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.

Hyundai’s Successful Marketing Tactic

Marketing precision has become precedent for brands such as Hyundai that have traditionally relied on car sales.

So for a personalized video campaign on Facebook and Instagram to promote the 2018 Sonata, Hyundai locked in on users based on purchase behavior. They went specifically after audiences such as sedan loyalists, those with an affinity for the Sonata and owners of competing models from Nissan, Honda, Chevrolet and others.

Their digital ad firm executed the video rollout in the fourth quarter of 2017, creating 20 spots using rolling footage from Hyundai that touted various Sonata features while making head-to-head comparisons with rival models. The sedan loyalist audience would likely skew older because the group was defined as people who had already bought multiple sedans. The campaign reached 5.4 million households and was credited with 2,227 new Sonata sales during the measurement period. “Great stories don’t begin with great tactics. They begin with an understanding of who we are telling that story to.” Diamond stated during the J.D. Power Automotive Marketing Roundtable here last month.

Hyundai built ads highlighting the different life stages of each audience. To reach corporate moms, the videos depicted a woman in a business suit in one scene, while having her push a stroller in another. For the traveler, the ads showed a man with a surfboard, taking photos and walking with his family. The company mixed up the sequencing of those scenes in multiple versions of the videos to see how different arrangements would influence viewers.

Automakers may do themselves a disservice by developing too many distinct audiences for a campaign, but then running only one video to reach them all. Therefore by using a variety of subtle changes to draw in the target audience, customers feel more connected to the brand and are more inclined to purchase their vehicles over their competitors.

However, the Sonata campaign wasn’t about playing the long game of brand building. The goal was more immediate to secure the perception of customers and motivate them to take action.

Subaru’s Crosstrek chosen for first plug-in hybrid

Subaru seeks to thrill at the Los Angeles Auto Show with the brand’s first plug-in hybrid, a gasoline-electric version of the Crosstrek subcompact crossover that arrives in U.S. dealerships by year end.

The 2019 Crosstrek Hybrid gets exterior and interior design flourishes to distinguish it from its gasoline-powered stablemate, the brand’s No. 3 seller since 2014.

The all-wheel-drive plug-in hybrid will also be the most powerful and fuel-efficient variant, according to Subaru. The drivetrain pairs a 2.0-liter direct-injection boxer engine and new continuously variable transmission with two electric motors and a lithium ion battery.

The 148-hp setup achieves an electric-only driving range of 17 miles and can speed up to 65 mph in full electric mode. For a fuel economy rating of 90 MPGe, the Crosstrek shows remarkable promise while still delivering quicker 0 to 65 mph acceleration than the gasoline-powered counterpart.

 More to come

But after the Crosstrek Hybrid, Subaru plans to introduce another full electric in 2021.

The Crosstrek Hybrid will start at $35,970, including shipping, about $8,000 more than the base Prius Prime, Toyota’s plug-in hybrid offering. The Crosstrek Hybrid is built on the company’s new Subaru Global Platform, which is designed to accommodate hybrid and full-electric powertrains.

Blue headlight projector rings and silver metallic finish on the grille will make the Crosstrek Hybrid stand out from the standard Crosstrek. A lower front bumper and body cladding, as well as fog light accents, further convey the model’s electrified persona.

Interior highlights

Inside, the plug-in hybrid sports a new color scheme of high-contrast gray and navy blue. The leather seats, door panels and armrests are accented with blue stitching.

Drivers using Subaru’s Starlink multimedia system can also access some special hybrid-only functions. The Crosstrek Hybrid’s system will allow them to remotely start the vehicle’s climate control. They can also use a remote battery charging timer to manage charging from afar.

U.S. sales of the Crosstrek surged 40 percent to 122,464 vehicles through October. But executives expect the plug-in hybrid to be a niche model helping Subaru comply with new emissions mandates. Former global r&d chief Takeshi Tachimori said in January that Subaru expects to initially sell it only in states that have adopted California’s zero-emission vehicle regulations.

New features for 2020 Corolla

Toyota’s trusty Corolla compact sedan enters its 12th generation on a new platform that promises a quieter, more agile ride and engines tuned for more power and better fuel efficiency. The Corolla must prove it can deliver more stability and power to Toyota Motor Sales’ U.S. car sales, which are down 11 percent this year through October.

Underpinnings: The 2020 Corolla is built on the Toyota New Global Architecture, which underpins most of the brand’s car lineup, from the Prius to the full-size Avalon. Toyota says the vehicle incorporates new approaches to design, engineering, assembly and materials to reduce weight and improve fuel economy, safety and driving dynamics.

Interior: The instrument panel, cowl, hood and beltline height are lower than on the previous version to increase visibility and create a more open feel in the cabin. The cockpit provides an interior space that surrounds the driver while offering a spacious environment for all passengers. Minimized gaps between buttons and switches, along with the elimination of unnecessary lettering on switchgear. Available ambient lighting illuminates the front door trim, console tray and front cupholder. The tray can hold small items such as a smartphone or wallet, or houses the optional Qi wireless device charging pad.

Safety: The sedan comes standard with the Toyota Safety Sense 2.0 suite that includes a pre-collision alert and braking-assistance system, dynamic cruise control and lane-departure alert. Blind Spot Monitor is a standard or optional feature, depending on model grade. When an approaching vehicle is detected, the system is designed to alert the driver using indicators on the outside mirrors.

Brake Hold is also a convenient technology that helps reduces driver workload while waiting at a traffic light or while driving in traffic.

Powertrain: The L, LE and XLE trims carry over the 1.8-liter engine from the previous generation, but are tuned for more horsepower and fuel efficiency. The XSE and SE grades get a new 2.0-liter direct-injection inline four.

Three-pronged attack: With help from a recently launched hatchback and a hybrid to be introduced this month at the Los Angeles Auto Show, Toyota seeks to shore up the nameplate’s U.S. sales, which are down 11 percent this year, dragging down overall U.S. sales.

Chevy Silverado is among the 2.7 Million vehicles GM is probing

U.S. highway safety investigators are probing an alleged defect in 2.7 million pickups and SUVs built by General Motors that are getting into collisions due to braking issues.

The National Highway Traffic Safety Administration opened an investigation on Tuesday of trucks and SUVs including GM’s best-selling Chevrolet Silverado after receiving over 100 complaints from consumers. The power brake vacuum pump in the models can degrade which makes it difficult to stop and avoid possible collisions. There have been at least nine crashes related to the problem and two serious injuries according to the NHTSA.

The current investigation involves the 2014 to 2016 model year Chevy Silverado, Suburban and Tahoe; GMC Sierra and Yukon; and the Cadillac Escalade. GM has been monitoring field reports and other data on the vehicles and will cooperate with NHTSA to evaluate them further, said company spokesman Tom Wilkinson.

The scale of Detroit automakers’ pickup sales follows that when there’s an issue with the trucks, recalls can be quite costly. GM’s rival Ford Motor Co. called back about 2 million F-150 pickups in September, and the North American safety campaign cost the company about $140 million. That recall involved faulty seat-belt pretensioners that sparked fires after crashes.

Unfortunately, General Motors is not only having issues with its brake pumps. They are also recalling more than a million big pickup trucks and SUVs in the U.S. because the power-assisted steering is having issues as well. The power-assisted steering is briefly shut down at random and this puts drivers at a higher risk of having a collision. This recall covers certain 2015 Chevrolet Silverado, GMC Sierra 1500 pickups as well as Chevy Tahoe and Suburban SUVs. 2015 Cadillac Escalade and GMC Yukon SUVs are also under investigation.

GM says the power steering may fail momentarily during a voltage drop and suddenly return, mainly during low-speed turns. The company didn’t mention any crashes in documents filed with the government. However, dealers will update the power steering software at no cost to owners but there has yet to be a set date for the recall to begin.

Apple Co-Founder Not Sold on Self-Driving Vehicles

Apple co-founder Steve Wozniak expressed last week that he doesn’t believe fully self-driving cars are possible in the near future.

Wozniak told CNBC in a recent interview he hoped Apple would be first to launch a self-driving car, but now he feels that the industry is quite some time away from this capability. His sentiment towards this technology came after his ownership experience with Teslas.

The Apple co-founder continuously upgraded his Tesla with hopes that the company’s Autopilot system would flourish into a genuinely hands-free driving system. Although Wozniak stated he still enjoys driving his Tesla, he also said the company has been making too many mistakes.

For example, this March Tesla issued the largest recall in its history. This recall involved power-steering systems in 123,000 Model S sedans. Tesla stated the five bolts responsible for holding the power-steering motor in place could corrode, break, or come loose, which could result in the loss of power steering. The company tried to soften the blow by stating the problem was rare and most likely to happen in colder areas that use a specific kind of salt to lessen the amount of ice and snow on the road.  

Tesla also faced controversy over a fatal crash involving their Model X vehicle that crashed into a highway barrier in Mountain View, California. The Autopilot system was engaged during the accident and the victims wife said he had complained about the system not working properly near the area where the crash occurred.

The company addressed statistics that indicate fatal accidents are 3.7 times less likely to happen in Tesla vehicles that have Autopilot than in other vehicles. However, this crash highlights the difficulties automakers face as the industry slowly shifts toward autonomous vehicles.

Despite these incidents, Tesla claims it will begin to roll out its first chip to enable its Full Self Drive mode next year. Yet shortly after this announcement, the electric-car maker dropped the option from its online configurator claiming this option will be “off the menu” after it caused mass confusion for a week. The option has yet to return over a month later.

Instead of a fully self-driving car, Wozniak believes the near-term future will instead be “assistive-driving” technology. These systems will countdown red lights, warn drivers of vehicles that approach an intersection and others will help avoid some common crashes that occur today. The former Apple executive also stated today’s roads and infrastructure would not be able to handle self-driving cars as the majority as humans build roads today, who are “not as good as nature and mathematics and even evolution.”