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Toyota Recalls Another 2 Million Cars. Apology Needed.

Posted by: David Welch on February 24, 2011

When NASA released the results of a 10-month study on Toyota vehicles on Feb. 8 concluding that the automaker's cars did not have an electronics problem that caused unintended acceleration, one of Bloomberg BusinessWeek's columnists said the media owed the company an apology. There is no ghost in the machine and the intense media coverage caused a frenzy, Bloomberg BusinessWeek columnist Ed Wallace wrote. I know Ed personally and have tremendous respect for him. But I must part ways on this issue.

Toyota may not have had electronic throttle issues. But certainly the company had plenty of other problems. Just today, Toyota announced its biggest recall in a year. The Japanese auto giant recalled 2.17 million vehicles because of carpet and floor mat flaws that could jam gas pedals. Toyota has recalled more than 12 million vehicles globally since November 2009, many of them related to unintended acceleration claims. Of those actions, 5.3 million vehicles were recalled to fix floor mat problems. Some of the cars were recalled because of a sticking accelerator pedal. It may not have been electronics, but there were problems.

Toyota has had other investigations and recalls not related to unintended acceleration. Last week, the National Highway Traffic and Safety Administration opened an investigation into the 2006 Highlander hybrid amid claims that the SUV stalls frequently. In January, Toyota voluntarily recalled 1.7 million vehicles for potential defects in fuel pipes and pumps, Bloomberg reported. On Jan. 10, Toyota CEO Akio Toyoda told reporters that the recalls have inflicted "big damage" on the company, but he maintained that its cars are safe, Bloomberg reported at the time.

Back to the apology. While it's clear that there is no mystery magnetic glitch in Toyota's cars and that they are as safe as anyone else's vehicles, forget the apology. First of all, investigations are news. So long as the media reports the conclusion, it's in the public's interest to know what's happening. Second, Toyota's lost its once-astute focus on quality. Rapid expansion of its model lines and sprawling archipelago of factories has made it difficult to mind every detail, which was a principal tenet of the company.

Consumer Reports has found a decline in the quality of interior finishes in Toyotas for the past three or four years, David Champion, the magazine's director of automotive testing, told Bloomberg for a Jan. 12 story. The company whose customers once relied on Toyota for bullet-proof quality and reliability suddenly suffered a rash of problems. In fairness to my old pal Ed, some media reports accepted the unintended acceleration claims as gospel. But that alone does not exonerate Toyota. Sorry Ed, but it's the customers - not Toyota - who deserve the apology. Toyota's executives have apologized, and justifiably so.

Darth Vader Works His Mojo for VW, but Mini Misses the Mark

Posted by: David Welch on February 11, 2011

After my last missive gave a 'thumbs down' to Chrysler's 200 ad, which aired during the Super Bowl, one reader asked for my take on Volkswagen's "Darth Vader" spot for the Passat. Since more of you disagreed with my view on Chrysler's Eminem ad than sided with me, I'm flattered. In VW's ad, a young boy is marching around his house in a Darth Vader costume that must be the envy of the neighborhood. He tries to use The Force to get his dog to rise, open the dryer, move a sandwich across the counter, and all in vain. Finally, dad comes home in the Passat. Junior Darth starts with the Jedi gesticulations to get the car to do something. We don't know what exactly. Dad uses remote start from inside the house to fire up the ignition. His son is shocked. He got the force to work. He thinks he started the car with Jedi mind tricks.
My take: It's a great ad, and not just because I like John Williams' score "Darth Vader's Theme." This ad is a lot of fun and shows once again that VW doesn't take itself too seriously. VW's marketing efforts have usually displayed some joie de vivre and consistently cast a fun image. They have done some more serious ads when talking about safety features, but generally VW's marketing has been pretty loose. It's a testament to VW marketing that the brand has so much recognition in the U.S., even though its actual sales presence is so small. About 19% of car buyers shop it, according to research firm Strategic Vision. But only 2% of Americans buy VWs. Fat sticker prices have long kept many buyers away. That may change as the new Passat starts around $20,000, which is a $7,000 drop from the last-generation car. Giving up so much price in the name of sales volume is a questionable strategy. For now, let's stick to the ad. It was humorous and right for VW.
The Super Bowl is getting smaller in the rearview mirror at this point, but while I'm on it let me talk about one more ad. It must be said. Mini's "Cram it in the Boot" ad was truly terrible. The theme is you can cram all kinds of things in the back of a Mini Countryman. But the fraternity house double entendre is beneath a car brand that has great cachet and appeals to a sophisticated buyer. They really missed the mark with that one.

Eminem earned Chrysler some buzz. Sales may be tougher get.

Posted by: David Welch on February 7, 2011

It can only be a good sign that Detroit carmakers have the cash on hand to advertise in pricey venues like the Super Bowl. But in Chrysler's case, the money for its "Imported from Detroit" ad for the new 200 sedan may have been better spent elsewhere. The commercial starts with gritty images of bleak urban ruins, smoke stacks and downtown Detroit set against a lead-grey sky. The narrator asks, "what does this city know about luxury?" As we see more images, rapper Eminem comes onscreen driving a Chrysler 200, which replaced the weak-selling Sebring sedan late last year. The opening riff to his tune "Lose Yourself" eerily starts in and Eminem cruises the city. By the end of the ad he walks into Detroit's Fox Theater where a gospel choir is singing. He then points into the camera and says, "This is the Motor City. And this is what we do." The imagery is nicely done and Eminem is cool, but this ad misses the mark for several reasons.

1. The 200 is the wrong car. No one confused the old Sebring with luxury and this car is an upgrade, but not a completely-new model. The 300 is Chrysler's big, stylish, pseudo-luxury car for the gangsta set. No way Eminem drives a 200. His bag man probably wouldn't drive a 200. The 300 would have been a better choice.

2. We didn't see enough of the car. The ad is expertly shot and brings to life the idea of a tough and resurgent Chrysler and Detroit. It shows a side to the human side to Motown that most outsiders don't know, but it shows so little of the car that it's tough to conclude that Detroit, or more specifically Chrysler, can do luxury.

3. To the rest of the nation watching the Super Bowl, Chrysler is struggling to make it back and Detroit as a city has been left for dead. Trying to raise the prospects of both in one ad is, shall we say, extremely ambitious.

4. Troubled American car brands need to get away from gritty Detroit imagery. No one needs reminding that Detroit is a city in serious trouble and that two of the Big Three would have disappeared if not for a government bailout. Domestic brands have to change the conversation for generations of Americans who abandoned them years ago and for young consumers who don't know them. Ford has been plugging quality and technology like Sync. Chevrolet and Buick have been talking about fuel economy, Bluetooth and 40-gig hard drives in the dash. Both ideas are getting traction.

Chrysler can boast that the 2-minute ad, which is long for a Super Bowl commercial, got the new car some much-needed attention. Auto research website said that after the ad aired, 1,619% more people (about 8,300 in total) went to the site to look at the 200 than typically search for it on a Sunday evening. The problem with the comparison is that few people were looking at the car to begin with. Edmunds says that 681 people on average were shopping the car before the ad aired. An average of 15,911 typically shopped for the competing Hyundai Sonata. Will these new visitors buy the car? That will be the real test. The Sebring sold fewer than 25,000 cars last year. For comparison, Ford sold 219,000 of the competing Fusion. Chrysler got some sizzle with the ad, but there may not be enough substance to generate sales.

Cadillac and Audi Ham It Up in a Battle of the Hippest

Posted by: David Welch on January 27, 2011

There's a subtle rivalry brewing in the luxury car business. Audi and Cadillac are both hamming it up with television advertising to make the case that they're the hip antidote to stodgy traditional luxury (read: Mercedes). In recent ads, both of them have new commercials loaded with imagery painting luxury as cold and stuffy as they take a fun stab at old money.

One of Cadillac's newest ads depicts an older couple having an anniversary dinner at their long dining room table. Actor Laurence Fishburne intones, "blue-blooded, cold." Cut to racy imagery: a motorcycle roaring down the highway, a young guy eyeballing a beautiful woman in a glass elevator. The ad eventually goes to a Cadillac CTS and Fishburne asks, "What happened to luxury? Where did the personality go?" The point, of course, is that Cadillac brings something new and edgy to the luxury market. The theme is "red-blooded luxury."

Audi takes it a step further. On one of the German brand's newest ads is an obvious play off the classic Margaret Wise Brown kids' book "Goodnight Moon," with a vaguely creepy animated fox fur and other classic luxury items such as a well-coiffed French poodle and gold cuff links. "Goodnight outdated. Goodnight stuffy," the ad says. "Good night old luxury and all of your wares." Then we see a Mercedes sedan. Its lights go out. The ad concludes with a beauty shot of an Audi A8 sedan and we hear, "good morning, innovation. Good morning, unequalled inspiration."

Audi likes throwing down the gauntlet before its German rivals. The brand has taken on BMW several times. Audi actually staked its claim as the newest and coolest luxury brand several years ago with an ad that had an old rich man waking up to the grille of his big luxury car in his bed. It's a knockoff of the horse's head from "The Godfather."

So who has the better shout? Both brands are growing fast, Audi sales rose 23% last year and Cadillac was up 35%. Cadillac sells almost 50% more vehicles. But in terms of burnishing the brand as the coolest newcomer, Audi has the edge. Its average buyer makes more money. The A8 is a legitimate competitor to the Mercedes S-class and BMW 7-series flagship sedans. Audi's A4, which is smaller than the Cadillac CTS, attracts nouveau luxe buyers. Cadillac is still working on cars to battle it out in those two vital market segments. Plus, Cadillac marketers readily admit that they are trying to expunge the image of old, stuffy Cadillac. You have to appreciate the moxie shown by both brands.

Detroit auto show: Think small

Posted by: David Welch on January 14, 2011

Think small. Think fuel efficient. That is the theme at this year's Detroit auto show, also known by the official name North American International Auto Show. This year's expo does not have the kind of heart-pounding displays of horsepower and luxury of past years. But there are some very significant models that tell us where higher fuel prices and tougher emissions regulations are pushing the cars of tomorrow.
Judging by the new models and concepts on display, carmakers are trying to make the case that you can have a hot car and a bit of fun driving it but without having a panic attack at the pump. There are compact Buicks and a subcompact from Chevrolet. Ford has a small people mover. Honda has the new Civic and both Mini and Hyundai are trying to give us more fun in a small package. Here are seven cars worth checking out.

Honda_Civic.jpgMost significant: Honda showed off a new concept car that is, more or less, going to be the new 2012 Civic when it goes on sale this spring. You can tell by the aggressive curves in the car that Honda is trying to get its mojo back. Honda's market share fell to 10.6% in 2010 from 11% the year before. The Civic is a perennial winner for the company and vital to its success. Styling has never been the Civic's calling card. This one takes a bold step with a fast backward-sloping roofline and some curves in the side panels that reminded me a bit of a Hyundai Tiburon. More important for Hondaphiles, the car has the company's vaunted i-VTEC engine and a hybrid option will be available. We'll see if its bold new look will get any love from outside Honda's loyal followers.

buick_verano.jpgBiggest turnabout: You've heard the cliché "as big as a Buick." It comes from a description of a spider in Woody Allen's film "annie Hall." I doubt anyone will say "as small as a Buick" when the compact Verano goes on sale late this year, but the 2012 Verano compact tells us where carmakers think the market is headed. General Motors figures fuel will only get more expensive and that luxury buyers will want creature comforts without shelling out a fortune for gasoline. The car's 177-horsepower engine will get 31 miles per gallon on the highway with the 2.4-liter engine. A 2-liter turbo model comes later. The Verano will be an interesting test. Can Buick, which grew 52% last year, sell small cars to younger luxury buyers? On the surface it's a tough sell. But who would have thought a year ago that the Lacrosse sedan would be one of the hottest cars on the market?

mini_paceman.jpgPick of the show: The Mini Paceman is my pick for the best design at the show. It's Mini's future crossover SUV and it probably it is dead one for the brand. It's stylish, sporty, has a bit more space than a Mini Cooper but can go off-road. Stylistically, the two-door Paceman is an athletic version of the Countryman, Mini's existing crossover suv. The two-door Paceman doesn't look as upright as its more practical forebear. In the rear, it has haunches like it's going to pounce. The concept had Mini's 1.6-liter turbo engine used in the John Cooper Works performance cars and the ALL4 all-wheel drive system. That's a strong hint that the Paceman will offer both as options. That will make it an off-roader with tire-burning potential. One bonus: They will probably ditch the Paceman name. Mini USA President Jim McDowell said in an interview that, onfortunately, consumers associate it with '80s video-game sensation Pac Man.

toyota_prius.jpgThe comeback kid: Beating up on Toyota is a favorite pastime these days, what with their quality woes, lost market share and fallen image. I'll give the company some accolades. The Prius c concept takes a hybrid franchise known for its egg-shaped fuel sippers and takes it out on the edge. The car leans forward like it's in motion. The headlights are pushed up the hood and closer to the windshield as if the car is barreling down the highway. The car has shoulders, which makes it look more muscular. This car will come to market in the first half of 2012. One word of caution: There is no telling how much of the concept car's edgy design will make it to the showroom.

FordCmax_12.jpgFord gets in the game: Nissan and GM have a jump on Ford in the green-car game. Next year, Ford will make a big statement with the C-Max Energi, a five-passenger plug-in hybrid small SUV that the automaker says will get better fuel economy that the Chevy Volt. Untested fuel economy ratings are always suspect; the Volt gets 37 mpg if it runs the gas tank dry. GM may even upgrade the Volt before the C-Max Energi goes to market. But it still looks like a good package. It's more spacious that the other EVs and hybrids on the market and can go 500 miles using a full battery charge and tank of gas.

hyundai_veloster.jpgHyundai makes a bold statement: The Hyundai Veloster will go on sale in 2012 as a boldly-styled three-door coupe that promises to be a fun ride that gets 40 mpg on the highway. It doesn't need a hybrid-electric system to do it, either. It mates a dual-clutch transmission with a direct-injection 1.6-liter engine to maximize fuel economy. The interior is inspired by sporty motorcycles. This could be a hit with younger buyers given the curvy styling and fuel economy. Hyundai has moved well beyond selling just on price.

vw_passat.jpgBiggest snoozer: And last, the new Volkswagen Passat is the German carmaker's attempt to offer more value and become a big-volume seller in the U.S. market. The company only has 2.2% of the market, so it is dropping the price of the Passat by some $7,000 to get close to $20,000. The cabin looks like a VW, with well-crafted appointments and a certain German precision to the construction. On the outside? There isn't much to it. The sides of the car are pretty flat. The back end reminds me of a Saab. Overall, the Passat is undistinctive. The selling point is affordable German engineering with options like a 2-liter diesel engine that is expected to get 43 mpg on the highway. That will have to win buyers because the design won't turn many heads.

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