Episode 216 – Chrysler & Nissan Split, Russian Troika, Sales Collapse in Europe?

August 27th, 2009 at 12:08pm

Runtime 8:08

Chrysler and Nissan call off their deal to supply vehicles to each other. A state-owned Russian conglomerate plans to merge the top-three auto companies in the country. Ford is worried that once scrappage schemes in Europe come to an end, car sales are going to crash. All that and more, plus a look at the new Nissan Cube.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Nissan and Chrysler call it quits. Russia wants to merge its top three car companies. And when the clunker money runs out Ford worries about a sales collapse … in Europe. Our feature story today takes a look at the new Nissan Cube.

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

This is Autoline Daily for Thursday, August 27, 2009, and here’s what’s happenin’.

Chrysler and Nissan called off their deal to supply vehicles to each other, and undoubtedly this was a decision made by Sergio Machionne, the CEO of Fiat who’s also running Chrysler. Why would he cancel the deal? Fist off, Nissan was going to supply a version of the Versa for Chrysler to sell in South America. But Fiat is one of the biggest automakers in South America and can help Chrysler there better than Nissan can. Also, Nissan was supposed to supply Chrysler with a small car for sale around the world. Again, Fiat can do that, too. Then Chrysler was supposed to build a version of the Titan pickup for Nissan, but it sounds like Nissan called off that part of the deal. Chrysler says it’s still interested in selling trucks to them.

Just as clunker mania dies down in the American market, Bloomberg reports that Ford is lobbying European governments to keep the cash flowing. Ford is worried that once the scrappage schemes in Europe come to an end next month, car sales are going to crash. Indeed, we reported a couple of months ago that Renault’s CEO Carlos Ghosn was warning of the same thing. European governments put far more money into their incentive programs than the U.S. government did. Germany alone put $7 billion into its program. But automakers want to see it gradually phase out and not get cut off all at once.

What once looked like a promising answer to help the United States wean off foreign oil, bio-fuels are now out of favor. According to the Wall Street Journal, the viability of biodiesel and ethanol are being threatened by the global economic collapse, too much capacity, low gas prices, and the government dragging its feet about rules changes for fuel mixes. And according to the National Biodiesel Board, two-thirds of U.S. biodiesel production capacity is now idle.

But maybe they can export that excess biodiesel to Thailand. According to Ward’s, the country will switch to using B5 (subscription required), a blend of 5 percent biodiesel in diesel, starting in 2011. Currently B5 makes up 50 percent of all diesel sold in Thailand.

State-owned Russian conglomerate, Russian Technologies, plans to merge the top three auto companies in the country. According to the AFP, automaker Avtovaz, truck maker Kamaz, and engine company Avtodizel will be merged into a new firm called Rosavto. Interestingly, Renault owns a stake in Avtovaz and Daimler has a stake in Kamaz.

Since it’s celebrating its 100th birthday this year, Audi decided to spruce-up its logo to mark the occasion. According to Autoblog, the refreshed rings are slightly flatter, and a little harder-edged than the ones they replace. The company also tweaked the font it uses for its name. It’s more conventional-looking than the swept-back lettering used before. Could this be a new trend? Several other automakers have redesigned their logos this year, notably Citroen.

Uh-oh, more bad news for Toyota. Just after announcing a big recall in China, it’s recalling almost 96,000 vehicles in the U.S. for a potential brake problem. Certain 2009 and 2010 models of the Corolla, Matrix and Scion xD with the 1.8-liter engine are affected. Over time, moisture can collect, and in cold weather, freeze, in the brake system. The water comes from the PCV, or positive-crankcase ventilation system, which vents fumes from inside the engine. Toyota dealers will install a redesigned air-intake connector which should take about an hour.

In other braking news, sorry, I couldn’t resist, Autoblog is running some photos originally posted on the VWVortex forums that shows what are possibly the worst brakes EVER. As you can see in the pictures, the rotor on the back of this Mercury Grand Marquis is completely rotted away! Looking closer, there’s literally nothing there. I wonder how many miles it took to do that much damage.

Coming up next, a look at the Nissan Cube Krom, we’ll be back before you know it.

More and more automakers are starting to offer funky, new compact cars that focus on design. Arguably one of the first in the segment, at least here in the U.S., was the Honda Element. Shortly after it came out it was followed by the popular Scion xB. Now, there are a bunch of other vehicles in the segment. Here’s my take on one of the newest offerings out there.

We have a longer version of the package on the Nissan Cube which you can find in the John’s Journal section of our website at autolinedetroit.tv.

Don’t forget that Autoline After Hours is tonight, live at 7 p.m. Eastern time. We’ll be talking with Jessica Caldwell of Edmunds.com about which vehicles sold best under the Cash for Clunkers program. The government says the Toyota Corolla sold the best, Edmunds says the government is counting it all wrong. You will be amazed to learn the convoluted way in which the government came up with its numbers. Tune in tonight to hear the details first hand.

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

38 Comments to “Episode 216 – Chrysler & Nissan Split, Russian Troika, Sales Collapse in Europe?”

  1. pedro Fernandez Says:

    That Mercury must have been driven over too many puddles,snow and standing water, people that buy the Cube only care about putting a sub back there, and tonight’s guest looks like Jessica Alba, hubba hubba! Despite the recalls, I’ll still take a Toyota over most brands sold here.

  2. Ivan Sears Says:

    John,

    As for the Nissan Cube, it is another box, and not that useful of a box.

    I’ll stick with my HHR! I can haul my mountain bike with not problem and pretty much an entire local rock band’s equipment set with the back seat folded down. There is also well more room behind the rear seat when it is upright. By they way, mine is fully loaded and was out the door for less than $22,000. You can get a basic one for less than $16K as well.

    Ivan Sears
    Rochester Hills, MI

  3. martin Says:

    LOL! I was working in a Volvo dealership years ago when a woman came in with her 745 Turbo complaining that the brakes werent working well. She said that when she applied them there was a grinding noise. The rusty wheels indicated she was through the front pads, but when we removed the wheels we found that she had gone through the rotors and the pistons were dragging against the vented fins! Im pretty sure she was only a few stops away from certain death. I wish I had kept one, it would make an interesting conversation piece.

  4. Pedro Fernandez Says:

    ps. Were we not promised by the candidate Obama that there would be a push towards alternative energies incl. biofuels and such? Like every other candidate b4 him, nothing changes, oil will be king until it runs out, and the the shit is gonna hit the fan.

  5. Nick Stevens Says:

    The Euros may spend more $ on clunkers, John, but they offer much less than the $4,500, and even the $3,500 per vehicle offered here. I have no clue how these amounts were decided, but they sure seem too high, judging by the response.

    If they continue the clunkers program here, maybe they should be more conservative and offer only half of that, or a third ($1,500-$2,000) and include clunkers that get up to 19.99 MPG, not just 18, since few, if any, cars, even with a V8, are so thirsty.

  6. Nick Stevens Says:

    Oil will never, ever run out. The previous fuel of choice, Coal, certainly did not run out as they were fearing back in the 19th century. The so-called “Peak oil” idiots are just that, clueless, deranged idiots.

    A retired MIT professor had an excellent Op-ed piece in the NYT recently and exposed these truly deranged frauds, who have been wrong every time they have come up with their gloom and doom BS. The illiterate media love them, though, and always ask them for interviews..

    There is plenty of oil, but oil prices may go up due to higher demand in India and China in 10-20 years. But this is the beauty of the markets, prices will reflect that, they will go up, and then demand will drop, so oil, as any other such commodity, will never, ever run out.

  7. Thor Says:

    Biofuels were such a silly government intervention, we should had known that once oil prices fell from their ridiculous heights, biofuels would be in trouble, and especially corn-based ethanol.

  8. Thor Says:

    The HHR and even the Chrysler PT Cruiser were efficient, smart designs, for families that want space but not excessive weight and dimensions.

    The PT was so smart a design, it was actually shorter than the tiny Neon, on whose platform it was based, but carried a ton of stuff more than the Neon. The only downside is that due to its large surface area, due to its height, it did not get as good HIGHWAY MPG.

    Too bad they discontinued it, they should have redesigned it as a small minivan.

  9. Max Christensen Says:

    Fiat and company decided to keep the PT Cruiser through the 2010 model year, thus it’s not been discontined.

  10. Thor Says:

    It is already the 2010 model year. After that, they plan to just let the PT die. Even this year, PT production has virtually gone to zero.

  11. Jim Sachetti Says:

    Doing the minimum of maintenance is one thing, but to let that Mercury or Ford dinosaur go to that extreme of no rotor left it ludicrous. How come nobody saw it,even during a routine service checkup, and alerted the auto-challenged person who owned it?

  12. Tony Gray Says:

    “and here’s what’s happenin?” When will we add “Hotstuff”?

  13. Kit Gerhart Says:

    The Cube and HHR are not really in the same market. Sure, they are both “box” designs, but the Cube is smaller, and therefore gets much better city gas mileage. Cube and HHR are both good cars, and you have a choice between funky and retro styling, and a choice between Asian and American manufacture.

  14. Pedro Fernandez Says:

    The problem with the pt cruiser and many other domestics is that the manufacturers keep building the same car year after year w/o any significant changes or improvements, and after a few years the competition DOES improve their vehicles leaving the domestics behind. I rented a PT 3 yrs ago and found it to be noisy highway cruiser, even though it had a ton of rubber around the window/door area.

  15. Ken Stadden Says:

    John, as a fellow mountain biker, I found your comments on the Nissan Cube’s lack of interior space to be very helpful. Who knew from looking at it from the outside? You saved me a trip to the Nissan dealer. Keep up the great reporting!

  16. Jim Sachetti Says:

    I would buy neither of these breadvans, but if I had a young family I wouold consider them, but I suspect there must be better and far better looking ones for a fewe bucks more than the Cube and the Scion Xb and the Xa etc. One can subdivide the segment, but it is essentially tall wagons with an attitude, small, medium, etc.

  17. Max Christensen Says:

    There ARE better looking “boxes on wheels” out there …….. check out the Kia Soul. Those things are selling like hotcakes, at least here in the midwest! The local Kia dealer can’t keep them on the lot. I test drove one a couple weeks ago. I would not want it as my only vehicle, but as a funky, fun, fairly peppy little plaything, it would certainly do the trick!

  18. Thor Says:

    One thing that did not go well with the PT’s retro design was the headlights, which were modern shapes and not the old round ones that would be consistent with the retro theme, but probably aerodynamic and safety concerns led to the ones the PT actually had.

  19. Thor Says:

    I would never imagine anybody found the Soul good looking. Eccentric perhaps, or some modern art piece, BUT not a serious piece of automotive engineering, which requires both city utility (which the Soul has) and highway efficiency at high speeds, which the soul does not even begin to have. But different strokes for different folks, otherwise how can one explain to me why there were people, tehs of thousands of people, that willignly shelled out $30-40k for a BUICK, and not just today, when the $ has lost most of its value, but back in the 90s, when the $ could buy twice what it can today. (I am talking of the Park Avenue, which looked OK on the outside back in 92 or so, almost like some Jaguar, but the interior was really, really poorly put together, for such an expensive car)

  20. dcars Says:

    With Toyota growing as big as it is, I wonder if it’s gotten to big to control and maintain build quality? It makes GM look more impressive that they stayed No.1 for so long. I also wonder if autos are so technologically advanced that they can no longer support such big bureaucratic business structures. Is Honda’s business model ideal for the future car companies?

  21. Max Christensen Says:

    I didn’t say it was good looking ……. just better looking than the other boxes – or at least in my opinion.

    As to the question on purchasing a Buick – perhaps it’s called “customer loyalty”? There are a few of us left out here that will be loyal to a certain brand, right down to our last breath, regardless of whether the brand deserves such loyalty or not.

  22. Pedro Fernandez Says:

    To a lot of people, a plush, quiet, comfortable car is very important and Buick did give that at at lower price than a Caddy or a Lincoln. That explains why it has sold well, despite what many find horrible about it. Perhaps with the outset of all the imports, it has lost some of its appeal and has become the geriatric brand. I believe TOyota has now realized that maybe it’s not that great to be #1 in sales volume.

  23. Alex Kovnat Says:

    I am disappointed to hear about biofuels falling out of favor.

    I would jump for joy if it could be proven that global warming and other alleged problems from carbon dioxide buildup, are a hoax. I know which side my bread is buttered on, and if CO2 doom and gloom theories were proven false, certainly it would be in my practical interests. And I suppose for that matter, everyone else’s except intellectuals who don’t like cars or our way of life.

    But while its good to hope for the best, we have to plan for the worst. If global warming or other CO2-based problems (i.e., acidification of the oceans) is serious enough to justify 35 (or >40, like what California’s intellectuals want) miles per gallon, its also serious enough for society to encourage cellulosic ethanol, BioDiesel and other biofuels.

  24. John Says:

    John McElroy, Thanks for another great show.

    Re: “As you can see in the pictures, the rotor on the back of this Mercury Grand Marquis is completely rotted away! Looking closer, there’s literally nothing there.”

    Since the highways have been “sprayed” with a deicing liquid I have seen a lot of rapid rust under vehicles such as Brake and Fuel lines, spring mounts, calipers, etc.

    What is the primary chemical that does this new “rapid rust” damage ?

    “Dream Car Garage” that was on speed channel last year, showed a product that you could spray on before the winter and remove after the winter that would take the corrosive residue with it.

    Solid road salt would wash off, but this new liquid deicer seems to stick. (and keep rusting at a rapid rate)

    I found this pdf from Michigan.

    http://www.michigan.gov/documents/ch3-deice_51440_7.pdf

  25. Kit Gerhart Says:

    Buick’s main problem right now is image. The Lucerne is a quiet, comfortable, and roomy car that is a bargain compared to a lot of what is on the market. The new LaCrosse also promises to be a very good car. A lot of people who pay over $90K for a Mercedes S-Class would like a Lucerne as well as the Mercedes, if they could get past the image difference. I’m not saying a Lucerne is as good as an S-Class. What I am saying is that to many of the older, wealthy people who buy S-Class, the Lucerne would be at least as pleasant to drive.

  26. dcars Says:

    If Buick wants to lose it’s generic image, it will have to make cars that appeal younger buyers. The Lucerne and LaCrosse are very nice cars, but if you were in the 20 to 30 age group would buy one? They should consider keeping the Sky/Solstice.

  27. Kit Gerhart Says:

    If the Solstice and Sky were properly designed and developed, they should keep them. Unfortunately, they have poor top mechanisms, so-so interiors, and no trunk. If these things could be fixed without spending a lot of money, it would make sense to keep them. Since it WOULD

  28. Kit Gerhart Says:

    woops, I accidently sent before I was done writing……….

    Since it would cost a lot of money to fix what’s wrong, they are doing the right thing in dropping Solstice and Sky. Also, they would have to decide whether to make the car a Chevy or Buick if they kept it. At best, they could probably expect to sell 15-20 thousand of the roadsters a year, even if they made them as good as a Miata.

  29. Thor Says:

    Motorweek has a long term Cube with the CVT, and its first long term diary entry below at 2,500 miles is very surprising, they got 5 miles above the EPA HIGHWAY rating. I wonder what kind of driving they did, country roads at 45 MPH on cruise? OR is the EPA system a joke, even after its lowering of the MPGs again in 2008 to include A/C and higher speeds?

    Here is the MW item:

    Date: August 2009

    Miles: 2,500

    …After only a month with us, the odometer already reads 2,500 miles. Our staff has been using it for both the city driving that the Cube was designed for, and quite a bit of freeway hopping as well. The Cube’s flexible 1.8-liter, 122-horsepower engine, and front-drive CVT automatic, easily handles both. Cube’s fuel economy is also treating us very well at 34.1 miles per gallon of regular.

    But, the Cube really works best in the city. There, its maneuverability shines. There are no semi’s to blow its boxy shape around like on the highway. There’s plenty of room for 5 friends, and even the bulkiest cargo…”

    (that fifth friend I do not envy, no matter how small she or he is-Thor)

  30. Thor Says:

    “Pedro Fernandez Says:
    August 27th, 2009 at 3:18 pm

    To a lot of people, a plush, quiet, comfortable car is very important and Buick did give that at at lower price than a Caddy or a Lincoln.”

    You can have all that, plus much superior quaklity and reliability, if this is yoru style, with a Toyota Avalon, which was specifically designed to take sales from Buick, or, indeed, with most used Lexuses or Lexi, and there you got much, much nicer interiors, and the LS400-460 is good for 250,000 trouble free miles easy, I know actual people who did this, while their spouses leased Jags which were utter POS.

    Indeed, some people mockingly call the Lexus LS460 the.. Buick LS460.

    There is still NO justification for the ridiculous price of $30k-40K back in the 90s for a Buick, any buick. You can buy a Chevy for much less, and indeed, if you want to buy a GM product, why not buy the Chevy version, and put options for luxury.

    Buick should have been killed and Pontiac should have let live. HUGE mistake by GM and Obama Motors Auto Illiterate supervisors..

  31. dcars Says:

    Yeah I agree the S & S aren’t perfect, but GM can’t change Buick via marketing. They’ll have to offer cars that appeal to a younger range of buyers. That means a car like a Sky but executed better. How about something based on a Camaro plate form, to rival a Dodge Challenger. I’m sure that GM can make a convertible that they can fit golf clubs in ;) .

  32. Thor Says:

    There is no reason to keep the buick name. Most buick owners that appreciate the kind of car Pedro described, were already very old and have died out rapidly. Baby boomers close to retirement would rather be shot than seen in a Buick. The only segment that might still consider it are people that, on principle, will never buy a so-called “import” (even if that import is more domestic than most domestics will ever be, and is made largely of US made parts and assembled right here in the US).

    But they can always buy a Chevy or Caddy instead.

    Killing Pontiac instead of having it as the Sports/Enthusiasts division was a HUGE mistake.

    Keeping Buick was an equally big mistake.

  33. Pedro Fernandez Says:

    Thor: I don’t get why you hate Buick so much, a lot of Buick buyers would not buy a foreign brand for nothing in the world, they still think service and spare parts are a problem, so they feel more secure buying a domestic brand. Are you a Toyota salesman? that would explain your enthusiasm for the brand, but yet you drive a Bimmer, which is the opposite of a Toyota, you should have bought an Avalon instead, the service costs are a lot less than a Bimmer, are they not?

  34. Thor Says:

    “# Pedro Fernandez Says:
    August 28th, 2009 at 10:43 am

    Thor: I don’t get why you hate Buick so much,”

    It is not that I hate Buick, those who drive buicks MUST hate driving, they MUST so much prefer a car that offers NO joy of driving, that they are willing to pay $10-20k MORE than an equivalent Chevy or used Avalon to do so!

    ” a lot of Buick buyers would not buy a foreign brand for nothing in the world, they still think service and spare parts are a problem, so they feel more secure buying a domestic brand.”

    This betrays that they have NO IDEA! Do they seriously believe that it will be harder to find parts for an Avalon or even a Lexus than for a buick, which, for all we know, may be ALSO KILLED a few months from now, if its sales continue to be DISMAL?

    ” Are you a Toyota salesman? that would explain your enthusiasm for the brand,”

    Don’t make me laugh. I have not even owned a toyota, ever, but I DO recommend Toyotas to friends of mine that are NOT Auto enthusiasts.

    I only have driven the 7 for 4 years now. Before that, I owned a civic (still own) and an Accord, and before that a small fuel eficient fvive speed Pontiac, which I bought new, and liked it because I knew no better, and it died after 11 yrs and only 65k miles.

    ” but yet you drive a Bimmer, which is the opposite of a Toyota, you should have bought an Avalon instead,”

    You make NO Sense here. The Bimmer is not the opposite of the Hondas I owned before, but sure is different. Both BMW and Honda reached greatness in MOTORCYCLES, which is reflected in their sportier models (than toyotas).

    I respect TOyotas because they give people good VALUE. BUICKS DO NOT. If you worry about SAFETY, as you should, you would want both TOyotas and Buicks to NOT have these soft suspensions and poor handling but tauter ones, so you can have full control over where you are going. (Unless you have serious back aches?)

    ” the service costs are a lot less than a Bimmer, are they not?”

    The 7 is the TOP Bimmer, and still many items are not much more expensive to replace than in the Accord, and surprisingly, and contrary to what COnsumer Reports says (to avoid the 7), it turned out to be a very well built car, that can last 200,000 miles and still look like new outside AND inside and mechanically. The exhaust on the Accord had to be replaced frequently, for example, because of my stop-go driving with cold engine, short drives, but with the BMW NEVER (perhaps better materials)

    My point again is it was a HUGE mistake to keep buick alive and kill Pontiac, which has a glorious story and could still compete as the Sports Enthusiasts GM division. Caddilac and Chevy can, between the two, inherit any buick model worth keeping. There is NO value in the “Buick” name to keep it.

    I am curious what others think about this.

  35. Nick Stevens Says:

    And don’t forget Saturn, which was correctly terminated a few months ago, and it should not have been started in the first place. GM’s PC desire to preserve Saturn resulted in GM killing another famous brand with more than 100 years History, Oldsmobile, which, like Buick, went off message in recent years and did not justify its existence. In fact, some saturns and their logos reminded me of some Olds models back then.

  36. Pedro Fernandez Says:

    @Thor: I owned an Xcar Buick in 1980, for the 1st 2 yrs it was ok, after that it was a persistent overheating problem that got to the point I could not trust the car to go anywhere, so I traded it in for a Camry at a time when Toyotas were just getting a foothold in the American market, for the same price I could have had a Taurus or a Chevy whatever it was called then (back in 1985 the Camry was smaller than the American competition) but due to my bad experience with that X car, I have never gone back to American brands, but I realize there are a lot of people out there who are very happy with their American “iron”, so there’s a car for every need and taste out there.

  37. Thor Says:

    pedro,

    your experience is typical, and those “lot of people” that you claim are still happy with Buick are not that many. If there were really a lot of them, then GM would not be bankrupt. It is not a matter of personal opinion, just look at the sales numbers over the years, the big 3, and Chrysler and esp. GM, were destroyed by the imports.

    And re the 80s, don’t forget The infamous “voluntary (NOT!) import quotas under Reagan, put in place again to help the drowning Detroit 3, that resulted in imports being sold at $2,000 more (20% in those times for compact cars) than an “equivalent” (same size) domestic. Dealers and the Detroit 3 benefited from that (only in the short term) but the Consumer was fleeced.

    That is why I bought that small Pontiac and not the equivalent Accord or Civic I should had bought. That Pontiac was really an OPEL Ascona 1.8LT Engine, made in Brazil, and had a poor 5-speed (no comparison to Honda 5-speeds), but its MPG was quite good, being a lightweight car with a small engine. But it should not had died at 11 years and with only 65k miles!

  38. Pedro Fernandez Says:

    I paid over msrp for the Camry due to those import quotas you mentioned and was ridiculed by those who knew me for “spending more and getting less”, After 5 yrs when their cars were crap and mine was still running strong ( I drove from New York to Fla when it had 150,000 miles) I had the last laugh, here in So.Fl. there’s a lot of older folks and latinos who still believe American cars are the best, so you do see a lot of GM cars still rolling around, and if you travel to the heartland the American car is still prevalent, specially pickups. ps my boring Corolla will soon have 300k miles.