AD #1283 – Diesels More Popular Than Hybrids?, Krafcik Out at Hyundai, Fiat Buys Chrysler

January 2nd, 2014 at 12:16pm

Runtime: 8:50

- Diesels More Popular Than Hybrids?
- Krafcik Out at Hyundai
- Fiat Completes Chrysler Takeover
- Dr. Evil’s Favorite Car
- Shumi in Critical Condition
- You Said It!

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Hello and welcome to a brand new year of Autoline Daily. We hope you’ve had a great holiday season, but now let’s get to some of the latest developments in the global automotive industry.

Here’s a fascinating development. While automakers have been debating whether or not American consumers would buy diesel engines in passenger cars, Volkswagen just reported that it sold over 100,000 diesels in the US market in 2013. That means VW sold more diesels than any other car company sold hybrids, with the exception of Toyota. Remember, VW didn’t have a very good sales year in 2013 in the US. It’s sales actually went down. And yet demand for its diesels shot up to the point that VW sold more diesels than either Ford, Honda, Nissan or General Motors sold hybrids, plug-ins and electrics. That’s even more impressive when you realize there are no federal tax credits for diesels, no state or infrastructure incentives of any kind, no CAFE loophole gimmicks…and the price of diesel is higher than it is for gasoline. I wonder how well hybrids and electrics would sell if they faced those kinds of barriers.

One of the unexpected developments we saw at the very end of 2013 is that Hyundai Motors America announced John Krafcik would step down as CEO. He’ll be replaced by Dave Zuchowski, who had been in charge of sales. Krafcik has been something of a star in the auto industry, an engineer by training, but an executive with a very broad understanding of so many different disciplines in the industry. But Hyundai’s sales have not kept pace with the growth in the marketplace, meaning it’s been losing market share. Krafcik blamed a lack of manufacturing capacity, but clearly the top bosses at Hyundai thought they needed someone with more sales experience calling the shots. Hyundai was effusive in its praise for Krafcik’s contribution to the company, so you know this was not an ugly breakup. And I’ll bet a million bucks we haven’t seen the end of John Krafcik. Some car company is almost certain to pick him up. Shall I kick off the speculation? Wouldn’t Mazda like someone of Krafcik’s caliber? Or how about Chrysler? I think Mitsubishi would love to get him, but I don’t think he’d go there. Unless he has a non-compete clause, I think we’ll hear of Krafcik getting a new job before this year is out.

Fiat finally owns Chrysler lock, stock and barrel. The Italian automaker agreed to buy the remaining 41% stake in Chrysler from the UAW’s VEBA healthcare fund. The total amount comes to $4.35 billion. Chrysler will contribute $2.6 billion to the deal while Fiat kicks in the remaining $1.75 billion. This is a giant milestone in the Fiat-Chrysler relationship, and now we’re going to see Part II of how this deal develops.

As you know, the Detroit auto show is right around the corner and we’ll be bringing you live coverage from the floor thanks to our signature sponsor Chrysler. We’ll have two days of auto show broadcasts for you: Monday, January 13th and Tuesday the 14th both at 1PM eastern time. We’re following those days up with additional broadcasts from the second-annual Autoline Supplier Symposium thanks to our signature sponsor Ford. The LIVE webcasts are on Wednesday, January 15th and Thursday the 16th, both days start at 2PM Eastern Time at our website

We’ve reported on Audi’s 700 horsepower plug-in hybrid, the Sport Quattro concept a few times now. But an updated version will be making an appearance at next week’s Consumer Electronics Show in Las Vegas. This concept will feature laser-light headlights and a new user interface. The headlights are a combination of Matrix LEDs that control the low beam and uses laser light for the high beams. Audi will use a similar system on the race track in its 2014 R-18 e-tron quattro. The car will also show off a new user interface that uses a menu similar to a smart phone. The system is controlled by a rotary pushbutton and displays key information on a large TFT display screen. The Consumer Electronics Show gets going next week.

And maybe you’ve already heard this one, but seven-time Formula One champion, Michael Schumacher remains in critical condition following a skiing accident last week that resulted in a brain injury. Schumacher has undergone 2 brain operations and is currently in a medically induced coma. No word yet on his future outlook but we’ll keep you up to date.

Coming up next, it’s time for You Said It!

And now it’s time for some of your feedback.

Chuck Grenci wants to know, “A lot of the sales for the last couple years are partially attributable to pent up demand; what is to happen when demand begins to wane, jobs continue to remain flat and credit eventually dries up for marginal borrowers?”

Chuck, that’s easy. Sales go down, that’s what happens.

Bradley says, “Wow, I’d love to have lunch with Maryann Keller. The book, “The Machine That Changed The World”, was magnificent. The questions I would ask her. It was by pure chance I found that book while in college. It was on a discount shelf and I randomly found it. It captivated me from cover to cover.”

Yes, it’s a good book, but it was not written by Maryann Keller. She did advise the MIT team that did the research for that book. And, oh by the way, John Krafcik, who we mentioned earlier in the program having stepped down as CEO of Hyundai Motor America, was a graduate research student at MIT who was heavily involved in all that research.

Steve Weintraub loved to point this out. “Re: Infiniti Drive by Wire~~~John, I hate to say I told you so but I said previously in this venue that I didn’t trust this concept and you disagreed. This is only the start!”

HtG wants to know, “Any chance you’ll let us loyal commenters know how the vote for Exec of the Year went down? Unanimous or split decision?”

HtG, it was unanimous. Every one of my panelists started with their own favorites, but as we went through our discussions of their strengths and weaknesses, we kept coming back to Mark Reuss. And finally we all said, hey, this is our guy.

Last Daimyo is of the opinion that, “A 10 speed transmission, sounds incredibly heavy, and the added benefit of gas mileage seems negated due to the weight.”

All I can say is wait until you see these 10-speeds. They are barely bigger than today’s 8-speeds and the weight difference is marginal.

Hey don’t forget to join us for Autoline After Hours tonight. My special guest is Bob Casey, the former transportation curator at the Henry Ford Museum. He’s a walking encyclopedia of automotive knowledge and a car guy to boot. He also authored the beautiful book called Driving America which we gave away last year. We’re going to have a lot to talk about, so get your questions in early. Then join us here live at starting at 6 pm eastern time.

And that wraps up today’s show, thanks for watching.

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33 Comments to “AD #1283 – Diesels More Popular Than Hybrids?, Krafcik Out at Hyundai, Fiat Buys Chrysler”

  1. Chuck Grenci Says:

    Thanks John (for airing my question); good answer (but I knew that). My bad, not intertwining my question to the continued optimistic pronouncements for continued increase in North America SAAR. I’m doing, as you did in today’s program, ringing my finger around my neck in an ‘OOPs’. :D

    Anyway glad you are back (from the Holidays); sure missed the show.

  2. HtG Says:

    1 that last part about missing the show, Chuck? I’m with you.

    And then later this evening we get to complete an extended test drive of some of Santa’s distilled spirits? Happy New Year indeed.

  3. Jon M Says:

    Call the sales of diesels a fascinating development if you want, but I’d call it a revelation only the White House needs. For the rest of us it just proves that government ink pens and not consumer demand are most influencing the auto industry…at least not to the degree that it should be. Just imagine what automotive showrooms would look like if the government were to quit trying to force feed consumers and meddling so much into the affairs of the market!

  4. T. Bejma Says:

    Fiat buying the VEBA

    So, CK was conspicuously quiet about this little nugget before his [latest and of course not last] departure. As I recall his opinion was that the UAW/VEBA would NEVER sell to Fiat in order to protect Chysler’s [supposed] cash reserves. Guess he missed that one [again]…

  5. M360 Says:

    John -
    With your vast knowledge of the automotive industry, have you ever considered writing a book of some sort? I would buy it the moment it hit the market.

  6. G.A.Branigan Says:

    Diesels-diesels-diesels……100k very smart people joined the ranks of the oil burners.

    Hey TB,how long do I have to wait for my diesel Colorado?

  7. T. Bejma Says:


    Official word is still 2016 model year for the diesel G.A., but I am still asking around to find out the story ;-)

  8. Kit Gerhart Says:

    There would be a lot more diesel cars in the U.S., were VW not the only game in town with a variety of affordable diesels. We’ll see how the Cruze sedan does. I’d consider it a viable alternative to a Prius, for me, if they sold the hatchback or wagon here.

    As far as “government meddling,” the air quality in LA would be a lot worse than the air quality in Beijing, were it not for government intervention. The thing government could do that would increase sales of diesel cars, is raise tax on gas, lower it on diesel fuel, or somehow regulate wholesale prices to make them the same. The federal tax on diesel fuel is now 6 cents higher than on gas, but that is an insignificant factor in diesel costing 15-20% more than regular gas most places in the US. The usual explanation is that refineries have excess capacity for producing gas, or inadequate capacity for producing diesel. It would seem that diesel “should” cost about 7% more than gas, based on the amount of crude it takes to produce the two fuels.

  9. pedro fernandez Says:

    Kit you are correct, on Motorweek they feature a weekly segment on companies or local governments who have used part of Fed grants to change to natural gas or some kind of petroleum alternative to power up their vehicles, thus saving millions of barrels of crude oil every year.

  10. C-Tech Says:

    Heard an interesting news nugget on NPR this morning. It seems the U.S. Oil industry is quietly lobbying Congress to drop the ban on exporting U.S. oil. Why? Because they are producing a surplus of oil with the new fracking and other oil drilling techniques. The increase in fuel mileage in cars and trucks and the fact Americans drive less and use much less oil. My question is if there is so much surplus oil, they why is gas over $3/gal.?

  11. ColoradoKid Says:

    UAW Sells its shares to Marchionne

    So hey …. why should I care ? The UAW wants to shoot itself in the foot … have at it I say ! I mean what the heck … the UAW’s already taken to shooting their wives * … so why not themselves as well

    * cause of course the UAW memberships too stupid to unload a gun before cleaning it

    Yeah … things are starting out real well for the US auto industry 2014 … real well indeed

    [ sorry ... couldn't resist this one ]


    9 Yeah right … saved millions of gallons of oil my lily white arse ! Like MW’s gotten anything right in say the last decade .. not to mention KG’s record of late ;-)

    Face facts .. the only thing those Fed programs have saved is the political careers of the @$&hats promoting them .. as well as deluding the general public into believing them

    Propaganda Pedro [ something you of all people here should be all too familiar with ] … plain and simple

    As to diesels in the US ? BS I say ! We don’t need no stinking ( and I mean that literally ) French Farm Tractor diesels in the US .. polluting our air and making our cities as bad as in those countries that promote such BS

    Diesels belong in Trucks and maybe SUV’s … not cars where the price of diesel and pollution spewed out well and good exceeds any gains made

    Let the French suck on those diesel fumes I say … and leave the gasoline to us ( US )

    Saving crude oil indeed . More like wasting Government funds that could of gone to mass transportation etc .. is a hell of a lot more like it

  12. C-Tech Says:

    Somehow with the cash reserves being at Chrysler, shouldn’t Chrysler have bought Fiat?

  13. Wim van Acker Says:

    #8: Probably we should ask an oil expert to clear this, but as far as I know the situation is as follows. Refining crude oil yields distinct percentages of, from heavy to light, asphalt, heavy bunker oil, heating oil, diesel fuel, jet fuel,naphtha (key feedstock to the chemical and plastics industries), gasoline, and then gaseous fractions such as butane, propane, ethane and methane. The respective yields depend on crude oil (heavy Venezuelan versus light Libyan oil, for example) and refinery lay out (whether of not equipped with costly equipment to increase the yield of higher value added fractions. With the yields more or less given, ideally demand would match production. As far as I know there is currently over-supply of diesel fuel in the U.S.A. and over-supply of gasoline in Western Europe. Leading to: tankers filled with diesel fuel going from Houston to Western Europe, meeting along the way tankers filled with gasoline originating from Western Europe. Since gasoline cannot be contaminated with diesel fuel (stalling engines) I even wonder whether the same tankers can be used.

    This situation would improve, if:
    1 the U.S. market starts using more diesel fuel (is starting to happen as we saw today)
    2 the Western European market starts using more gasoline (is happening due to a trend from diesel engines in the lower segments of the market to small bi-turbo gasoline powered engines.

    As mentioned, I am not a market expert, so a contribution by somebody who understands this would be interesting.

  14. ColoradoKid Says:

    10 – Greed C-Tech … greed .. plain and simple

    And yes the NPR story’s right on the mark … they now want to send our oil elsewhere ….

    …. Because they need more PROFIT …. because … Fracking costs a Goram almighty fortune … both in execution …. as well as cleaning up the mess it leaves behind … like polluted water supplies … earthquakes where no Fault Zones exist … etc etc etc

  15. HtG Says:

    Heard enough yet, CTech? Here’s Bloomberg on the issue of american crude exports and refinery limitations and world oil prices, and all manner of thingies that NPR may not have had time for between the ‘thank you so muches’ and the ‘supported bys.’(sorry, can’t resist sometimes)

  16. ColoradoKid Says:

    WvA – 13 – The REASON the EU’s gradually shifting towards gasoline over diesel .. despite the fact that gas costs significantly more than Diesel in the UK/EU … is because ….

    Of all the excess pollution .. health problems .. city wide damage to buildings due to excess diesel usage etc etc

    So … remind me … why is it we’d chose to NOT learn the lessons the EU/UK has already come to grips with ?

  17. ColoradoKid Says:

    15 … as well as the fact that they can sell our oil for significantly more money over there … than over here .

    Which would then of course … raise our oil prices as demand exceeds supply …

    Jeeze … from manufacturing .. to jobs … to now oil … we’re pretty much ****ed … backwards .. forwards … and upside down with all this Globalization BS

  18. Kit Gerhart Says:

    Great explanation, mostly, but why is diesel more expensive than gas in the US? I’d heard it was because of excess capacity of gas vs diesel, which makes sense.

  19. Kit Gerhart Says:

    KG’s record of late, and always, is a lot better than yours. Why don’t you get the F… out of here, as you have promised to do so many times?

    You are right about the FIAT/Chrysler ‘deal,’ though.

  20. C-Tech Says:

    @ #19 Kit is that you?

  21. Kit Gerhart Says:

    Yes. I guess I said what I thought in response to his comment specifically directed at me.

  22. Kit Gerhart Says:

    16, “Of all the excess pollution .. health problems .. city wide damage to buildings due to excess diesel usage etc etc”

    …but as we read a week or two ago, the emissions from direct injection gas turbos may be worse than diesels, from a health standpoint.

  23. G.A.Branigan Says:

    They were referring to ‘particulates’.Lower compression diesels produce much lower particulates,plus new diesels are equipped with ‘particulate filters’ as part of the exhaust system.The new turbo gassers out produce their diesel counterparts in making more particulates,and don’t have filters either.Also,I believe the new clean diesels produce less NOX.

  24. HtG Says:

    John Kravchik to run Microsoft? (AAH tonight)

    Puhhleeez. (snickers)

    Didn’t anyone see how Qualcomm named Mollenkopf to be their CEO, followed shorty by an MS board member saying it would be the new year before they picked a new CEO. Helloooooo.

    It ain’t going to be an auto executive like Kravchik or Alan M. that takes over and sets direction for Microsoft. The computer industry is so in flux now that it’s plain hubris for Motown to imagine it has the chops.

    (of course I will admit it if I’m wrong, but come on now. btw, Recode’s Kara Swisher still hasn’t gotten a sniff about who it will be.)

  25. HtG Says:


    The Telegraph reports that MS was injured when he hit a rock and was catapulted, landing head down.

    A physician attending to him says there are still multiple pockets of blood in MS’ brain, which are a serious problem…

    “There are still many haematomas in the brain, with little bits everywhere. That is what makes the situation critical and it needs to be looked at hour by hour, day by day.

    “We won’t be able to evacuate the other haematomas at the moment because they are not accessible. They are not as big as the one we removed yesterday.”

  26. Wim van Acker Says:

    #16: concur with your observation of that inconsistency on a 40,000 ft level. But: in Europe diesel powertrains have reached a very high market penetration level and part of that is being replaced by gas powered engines. Diesel is expected to continue to play an important role in the energy mix. In the U.S. the market penetration is very low and therefore there are meaningful combinations of vehicle types and type of usage still to be conquered by diesel powertrains.

    And: when an economy refines crude oil it will end up with all fractions in its respective relative quantities. You either make use, or have to get rid of those. Not using = the rest becomes more costly per unit.

  27. Wim van Acker Says:

    #18: energy is packed more densely (+30%) in diesel fuel than in gasoline. Meaning “per gallon it costs more, per Mile driven less”. Therefore you pay 5% more at the pump per gallon, but since you need 25-30% fewer gallons there is a gain to compensate for the higher vehicle purchasing price. Whether that makes sense from an economic point of view depends largely on the number of miles driven per year.

  28. Bob Wilson Says:

    The proposed experiment,”no federal tax credits for diesels” is currently the status for all Toyota hybrids. As for State and Local incentives for Toyota hybrids, well perhaps it because the “clean” in diesels means they only pollute as bad as today’s gas cars. The Toyota hybrids are ‘air cleaners’ compared to that marketing fraud,”clean diesel.”

    Ordinary Prius c through Prius v, a factor of 5x lower THC/mile and 3x lower NO{x} than the best VW “clean diesel.” It could be that those who have to breath air, especially in Cities, like to have hybrids cleaning up what the “clean diesels” spew out.

    Yes, we’d rather see a diesel over an ordinary gasser. But we’d rather see a Toyota hybrid over any VW diesel.

    Bob Wilson, Huntsville, AL

  29. Kit Gerhart Says:

    Actually, the energy density of diesel is only ~10% higher than gasoline according to several sources I found, including:

    Diesel cars get ~30% better mpg than their gas conterparts, partly because the fuel has more energy, but because diesels are more efficient due to lower pumping losses, the better efficiency from using very high compression ratio, and other factors.

  30. Wim van Acker Says:

    #29: thanks, did not know that. I will read the link.

  31. Kit Gerhart Says:

    29, 30
    One thing is a bit confusing in that link. If you divide out the btu/gallon figures, diesel has 10.6% more energy than gas, but the “gasoline gallon equivalent” row in the chart says 13%. I guess those are close, but I don’t know the reason for the difference. Other sites I found showed numbers in the 10% range.

  32. Kit Gerhart Says:

    23, The new diesels produce low NOx, with the aid of the urea after treatment.

  33. Bob Wilson Says:

    Well there is a good reason for excluding Toyota from the VW diesel report as these are the numbers of just Toyota sales “counts through November…

    Prius – 135,291
    Prius C – 39,169
    Camry – 41,722
    Prius V – 32,879
    Avalon – 14,988
    ES – 14,856
    CT200h – 13,284
    Prius PHV – 11,169
    RX400h/450h – 10,154
    Highlander – 4,798
    GS450h – 478
    LS600h – 109
    HS250h – 5

    …the total comes to 318,902.”
    (Thanks to John at PriusChat who tracks such things.)

    BTW, the emission numbers come from the March 2013, EPA tests with the VW Passat as their latest and cleanest, emissions vehicle. Regardless of what technologies used, the hybrid-to-’clean’ ratios remain high enough that City residents would encourage hybrids over ‘clean’ diesels.

    Bob Wilson