Detroit’s saving grace: All-American muscle car

The amount of passenger cars sent to the scrap heap keeps getting
larger. The Dodge Dart and Chrysler 200 are over, Ford models including the
Fusion and Fiesta are done and last month General Motors Co. announced plans to
cull the Buick LaCrosse, Chevrolet Impala and others. But as Detroit kills off
slow-selling sedans, there’s one niche that’s hung on: retro-styled reincarnations
of muscle cars introduced in the 1960s and 1970s. “What’s dying is the commoditized, four-door nothing burger, no-personality cars,” said Tim Kuniskis, who ran the Dodge brand at Fiat Chrysler Automobiles NV from 2013 to early 2018. Muscle cars “have a really well-defined personality and positioning while enticing respectable revenue.” For example, Fiat Chrysler commands an average transaction price of around $36,000 for its muscular Dodge Challenger. It might not be enough to match the fat margins on the trucks and SUVs that have become the focus for Detroit, but these powerful throwbacks can be still be moneymakers. And that can help big automakers finance their shift to a more electric future, especially since the initial investment on developing a Challenger or a Dodge Charger has long since been paid off.

Looking for growth in muscle cars still might be a bit of a stretch. Fiat Chrysler expects to sell roughly 65,000 Challengers this year, about the same as last year and just below the record 66,000 reached in 2015. Sales of the four-door Charger dropped 11 percent this year through November. Still, compared with the death spiral that’s consumed sedans, the Dodge muscle cars are doing alright. Retail sales of large passenger cars, a segment that includes the Nissan Maxima and Chevy Impala, is down 21 percent in 2018, according to J.D. Power. The Ford Mustang, the top-selling muscle car in America, was down a modest 3.6 percent through last month.

Manufacturers of more mass-market sedans are trying some of the same tricks to a lesser degree as a way to revive flagging sales. Even Fiat Chrysler is to stanch the bleeding from Americans’ disinterest in compacts by packing more power into their engines. Every Fiat model starting in 2019 will be turbocharged, said Steve Beahm, head of Fiat Chrysler’s passenger brands. However, considering that drag racers in Challengers, Camaros and Mustangs are already being bested by Tesla drivers on the track, a omen of the electric future awaiting the muscle-car world. Kuniskis said he expects performance cars to become more electrified over time, with plug-in hybrid versions taking off in the future. However, they declined to go into detail on Fiat Chrysler’s product plans, and the automaker hasn’t invested heavily thus far to bring in electric vehicles to market. But their cult following, muscle cars are always going to be a niche segment, leading some analysts to still question how much longer they’ll hang around. The Dodge, Fiat, and Chrysler brands were all left out of the automaker’s five-year strategic plan the company presented in June, and Schuster of LMC thinks it may be hard to sustain enough volume to keep the Charger and Challenger alive beyond the next three or four years. Fiat Chrysler’s Beahm insisted the Challenger isn’t going anywhere because it sets the tone for the whole Dodge brand. “I’m not going to tell you it’s going to grow,” Beahm said. “But it’s going to dramatically buck the trend regarding where passenger cars have gone lately and where they’re going to go in the next couple of years.”

BMW’s Electric Future for 2019

BMW’s i sub-brand launched the i3, a full-electric city car with an ultra-lightweight carbon fiber frame, in 2013. BMW showed that it will continue to push the sub brand to new levels when it previewed the iNext, in September 2018. Robert Irlinger, the head of the sub brand was recently interviewed about BMW’s electrification strategy. He disclosed that they announced four BMW electric models and one Mini. Which entails that there are seven battery-electric models still to come. He hopes to increase the distribution of their volumes across the brands while also covering the segments according to customer demands as much as possible. With the new iX3, they will expand into the compact SUV segment, the i4 is a compact sedan with a coupe like look and the iNext will roughly has the dimensions of an X5. These are all volume segments BMW is entering since the demand for electric vehicles is growing, governments will support them and the infrastructure is expanding. They changed strategy because they felt the customers want them to bring electrification across a broad range of our models. Irlinger also discusses the i3 letdown by stating that they were going through the learning process. He expresses how they started with a range of 80-99 miles in everyday conditions and thought that was enough since they originally positioned the car for urban mobility. However, the customer had a mindset that more range would be better, so they decided it was necessary to bring a second battery update relatively quickly. The first update brought 50 percent more range with the 94-amp-hour cells, and the 120-amp-hour cells now add another 30 percent on top. Car buyers continue to ask for more range at present. Although, there could come a time when they say, for example, 600 km under WLTP rules is sufficient. Then maybe the sub brand won’t need to come with an update at all. However, if customers want 500 mph and our competitors respond, then they would have to adapt appropriately.

Dealers’ most-liked brand remains Lexus

According to the most recent NADA’s Dealer Attitude Survey, Lexus remains the most-liked brand by dealers. Toyota held the second spot, followed by Subaru repeating at third, Honda remaining in the No. 4 position and Porsche moving up one spot from the winter survey to finish fifth. The rest of the rankings for the latest survey included Audi, Mercedes-Benz, Volvo, Jeep and Ram. Kia and Ford fell out of the top 10 this round, while Volvo and Ram entered in. NADA confidentially surveys franchised dealers twice a year about their relationships with their automaker partners. They are questioned on satisfaction with brand franchise policies, the automaker’s field staff and franchise value, and those opinions are measured. NADA declined to offer a complete list, including brands that finished at the bottom. The summer survey was conducted over a one-month period from July to August and NADA shared survey results privately with automakers in a series of meetings in late November.

The rankings are simply a measure to help automakers engage with dealers to improve business practices. Rankings also are shared with NADA’s industry relations committee and brand-level dealer council members in meetings. This survey also measures the consideration of dealer input on product, quality concerns and advertising programs. In that ranking, Lexus also finished atop the list, followed by Toyota, Subaru, Audi, Honda, Mercedes-Benz, Ford, Volvo, Porsche and Lincoln. The top four in that list remained the same from the winter survey. NADA also tracked dealer response to the survey and found BMW dealers had the highest rate of response, at 88 percent. Toyota followed, at 81 percent, Kia at 76 percent, Porsche at 72 percent, Volvo at 70 percent, Mercedes-Benz at 70 percent, Hyundai at 67 percent, Mini at 67 percent, Acura at 66 percent and Audi at 65 percent. During the last survey, Mercedes-Benz dealers had the highest rate of response but BMW was able to take first this round.

Congress will not pass self-driving car bill in 2018

Congress announced that they will not vote on a bill to speed the introduction of self-driving vehicles before it adjourns for the year. A monumental blow to companies such as General Motors and Alphabet Inc.’s Waymo unit, according to key senators after the latest hearing. Congress will also not take up a proposal pushed by GM and Tesla Inc. to extend or expand a $7,500 tax credit for electric vehicles. To win passage in the final days, the measures had to be attached to a bill introduced December 19th to fund government operations. Senators conceded the funding bill was the only way forward before Congress adjourns.

Senator John Thune and Gary Peters led the battle to win approval for more than a year and vowed on December 19th to try again in 2019. Thune stated it is a problem if Congress does not act in 2019 because “the technology is going to keep advancing.” Peters warned that the United States could get surpassed on self-driving vehicles by China, South Korea and others who “are betting big on the technology and they are developing the regulatory framework to accommodate it.” Automaker lobbyists say the measures will face harsher odds in 2019 when Democrats and Republicans will share control of Congress. The Alliance of Automobile Manufacturers, called the bill’s failure “a setback for the development and ultimate deployment of potentially life-saving technologies, and leaves many unanswered questions on how this technology will be regulated.” The tax credit for Tesla buyers will fall to $3,750 on Jan. 1 and will phase out entirely by the end of 2019, according to the Internal Revenue Service. Senator John Barrasso, proposed termination the EV tax credit entirely and has plans to reintroduce the measure in 2019, while automakers plan to press for the credit’s extension.

The U.S. House of Representatives passed legislation in 2017 to increase the adoption of self-driving cars and bar states from setting performance standards, but the legislation stalled in the Senate. Despite concessions by automakers, the bill could not overcome oppositions from some who argued it did not do enough to resolve safety concerns. Automakers may instead turn to the National Highway Traffic Safety Administration, which has said it plans to make it easier to test self-driving vehicles. In October of 2018, NHTSA said it was considering a pilot program to allow real-world road testing for a limited number of vehicles without human controls. GM in January filed a appeal seeking an exemption to use fully automated vehicles as part of a ride-sharing fleet it plans to implement in 2019, but the agency has not yet acted on it.

Sedan buyers on the lookout for a redesigned Insight

Honda has been relishing strong mini car sales here in its small-car-heavy home market. However, that success has caused the company to think hard lately about its identity as a carmaker. The problem is that Japan is currently undergoing a consumer preference shift. While American shoppers are switching from sedans to crossovers, young Japanese consumers are turning from stylish cars to mini cars. To get back to its roots as a maker of sporty cars that promise driving performance, Honda is pinning hopes on its new Insight sedan to underscore “a fundamental value of automobiles.” They are also exploring a new way to reach possible sedan customers.

The Insight is already getting public acclaim, winning the 2019 Green Car of the Year award at the Los Angeles Auto Show in late November. Kimiyoshi Teratani, Honda’s Japan operating officer said the third-generation Insight embodies driving feel and good design in one package. “Fuel economy, driving and design — we have sought to strike the right balance among these three elements at high levels,” he said. In the U.S., the model is targeted at younger customers with no families to drive around. But in Japan, the Insight is pitched to people in their 40s and 50s who are more familiar with driving sedans. In Japan, young people have shown less interest in buying cars, and many users have been deciding to drive mini cars. Of the top 10 sellers in the first half of this year, seven were mini cars, with the Toyota Prius as the only sedan, in eighth place.

Japanese consumers are also increasingly gravitating toward sport utility vehicles like their counterparts in the U.S., thus cutting further into the market for sedans, which have made Honda globally successful. However, with all this success would this the best time for Honda to introduce another sedan. Honda acknowledged that the overall sedan segment is shrinking at home, but customers now have more diverse choices in the sedan segment. “The new Insight is neither an ordinary sedan nor an ordinary environmentally friendly vehicle,” Teratani said. “I think this is more like a luxury sports-car-type model.” Short-term rental programs can be an effective way to help lower a psychological barrier and make it easier for Japanese consumers to try driving the redesigned Insight and experience its smooth acceleration firsthand. Honda is targeting Insight sales of 12,000 units a year in Japan and hopes to sell more than 20,000 vehicles a year in North America.