When in Rome...don't walk like an Egyptian

A buddy of mine asked me if I ghost-wrote Mark Rechtin's AutoNews article "Acura finds sales, still seeks luxury identity" http://www.autonews.com/apps/pbcs.dll/article?AID=/20101220/RETAIL03/312209984/1274 as it reminded him of our three-part series written earlier this year, in which I discuss Acura's identity problem:

• Audi & Segmentation (May 13);

• Segmentation Part 2 - Acura needs a true flagship (May 13), and

• Segmentation 3 - Cleaning up Acura (August 8).

The frustration with Acura is that, while on one hand it continues to say that it's happy with the intelligent value shopper, articles like Mr. Rechtin's yet belie a keen sense of misgiving at Acura that it apparently actually wants to measure up to "real" luxury brands where it matters most - in the perception of the consumer. This is where I scratch my head.

Fool us once, shame on you. But twice? Say it aint so.

 

The Globe and Mail today observes that "accounting issues raise big red flag over reborn GM".

How "reborn" can it be if it's carrying over accounting issues from before its collapse? (discussed, for example, here and here).
Sadly, having previously observed other practices that hearken to their shifty ways, there remains enough bad habits to make any investor pause before trusting GM. 

I've got to ask, having seen them burn through over $60 billion dollars en route to one of the biggest failures in corporate history, and now seeing bad habits resurfacing, why should tax payers be putting ourselves in a position to get burned again?

VW's make or brake play

First, I know the title should read "make or break," but this is an auto blog...brake. Yeah, all righty then.

Anyway, a buddy of mine asked me what I thought of Jeremy Cato's article in the Globe and Mail this morning, VW's impending comeuppance.

Almost a year ago (back in January) I wrote Oh no, not another one (I must, however, credit Mr. Cato - I remember wanting to use the word "comeuppance" in one of those posts and opted against it. Shame on me, what a great word...but I digress...).

Having said that, it's not too late for VW to avoid this comeuppance. In our posts since last January, we've talked about emerging paradigms and buggy whips - the landscape which befell GM and Toyota over the last decade is changing.

Stay tuned - there are some fundamental realities that may remain relatively the same, but there are also new realities being created as we speak. We'll make sense of it all here at J and D's Auto Talk with insights that are not infrequently months ahead of the mainstream media.

Gas engines and buggy whips

 

I read this article today, Electric cars give Japan anxiety over fate of gas engines and I'm reminded of the stockholder meeting speech delivered by Danny DeVito's character Larry 'the Liquidator' Garfield in the movie Other People's Money when he said "I'll bet the last buggy whip maker made the best damned buggy whip you ever saw. How'd you like to own stock in that company?"

The point he was trying to make was that times change, and as they change, companies must change with them. Making buggy whips was big business when horses drew carriages. When the internal combustion engine became the heart of the horseless carriage, it was only a matter of time before the last horse-drawn cart would be left behind. The companies who accepted this reality and migrated their core competencies survived; those who held on to a dying paradigm died with it.

Which brings us to the gasoline engine, and the cloud of parts manufacturers surrounding it. Like the horse as a mode of transportation, and the ancillary components surrounding it such as buggy whips, it's all long in the tooth.

An emerging paradigm

A few years ago, back when I worked at a leading OEM, I floated an idea to my supervisor during a casual lunch conversation. He said I was nuts. These few years later, it's becoming clear that, if I am nuts, I'm not alone. I've been sitting on this idea for a little while now, and a couple of articles and auto industry posts of late reminded me to finally put something down.

The Crazy Idea

The idea was that auto manufacturers could not sustain a profitable future based on a "consumer ownership model;" as such, a "loss leader service model" could build up and extend the industry's strengths.

While this idea was my own, I would eventually find that I wasn't the only one to conceive of it. Not by a long shot.

Segmentation 3: Cleaning up Acura

Too many models muddling up the middle. That's a problem with Acura.

• In the space of the 3-series, Acura offers CSX and TSX and TL.
• In the space of the 5-series, Acura offers TL and RL.
• In the space of the 7-series, Acura offers...um...nothing. We've already firmly established that this is not good.

Blend the best of the CSX and TSX into one and run it against the BMW 1. Leave the TL to run in the 3-series space. Any sport mod to the TL can use the X as a "type".

In the 5-series space, run the RL.

Introduce the Acura SL into the flagship space, upwards of $100,000.

Let's grow up - accountability for efficiency supply

I like asparagus.

When I was a kid, I didn’t like asparagus. Or broccoli. Or bok choy. Or a big salad. But, evidently, I’m not a kid anymore, because I like them all now.

When I was a kid, I wanted breakfast cereals full of sugar and food coloring. However, Mother usually made oatmeal. When I was a kid, I’d rather eat candy than healthy food. My parents knew what was good for me, which was a good thing because, as a kid, I sure didn’t. My parents took the responsibility to provide what I needed, not what I wanted, because what I wanted tended to be bad for me, and I didn’t like what tended to be good for me. Consumption in my house was not determined by my child-like demand for junk food - I was consuming healthier food because my parents were responsible for the supply.

Segmentation Part 2 - Acura needs a true flagship

Our first installment in this series introducing luxury branding and segmentation, presented the A8 flagship as a key component in Audi's turnaround, as well as a critical piece of the segmentation puzzle. I'd like to look at the Acura brand through the lens of segmentation to reveal the not-so-hidden fundamentals that provide a constructive answer to the question "why isn't Acura - with all its technical and engineering quality - more recognized as a luxury brand?" I'm not even going to entertain discussion of "near luxury" as a segment (does Honda really need an entirely new brand to compete with a Chrysler 300 or a Buick or a Nissan Maxima? I don't think so either).

Audi & Segmentation

Audi recently announced that its 2011 A8 would be 130mm longer than it already is, ensuring that its flagship remains the quintessential expression of Audi luxury. It reminded me of an article I drafted some time ago but never got around to sharing, and prompted me to finally share it, so here it is.

Audi had been a premium brand with its popular 4000 and 5000 series sedans in the 80s, but went through some tough times in the late 80s/early 90s. Down for the count, the turnaround is a nearly peerless business success story. Audi's revitalization can't be simplified as though it happened overnight, and I certainly had no seat on their board by which I can reveal any secrets, but one prong of their attack can be readily identified - a clearly defined segmentation strategy.

GM is becoming more transparent...we can see right through them

So, GM is announcing that it has "paid back its government loans, in full, ahead of schedule."

Really? Bnet doesn't count the beans quite that way at all. Apparently, law makers are calling it misleading.

I Love Honda!

At the Auto Show, we met Dave Tsai from 2nd Glance Media, and he talked about the upcoming Import Expo at Mosport on July 11, 2010.

Very popular in Japan, this is the first time this show is being put on in all of North America, and it's right in southern Ontario, which is most appropriate since 2nd Glance runs "I Love Honda!", the Honda Civic is Canada's number-one selling vehicle 12 years running, and it's built in Alliston, ON.

In all Honda vehicles there beats the heart of a racecar - go see them in action on the track!

CIAS ("Toronto") Auto Show 2010

Here's some coverage of the Toronto Auto Show, featuring guest Kareem McLean who also shot the footage and did all the editing himself (talented guy).

Everything old is new again

On the face of it, the headlines "GM to recall, hire new workers" looks like good news, right? Yeah no. Wrong.

I hate to rain on the parade but GM's old school "let's pump up production to sell as many of these hot units as we can" is a part of their age old problem. "We want our plant running at full capacity" gets workers accustomed to the paycheck but also means they'll be really busy and that's a challenge to quality. Is there a correlation between Porsche's recent accolades and their production numbers? Better yet, is there a correlation between Toyota's production ramp up over the last two years and its quality problems?

Toy-woe-ta

It will take some time to sort through the headlines and analysis of this recall crisis, but it's worth repeating that we here at J and D Auto Talk saw this coming two years ago, going on record in February 2008 (Toyota production is down - no kidding) with a follow up in August of that same year (Hey Toyota, I hate to say "I told you so...").

We were bang on, not based on regurgitating what every one else was saying at the time, but by our own sifting of the available data through the filter of our own way of looking at the industry. This process doesn't go half-baked, so stay tuned, we'll have a thought on this before too long.

Oh no, not another one

David Welch is writing that VW is the car giant to watch, and why is that? Well, because "Volkswagen is bent on displacing Toyota as the world's biggest car company—and it just may succeed."

Part of VW's strategy? Abandon their odd ball attempt to move upscale (which made no sense to me since they already have Audi doing quite well and the entire concept of Volkswagen - "the people's car" - was to be affordable), and move into the entry level cars. So, basically, more volume of low-profit margin vehicles - oy vey!

Hey, Volkswagen, please see

• Toyota production is down - no kidding 
• Hey Toyota, I hate to say "I told you so..."

I agree with Premier McGuinty, drivers should decide

It certainly doesn't happen often that I find myself saying "I agree with Premier McGuinty", but in this case, I do. All drivers - seniors included - must be responsible for deciding when it's time to stop driving, rather than tightening legislation, regulation and enforcement on the arbitrary basis of age.