Do American's really want to embrace the idea of fuel efficiency and green energy when it means sacrificing our all American Chevy Tahoes? Personally, every time I walk out on to the streets around my home in Northern New Jersey, left and right gleams of sun light hit my eye as the sun's beams reflect off the shiny silver body work of Lincoln Mkxs and Cadillac Escalades. I'm not afraid to admit that I admire this sight, as much as these prestigious planet killers represent the degradation of the ozone layer and mother nature. However, I'm not the only one in America who values rubber and gasoline more than spring and summer. A recent article in the Wall Street Journal posted that the demand for hybrid and "green vehicles" had in fact decreased, "Hybrid sales continue to fall, from about 315,000 vehicles sold in the U.S. two years ago to 290,000 last year... That number is projected to fall by 12% this year" (Bennett, WSJ). 12% is huge, that's 34,800 cars less than the previous year. The confusing issue is that commercials for green vehicles has only increased since 2009. If anything the number of green vehicles being sold should increase. I remember watching Audi's commercial for their clean diesel TT this past Superbowl and when the previous 5 Series BMW was released, a diesel model was offered as well.There are more consumer vehicles geared towards a green conscious than there has been in the history of the U.S. car industry.
The issue remains that Americans are not interested in small vehicles. The Toyota Prius, the Audi TT, the Tesla sports car, the Smart Car especially, the list can go on and on but the fact holds that fuel efficient vehicles especially hybrids are just visually small and unappealing to Americans. When has it ever been the case in American history when a father and his son set out excitedly to buy a Smart Car. America was raised on the notion on being gigantic and unstoppable. This idea or belief is present all around us when we go to New York and stare in awe at the domineering Empire State Building or St. Louis and try and comprehend the size of the Ead's bridge. Living right next to New York, I would stare into the city and gaze into its grandeur. The bright lights and city heights were intoxicating and most of all they were contagious. I wanted to get out of my small town and move over and join the russle and bussle of the living breathing New York City. I would imagine myself being driven down 42nd street in a Rolls Royce Phantom, enjoying myself in the plushiest leather seats hands could make. The American belief is to follow big and great and so far U.S. automakers have unsuccessfully integrated this concept into green vehicles.
However on a serious note, big vehicles in the U.S. don't just offer drivers presence but also safety. Just last year in December I was in the middle of a snow shower when my SUV lost control. Spinning out into the the center of the roadway, my car hit two incoming sedans, one being a Toyota Camry and the other a Mercedes Benz CL350. The other drivers along with myself came out of the accident without a scratch, but upon further inspection of their vehicles I had dented in the Camry's front bumper by a full 7 inches and the CL 350s hood was cracked in half. Amazingly, my SUV came out with just a dent on the side panel and a scratch on the front fender where I had hit the two cars. It is as Mr. Tonkins, the Chairman of the National Automobile Dealers Association says, "The fact is, manufacturers have struggled for years to make money on small cars... consumers remain skeptical that small cars are safe" (Tonkins, WSJ).
Personally, I like hybrid vehicles. They're fuel efficient, which means I can worry less about searching for the lowest gas price. Having money to spend on snacks and knick knacks rather than fuel is an uplifiting thought. But, the resonating question remains, can American automakers produce vehicles that offer the fuel efficiency our oil dependent nation desperately needs without compromising safety and the American myth of grandeur and gigantism?
http://proquest.umi.com/pqdweb?index=0&did=2169407111&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1288241723&clientId=31806
Thursday, October 28, 2010
Wednesday, October 27, 2010
GM Stacks Advertising Money on Chevy
Since emerging from bankruptcy last year, GM's advertising has been somewhat weak and poorly thought out. However, GM just unveiled a new Americana-themed ad campaign for Chevy that hopes to build on the success of previous ad campaigns with similar themes. You may recall some of Chevy's most famous slogans; for instance "See the U.S.A. in Your Chevrolet", "Like a Rock", or "An American Revolution". Well, GM is once again barking up the same tree in hopes of finding more fruit, and they're doing it more "American" than ever with their new commercials, which feature Chevy cars and trucks over the years in scenes that evoke nostalgia for America's past, all with voice-overs by actor Tim Allen. Honestly, what good American doesn't love Tim Allen? GM doesn't believe that these ads will be too patriotic however. The newly hired marketing chief executive Joel Ewanick, the former Hyundai Motor Co. ad executive known for helping Hyundai bolster its U.S. sales, said of the campaign: "Are we going to wrap ourselves in the American flag? No, We are going to wrap ourselves in the character of this country".
GM executives estimate that around 70% of their advertising funds will be poured into this Chevy campaign, and they're going to need every penny of it is they have taken the initiative to advertise during some of the highest-rated and most costly events on TV such as the World Series and the Super Bowl.
Personally, I think this is a good idea by the Chevy marketing executives, but they have to be careful in that their ads must differentiate their products from their competitors. Every single US automaker has employed this sort of ad strategy at some point or another, and Chrysler happens to be using the same sort of patriotic appeal strategy right now. Through our discussions of successful marketing in class I see how important it is for GM to strike a different chord with the potential customers to get them to chose their product over their competitors. Hopefully this campaign will work out well for GM and the company can make progress back toward normalcy.
Morgan Duff
http://online.wsj.com/article/SB10001424052702304173704575578073119960604.html?mod=WSJ_auto_IndustryCollection
GM executives estimate that around 70% of their advertising funds will be poured into this Chevy campaign, and they're going to need every penny of it is they have taken the initiative to advertise during some of the highest-rated and most costly events on TV such as the World Series and the Super Bowl.
Personally, I think this is a good idea by the Chevy marketing executives, but they have to be careful in that their ads must differentiate their products from their competitors. Every single US automaker has employed this sort of ad strategy at some point or another, and Chrysler happens to be using the same sort of patriotic appeal strategy right now. Through our discussions of successful marketing in class I see how important it is for GM to strike a different chord with the potential customers to get them to chose their product over their competitors. Hopefully this campaign will work out well for GM and the company can make progress back toward normalcy.
Morgan Duff
http://online.wsj.com/article/SB10001424052702304173704575578073119960604.html?mod=WSJ_auto_IndustryCollection
GM Creating Jobs
As it turns out, GM's restructuring may actually be very good for autoworkers. After just recently striking a deal with the UAW to staff a new compact-car plant, GM is about to announce the creation of 600 jobs at a plant in Lansing, Michigan, according to The Detroit News:
GM has a lot of great products in the pipeline, meaning that new offerings over the next five years will greatly improve the company's image and bottom-line.
Tuesday, October 26, 2010
Reliability: Who's at the Bottom?
Reliability is one of the more mundane reasons to buy a car but in hard economic times many buyers are planning to keep cars longer, thus placing a greater importance on reliability. Good reliability has one major advantage within the industry—they can charge more. If consumers believe a company’s cars are reliable they will be willing to pay a little more and manufacturers will not need as many rebates to get cars off dealership lots.
Consumer Reports recently released their latest new-car reliability survey. 1.3 million car owners were surveyed with vehicles from the past three years.
Firstly, the recalls that haunt every Toyota executive at night have not made a significant effect on Japanese cars. Toyota owners still seem happy with their vehicles and the Toyota brand Scion ranked No. 1 in the survey. However, the Prius’ reliability ranking was downgraded to “average” in light of the recalls. Honda and its luxury brand, Acura, still impress with top stops in five segments.
Secondly, Ford and GM show improvement as they discontinue the older models which were dragging down their scores. Ford ranked No. 10 among the 27 brands and Chevrolet ranked 17th in the survey. Ford’s Fusion even beat the Camry as being the most reliable car in the family sedan segment. This increased credibility allowed Ford to earn an additional $400 million to income because they did not have to rebate as much.
Thirdly, and most damaging, luxury German brands did not do well. BMW ranked 23rd out of 27 in reliability. There seems to be a price paid for putting more modern and advanced technology in cars.
Reliability surveys are very important to the industry but I have been told, from a former employee in the car survey business, that they should be taken with a grain of salt. Owners tend to have different expectations and different brands are owned by different people. A busy businessperson driving an Audi might find a minor recall annoying while a Buick owner, who is probably retired, may find a recall a nice opportunity to get out of the house and take a drive to the dealership. Most likely, there will be other Buick owners, who are also retired, at the dealership and they can talk the afternoon away. I also feel as if Mr. White is unfair to Ford and GM. The author of the article, Mr. White, barely applauds GM and Ford for bringing up their rankings from past years but calls Hyundai a company to be “reckoned with” with a score of No.12. Remember, Ford received the 10th spot in this survey but that doesn’t seem to be that important to Mr. White. I believe the days of giving slack to the Koreans should end.
http://online.wsj.com/article/SB10001424052702303891804575576403299442246.html?mod=WSJ_Autos_LS_Autos_2
Consumer Reports recently released their latest new-car reliability survey. 1.3 million car owners were surveyed with vehicles from the past three years.
Firstly, the recalls that haunt every Toyota executive at night have not made a significant effect on Japanese cars. Toyota owners still seem happy with their vehicles and the Toyota brand Scion ranked No. 1 in the survey. However, the Prius’ reliability ranking was downgraded to “average” in light of the recalls. Honda and its luxury brand, Acura, still impress with top stops in five segments.
Secondly, Ford and GM show improvement as they discontinue the older models which were dragging down their scores. Ford ranked No. 10 among the 27 brands and Chevrolet ranked 17th in the survey. Ford’s Fusion even beat the Camry as being the most reliable car in the family sedan segment. This increased credibility allowed Ford to earn an additional $400 million to income because they did not have to rebate as much.
Thirdly, and most damaging, luxury German brands did not do well. BMW ranked 23rd out of 27 in reliability. There seems to be a price paid for putting more modern and advanced technology in cars.
Reliability surveys are very important to the industry but I have been told, from a former employee in the car survey business, that they should be taken with a grain of salt. Owners tend to have different expectations and different brands are owned by different people. A busy businessperson driving an Audi might find a minor recall annoying while a Buick owner, who is probably retired, may find a recall a nice opportunity to get out of the house and take a drive to the dealership. Most likely, there will be other Buick owners, who are also retired, at the dealership and they can talk the afternoon away. I also feel as if Mr. White is unfair to Ford and GM. The author of the article, Mr. White, barely applauds GM and Ford for bringing up their rankings from past years but calls Hyundai a company to be “reckoned with” with a score of No.12. Remember, Ford received the 10th spot in this survey but that doesn’t seem to be that important to Mr. White. I believe the days of giving slack to the Koreans should end.
http://online.wsj.com/article/SB10001424052702303891804575576403299442246.html?mod=WSJ_Autos_LS_Autos_2
Wednesday, October 20, 2010
U.S. automakers, get ready for your Godzilla!!
A car company that I've grown up with my whole life, Volkswagen, is taking a drastic turn. It was always known to be the "chick" car with alien like dome shape that only a hippie could love, and the car that only a hippie would buy. However, recently every high school parking lot I drive by, I see loads and loads of Volkswagen cars. What is happening?
Well, Volkswagen first hired Tim Ellis as Vice President of Marketing.Tim Ellis is a dangerous adversary and a veteran of the marketing industry. Originally from Volvo Car Corporation in Gothenburg, Sweden the veteran brings experience from his past advertising agency account management roles in the United States and Sweden. Tim Ellis's first priority was to offer Americans a new beetle, a "convincing comeback based on the needs and wants of U.S. customers". Tim Ellis demands were counter-intuitive at first, he demanded a new beetle but at the same time wanted to maintain the image and the identity of the beetle. Reading this, I could understand where Tim Ellis was coming from. As a product of the 90s, I see Volkswagen beetles as symbols of "punch-buggies" and my childhood. Beetles have become an icon of America just like McDonalds and Ford. The new beetle, as you have probably seen on the road, retain the same shape of the original. Differences between the new and the old are in superficial body layouts, such as more accentuated side panels and hip rims with an option of either 16" or 17". The striking component of Volkwswagen's marketing strategy relies on the fact of producing an American icon. While writing this blog, I visited the site multiple times, and time and time while I waited for the Volkswagen homepage to load, the quote "A blast from the past? Or ahead of the time?" and "People want a true icon" would appear".
Tim Ellis's marketing strategy clearly is working because every colleague I speak with would always list Volkswagen as a strong candidate for their future car. The direct results, however are Volkswagen taking over Audi, Lamborghini and just recently are in the process of taking over Porsche. This once mini German automaker is now out-manufacturing the regal Mercedes Benz, and competing with BMW. If you had asked me ten years ago if Volkswagen were to compete with any luxury car brand I would have laughed. I'm not certain if Volkswagen's performance is revealing a trend of the decline in the luxury automobiles, but it certainly is telling me that I should invest in Volkswagen.
Just in December last year, Volkswagen initiated the takeover of Porsche, buying 49.9% of the sports car operation for 3.9 billions euros, equivalent to $5.46 U.S. billion dollars. Volkswagen has swallowed automotive supercar giant Lamborghini and put aside German automaker Audi in its pocket. Porsche is next to be placed in Volkswagen's trophy case. If in the position of a U.S. automaker I would be scared. The only thing that is holding back Volkswagen from inundating the U.S. car market are two issues. "One lawsuit filed by a group of U.S. hedge funds seeking more than $2 billions from Porsche", the other involves Porsche's tax liabilities". Once these two humps are flattened by Volkswagen I fear that GM and Ford, (my father's American icons) may have an identity crisis to deal with. Who will be the true American icon because my father tells me that its' Ford but my little brother tells me that it's Volkswagen. As U.S. automakers are slowly pulling their trousers up from the recession and placing ointment on their behinds from a tumultuous period, new threats arise each day that will potentially harm their comeback. As a consumer I encourage the competition and the direct results of such like lower prices and more options in my car. As an American, I believe GM and Ford must contend with Germany's automotive giant. But one question that I'm left with is, should we pride ourselves in being Americans and push Volkswagen aside, or should GM and Ford accept the inevitability of a foreign automaker taking over the U.S. auto-market and join forces?
Well, Volkswagen first hired Tim Ellis as Vice President of Marketing.Tim Ellis is a dangerous adversary and a veteran of the marketing industry. Originally from Volvo Car Corporation in Gothenburg, Sweden the veteran brings experience from his past advertising agency account management roles in the United States and Sweden. Tim Ellis's first priority was to offer Americans a new beetle, a "convincing comeback based on the needs and wants of U.S. customers". Tim Ellis demands were counter-intuitive at first, he demanded a new beetle but at the same time wanted to maintain the image and the identity of the beetle. Reading this, I could understand where Tim Ellis was coming from. As a product of the 90s, I see Volkswagen beetles as symbols of "punch-buggies" and my childhood. Beetles have become an icon of America just like McDonalds and Ford. The new beetle, as you have probably seen on the road, retain the same shape of the original. Differences between the new and the old are in superficial body layouts, such as more accentuated side panels and hip rims with an option of either 16" or 17". The striking component of Volkwswagen's marketing strategy relies on the fact of producing an American icon. While writing this blog, I visited the site multiple times, and time and time while I waited for the Volkswagen homepage to load, the quote "A blast from the past? Or ahead of the time?" and "People want a true icon" would appear".
Tim Ellis's marketing strategy clearly is working because every colleague I speak with would always list Volkswagen as a strong candidate for their future car. The direct results, however are Volkswagen taking over Audi, Lamborghini and just recently are in the process of taking over Porsche. This once mini German automaker is now out-manufacturing the regal Mercedes Benz, and competing with BMW. If you had asked me ten years ago if Volkswagen were to compete with any luxury car brand I would have laughed. I'm not certain if Volkswagen's performance is revealing a trend of the decline in the luxury automobiles, but it certainly is telling me that I should invest in Volkswagen.
Just in December last year, Volkswagen initiated the takeover of Porsche, buying 49.9% of the sports car operation for 3.9 billions euros, equivalent to $5.46 U.S. billion dollars. Volkswagen has swallowed automotive supercar giant Lamborghini and put aside German automaker Audi in its pocket. Porsche is next to be placed in Volkswagen's trophy case. If in the position of a U.S. automaker I would be scared. The only thing that is holding back Volkswagen from inundating the U.S. car market are two issues. "One lawsuit filed by a group of U.S. hedge funds seeking more than $2 billions from Porsche", the other involves Porsche's tax liabilities". Once these two humps are flattened by Volkswagen I fear that GM and Ford, (my father's American icons) may have an identity crisis to deal with. Who will be the true American icon because my father tells me that its' Ford but my little brother tells me that it's Volkswagen. As U.S. automakers are slowly pulling their trousers up from the recession and placing ointment on their behinds from a tumultuous period, new threats arise each day that will potentially harm their comeback. As a consumer I encourage the competition and the direct results of such like lower prices and more options in my car. As an American, I believe GM and Ford must contend with Germany's automotive giant. But one question that I'm left with is, should we pride ourselves in being Americans and push Volkswagen aside, or should GM and Ford accept the inevitability of a foreign automaker taking over the U.S. auto-market and join forces?
Sunday, October 17, 2010
Electric-Car Offshoots Pick Up Momentum
There is definitely a new trend in the automotive industry. This new trend is the switch from oil dependency to renewable ectricity dependence. Just this year, Coulomb Technologies Inc. tripled in value. Coulomb technologies offers large automotive companies like General Motors Inc., Ford Motor Co., with viable means of producing electric motors and efficient batteries. Coulomb's greatest contribution is a software that is "designed to among other things, make it easier for station owners to bill drivers for the electricity they use" (WSJ). A big issue automotive companies have to deal with is how to provide electricity (fuel) to consumers and drivers. Electricity distribution should be easy for drivers to use and practical for companies to rake in profits. Coulomb's software is such a big leap forward in helping to distribute electricity that it expects its sales to rise to $9 million this year from $1 million last year. Their valuation increase can also be attributed to participation in a Department of Energy program to deploy charging station sin nine U.S. cities.
In addition to Coulomb's recent developments, "battery developer Sakti3 Inc. received $3.2 million is Series B funding from General Motors' new venture-capital arm" (WSJ) in hopes that GM will help commercialize Sakti3's business. Currently, they are working on developing a lithium-ion battery designed to extend the range, lifetime and power of batteries both in electric vehicles and consumer electronics. General Motors is planning to test Sakti3's batteries once they are ready. General Motor's investment in Sakti3 reveals a developing trend within automotive industries: the push for alternative fuels. Not just GM but companies like Ford are joining the energy race. Competition is beginning to heat up.
With the recent increased interest in alternative energies, NuvoSun Inc., a maker of thin-film solar cells, has raised $29 million in two founds of financing this year from Dow Chemical Co.. The company based in Palo Alto Calif., says it will use the capital to open its first commercial size factory, in Milpitas, Calif. Mr. Pearce says NuvoSun will be able to make solar modules for less than $1 watt by 2012. At 70 to 75 cents a watt, CIGS would be able to compete with Chinese manufacturers of the more prevalent solar modules based on cyrstalline silicon, he says.
Electric and oil companies alike are all jumping on the energy band wagon as soon as possible. They realize that an early investment now will lead to great returns in the future. The automotive industry is going through a new and exciting trend. No one is really sure what the outcome will look like, but I know for sure that we're taking the right path. Renewable energy will relieve our dependency on Middle Eastern fuel. For companies like GM and Ford, the time to invest and develop is now. For GM this could be particularly be a great time for their comeback. The automotive industry was hit hard during the recession and U.S. automakers did not make out so well, with the exception of Ford. Considering the recession, I feel that GM is planning to lead the electric revolution. GM's investments only indicate their electric intentions. As a consumer, I would invest in the electric market much like the big auto companies of America.
http://proquest.umi.com/pqdweb?index=0&did=2164833481&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1287366261&clientId=31806
In addition to Coulomb's recent developments, "battery developer Sakti3 Inc. received $3.2 million is Series B funding from General Motors' new venture-capital arm" (WSJ) in hopes that GM will help commercialize Sakti3's business. Currently, they are working on developing a lithium-ion battery designed to extend the range, lifetime and power of batteries both in electric vehicles and consumer electronics. General Motors is planning to test Sakti3's batteries once they are ready. General Motor's investment in Sakti3 reveals a developing trend within automotive industries: the push for alternative fuels. Not just GM but companies like Ford are joining the energy race. Competition is beginning to heat up.
With the recent increased interest in alternative energies, NuvoSun Inc., a maker of thin-film solar cells, has raised $29 million in two founds of financing this year from Dow Chemical Co.. The company based in Palo Alto Calif., says it will use the capital to open its first commercial size factory, in Milpitas, Calif. Mr. Pearce says NuvoSun will be able to make solar modules for less than $1 watt by 2012. At 70 to 75 cents a watt, CIGS would be able to compete with Chinese manufacturers of the more prevalent solar modules based on cyrstalline silicon, he says.
Electric and oil companies alike are all jumping on the energy band wagon as soon as possible. They realize that an early investment now will lead to great returns in the future. The automotive industry is going through a new and exciting trend. No one is really sure what the outcome will look like, but I know for sure that we're taking the right path. Renewable energy will relieve our dependency on Middle Eastern fuel. For companies like GM and Ford, the time to invest and develop is now. For GM this could be particularly be a great time for their comeback. The automotive industry was hit hard during the recession and U.S. automakers did not make out so well, with the exception of Ford. Considering the recession, I feel that GM is planning to lead the electric revolution. GM's investments only indicate their electric intentions. As a consumer, I would invest in the electric market much like the big auto companies of America.
http://proquest.umi.com/pqdweb?index=0&did=2164833481&SrchMode=1&sid=2&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1287366261&clientId=31806
Thursday, October 14, 2010
One of the new and emerging technologies in the automotive landscape is electric cars. Tesla is a new and popular company which has become the poster child for the new generation of electric cars. Additionally, Nissan is making headlines with their new Leaf car. A recent Wall Street Journal article by Joseph White sheds light on some of the problems facing this new segment of the market.
Firstly, the range numbers reported and advertised by companies such as Tesla and Nissan come purely from their own engineers and EPA standards for gasoline powered cars. Tesla reports that their Roadster gets 245 miles on a charge and Nissan reports 100 miles per charge, but these companies like to use phrases such as “up to” when reporting these numbers. The EPA is beginning to develop new formulas for standardized electric car mileages but they will most likely force manufactures to reduce their claims by 30%. White argues that these companies must accept new EPA standards because they are much better than the public seeing electric car owners stranded on the side of the road.
The second major hurdle for electric cars to overcome is infrastructure to support electric charging. Currently there is little of this infrastructure in place but companies like Better Place are attracted massive contracts and government backing. Better Place already has charging stations in Israel and Denmark and has plans for a system in Hawaii. The problem, however, is that investors would rather put their money into developing electric infrastructure in countries with very high fuel prices. The United States has simply too cheap of gas to motivate investment.
I have to disagree with Mr. White. These limitations will not be a big problem for electric cars. Just like hybrid owners, the people who buy first generation electric cars are doing so more as a statement than a purely economic decision. Secondly, I doubt the lack of charging stations will be as big of a problem as the articles makes it out to be. Most people will charge their cars at night and not go on long road trips with these vehicles. The average commuter travels much less than most assume and could easily go to and from work with one battery charge. While owners of electric cars will face several challenges, the industry has to remember that many of these first generation buyers understand these limitations and are not buying these vehicles for economic reasons.
http://online.wsj.com/article/SB10001424052748703834604575365244247963772.html?mod=WSJ_Autos_LS_Autos_5
Firstly, the range numbers reported and advertised by companies such as Tesla and Nissan come purely from their own engineers and EPA standards for gasoline powered cars. Tesla reports that their Roadster gets 245 miles on a charge and Nissan reports 100 miles per charge, but these companies like to use phrases such as “up to” when reporting these numbers. The EPA is beginning to develop new formulas for standardized electric car mileages but they will most likely force manufactures to reduce their claims by 30%. White argues that these companies must accept new EPA standards because they are much better than the public seeing electric car owners stranded on the side of the road.
The second major hurdle for electric cars to overcome is infrastructure to support electric charging. Currently there is little of this infrastructure in place but companies like Better Place are attracted massive contracts and government backing. Better Place already has charging stations in Israel and Denmark and has plans for a system in Hawaii. The problem, however, is that investors would rather put their money into developing electric infrastructure in countries with very high fuel prices. The United States has simply too cheap of gas to motivate investment.
I have to disagree with Mr. White. These limitations will not be a big problem for electric cars. Just like hybrid owners, the people who buy first generation electric cars are doing so more as a statement than a purely economic decision. Secondly, I doubt the lack of charging stations will be as big of a problem as the articles makes it out to be. Most people will charge their cars at night and not go on long road trips with these vehicles. The average commuter travels much less than most assume and could easily go to and from work with one battery charge. While owners of electric cars will face several challenges, the industry has to remember that many of these first generation buyers understand these limitations and are not buying these vehicles for economic reasons.
http://online.wsj.com/article/SB10001424052748703834604575365244247963772.html?mod=WSJ_Autos_LS_Autos_5
Wednesday, October 13, 2010
Chevy Volt: What is it?
Since GM's announcement of the Chevy Volt, people have been wondering what type of vehicle it is. Hybrid? Electric Vehicle (EV)? What?
First, let's get some context from Media Post, a marketing blog:
First, let's get some context from Media Post, a marketing blog:
Chevrolet unveiled its new Volt to the press last week, but revelations about the intricacies of the electric motor and small gas engine under the hood have some arguing that the company has a launch problem on its hands: they say the car is not a pure electric vehicle and Chevrolet should have made that clear at the outset. The car is, in fact, powered an electric motor, with a small gasoline engine that comes on when the battery approaches depletion after about 60 or so miles of electric-only driving.
What has some observers riled is that on its extended-range mode the car's gasoline engine sometimes helps turn the wheels as well. Thus, semantically, the car's a hybrid, not an electric, they argue.
A site called Green Car Advisor reportedly noted this in June, but with the weekend event, where the company's technical explication included news about the car's extended range capabilities -- and the fact that under those circumstances the gas engines helps turn the wheels -- the web started the echo machine, with terms like "Volt Gate" banging from site to site like a Ping-Pong ball.
Edmunds.com's InsideLine said General Motors had duped the press: "Even conceding that all engineering projects involve compromise and chalking that phrase up to marketing hyperbole, the Chevy Volt isn't as electric as GM pretends it is," said the column. "And it isn't as electric as GM has been saying for the past three years." The article went on to say the Chevy Volt is a plug-in hybrid with more in common with Toyota Prius "than the marketing hype led us to believe."
GM argues that "electric vehicle" still fits because the drive train doesn't involve direct mechanical connection between the engine and the drive wheels. "In extended-range driving, the engine generates power that is fed through the drive unit and is balanced by the generator and traction motor. The resulting power flow provides a 10 to 15% improvement in highway fuel economy."
Pamela Fletcher, GM's global chief of global engineering for Volt and plug-in hybrids, tells Marketing Daily that the gist of the technology is that there are two ways to direct power flow through the Volt's drive unit in range-extending mode.
"First, we pull energy through the battery to the wheels. At the same time we have internal combustion engine connected to the generator motor replenishing the battery." She says that method is fine at lower speeds but becomes terribly inefficient at high speed, where that configuration becomes like rowing a boat with an oar that, rather than dipping in the water, connects to another oar that pulls through the water.
"It's just very inefficient," she says, explaining that power must take a circuitous route to get to the wheels. "Instead, when we get to higher speeds, we have clever solution where we put the combined power to the wheels on a planetary gear set." Jeremy Anwyl, CEO of Edmunds.com, says all of that definitely makes for a better vehicle. However, it also makes for a hybrid, at least under certain circumstances. "I think the confusion is an exercise in semantics," he says. "And it flubbed the launch of the Volt. GM has made a point of coming in here over and over, selling us story that the Volt is not a hybrid, not another version of Prius, but that it's an electric vehicle that only charges the battery. I think part of the reason our editors are wound up about it is we bought it. And repeated it."
Okay, that's a lot of information, but I think it is necessary to have some context before delving into a substantive discussion. Clearly the Volt has certain attributes of an electric vehicle, mainly, the ability to travel 25-50 miles on electric power only. You plug it in, charge it for ten hours, then take it for a short spin. Nissan's Leaf is a recently revealed electric car, and it too is charged from a wall outlet and able to take a short spin (although more than double the distance of the Volt). But what the Leaf lacks is an on-board internal combustion engine to increase the driving range. With the Leaf, once you run out of juice you're stranded. The Volt, on the other hand, has a gas engine that increases the potential driving distance. In this way it is like the Prius, except the Prius operates in an entirely different way. It can never run on electric power alone: From o-20 mph is runs on electric, beyond that the gas engine kicks in. With the Volt, you can cruise at highway speeds on solely electric power. The guys at edmunds.com need to stop whining. The Volt now appears to have more in common with the Prius than originally thought, but that's probably a good thing. The longer range makes the car a more reasonable replacement for gas-only vehicles. Unlike the Prius, the Volt can run solely on electric, making it a lot more technically advanced. These recent developments, rather than anger me like the people at edmunds.com, make me more enthusiastic about the Volt's success. With just the electric motor to power the wheels, with a gas-engine to recharge it for backup, the car seemed less real-world realistic. The gas-engine, under that configuration, would never directly power the wheels, making the system less efficient. The news that the Volt's drive-train is more complicated than expected, allowing for combined electric-gas engine operation, means that it is even cooler than originally thought. Call it what you want, but the Volt is the most innovative car to be released since the Prius. This is a new type of hybrid-electric vehicle hybrid. A double hybrid.
E15: a good idea?
The Environmental Protection Agency, under the Clear Air Act, announced it has approved an increase in the levels of ethanol in gasoline for model-year 2007 cars and newer. The increase of 50% in the amount of ethanol, from 10% to 15%, was criticized by auto makers, off-road equipment makers and the petroleum industry. They argue the EPA made a premature decision and more tests should be done before the measure is put into effect. The EPA, in turn, said it relied on solid testing to reach its conclusion.
The highly controversial EPA decision will ultimately reach its objective of reducing the pollution created by burning gasoline, but at the same time, I feel the general public will be concerned and cautious about the impact of ethanol on car's engines, even though the EPA claimed it relied on solid testing to make the changes. The fact that adding ethanol to gasoline reduces car's fuel efficiency, at a time when the government plans to drastically increase it, is particularly odd. The changes could result in new costs to gas stations which would have to buy new equipments to accommodate with the new regulations. Since the increase in ethanol levels is limited to relatively new vehicles, owners of old cars could have difficulties finding gasoline containing today's levels of ethanol once the measure is put into effect.
The EPA decision ought to be thoroughly analyzed before it is put into action. Although making our air cleaner should be a priority, the decision have the potential of negatively impacting a wide range of businesses and consumers.
Sources:
1- http://online.wsj.com/article/SB10001424052748703673604575550261503126190.html?mod=WSJ_auto_IndustryCollection
2- http://wheels.blogs.nytimes.com/2010/10/13/an-e15-quandary-for-service-station-owners/
Wednesday, October 6, 2010
Alan Mulally: Ford's Savior and CEO
Mulally was forced into a difficult position as soon as he was named CEO of Ford, and one of his first initiatives as the company's leader was to take over their "The Way Forward" restructuring plan. This plan was designed to turn around Ford's massive losses and declining market share, and was made possible by Mulally's effort to borrow $23.6 billion by mortgaging all of Ford's assests. At the time the loan was viewed as a sign of desperation, but now many believe it is responsible for stabilizing Ford's financial situation and saving the company from bankruptcy. Ford is the only one of the Detroit Three (Chrysler, Ford, GM) that has not asked for a government loan, and while Chrysler and GM have majorly downsized as a result of bankruptcy, Ford has emerged as the largest US automaker after the industry crisis in 2008-2009. Because of Mulally's decisions, Ford had its first profitable quarter in two years, and his predecessor and current chairman, William Clay Ford, said of Mulally: "[he] was the right choice [to be CEO], and it gets more right every day".
In addition to his brilliant efforts to save the company through the industry crisis, Mulally is often praised for his hands on management style and company-first attitude. For example, during hearings for government loans to Ford, he and other industry leaders were criticized for flying to Washington, D.C. in corporate jets. During a subsequent meeting, he traveled from Detroit to Washington by a Ford-built hybrid vehicle, and sold all but one of the company's corporate jets. He also lives very close to Ford's global headquarters in Michigan and arrives to work at 5:15 AM and works for 12 hours every day.
His achievements at Ford earned him a spot in the 2009 Time 100 List, and I believe this recognition is very well deserved. Mulally truly understands the concepts of corporate management and business in general, and this allowed him to make the right decisions to save his company from collapse in the midst of an industry crisis and have it emerge at the top only a few years later. Alan Mulally is a truly influential figure in the automotive industry and the world of business as a whole.
Morgan Duff
http://investing.businessweek.com/businessweek/research/stocks/people/person.asp?personId=370889&ticker=F:US
http://media.ford.com/article_display.cfm?article_id=24203
http://en.wikipedia.org/wiki/Alan_Mulally#Ford_Motor_Company
Differentiation
How does a company differentiate itself from other competing companies in the market? This question can be approached through various perspectives, such as that of the consumer, a competing company or even an objective observer. I will begin by looking at the automotive industry as a parent looking for their child's first car. As a parent, the first and probably only thing I am concerned about is the safety of my child. When I look at the vast ocean of automotive options, certain names pop into my head like, Kia, Volvo and Mercedes Benz. The next thing, which also leads into my additional perspective is the pricing on the vehicle. How much will this vehicle cost? Not only am I looking for safety but also affordability. As much as I care about my child, I don't want to the break the bank purchasing my child's first car. This is where competing car manufacturers come into play. Each car brand is looking to out perform the other not only through production efficiency but through revenue gains. Parent's are not concerned whether Kia is looking to generate more profits than Mercedes Benz this year, but car companies are looking for various shortcuts and new innovations to outdo the competition. So I go fishing around the car market and finally find a car that not only offers practicality, a bit of style and safety, but also affordability. My child hugs me and tells me that I am the greatest half male/female parent ever and I feel proud of myself. But am I truly proud of myself or did I just get jipped and pay way too much for a vehicle that is worth much less. This is where finally, the objective observer comes into play. Each company has it's own marketing scheme. May it be safety, national pride or technology, are the big companies brainwashing consumers into buying cars that are beyond our budget and practical use? More questions can arise such as is the company I am buying a product from support child labor or do they perform unethical business practices?
In the end, it comes down to the question of "what is in it for me"? Consumers want to find the best product, companies and their CEO's want the biggest profit margin, and objective observers support causes that enforce their agenda (agendas that support their personal beliefs). I believe that differentiation is a matter of capitalism, and that we cannot actually point a finger to how companies differentiate themselves. This is a topic that is constantly changing shapes quicker than an amoeba. For now, each company has its poignant marketing campaign, but in the future I believe that it will evolve to attract customers, gain more profit and ease third party observers.
In the end, it comes down to the question of "what is in it for me"? Consumers want to find the best product, companies and their CEO's want the biggest profit margin, and objective observers support causes that enforce their agenda (agendas that support their personal beliefs). I believe that differentiation is a matter of capitalism, and that we cannot actually point a finger to how companies differentiate themselves. This is a topic that is constantly changing shapes quicker than an amoeba. For now, each company has its poignant marketing campaign, but in the future I believe that it will evolve to attract customers, gain more profit and ease third party observers.
Auto Makers Aim at Reducing Car Weight to Improve Fuel-Efficiency
Generally, when one thinks of ways to increase fuel-efficiency in cars, the only thing that comes to mind is the development of alternative fuel sources such as electricity and ethanol.
To meet the federal government's demand for an average gas milage of 62 miles per gallon by 2025, auto makers will have to explore and implement other ways of increasing fuel-efficiency in cars. One way of doing that is by reducing the car's weight.
In this year's Paris auto show, some companies showcased cars that combine fuel-efficiency, power, and design. Among those companies is Lamborghini which managed to accomplish that by releasing its new model, the Sesto Elemento, which is approximately 700 pounds lighter than the current production Lamborghini Gallardo because it is built almost entirely with carbon fiber. Land Rover, known for its big sport utility vehicles, also presented a more fuel- efficient vehicle that emphasizes lightness: the Evoque. The SUV, which have aluminum hood and roof panels, aluminum suspension parts, and plastic front fenders and tailgate, weights 3,500 pounds, almost a ton less than Land Rover's Range Rover model. The car has a smaller engine, that improves fuel-efficiency by 20%, without sacrificing performance.
Reducing the car's weight, is specially important for high-end automakers that don't want to sacrifice power and comfort for fuel-efficiency. "We see the future as not so focused on increasing power, as there is a limit to power increase due to emission regulations, but in reducing weight," says Lamborghini Chief Executive Stephan Winkelmann.
Usually, technology developed in luxury cars starts to become more popularized with time. Although we are not expected to see popular cars being built with carbon fiber or having a eight-speed transmission designed to improve fuel-efficiency (BMW 5 -series), these changes are important and relevant in achieving the Obama administration goal of making cars drive twice as much with the same fuel by 2025.
Picture from thecarconnection.comOne of the most fascinating leaders within the auto industry, personally, has been Bob Lutz who retired earlier this year. BusinessWeek’s David Welch wrote about Mr. Lutz at the time of his retirement. Many notable vehicles can trace their origins to him like the Dodge Viper. He has been in the industry for many years, working for Chrysler, BMW, Ford and most recently at General Motors.
Lutz has been working in the industry for 47 years but has been most known for his work in the past decade at GM. A former Marine pilot, Lutz is a no-nonsense guy who does not believe in Global Warming or government fuel economy standards but became the force behind the new Chevy Volt.
Many credit Lutz for focused GM back towards quality products when he first entered the company in 2001. He has consistently pushed for better quality design and materials in all of GM’s products. Products like the newest Chevy Malibu and Cadillac CTS directly reflect his work for better GM products. When he arrived at GM, they were building hopeless vehicles like the Pontiac Aztek and within a decade they were producing impressive products and pushing new technologies with the Chevy Volt. Lutz’s primary role at GM was one of product development but at the time of his retirement was Vice Chairman and a senior advisor at General Motors.
David Welch expresses concern with the exit of Lutz. He sees no one else within the company who fights for quality designs and interiors the way Lutz has done. Considering GM’s eagerness to repay distance themselves from government loans and return better profits to their shareholders, GM leadership could be tempted to cost cut and cheapen designs without Lutz’s voice.
I disagree with this fear and truly believe GM, like the others within the Big Three, understand the need for more competitive products. What Lutz did was convince GM to invest in design and push the company to sacrifice production costs to future sales. The reason I mention Mr. Lutz is because his job is my dream job, working with the design department to create vehicles like the Cadillac CTS and Chevy Volt seems to be a very rewarding career.
http://www.businessweek.com/autos/autobeat/archives/2010/03/bob_lutz_retires_from_gm_long_live_his_influence.html
http://www.dailyfinance.com/story/company-news/having-reinvigorated-design-at-gm-bob-lutz-is-retiring/19382022/
GM cuts Historic Deal with UAW
General Motors and the United Auto Workers, the largest automotive worker union, reached an historic deal to manufacture a subcompact car in the United States. At a time when many US plants face closure or reduced operation, this is great news of workers, consumers, and management.
Dave Barkholz of Automotive News reported this news on Monday, October 4:
Dave Barkholz of Automotive News reported this news on Monday, October 4:
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