March 31st, 2010 at 1:43pm
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.
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.