle,I go to Edmunds and look up the forums for that car/truck and see what if any are the common complaints etc.Also,I will join a particular forum to stay abreast of any tsb’s etc.I have a 08 jeep jk,so I joined JKOwners.com forums like that covers just about everything from brand new to high mileage faults etc.JD Powers is a dinosaur.

  5. Episode 170 – PSA to Post Big Loss, Retooling Loans Awarded, Four Banger Buick Says:

    [...] Original post by John’s Journal [...]

  6. Bill Murdock Says:

    It’s nice that the government is loaning the car companies big bucks, but those bucks have to be used for a specific purpose. Nothing at all wrong with greener cars, of course, but is this another indicator that the government is forcing the companies to make cars that very few people will buy? If so, they’re really not helping at all, are they?

    Also, the quote from your trivial pursuit subject scares me. A business is a business only up to a point. Some are quite different from the rest, and the car business is one of those. One reason they got into so much trouble, in my opinion, is all the non-car guys that were running things for a while. With non-car guys in top spots again, plus government “help”, this may mean another boom for the foreign based companies, and who knows what for the Detroit three.

  7. T. Bejma Says:

    Pedro – No, listen, [sarcasm] the government says that YOU WANT fuel efficient (i.e. – underpowered) vehicles, not large, powerful, comfortable vehicles. The sooner you understand that, the better [/sarcasm].

    Also, we will get the little Buick, it’s called the CRUZE…

  8. G.A.Branigan Says:

    I strongly believe that having “non-car” type people in charge of a car company is a death nell.They are concerned only for shareholder returns and completely IGNORE what the car buyers (that would be us)really want.Add to that more govt intervention= disaster (another)in the making.Step in foreign car makers with products we want in a timely fashion.They (the big 3) will never learn.

  9. D Bruckbauer Says:

    Maybe if Cadillac would get the 2.9 turbo-diesel online, then get it to Buick, it might prove to be a better small displacement choice.

  10. Alex Kovnat Says:

    I’d like to comment on the Buick LaCrosse with the four-cylinder engine:

    I see no reason why ALL cars, not just hybrid cars per se, should not have some degree of hybrid functionality. What I would like to see is this: replace the alternator with an electric machine capable either generating electricity or motoring. Then, use a drive belt capable of transmitting whatever amount of torque might be needed, whether said electric machine is motoring or generating electricity.

    Furthermore, use a somewhat larger battery, perhaps a nickel metal hydride type, perhaps a more capable lead acid battery, or even a lithium ion battery. Said battery does not have to store all that much energy, since I am not asking for 40 mile electric-only range. Hence it would cost less than the battery pack one would need in a car like the Chevrolet Volt.

    By reversing the electric machine so it supplies torque (temporarily drawing stored energy from the battery), one would have a better launch than with the usual configuration where the alternator consumes torque/power, leaving less for vehicle launch. When the vehicle is at speed, the electric machine would switch from motor to generator mode, so as to bring the battery up to whatever state of charge is desirable.

    It would be interesting to see what results (performance, fuel economy) could be attained if a car such as the LaCrosse were to be powered by a 2.4 liter engine combined with the technology I describe above. Certainly it would cost less than a Prius or Volt style arrangement.

  11. John V Says:

    I agree that good initial quality survey scores do not tell much about the long term quality or durability.
    I find that the Consumer Reports surveys are of interest because they include cars that are significantly older. They also tell you if they did not get enough responses about a model to draw a conclusion. Residual value also says a lot, especially if you are in the used car market.
    However, those long term scores do not necessarily tell you anything about today’s new cars.
    I think there is some correlation between a poor initial score and poor long term performance. If they are not put together right with good parts, more of them are likely to perform poorly as time goes on.

  12. Episode 170 - PSA to Post Big Loss, Retooling Loans Awarded, Four Banger Buick | Real Rumors Says:

    [...] Episode 170 – PSA to Post Big Loss, Retooling Loans Awarded, Four Banger Buick 23.06.2009 | Posted in Industry Runtime 6:14 Peugeot-Citroen says European sales may drop as much as 12 percent and that it may lose up to $3 billion. Ford, Nissan and Tesla are set to get loans from the government to help them build green cars. GM announced the 2010 Buick LaCrosse will be available with a four-cylinder engine. All that and more, plus a look at the latest J.D. Power Initial Quality Survey. Transcript and Story Links after the jump . . . Here are today’s top headlines. Peugeot-Citroen expects a big lo Original post: Episode 170 – PSA to Post Big Loss, Retooling Loans Awarded, Four Banger Buick [...]

  13. John V Says:

    I see no big risk to Buick having a 4 cylinder engine. At least half of the people who buy one won’t even know what is under the hood. My guess is 0-60 in about 8.5 seconds which is not high performance but good enough for safe merging. At about 180 HP, it will likely out run most older Buicks with V6 engines.
    Toyota has a 4 cylinder, 6sp auto Camry in our market. Why shouldn’t Buick?

  14. pedro Fernandez Says:

    Both Accord and Camry weigh less than the Lacrosse, so its the power to weight ratio thing again, plus most Buick buyers will not go for a 4 cyl engine, it was hard enough to get them into a 6 from all the years of having v8′sas the powerplant of choice. I’m sorry but I still have bad memories from that awful MustangII with the paltry 4.

  15. Len Simpson Says:

    not much diff in size or weight than the 4 banger Malibu is there? same platform, maybe?

  16. Hermann the German Says:

    JDP may not have much value to a journalist, but GM crowed about their scores on GMBlogs yesterday. They think it has some value, but they also use many more metrics, such as residual values, as John V wrote. The JDP tests don’t only measure the number of defects but overall quality, which GM understands can mean something like dashboard configuration and design.

    Consumers look at lots of factors when buying. How else to explain Mini’s poor fairing, but market success?

  17. pedro Fernandez Says:

    You guys seems to forget that Buick represents a more upscale brand than Honda, Toyota, Chevy ect. Buick buyers expect a certain level of refinement and the car must “feel” like its got a lot of oomph under the hood. I would hate to be a salesman trying to convince your typical Buick buyer that the modern, state of the art 4 cyl is as good as a v6 or v8.

  18. db cooper Says:

    When will H. Obama get rid of the large cars in DC that the Govt. dudes like to cruse in?

  19. pedro Fernandez Says:

    John’s headline startled me at first, there hasn’t been any “banging” in a Buick in decades, I would guess by the folks I see driving Buicks all over.

  20. Salvador G. Says:

    To John McElroy,

    With car manufacturers today being pretty much equal in terms of technology,…
    Why do you think Nissan will only asked for 1/2 a billion for retooling instead of the 6 to 11 billions???… And How is it that I don’t hear word about helping the Part suppliers retool don’t they need to improve as well???

    Also, about the IQS… What is the specific defect that makes a Toyota better than a Ford?? and I swear if you say that is something really small like a bad nob I’m gonna loose it.

    -

  21. Michael Karesh Says:

    In the past the VDS was released after the IQS. But this year it came out in March:

    http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?id=2009043

    Neither is a complete picture. Model scores would be much better than brand scores. It’s also important to realize how many models have been redesigned in the last three years. Jaguar tied for first in the VDS, but was 29th in IQS. A key factor: of the models in the 2006 line, only the XJ remains largely unchanged.

  22. Dan Clemons Says:

    Companies should survive on their own without government help of any kind. Nor should the public have to bail out any Federal, State, or Local government. We should all have to live within our budgets.

    I walked around a two Saturn’s on display at a local mall. The fit and finish was atrocious. The trunk lid was to far to the right. The hood was not on straight and there were big gaps between the body and the bumper. The local dealer could not have looked at those cars before they were put on display. I don’t care what JD Powers says because when it comes to the cost of ownership, the Japanese still have the advantage.

  23. pedro Fernandez Says:

    Dan made a good point, many times a car will have a defect and the owner will not realize it or will not think it’s important enough to take the time to bring it in for service or repair, so this is never recorded, but it is still a defect.

  24. Kit Gerhart Says:

    The LaCrosse with a 4 cylinder will have adequate power for most people. Also, it should be sufficiently refined that most people wouldn’t be able to tell how many cylinders it has. Drive a late model 4 cyl. Honda Accord, or a “new” Malibu 4. That said, it will be a little slow, and will get only slightly better gas mileage than the V-6′s.

  25. Kit Gerhart Says:

    It’s too bad Buick (or Chevy) won’t be selling the new Astra in the US. It is a car I would strongly consider when I’m ready to replace my Malibu Maxx in 2-3 years. At it now stands, it doesn’t look like GM will have anything that will even make my shopping list, unless they end up selling a hatch or wagon version of the “Cruze.”

  26. Stuart Somers Says:

    Resale value might after three years might be a better indicator of quality than a survey after a few months.

  27. Dave E. Says:

    Hello,
    I looked up the JD Power Vehicle dependability study and agree with you. Three years is a much better time period. I’ve never heard of this study and I bet it’s because companies like M&B and VW don’t want people to see the real truth about their cars. Thanks for the info.

  28. JaredN Says:

    While I agree that the initial quality survey is not the be-all-end-all, it is still somewhat indicative of quality. I view good performance on the IQS as necessary but not sufficient. If a manufacturer can’t be bothered to deliver a car with few defects, long-term reliability is likely to be poor as well.

  29. Thor Says:

    Power surveys are biased garbage, paid by the manufacturers, and seldom negatgive.

    Buicks and most other GM POS is far inferior to TOyota and Honda in i nterior Quality and ergonomics, and even materials.

    Reliability and Durability of course is far superior for Honda, TOyota and even a few German imports than your average GM or CHrysler.

    CONSUMER REPORTS is the best (by far) and ONLY UNBIASED source of auto frequency AND cost of repair data.

    Even some Buicks that look good on the OUTSIDE (however boring or conservative), they look terrible INSIDE, including top of the line PArk Avenues and their successors, filled with fake wood that looks terible and fits even more poorly.

    This is a disgrace unacceptable in a $30-40k car!!! When $15-20k Hondas and TOyotas have none of these problems and last 20 years easy!

  30. Kit Gerhart Says:

    Consumer Reports may not insert bias in their surveys, but there are a lot of deficiencies in the CR survey, starting with the fact that the only question used is “did you have a problem that you consider serious” for each of many parts of the car. The meaning of “serious” is in eye of the beholder. Also, only about 10% of the surveys are returned. Also, vehicle “families” are lumped together, even when there are major differences in engines and tranmissions used. A prime example of this is Chrysler minivan a few years back when some of the transmissions used were reliable and some were not, but the survey results were not separated. I’ve subscribed to CR for many years and find the auto survey results intesting reading, but they are not the “end all” of reliability data on cars.

  31. Sean T Says:

    I agree that long term dependability is a better indicator, but you have to wait 3 years to get it! If you are looking for a new car now, that doesn’t help. IQS gets you data now, and tracks fairly well with long-term data. If you want to know how an OEM was doing 3 years ago, check out the long term data. But if you want a pretty good indication of how they are doing now, check out the IQS.

    Salvador: US loans are for retooling US plants, so if Nisaan doesn’t have as much US plants to retool, then they won’t qualify for as much money. There’s also a financial viability requirement of companies, so anyone bankrupt (or in danger thereof) won’t be able to get the loans either.

  32. Lacrosse » LUYAA wins in Ripken tourney - Frederick News-Post Says:

    [...] Episode 170 – PSA to Post Big Loss, Retooling Loans Awarded, Four …We just learned more details on the new Buick Lacrosse. It will offer two different V6s that produce over 254 horsepower, but it’s also going to be available with a 2.4-liter four-cylinder engine with direct fuel injection. … [...]

  33. Reno Says:

    Its been awhile since I’ve seen a Reliable closed trailer, loading and unloading GM test prototypes and drivetrains under the cover of Pittsburgh Police vehicles and Yellow Cabs. The 4 cylinder LaCrosse reminds me of the Park Avenue police units that would run up and down the hills of Pittsburgh. I hope GM has a real world equivalant test program. My ’00 Alero does really well on these hills; how much more can a LaCrosse weight over an Alero?
    Too bad AAH is about the auto industry, and not Denise on Thursday. She is fancinating, I don’t know her personally, had a chance to meet her a couple year ago at NAIAS, on our b-days. Cars, racing, some of her stories, she’d be cool to hang with.

  34. Reno Says:

    The problem with CR is that it surveys its readers, which are of the same demographic; older, highly educated, foreign car owners. How much bad are you going to say about your major car purchase? Usually, little unless it’s very bad.