CR (Still) Hates American Cars

Consumer Reports, which claims to be an impartial advocate for the consumer, to my mind is really a left-leaning organization of dubious intent. CR frequently tells consumers what CR thinks is best for them, rather than primarily taking their interests into account.  Witness their love for socialized medicine and CFL bulbs.  

Today's example, this blog posting from CR on "Best Used Cars Under $20,000"

Several CR staffers submit their choices, and all of them pick Honda or Toyota vehicles, except for two.  There is 1/2 a vote for a Ford Fusion, and 1 vote for a VW.  

Really guys?  You have $20,000 to spend, which is plenty, and you don't even consider some of the better American used vehicles, such as the Ford Escape, Chevrolet Equinox/Saturn Vue, Chevrolet Malibu, Ford Taurus, Chrysler 300?   

Consider: you can get a late model used Malibu or Taurus for under $20,000 which has all the trimmings, including leather heated seats, automatic lights, back up sensors, automatic climate control, etc. 

Space Shuttle Joke

Saw this suggestion for a practical joke making the rounds.

"When the Space Shuttle lands, everyone wear ape suits!"

Heh.

Nissan Leaf vs Chevy Volt Pricing

Nissan has announced that it is increasing the price on the 2012 Leaf, by $2,400 over the 2011 model, to $36,000.   Compare that to the price of the Volt, at $40,000.  Nissan also is capped at 20,000 units/year for the U.S. market, while GM has said it plans to produce 60,000 Volts in 2012.

If the Leaf is scarce, dealer markups may continue, reducing the price advantage further.  

Personally, if I was in the market for a plug-in car, I would probably choose the Volt over the Leaf, buying the gasoline hybrid capability for an extra $4,000 or less.

Auto Alliance CAFE Web Site

The Alliance of Automobile Manufacturers has launched a web site to promote the automaker's side of the CAFE debate.  You can find it here.  

Toyota: No Electric RAV4 For You!

According to this source, Toyota will reserve its plug-in RAV4 product (co-produced with Tesla) for fleets and government entities, and won't sell them to the general public.

The Toyota RAV4 EV will make its comeback after first being sold 15 years ago. The vehicle won't be made available to consumers, Yoza said, instead they are focusing on "very strategic applications" such as fleets and car sharing programs. Despite being a BEV that could benefit from fast charging, the RAV4 EV will not include a CHAdeMO charging port. Yoza said Toyota will not offer fast charging on any vehicles until the SAE determines a standard.

 I can hear the shrieking of the BEV boosters all the way from my perch here in Detroit.  "Toyota thinks it's the 1990's!"  Several are probably loading up their super-8 movie cameras in preparation for "Who Killed The Electric Car 2".

Why would Toyota do it this way?  Simple.  Cost.  Chances are the RAV4 EV will be so expensive that Toyota doesn't want to lose a ton of money on them.  Think about the overhead for a new small volume vehicle--dealer training, special service tools, parts distribution.  Instead, by keeping it fleet only, Toyota can keep costs down by centralizing service and support.  

The RAV4 EV is mostly a product for CARB and the "green states" who follow California mandates.  It helps get Toyota the EV points it needs in California, so it can keep selling Tundras (13/17MPG) Sequoias (13/18MPG), FJ Cruisers (15/20MPG) and 4Runners (17/22MPG).   

CNG Civic: Cheap Running But Slow

The Honda Civic GX is slated to be sold to retail customers nationally in 2012 (it was only available in four states, previously).  Since it runs on compressed natural gas, it is relatively cheap to run, with CNG fuel economy in the range of 28mpg (EPA estimate) and CNG costing around $1.70/gal.  

However, there are some big trade-offs involved in driving a Civic GX.  Acceleration is poor, with 0-60mph times coming in at 12.6s according to Edmunds.  The range is limited compared to a gasoline powered car, or a Chevy Volt, typically around 200 miles.  And if you want to fuel at home, which is likely because CNG stations are not common, you need to install a CNG compressor which will cost you around $5000, installed.  

Does the Civic GX make more sense than a Chevrolet Volt?  It's a tough call.  The Volt's price (after subsidy) is around $33,000.  The GX price is about $30,000 if you include the cost of the CNG compressor.  For the extra $3,000 you gain the ability to fuel anywhere (if you run it on gasoline or charge at 110v).  CNG miles cost about $.07, while all-electric miles will cost you about $0.06 per mile.  

But the Volt gets to 60mph in about 8.5s, and in range sustaining (gas) mode has a range of over 300 miles.  I think while the government tax credit is in place, I'd take the Volt.

A Couple Evening Car Photos

I went to Woodward to get some ice cream today before sunset. Spotted a few neat cars.

This one appears to be a GM guy driving a late pre-production Chevrolet Caprice.

And this is a tail light of a new Cadillac SRX crossover. It surprised me, the shape of it, I had not noticed it before. It's like a little throwback fin, back to the 1970's.

Carbon Motors, Aptera, VPG, etc.

For a while, it looked like all of the smart kids knew how to make a better car, and how to run the business better than the big boys.  There was a "gold rush" of sorts, as electric car and other niche producers scrambled to set up shop and grab venture capital funding.   

Then the hard economic reality kicked in.   Making cars is hard.  It takes a huge amount of money, people, and time.  And the regulatory hurdles are enormous.

Look at the up-start graveyard.  Bricklin's Visionary Vehicles?  Nowhere.  Mahindra USA?  Limbo at best.  

Aptera is waiting for a federal loan which will probably never come.

So apparently is Carbon Motors, the purpose-built BMW diesel powered police vehicle.  Carbon requested $310,000,000, but is still waiting a year later.  

VPG, maker of a purpose built wheelchair accessible taxi vehicle, apparently got a $50,000,000 loan from DOE to produce a CNG version.  

Survey: U.S. Consumers Unwilling To Pay For CAFE

The Boston Consulting Group, a business consultancy, has issued an interesting report about how automakers can achieve the stringent 2020 fuel economy and CO2 emissions standards without having to resort to electric vehicles.  There is a lot of interesting stuff in there, and as I digest it I'll probably post more about it.

One thing that jumped out at me is this table.  In it, a majority 56% of survey respondents in the U.S. are not willing to pay any premium for an "environmentally friendly car".

And also, consider the odd result for the people who would, if they vehicle would pay for itself.  They are willing to pay up to $3,900 premium, but expect it to pay back in 3 years.  That implies an expected fuel savings of 325 gal/year at $4/gal.  A 27mpg car uses 444 gal/year with a typical 12,000 mile/year driver.  This means people expect the equivalent of going from 27mpg to 100mpg, for $3,900!   Clearly, this is not going to be realistic in any short term time scale. 

The closest vehicle we have now to 100mpg is the Volt, which carries a premium of about $15,000 (compared to a well equipped Cruze).  

So, basically, American consumers are saying, "we'd love fuel efficient cars--as long as they don't cost much (or anything) extra".

CAFE May Cramp High End Luxury Market

An interesting piece in the WSJ, here, expains that luxury car makers such as Porsche and Mercedes may be severely impacted by future CAFE rules.

Future U.S. government fuel economy regulations could saddle auto makers with steep fines or even bar the sale of certain models. Violations of proposed government standards could cost auto makers up to $25,000 a vehicle beginning in 2016, up from current levels of $5 to hundreds of dollars per vehicle.

The issue for the luxury automakers is that CAFE is a fleet average, not a per-car requirement. Large full line carmakers like GM can produce lots of Cruzes to offset a few Cadillac V8's. However, Mercedes doesn't sell enough high MPG vehicles to avoid paying today's fine. And when CAFE marches north of 50mpg average, Mercedes only option is to find some hybrid electric powertrains schnell.

I am not a fan of CAFE because of the way it hides regulation from the consumer, and distorts the car market. However, I don't see why luxury car makers such as Mercedes should be exempt. If CAFE is the regulatory regime, and the goal is to reduce fuel consumption, the luxury car makers should not be allowed to skate.

Now, don't get me wrong, I am not saying that powerful cars should be banned. But I think the wealthy folks who love European luxury cars can afford a "CO2 premium" for their sins. I also admit, bad economic policy aside, that I like the competitive advantage that CAFE gives the full-line automakers such as the Detroit 3.

The Tablet Race?

Somehow, the wizards at Apple figured out that the next big thing in
personal computing was going to be the tablet. Apple's iPad wasn't
even that great of a computer when it first went on sale. They are
great for consuming media (as long as it isn't Flash) but not great
for any sort of intense productive or creative work.

What amazes me is that the very smart people at companies like HP,
Dell, Motorola, and Microsoft were apparently unready to compete.
Only now are credible iPad alternatives appearing, like the Galaxy and
Xoom, but even these are closer to oversized smart phones than general
purpose computers.

Where is Microsoft? Why isn't there a useable Windows edition
optimized for fingertips and not mice?

Now here comes HP, with another tablet OS, based on its (dying) Palm
sourced WebOS.

I think people will settle on two or three systems at most. One may
be Windows, I think, when Microsoft is finally ready. The other will
be Android which has a huge head start over WebOS and RIM's QNX. And
Apples iOS of course is too big to go away.

Me, I about to pull the trigger on an Eee Pad Transformer or maybe an
Iconia, if I can find a nice deal. I want Flash support and a
credible app store.

Consumer Reports Pushing 62 MPG

One of the reasons I dropped my personal Consumer Reports subscription is that they have become consistently liberal in their outlook, taking the sides of intrusive regulation by the government.

Today CR issues a statement supporting a high (62 MPG) fuel economy.  One of their arguments is that vehicles can be reduced in mass without necessarily becoming less safe.  For small differences in mass, this is probably true. 

Importantly, reducing vehicle mass will be essential in improving fuel economy. Consumer Reports is confident that lighter vehicles will not necessarily compromise vehicle safety. For example, a contemporary family sedan such as the Hyundai Sonata weighs 3,210 pounds and still achieves a Top Safety Pick by the IIHS. It weighs 7.5% less than its previous generation and about 6% less than the average family sedan. By contrast, a Chrysler 200 weighs 3,590 pounds (also a Top-Safety Pick) but with no performance or interior room advantage. The new Honda Civic at 2,810 pounds also received a Top Safety Pick and weighs 400 pounds less (about 9%) than the Chevrolet Cruze, a direct competitor.

However, they make a big mistake here--they refer to IIHS test results between vehicles that are about 400# different.  It is critically important to remember that crash test results such as IIHS and NHTSA, when they are intended to mimic front crashes, simulate a car hitting another car of the same weight.  

What happens when a heavier car hits a lighter car is not pretty.  Here are some great videos by IIHS which make this very point.  Here is the report.

Everything else being equal, heavier cars tend to be safer than lighter cars, and forcing people into lighter cars will, on average, reduce their safety.

Buick Wagon Lust

I can't remember the last time I felt open, unguarded lust about a Buick.  But now GM comes out with a Buick turbo wagon, as if breathing the ghost of Saab back into Buick.  Please tell us, GM, that this lovely piece of rolling practical sculpture will come with manual transmission.

Autoblog has photos.

Obama Leaks Some Oil

Obama's energy department yesterday announced it would release 30 million barrels of oil from the Strategic Petroleum Reserve, which holds a total of about 726 million barrels, or about 160 days supply at the maximum withdraw rate of 4.4 million barrels/day.  For reference, U.S. consumption is currently about 20 million barrels/day total, of which about 10 million barrels/day is imported.  

So Obama just spent $12.5 billion (at market prices) to temporarily lower oil prices.  In theory, this will soften the effect of lost Libyan production.  

The problem is, the energy department will have to refill the reserves, buy purchasing the 30 million barrels, or waiting to paid in royalties from oil producers.  

I am not sure if this was a valid use of the SPR, as we should be careful not to blow our oil reserves whenever the price gets high--it should truly be reserved for emergencies.   Loss of production from Libya is not an emergency--it was a foolish policy decision by the U.S. and NATO to go to war with wily Col. Gaddafi.

Senate Votes To End Ethanol Tariff

About damn time.  

The ethanol tariff and subsidy were essentially welfare for corn farmers, and perversely, most of the subsidy goes to agricultural giants like Archer Daniels Midland.  

Link To Story

Natural Gas to Ethanol

Now here is a form of ethanol production I have no problem with.  Dallas TX based Celanese says it has a process to make ethanol relatively cheaply from natural gas.  

However, because the ethanol is produced from a fossil fuel, it doesn't qualify as a renewable fuel, and therefore can't be used to satisfy the renewable fuel mandates that are driving corn based ethanol.  So unless the law is changed, corn ethanol will continue to drive up food prices and eat tax money.

Romney And Ethanol

Mitt Romney, pandering to Iowans, has come out in support of ethanol subsidies.  

I'm going to have a hard time supporting the guy in the primary.

Ethanol subsidies, like other agricultural price supports, are reverse-robin-hood: they take from the poor (us) and give to the mostly rich (large farms and Big Ag).  

Here's an idea: how about we let ethanol follow market forces.  If no one wants the stuff, there will be less produced, and farmers can plant wheat and barley instead, to make proper methanol.

GM CEO: Raise The Gas Tax

GM's CEO, Dan "plain speaker" Akerson said in an interview with Detroit News:

"There ought to be a discussion on the cost versus the benefits," he said. "What we are going to do is tax production here, and that will cost us jobs." For the years 2017-25, federal officials are considering 3 percent to 6 percent annual fuel efficiency increases, or 47 mpg to 62 mpg. That could boost the cost of vehicles by up to  3,500. "You know what I'd rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson said. "People will start buying more Cruzes and they will start buying less Suburbans."

He is of course, correct: it would be easier to push the market towards buying efficient cars by keeping gas expensive... easier for the carmakers, not for the consumer.  The consumer wants the pain hidden--we want cheap gas and efficient cars (but not too expensive, thank you).  However, the last part of his quote, "People will start buying more Cruzes..." is not what the CEO should really want--GM probably makes a much nicer margin on Suburbans than on Cruzes.   GM's top selling product is still the Silverado/Sierra.

Also, a gas tax now would hurt consumer spending, now, and slow economic recovery--hurting GM's sales. 

Akerson should be careful, he isn't going to win any friends among his customers, or on Wall Street, with so much plain speaking.

GM's Akerson Eulogizes LIncoln

In an uncharacteristically (for GM) blunt statement, GM's CEO said

"They are trying like hell to resurrect Lincoln. Well, I might as well tell you, you might as well sprinkle holy water. It's over," he said about Cadillac's historical competitor."

He's right, of course, that Lincoln is struggling.  

But, he shouldn't be too proud of Cadillac--at 11,600 sales in May of this year, Cadillac is still well behind BMW (20,600) and Mercedes (20,300), and even Lexus (12,300).   

Mazda Manufacturing To Leave US?

According to The Detroit News, an unnamed source is saying that Mazda plans to leave the AAI plant in Flat Rock, MI, which would make Mazda a true import brand once again, with models coming from Japan and Mexico.

I understand that Mazda has a business to run, and that the Mazda6 (a good car) is not a great seller, but I am a little disappointed.  I once owned one of AAI's previous products, the Mazda 626, which was a good handling but cramped mid-sized sedan.  It was fun to point to my "foreign" Mazda and tell people it was assembled in Michigan by UAW labor.