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Episode 291 – New Proposal May Hurt Toyota, Audi: EV Hype Overblown, 500 Can Only Be A Fiat

December 15th, 2009 at 12:00pm

Runtime 7:45

Toyota could be forced to sell-off Daihatsu, its subsidiary that makes small cars, and Hino, its subsidiary that makes medium and heavy trucks. Audi’s president of North America, Johan de Nysschen, criticized the U.S. Government for “falling in love” with electric vehicles. Sergio Marchionne explains why the Fiat 500 will be sold as a Fiat and not a Chrysler in the U.S.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Japan considers rules that could start to break up Toyota’s keiretsu system. Audi says the hype over electric cars is way overblown. And Sergio Marchionne explains why the 500 can only be sold as a Fiat.

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

This is Autoline Daily for Tuesday, December 15, 2009. And now, the news.

Japan’s new government is looking at making big changes. To protect minority shareholders, Bloomberg reports that a member of Japan’s Democratic Party is proposing to force big corporations to sell off or buy up all the shares in subsidiaries they hold. That means Toyota could be forced to sell off Daihatsu, its subsidiary that makes small cars, and Hino, its subsidiary that makes medium and heavy trucks. Or, it could be forced to buy them up. In Japan, the stock of the subsidiaries companies consistently underperform the stock of their parents, and Japan’s Democratic Party says the system is unfair to shareholders in those subsidiaries. This could also starts to affect Japan’s keiretsu system, where automakers own stock in their suppliers.

In a sign that they truly are starting to recover, Ford and General Motors will lift pay freezes for employees. Bloomberg reports that Ford will restore merit raises and will match 401(k) contributions up to 5 percent of base pay. GM already restored matches of 4 percent and will start merit raises in February. The automakers had imposed those freezes and cuts to preserve cash, and this is a sure indication that their cash crisis is over.

Speaking to the press yesterday, Audi’s president of North America, Johan de Nysschen, criticized the U.S. Government for “falling in love” with electric vehicles. According to the Detroit News, de Nysschen believes that the high cost of EVs won’t be offset by savings from reduced fuel consumption and the only way to do so is with government subsidies, which he doesn’t believe is sustainable. He favors diesel technology and says let the market pick the winners and losers, not government.

Audi is installing almost 12,000 square meters of solar panels on top of some of its buildings in Ingolstadt, Germany. The photovoltaic cells will generate more than 1,000 megawatts of electricity per year, which is enough to power around 220 four-person households.

In other Audi news, the company is gearing up to reveal the production version of its subcompact A1 at the Geneva Motor Show next year. To generate buzz, it’s released a few teaser videos. One of them features a street artist painting a mural of the car on a wall with spray paint. We’ll have to wait to see how closely this matches the real thing.

Most automakers that were in the heavy-truck business got out of that business, but now the pendulum is swinging back the other way. Chrysler will be getting back into large trucks thanks to its partnership with Fiat.  And now, according to Reuters, Volkswagen is looking to take full control of German truckmaker MAN. VW already has close to a 30 percent stake in the company and would like to combine it with Swedish truckmaker Scania, which VW owns a 70 percent voting stake in. An interesting part of this story, VW Chairman Ferdinand Piech, is also, conveniently, the Chairman of MAN.

Speaking of auto shows, NAIAS is just around the corner. Manufacturers are gearing up to build excitement for their reveals. The other day we reported that Toyota will have some big announcements about alternative-fuel vehicles. To whet our appetite, the company released two teaser shots of a new, dedicated hybrid. It’s hard to tell, but it sure looks like the iQ. Mercedes also spilled the beans on its new E-Class Cabriolet. Like the drop-top Audi A5, Daimler’s new convertible features a cloth roof, which is lighter and simpler than retractable hard tops. It should go on sale next May.

Coming up next, Sergio Marchionne explains why the Fiat 500 will be sold as a Fiat and why it could never be sold as anything else.

When Fiat announced that it would have Chrysler sell the 500 in the American market, there was a lot of speculation as to whether it would be sold as a Chrysler 500, or maybe just as a 500, with no other brand name on it. The thinking was that the Fiat name was poison in the American market, and besides, how could you sell a Fiat in a Chrysler dealership? But Sergio Marchionne, who now runs both Fiat and Chrysler, is known to have a laser-like focus on brands. And in the following clip, he explains why the 500 can only be sold under the Fiat brand.

If Marchionne can really get Chrysler to market the emotion of buying a car, and not just try to offer the best price on a commodity, then Chrysler’s future will look bright.

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

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42 Comments to “Episode 291 – New Proposal May Hurt Toyota, Audi: EV Hype Overblown, 500 Can Only Be A Fiat”

  1. dave Says:

    When and if the 500 come to the US with that siding top like the old Fiats, my father has a 1948 Fiat street rod withthe siding top, and it can be sold for a fair price..it will sell like crazy

  2. Tony Gray Says:

    Marchionne gets it.

  3. Pedro Fernandez Says:

    If I can translate what Sergio M is trying to say is this: you Americans have gotten too used to reliable, dependable cars with zero or no problems during its first 3 or 4 years, but no more of that, it’s time you became friendly with your local mechanic and get to know him on a first name basis. You can sit down with him, have a latte and discuss all the little annoyances and problems that your exciting, thrilling, unique, passionate cinco-cento may develop.

  4. Dan B. Says:

    Cars this small just do not do well when gas prices are affordable. If gas spikes again, then they will sell.

  5. dcars Says:

    Johan de Nysschen wants to flood the American market with german diesels. If the Volt, Leaf and Pirus are getting over 100mpg the germans won’t have a chance.

  6. Nick Stevens Says:

    Although different, the 500 will fight with the mini for the tiny “overpriced but cute” small car segment. The 500 probably does not handle half as good as the Mini, so success is questionable at best.

  7. Perry Cartwright Says:

    Your attribution of “falling in love” that you gave to Mr. de Nysschen’s National Press Club appearance seems intentionally skewed by your own opinion. The statement quoted in the papers is, “I understand why political leaders have fallen in love with hybrids and electrics. But this may the one time you’ll hear someone in Washington say it shouldn’t be a monogamous relationship.” This is hardly the sense of it in the program.

  8. Nick Stevens Says:

    The Audi boss is 100% right that Government has NO right to determine what we drive and distrort the playing field with huge subsidies for Hybrids or plug-ins only.

    He was also 100% right in his savage, but correct criticism of the whole silly idea of the VOlt, a Corolla sized or smaller vehicle which costs $15,000-$22,000 MORE than the Corolla and has none of the corolla’s monumental quality and reliability.

  9. Alex Kovnat Says:

    > …. Toyota could be forced to sell
    >off Daihatsu, its subsidiary that
    >makes small cars, and Hino, its
    >subsidiary that makes medium and
    >heavy trucks.

    Does this kind of government power-mongering have socially redeeming value? Or does it serve only the emotional and ego needs of the Japanese Democratic party?

  10. G.A.Branigan Says:

    I’m a fan of Sergio Macaroni.He loves Jeeps,especially the real one,the Wrangler.He is adamant about giving us the option of a diesel,and keeping the solid front and rear axles.No big deal to most,but those of us into American iron,it is a huge deal.Finally,not having driven a 500 in well over 30 years,I am reasonably sure the quality has improved,as well as the handling.In terms of reliability,whats so special about the mini?

  11. Craig Says:

    I don’t understand Audi’s president Johan de Nysschen comments on EV vehicles. Now I’m just a small town automotive technician, but even I can see the benefits to electric powered vehicles. Mr. Nysschen has stated on many occasions that diesel is the way to go. Has anyone told him that diesel is made from petroleum? You would think that to get that high up in an automotive company he would be aware of important facts like that. I always thought a good president of a company was to lead the company, not only in the present but also to take that company into the future with products that customer are going to buy. This world has only a finite source of petroleum and we are running out. I understand that diesel engines are very efficient and that’s great for the present, but what about the future. What does he think Audi is going to sell in the future? Or is he going to follow GM’s example and try to get bailout money when people stop buying your product because you have gotten complacent?
    Craig

  12. Nick Stevens Says:

    .In terms of reliability,whats so special about the mini?

    The Mini is obviously not special in terms of reliability, which should be average or above average but not excellent.

    Nobody suggested that the mini’s wild success was due to its reliability. But the reliab of the 500, if other fiats are any indication, will be as bad as that of the average chrysler-dodge and worse!

    If Mini buyers ranked reliability as no 1, they’d go buy a FIT and even a Yaris! And save HALF their $30k or so the new mini will cost them!

    Once more, to make it prefectly clear:

    People buy it for its CHARACTER, EXCELLENT HANDLING, styling. The 500 has its own character and styling but should be a far poorer handling car. But even if the 500 was as good as the Mini, which it is NOT, handling-wise, they will have to divide the little niche of overpriced cute little cars among the two and of course both of their sales and profits will suffer.

  13. Nick Stevens Says:

    Craig:

    Give me a break, Please! Do not parrot the serially failed slogans of the peak oil charlatans! we are NOT and we will NEVER EVER “run out” of any economic good, and if you knew your econs 101 you’d know it.

    But for OIL in particular, not only are we NOT running out of it, we have more reservesd THAN EVER BEFORE in its 150 year history, and if you include the UNconventional oil, we have TRILLIONS of extra barrels. Canada is producing more than 1 million barrels a day of that oil, and will go to 4 million soon! The us has HUGE oil AND gas reserves too!

    PS DIESEL is just as made of oil as GAS, BUT a gallon of diesel can take my car 50% more down th eroad!!! If a diesel was available for my S500, instead of 18-20 HWY I’d get 25-27! a 50% improvement. it WAS avail in Europe but not here after 1994 for the S class.

  14. Nick Stevens Says:

    PRICE. Look it up. IF and WHEN Oil becomes scarcer (compared to the Huge demand in China and India in say 2075 or 2100), PRICES will go up, and BALANCE will be restored, and that demand will DROP LIKE A ROCK! AND therefore we will NEVER EVER run out of the stuff! Only that it will cost more, so fewer will afford it. ANd if you ever wasted hours in congested highways inhaling cancerous exhausts, you would be GLAD if this ever happens. But probably not in anybody’s lifetime…

  15. Nick Stevens Says:

    Fiat has failed miserably in the US before. FIat recently swindled GM in their alliance out of $4 BILLION and produced NOTHING.

    NO Economy Euro maker was successful in the US since the VW BEETLE (the original one!). All the others LEFT in defeat, Alfa, Peugeot, Renault, Fiat, the whole sorry unreliable low-quality lot of them! This is a TOUGH market. Only the German Luxo makers were able to survive and profit in it. VW is a small potato compared to Toyota and Honda, even today. Even Hyundai And Kia together have 2.5 TIMES the sales VW has in the US.

  16. jesse m. Says:

    I think GM will be very surprised when the VOLT falls on it’s face because of pricing.40 grand for a Chevy that does basically the same thing as a 20 grand Toyota or Honda.Yea,so it goes 40 miles with no gas,big deal.At a saving of 20 + for the others,it doesn’t have a shot!

  17. Pedro Fernandez Says:

    Mr Marchione seems to underestimate the importance for Americans to have a reliable, dependable car; passion,excitement, blah, blah is ok for commercials or Hollywood movies, but in real life, it’s mostly stuck in bumper to bumper traffic or going down potholed roads, so save your passion for the Italian Alps or G.A.’s winding, mountainous northwestern USA roads. Fiat have always had the reputation for unreliability and if you do a bit of internet search, you will see things have not gotten much better. ps if you start bringing a lot of diesels here, then the price of the fuel will rise with demand.

  18. Dave Says:

    Some of you guys just trash anything that is not a….BMW or Ger. V8. In one posting “cars need to be smaller” the 500 is cute small and on the other side of the pond a ton of after market stuff for the car. The stock Mini is not a nice car, motor noise, plastic, and not cheap. The S, I have not driven. If the 500 can be 15 to 20 set up nice it will sell. If its 25 or more then it will fall.

  19. G.A.Branigan Says:

    I do love my mountains and trails etc.The diesel option will give me a “total offroad pkg” that will out do most mid sized cars in mpg.This I know to be true because I already had a Jeep diesel.Your right Pedro,I do love em :}>

    As far as the 500 goes,like already mentioned,if it’s priced right,I do believe they will sell.Not everybody is into the car/truck stuff like we are.Having said that,if it’s got the right price,it already has “cute” nailed,like the mini,people will buy it.I see it as being that simple.The “average” buyer will check it out,like the option pkg(s) and do a deal.gets great mpg,all the latest safty stuff,the single school teacher or people looking for an inexpensive yet stylish second car….why not?

  20. Gary Says:

    You know these car manufactures remind me of the airline industry which I am familer with. They delude themselves that the good old days will return only if they can get buyers enthused about there products. Surprise like the airlines who thought people would pay more for service it didn’t happen. The comsumer of today is looking the best price on a relible car if it looks half way decent. If that happens car is SOLD. Suprise personal transportation has be come a expense like all other things.

  21. Nick Stevens Says:

    “Dave Says:
    December 15th, 2009 at 1:24 pm

    Some of you guys just trash anything that is not a….BMW or Ger. V8. ”

    Not true for me. I appreciate the value that Hondas and Toyotas offer. I even appreciate some Detroit designs and overall packages. The new Equinox has impressive 32 MPG Hwy for a 3,800 lb car. The current Chrysler 300 has great styling,even if a bit too loud. Jeeps are unique and great if used as intended, off road.

    I enjoy the Italian Designers, they are the best in the world. Ideally, a small car with italian styling and Honda or Toyota mechanicals would be great.

    And I don’t even drive a BMW, I drive a big heavy old S-class, and I did not ever say it was so great. Mercs and BMWs are different, BMWs ten to have things fall off in the interior, MErcs are more luxurious and better made inside, BMWs handle better on twisty roads than mercs.

  22. Nick Stevens Says:

    “As far as the 500 goes,like already mentioned,if it’s priced right,I do believe they will sell.”

    If Europe is any indication, the 500 will be priced much higher than plain Yarises and other cars in its size class, mostly because of the nostalgia factor. Like the Mini, the new 500 is far bigger and heavier than the old 500, which was a tiny little rat, really, a bare-bones car like india’s Tata Nano and with even less interior space.

  23. G.A.Branigan Says:

    @ Nick:If Fiats are priced too much higher without showing well,it will more then likely be a flop.However,Fiat is brand recognition be it good or bad,where as they MIGHT be perceived as being better then say a hyundia or kia if priced about the same.I’m not into cars as such,not much of a secret there LOL,but the retro styling of the 500/mini will sell at least better then the non retro relative new comers.At least I see it as such.Only time will tell.

  24. Nick Stevens Says:

    GA, it is a narrow margin, if Fiat prices the new 500 like the yaris, it will bleed $ badly, if it prices it too high it will not sell as many copies, who knows what the “optimal” policy is..

    And no, I never said the 500 is in the same class as small Hyundais, Kias, or even the yaris and the Fit, it is in the “overpriced cute retro sentimental favorite” group, and so far only the mini is in that niche category.

    Retro styling is great, esp, when designers are out of ideas for beautiful new designs, which seems to be the case.

    Same as in Hollywood, where writers are also out of ideas, and they keep remaking successful old films instead of coming up with brand new ones.

  25. G.A.Branigan Says:

    @ Nick: I know you didn’t mention the hyundias etc,I did as an example,and maybe a poor one at that.I like the retro styling personally.The blend of old and new when done right is a pleasure,at least for me,to look at.Being an old fart I remember when most of the vehicles were in production,and even owned some of them.Which might just prove to be profitable for those companies that put out one or two “retro” mobiles.I loved the retro t-bird of the early 2000′s,but was way overpriced I thought.The Mustang has amassed such a following that both Dodge and Chevy had to jump in.On the other hand,the new bug didn’t do well at all.The PT cruiser did extremely well for a sort of borrowed 40 Ford look.Go figure…

  26. Ron Paris Says:

    “de Nysschen believes that the high cost of EVs won’t be offset by savings from reduced fuel consumption and the only way to do so is with government subsidies, which he doesn’t believe is sustainable. He favors diesel technology and says let the market pick the winners and losers, not government.”

    Finally, an auto exec with the balls to tell it like it is! Looking for a CEO General Motors? Here’s your man!

  27. G.A.Branigan Says:

    @ Ron Paris:I agree.Eventually electric vehicles at least for the urban set,will be popular to a certain degree.Diesel however is the near future for most.I still believe that whatever the feds mandate for ethanol blend (10-15%)they should include a corresponding bio-diesel blend.AND,remember guys,diesel fuel is a BY-PRODUCT of the gasoline making process.It ain’t so special as some would have you believe.Also,bio-diesel blends do not hurt the engine/fuel systen etc that the ethanol blends do.In fact,bio-diesel offers better lubricity then the standard diesel fuel.Imagine the savings should they mandate 15% bio-diesel,just on the commercial transportation end of things,trucks/trains etc.

  28. Nick Stevens Says:

    Ron paris: I also agree.

    Very few families can afford the $ and the garage space to have two cars for each driver in the household, one for city and one for highway, those few will appreciate tiny electrics for the city. Al the rest of us will do far better with a modern diesel. THose who do a billion miles a year should get a diesel-electric hybrid or a Prius.

    Priuses are ideal for taxis and I see more and more of them. Especially if Toyota can extend the prius line to offer slightly longer variants, full wagons/minivans that still retain most of their 50 MPG, they will be a huge hit in congested cities and their taxi drivers.

    The other time I took an old Ford Crown victoria taxi in DC and sat in the back. What a horrible, cramped design, no consideration for the passsengers in the back seat, uncomfortable at any speed. I was squeezed there, and I am only 6 1″. And that car has a length of 212″, almost half a foot longer than the S class, whose back seat is fit for effing KINGS!

  29. pedro fernandez Says:

    If the govt. gives out a rebate for the Volt, won’t the other electric car makers demand equal treatment for their vehicles, I’m thinking about the Nissan EV and whatever Chinese car may show up here in the next 2 years.

  30. HyundaiSmoke Says:

    Exactly Pedro. Why doesnt John Report on how FIAT is consistently behind the pack in small cars in Europe in Terms of Reliability according to most surveys?

    Punto=Lesat reliable subcompact
    500=least reliable supermini
    Bravo=Least reliable Compact car

    It goes on and on, the Alfas are just as bad too. Why doesnt John ask these tough questions?

    I have a question to start out with: “Why did our governemnt allow Chrysler to make a deal with this POS Automaker, who will only lead them to inevitable doom?”

  31. HyundaiSmoke Says:

    Remember, John this aint Europe where people use their cars to drive to work, and then Drive to the coffee shop after work, and then drive home.

    People will drive these FIATs and Alphas across country. Reliabiltiy matters.

    Think about this story:

    Just imagine a young woman and her baby getting stuck in Rural North Dakota in her “Cute” little 500 when its -35 outside becuase the car broke down yet again. She was on her way to Seattle becuase she got a job there and is supposed to start work in 2 days. Shes 100 Miles west of Fargo, and 100 miles west of fargo there’s nothing. (You would konw if youve ever driven through there)

    Think about that John, and the other reporters when you place your hopes on this POS Company.

    Yeah, Im a Social Worker by trade, so I see scenarios like this all of the time.

  32. HyundaiSmoke Says:

    I feel like Punching Sergio and whatever government official who approved this deal in the mouth just thinking about it.

  33. pedro fernandez Says:

    Because they want to save Chrysler at any cost even if it means bringing the unreliable, low quality Fiats here, forgetting the fact that they had to leave this market because they could not compete with the Japanese and they also saw the coming of the Koreans with their mission to improve their quality and reliability, I’ll take a reliable dependable car any day over a passionate, POS Fiat.

  34. HyundaiSmoke Says:

    I Like the A1 its a great small car for a Luxury Upstart to copy.

    John, I think its a Next Gen Yaris, not IQ. We’ll see.

  35. paulstewart Says:

    HyundaiSmoke, why would a woman with a baby be going across North Dakota in Nov-March by herself. That’s what’s known as Free-Will. Or as some might call it survival of the species. 1 less scenario for you to deal with. Sad but true

  36. John V Says:

    I am reading a lot of speculation and descriptions using words like “probably” about Fiat reliability. Do any of us have any recent numbers? Does anyone know the warranty IPTV (incidents per thousand vehicles) of the Fiat 500 or any other Fiats??? How do they compare with Chrysler, Ford, Toyota, etc.? How does their resale value compare to other cars in markets where Fiats are already sold? Resale value is an indicator of how good a model is in the long run.

    I agree with Marchionne that the 500 should be marketed as the Fiat that it is. Likewise for other Fiat/Alfa Romeo products. Why not sell them through Chrysler/Dodge/Jeep/Fiat Dealers? Fiat needs distribution and the dealers need products.

  37. dcars Says:

    Fiat made the best deal for Chrysler. A supposedly good company bought them (M&B) and they destroyed them. Fiat owns many highly specialized engineering companies. Give them a chance.

  38. Nick Stevens Says:

    FIAT reliability is the worst among Euro Automakers. Expecially in the US, FIATs of the 70s woudl rust after just a year and fail allthe time. hence the name FIAT (=Fix It Again, Tony!”

  39. Dave Says:

    How can you compare a 1970′s Fiat to one of today. Last time I looked the big three built junk in the 80s and 90s, that is not 30 years ago. VW are said to have poor reliabitity…never heard of a problem other than here. Audi has poor reliabitity, but I have not heard of problems and they sell. I had a 98 Ford that was recalled 4 times in 2 years and in for service 2 more times in the those 2 years and that was only 10 years ago!!

  40. HyundaiSmoke Says:

    Dave when FIAT is behind upstart Chinese Makes entering Europe in terms of reliability there’s a problem.

  41. FrankCanada Says:

    Hey HyundaiSmoke, and yes Hyundai’s smoke. Hyundai are the biggist junk ever sold in North America. Early Eighties Fiat Twin Cams are about four thousand times more reliable then junkie 2009 Hyundais. Dumb Ignorant Americans never appriciated Fiats, and its your loss. First Japonese, then Korean now chinese, the worse they are the more you like it. Thank God for europe. Fiat R&D – Ferrari Formula 1 team 8 Manufacturers Tittles in 10 years. Toyota? Showed they’re real abilities then left in disgrace. Fall on a sword all aisin car makers.

  42. Kit Gerhart Says:

    pedro fernandez Says:
    December 15th, 2009 at 5:59 pm

    “Because they want to save Chrysler at any cost even if it means bringing the unreliable, low quality Fiats here”

    …but the Fiat 500 and other Fiats have character, just like the non-particularly-reliable $200K cars from Fiat’s Ferarri division.