Episode 360 – Geely Invests in Volvo, Jatropha Plant Biodiesel, Lincoln MKZ Hybrid

March 31st, 2010 at 1:43pm

Runtime 8:42

Geely is investing nearly $1 billion in Swedish automaker Volvo.  GM and the U.S. Department of Energy are studying the jatropha plant for its potential as a new source of earth-friendly biodiesel.  Lincoln pulls the wraps off its first-ever hybrid, an electrified version of the MKZ sedan.  All that and more, plus Rod Meloni, Business Editor at WDIV Channel 4 News, Detroit, shares some of his thoughts on Chrysler.

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Transcript and Story Links after the jump . . .

Here are today’s top headlines, Geely announces a big investment in Volvo, Nissan prices its LEAF electric car and Lincoln’s building a hybrid.

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

This is Autoline daily for Wednesday, March 31, 2010.   I’m Rod Meloni, Business Editor at WDIV Channel 4 News, Detroit, sitting in for John who’s still living it up in New York.  Don’t worry though; he’ll be back later in the week.  And with that, here are the top stories of the day.

With the ink barely dry on last weekend’s agreement, Chinese automaker Geely — the soon-to-be new owner of Volvo — has announced a nearly billion-dollar investment to upgrade the Swedish company.  Offering no details, Bloomberg reports that company officials did say that it was developing plans on just where to target the upgrades with one obvious choice being a Chinese manufacturing facility for the vehicles that are currently manufactured in Europe and elsewhere around the world…though any such location is still under wraps.

Meanwhile, it looks like Volkswagen is targeting the luxury Chinese buyer as well.  Word out of Beijing, Bloomberg tells us, is that the German automaker is giving its under-performing luxury sedan, the Phaeton, a facelift in time to unveil it at next month’s Beijing auto show.  The goal is to get it in front of that growing group of Chinese millionaires who have money to spend on expensive cars.  The Phaeton is on track to receive some exterior design tweaks, interior upgrades as well as a wider selection of engines. VW sold about 1,400 of last year’s Phaeton in China and hopes the new version will break 2,000 making it the car’s largest market.

After months of speculation, Nissan finally announced pricing for its all-electric LEAF. According to the Detroit News, the car will sticker at $32,780, but thanks to a $7,500 federal tax credit, it will cost just over 25 grand. And depending on other state and local tax incentives the price could come down even further. The car goes on sale at the end of the year in the U.S. in select markets.

And in related news, BYD began selling its plug-in hybrid, the F3DM, to the public in China. According to Bloomberg, BYD is charging just under $25,000 for the vehicle and customers will receive government tax incentives as well. The car has a range of 60 miles when running on electric power.

For the first time ever Americans scrapped more cars than they bought. According to the Detroit Free Press, through September of last year, consumers scrapped 14.8 million vehicles while only 13.6 million were registered. Besides the bad economy and high unemployment, consumers are holding on to their cars longer because of longer warranties, longer-term financing and improvements in quality.

From corn-based ethanol to leftover fryer oil, there are many sources of biofuel, but GM and the U.S. Department of Energy are investing in yet another.  You’ve probably never heard of the jatropha plant, but this tropical weed could have a bright future as a source of eco-friendly diesel fuel.  It’s inedible, drought resistant and can be grown on marginal land which is just what the two organizations are doing.  As part of a five-year partnership they’re setting up two jatropha farms in India to test its viability as a commercial fuel crop.

We’ve got a little New York Auto Show news to share with you today.  First up, Lincoln announced that it will introduce a hybrid-version of its entry-level MKZ sedan.  The company says it will deliver at least 41 miles per gallon around town – that’s about 5.7 liters per 100 kilometers for you metric folks out there.  It looks like the car will share the same powertrain as the Ford Fusion and Mercury Milan Hybrids with a 2.5-liter four-cylinder engine under and enough battery power to hit 47 miles an hour in electric-only mode.  Ford says the MKZ hybrid will deliver best-in-class fuel economy.  Look for it on dealer lots this fall.  Nissan’s wildly styled juke crossover will take a bow in New York this week (subscription required).  The 2011 model will be powered by a 1.6-liter direct-injection four-cylinder engine with “more than” 180 horsepower.  However much that is.  Lastly, a little dose of performance, Cadillac will debut its CTS-V Sport Wagon at the show.  Now all you wagon lovers can enjoy the car’s 556-horsepower supercharged V-8.

Coming up next, some of my thoughts on Chrysler.  We’ll be right back after this.

And finally some thoughts about the most worrisome car company in the world… Chrysler.  We’re coming up on the first anniversary of its government-forced and -funded, quick-rinse bankruptcy filing. This is an important time to gauge the company’s progress with Fiat as its new partner… and consider the concerns looming large over a once-great carmaker.

There are those who would say Chrysler’s been one step ahead of the jailer for nearly a generation; that for all intents and purposes, it and its aged lineup, are irrelevant.  We learned in the year since the bankruptcy filing it was President Obama himself who decided to have pity on what had been allowed to become one pitiful car company. One need only remember the Daimler-damned version of the Sebring Chrysler put on the market just as Cerberus put Bob Nardelli in control, to realize how far this company had fallen!  Sadly Chrysler is still selling that beleaguered car with only minor changes.  Few will tell you Chrysler can get back to its sales levels of even five years ago. There is very serious concern the company’s cash burn is getting perilously close to the edge. While the Jeep Grand Cherokee gets a new look this year and the next-generation 300C is due next year… there is precious little else in the Chrysler product pipeline to draw-in new customers. That means they’re losing sales and old customers every day.  This does not bode well for any car company, much less one living on borrowed time and government money.

Yet let’s look at what’s transpired in the 11 months. Sergio Marchionne, not exactly a motor-oil-in-his-veins kind of car guy, decided to take a flyer.  It was an obvious and cheap way to move Fiat back into the American market and give both companies a global sales platform. This, of course, saved thousands of American manufacturing jobs. Marchionne has succeeded in doing more to marry two vastly-different cultures and car companies in 11 months than Daimler did in a decade. The miniscule 500 may well fit quite nicely on American highways, if gasoline prices go where they’re predicted. Marchionne is trying to pull forward as many new Chrysler and Dodge vehicles as he can; he’s working hard to give fresher, younger, classier ad campaigns to all of his different brands.  Expectations are the sales numbers coming out tomorrow will jump more than 50 percent from a year ago… but fleet sales are likely a large and unwelcome part of that.

I cannot say here whether Chrysler under Marchionne will succeed… but I can tell you what Chrysler insiders tell me… Marchionne is going for it with guns blazing. If he succeeds, he will do so spectacularly. If not, he will also do so spectacularly. There is no middle ground here.

In the end, the market will decide whether Marchionne’s efforts are good enough, whether this car company has earned to right to avoid irrelevancy.

I do genuinely fear that spectacular failure… yet I also find the possibility of success greatly intriguing. We’ll watch and hope for the best knowing there is as much at stake today as there was so many billions of government dollars ago.

And that’s it for today’s top news in the global automotive industry.  Again, I’m Rod Meloni, Business Editor at WDIV Channel 4 News, Detroit.  Thanks for watching, we’ll see you next time.

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32 Comments to “Episode 360 – Geely Invests in Volvo, Jatropha Plant Biodiesel, Lincoln MKZ Hybrid”

  1. MJB Says:

    Maybe I’m mistaken Rod, but isn’t the “ch” in Sergio Marchionne’s last name pronounced like a “K” as in Mark instead of “ch” like March?

    That’s the only way I’ve ever heard it pronounced. Well, that is until you skewered it about a dozen times in this segment.

  2. Dr Wu Says:

    What Nick Stevens has the day off?

  3. Jim Says:

    I like everbody else still doesn’t see the Chrysler deal working out in the long run and they say people have short memories but FIAT NA on its own I don’t see that at all.

  4. Salvador G. Says:

    eehhhh!!!!…

    oKAy@! thanks Rod.

  5. Dave Says:

    The leaf and the tax credit is a joke. All EV tax credit will NOT be paid to the car company nor the dealer, so you pay the full price for the car at the point of sale. Then the next years tas return..IF..you dont need to pay you MAY see the tax credit paid to you.

  6. adaptable Says:

    I really think FIAT’s plan is to sell their own product thru existing Chrysler dealers. Selling the JEEP and truck division will get them some cash to finance this plan. Chrysler does not have the resources to replace every outdated model it has.

  7. HyundaiSmoke Says:

    I told you guys about that Sonata didnt I.

    Will you at least give me some credit for my inccessant intelligence gathering measures, and come to the conclusion that, ” Hey Hyundai Smoke might have an idea of what hes talking about?”

  8. GUY FIROR Says:

    CAN RAM AND JEEP KEEP CHRYSLER ALIVE UNTIL NEW PRODUCT ARRIVES. MY HEMI TATOO IS STARTING TO LOOK WEATHERED

  9. pedro fernandez Says:

    So, Smoke, how about Hyundai putting out a small, RWD,no frills, 4 door sporty car like the old BMW 2002. Nothing like that available now. Everyone seems to forget why Fiat left this market, they sucked and saw the Japanese invasion coming which they could not compete against.

  10. dcars Says:

    Marchionni is a bold leader, he has decided what his company should look like (in his opinion) and is setting his company on that course. M&B did the same thing but their arrogance got in the way of the plan. Now they are looking to Renault and other partners to hit their sales goals. Isn’t it ironic that the guy that is probably most responsible for the down fall of Chrysler is now the chairman of Daimler AG, Dr. Z!

  11. Nick Stevens Says:

    “The Leaf and the tax credit is a joke.”

    There is nothing funny about tax credits if you are the taxpayer that is paying them.

    ” All EV tax credit will NOT be paid to the car company nor the dealer, so you pay the full price for the car at the point of sale.”

    Who cares? YOU the Leaf (or Volt) buyer will get the full tax credit. and it is NOT a tax deduction, where you only take a very small fraction of the benefit, if any, but a tax CREDIT, you get the full 7,500, as well as the full $5,000 extra if you live in CA or GA.

  12. pedro fernandez Says:

    Mopar guys: would a 4 or 6 cyl hemi engine be out of the question?

  13. Nick Stevens Says:

    “So, Smoke, how about Hyundai putting out a small, RWD,no frills, 4 door sporty car like the old BMW 2002.”

    Why are you assuming that 1. Hyundai can do it like BMW did it, and 2. that there are many who will pay a premium to buy a small hyundai. it takes decades to develop a good name and a reputationj which then allows you to sell a souped-up econobox at a premium.

    “Nothing like that available now.”

    I thought about this, maybe the 1 series and even the Z4 are too heavy to be the new 2002, but maybe the Mini Cooper S is. or the VW GTI. Except they are not RWD.

    ” Everyone seems to forget why Fiat left this market, they sucked ”

    They sucked Horribly. It is no coincidence that the Yugo was a rebadged fiat made in Serbia.

    “and saw the Japanese invasion coming which they could not compete against.”

    The other Euro econobox makers all also had to quit and leave with their tails between their legs, like Peugeot, Renault, and other names young people today never heard of.

  14. pedro fernandez Says:

    There’s no way you can bring back the past great cars like the 2002, orig 318, and 64 to 66 Mustang, BUT, a company could take a bold step and build something 2002-like with RWD and no frills, the 1 series is too expensive, too close to the 3, and the mini just doesn’t cut it the way it is now. Once in a while I see a 2002 or an old 318 and my heart longs for those days.

  15. pedro fernandez Says:

    Nick the idea is not to pay a premium for a good handling, RWD, if you don’t put a lot of frills standard. If you want the frills, then you can opt it out to whatever you want, but it has to start out inexpensive w/o all the bells and whistles

  16. HtG Says:

    HyundaiSmoke, that Sonata really looks good. All the Hyundais and Kias are that way to my eye.

  17. dcars Says:

    Concerning Fiat, they come along way their company looks like the old GM and Ford companies, a heavy equipment division, trucks and power train equipment etc…. But you folks are right if reliability at Chrysler does not return to pre-Daimler levels, Fiat will fail.

    The new Hyundais and Kia look good, but with their losing their top designer and marketing guy you have to wonder if they can sustain their upward trend. Good luck to them.

  18. G.A.Branigan Says:

    There is no way the Jeep brand and the Dodge Rams can carry Chrysler thru any more “trials and tribulations”.The full size pickup market is barely surviving,and the Jeep lineup only has the Wrangler and GC to really sell.The rest of the jeep lineup are pos’s that no one takes seriously and they shouldn’t.The Wrangler JK is by far the best Wrangler to date,but suffers from high prices and terminal cheapness.The GC is just a soccer moms suv.The Dodge Rams are a decent truck,but the prices on them is insane by anybodys standards.Ol Sergio needs to start putting clean diesels in at least the jeep lineup and bring on the Cummins diesel for the 1500 size.The engine has been ready for almost two years.If they stand any kind of chance recapturing a good portion of the pickup market,the diesel 1/2 ton is the way to do it.Of coarse,the same can be done by Ford and Chevy too.Whoever is first in that area….wins.

  19. Dave Says:

    @NIck,
    Regarding the taxes with EVs thats fine and you would get the full amount returned to you..LATER. So most people will still get the loan for 33 grand plus and then get the $$back at tax time and, most poeple, will put the cash somewhere else not on the car note. Also if you need to pay at the end of the year, then it will chip away from the return. So, I just wish the media would tell the truth instead of spinning the story. If the credit was at point of sale or pay to the car companies then it would be great. Now just beware..

  20. HyundaiSmoke Says:

    Guys, About the No Frills RWD. It wont be no frills by any means, but it will be affordable and KIA on the other hand will most likely get it.

    They have changed course, KIA is going upmarket too, but even more affordable than Hyundai. KIA will get its own Genesis that will be more affordable yet promises to be more wild, more sporty than its Hyundai Brother. The KIA version will be the true Pony Car out of the 2. That’s why Hyundai held back in the Gen Coupe. The K9 and the Kee Coupe are KIA Genesis works in motion.

    Hyundai is going for refinement, KIA is going for Wildness and Obscenity.

    They are going for VW/Audi on the Cheap, but Reliable, and Efficient too.

    Talk about sibling rivalries, VW/Audi is starting to step on each others toes as well.

    By the way, Nick we will earn a premium reputation. We dont care how long it takes, but we will earn it.

  21. William Bowen Says:

    Dave,

    Excellent point, to which I’ll add just one item. Since the rebate is POST-SALE, you’ll also pay sales tax on that amount too, which in California will amount to $660. Also, in some states that rebate would be considered taxable income, just like the “Cash for Clunkers” rebate was.

    Sure would be nice if the media where honest in its reporting . . .

  22. pedro fernandez Says:

    Smoke, there are other 2 door sporty cars around, what we need is a 4 door,RWD sporty sedan, like the good-ole days before the cars just kept getting bigger/heavier. If anyone could do it, it would be H/K

  23. HyundaiSmoke Says:

    Audi Kills A1 Plans for America:

    http://www.accentplanet.org/2010/03/accentrio-competitors-audis-johan-de.html

  24. Mario Says:

    What happened to the Chrysler 200/200c concept?
    Or the Dodge Hornet?

  25. HyundaiSmoke Says:

    They are working on something smaller that’s RWD, but thats 2 years out at least.

  26. Mario Says:

    What happened to the Chrysler 200/200c?
    Or the Dodge Hornet? When is Dodge going to sell
    the journey with 2.7 litre v6 instead of the smaller 2.4 litre I4, or diesel? They sell it in Europe, Why not in NA.

  27. FrankCanada Says:

    “Everyone seems to forget why Fiat left this market, they sucked and saw the Japanese invasion coming which they could not compete against.” Except that Fiat was about 1000 light years ahead in technology. My ’77 Twin cam 124 Spider had most mechanics heads fuming, in that era. My fathers ’58 Giuletta’s engine probably looked like it was out of sci-fi in America at that time. Crude Japanese was simple, my neighbours late seventies celica with the pushrod straight six (ala chevrolet) was testimony to that. He said it was good car until the strut towers rusted through, in ’82. The Japanese succeded by being persistant, & keeping it simple. But was it worth it. It’s better to drive an Alfa Romeo one mile, then a toyota for million. Any enthausist would know that. The problem is that enthausists don’t buy new cars, ask the British. And Marchionne is instilling that into Fiat, & now Chrysler. Heres hoping he dosent’t end up building toyotas, or God forbid hyundais!

  28. HyundaiSmoke Says:

    FIAT, superior Technology to Asians lmao Frank yeah ok!!!

    FIAT is persistent too. Persistent in maintaining Shit quality over the years.

  29. HyundaiSmoke Says:

    Hyundai/KIA wll show CHRYAT what Premium vehicles are all about. With Advanced technology that actually works, and more bolder futuristc design.

    Hyundai: THE ART OF TECHNOLOGY, THE ART OF DESIGN, THE SCIENCE OF EFFCIENCY!!!!!

    Hyundai did that through hard work. Hey Frank, youll be sorry you didnt buy the Accent or Elantra hatch when your Guilietta, Punto, or MiTo Breaks down in Bangle dick, South Carolina or whatever backwoods place where parts are 200 miles away at least. LMAO!!!

  30. ulisse di bartolomei Says:

    Speaking about the Fiat hybrids, the technology double clutch with electric motor between has been stolen by a patent that Fiat Company has never wanted to purchase, but only shamelessly to copy. I invite to visit my blog where her “vitality” of the Fiat planners it appears in all of evidence:
    http://dualsymbioticelectromechanicalengine.blogspot.com/

    Whoever appreciates an honest industrial ethics in defence of intellectual ownership should spread out the history reported in my blog. If the industries can afford unpunished to copy the ideas and defending it need very expensive legal action, to which target need the patents? How our young people can find intellectual courage if the economic potentates crush the rights of the single ones?
    whoever has a good idea on as I could act for defending my rights I beg him to leave a comment in my blog. Thanks and good time to everybody.

    Ulisse Di Bartolomei

  31. ulisse di bartolomei Says:

    The Fiat patent fraud. About the Fiat hybrids, the technology double clutch with electric motor between has been stolen by a patent that Fiat Company has never wanted to purchase, but only shamelessly to copy. This hybrid solution will be the basic technology with Chrysler’s electric and hybrid car program. Please give a look in my blog where her “vitality” and boldness of the Fiat planners it appears in all of evidence: http://dualsymbioticelectromechanicalengine.blogspot.com/
    If the industries can afford unpunished to copy the ideas and defending it need very expensive trial, to which target need the patents? How our young people can find intellectual courage if the economic potentates crush the rights of the single ones? How to defend the rights of private inventors? Whoever is about to ask for a patent or wants to propose a proper patent to a great firm I suggest to give a look to my experience with the Fiat, to get able to operate with best adroitness. Thanks and good time to everybody. Ulisse Di Bartolomei

  32. ulisse di bartolomei Says:

    I am sorry for the double comment. Good light to everybody and that everything goes for the best in these difficult times.