TrueDelta

I haven’t been following the GM-UAW negotiations, which might explain why the strike that was just called took me by surprise. This strike will probably end up hurting both parties. Sales will be lost, and the launches of the promising new Cadillac CTS and Chevrolet Malibu could be stunted. Many people blame the “outdated” union. But it’s not that simple.

GM’s leadership has long done a poor job of relating to pretty much everyone. While performing research for my Ph.D. thesis inside GM (executive summary), I observed firsthand how poorly GM’s senior management communicated with the rest of the organization. And it did an even worse job of listening to those in the trenches.

Similarly, GM has failed to communicate or cooperate well with suppliers. It has tended to lay down the law rather than listen to suppliers’ suggestions and work together to innovate and minimize costs. This has harmed product performance, reliability, and costs.

Similarly, GM has failed to listen and communicate well with the American car buying public. The Internet offers tremendous potential here. A few teams within GM have tried to connect with car buyers. But in general very little advantage has been taken of this potential.

And then there is the union. Back in the 1950s the basic arrangement arrived at between the GM and the UAW was that in exchange for having absolutely no say in how the company was operated the workers would receive an unusually generous pay and benefits package. Especially the benefits. This was the bargain GM struck. It agreed to pay huge amounts in order to not have to listen to its workers or include them in the business. The UAW we have is the UAW GM asked for, one interested solely in pay and benefits.

Meanwhile, the Japanese took a different approach, deeply involving plant workers in the design as well as the operation of the manufacturing process. GM formed a joint venture with Toyota to study its manufacturing process. And many GM executives learned the Toyota way while at NUMMI. I met a number of them while inside GM. The common report: GM’s management was unwilling to apply the lessons of NUMMI. It would not even listen to GM people who had been there.

Today’s strike brings this long-term process to its head. GM’s management wants to get out from under the labor costs it agreed to in previous decades, but it still isn’t doing nearly enough to involve the workers as true partners in the process of making cars. It still doesn’t want to listen, but it no longer wants to pay for the right to not have to listen.

Not that refusing to listen has ever made sense. It’s hard to listen to others. They might have different ideas, and whatever their ideas are they’re not your own ideas. No one likes implementing others’ ideas. Problem is, the best organizations do this anyway, because it’s a proven way to create a better product.

Whatever the outcome of the current strike, the real fix will occur when GM’s management learns to listen to and cooperate with others.

Note: Toyota’s Jim Farley ended up with the Ford job. The Wilhite rumor turned out to be incorrect. 

Ford has long had some of the worst marketing in the industry. Their brand identity has been broad and vague. Their product lineup has been full of overlaps and gaps. Their targetting has been somewhere between imprecise and non-existent. And their advertising has been consistently awful, with the partial exception of the campaign that launched the Focus.

Well, Ford might finally be getting the marketing talent it has long needed. Cisco Codina resigned last week. And Automotive News just reported that Steve Wilhite has resigned from Hyundai USA, and might be showing up in the top marketing job at Ford that Codina vacated.

Who is Steve Wilhite? He first made a name for himself by helping bring VW back from the dead in the U.S. As head of VW’s U.S. marketing in the late 1990s, he played a major role in the “Drivers Wanted” campaign and the launch of a new lineup spearheaded by the New Beetle. In 1998, BrandWeek named him “Marketer of the Year.”

From VW, Wilhite went to Apple in 1999, where he did not fare so well and lasted only a year or so. Whether responsible or not, he received the blame for tepid sales growth. He resigned, and Jobs took back responsibility for marketing.

After Apple Wilhite went to another job, at a healthcare firm, before ending up at Nissan USA in 2001. There he served as VP of Marketing as that brand acquired new life in the U.S. Of course, an entire new lineup of products with very competitive styling and performance was the main reason the brand came back, but the marketing hasn’t been bad. I’m personally not a fan of the _shift campaign–it’s way too conceptual–but this appears to have been championed by Ghosn and initially resisted by Wilhite.

Renault-Nissan CEO Carlos Ghosn was pleased with Wilhite’s achievements in the U.S., and in 2004 appointed him head of Nissan’s global marketing, with a new office in Tokyo. Reading between the lines, the iconoclastic, outspoken Wilhite probably did not fit in well at Nissan’s Tokyo HQ. In an insightful Detroit News article, he talks about improving his patience in order to work better in Tokyo.

This might explain why he left Nissan for a COO post at Hyundai USA in August 2006. In the press release he said, “I’m thrilled with the opportunity to return to Southern California.” But Hyundai has failed to meet ambitious sales goals in the U.S., and Wilhite may be taking the blame for that. In his defense, I’ve often heard that Hyundai’s Korean HQ is very difficult to work with, and gives the U.S. unit very little autonomy. So Wilhite was likely no happier there than he was at Nissan’s Tokyo HQ.

Which brings him to Ford. Or, actually, back to Ford. It seems that Wilhite began his career at Ford.

Ford could certainly use Wilhite’s best work. His strength is supposedly in crafting a strong identity for a brand, and Ford needs one. The big question is: will they give him the room to work that Hyundai did not? Will he fit in well with the Mulally-Fields team? Might Fields feel threatened by this potential replacement? Time will tell. I’m certainly looking forward to see how this one unfolds. If only I never have to see another awful ad from Ford, Wilhite will have earned every cent they pay him.

Operating a website with thousands of members is hard work. No matter how much you give, you’ll still receive many complaints in return. The experience has made site admins a generally cantankerous bunch. I know this from what goes on inside my own head, and from my communications with other admins.

And then there’s Greg of Nissan and Infiniti forum NICOClub.com. From the first email to the most recent, Greg has always been unusually upbeat and extraordinarily helpful. There are nearly 200 Nissan Versas enrolled in TrueDelta’s panel, and over a thousand other Nissans and Infinitis. Greg is the reason. Some other forum admins have asked what’s in it for them personally. Greg simply helped. And helped. And helped. He’s an amazing guy.

Today I learned that Greg’s young wife, with whom he has three kids, just passed away after a long battle with cancer. And I am thoroughly shocked. I have a wife about the same age, and three kids. Going through what he has surely been going through would have affected everything I do. And here Greg has been always upbeat, always helpful.

You can read more about Greg’s wife, who was apparently also an amazing person, on a page he has put up for her:

staceychilds.com

People have been expressing their condolences here:

NICOClub thread on NICOMom

Greg and his family certainly have my deepest sympathy. Just this morning I was arguing with my wife via email about some expensive groceries she had bought. This truly puts things into perspective. Next time life’s little troubles are getting to me, or someone sends me a less than polite email, I’ll have to try harder to be more like Greg.

J.D. Power withholds repair rate data from car buyers, but does provide ratings in the form of dots. In addition to the normal problems with dot ratings–they’re quite vague–J.D.’s have an additional, serious weakness: they only go down to two.

These days, most cars are at least fairly reliable. There’s not a huge difference between the most reliable cars and those around the average, maybe a third of a repair trip per year. So while J.D. Power likes to focus on the “winners,” those models that had the fewest problems reported in its surveys, it doesn’t really make sense to buy one of these just because of reliability. Plenty of competitors are nearly as reliable.

Instead, car buyers should be most concerned about not buying those models that are least reliable. There aren’t many of these, but they are out there. Unfortunately, with J.D.’s dots, you cannot identify them. Everything that is below average gets a two-star rating, marked “the rest.” This lumps the least reliable models together with others that scored near the average. And you cannot tell them apart.

Why does J.D. Power do this? Probably to avoid upsetting a manufacturer that pays them millions in fees each year. But in the process they avoid telling car buyers what they most need to know. It’s far more important to know which models are least reliable than which models are most reliable.

Back when I first became interested in cars, the second-generation Honda Accord was one of the hottest products on the market. People liked it because it was thoughtfully designed, well-assembled, agile, and compact. What it was not: fast or roomy. Owners looked down on Detroit iron as unnecessarily large and wasteful.

For 2008, Honda has introduced an eighth generation Accord. And it’s huge, a little larger even than Acura’s RL flagship. Compared to the 1983 Honda Accord, the 2008 has nearly 14 inches more wheelbase, over 20 inches more length (for a total of 194.1!), nearly eight inches more width, and four inches more height. Curb weight is up by over 1,000 pounds for the four-cylinder, and by over 1,400 for the V6. The latter weighs over 3,600 pounds. These are all HUGE differences. Even today’s Civic is significantly larger than that old Accord. More pointedly, the Accord is now much larger and heavier than most of Detroit’s midsizers were back in 1983.

Engine output has grown even faster than the car’s size. Back in 1983, the sole engine was a 1.7-liter four good for just 75 horsepower. For 2008, engines range from a 177-horsepower 2.4-liter four to a 268-horsepower 3.5-liter V6. The latter is nearly four times as powerful as the 1983’s engine.

Back in 1983, Honda loyalists saw Detroit’s V6s and V8s as unnecessarily large and powerful. Now we have an Accord that seems to confirm that Detroit was right all along: bigger and more powerful is better.

Is this as large and powerful as the Accord will get? Or can we expect a two-ton, 200-inch-long Honda sedan in the future? Even the size of the 2008 boggles my mind, since I still vividly recall the compact, finely detailed 1983 car.

For the first decade of Saturn’s existence, “no-haggle pricing”–the sticker price is the price everyone pays–made sense. It made Saturn dealers very easy to work with, and the brand’s reputation benefited. But today, despite an all-new product line-up, Saturn is falling short of its sales goals. The products are solid. The problem: no-haggle pricing.

Why did no haggle pricing work before, but not today? Two reasons: discounts have grown large everywhere else, and Saturn’s products now have close relatives at other GM divisions.

Consider the Aura and the Outlook using TrueDelta’s vehicle price comparison tool. (These model names should be ALL CAPS, but that gets obnoxious.) Despite all of the PR about supposed German origins, the Saturn Aura sedan is most closely related to the Pontiac G6 and Chevrolet’s 2008 Malibu. Compared to the Pontiac G6 GXP with a few options to bring it up to the Aura XR’s standard equipment level, the Saturn lists for about $100 less. Sounds quite good considering the fancier exterior and more upscale interior of the Aura. But the rebate (which only became part of the Saturn way in recent years) is currently $500 higher on the Pontiac, and the gap tends to be at least this large year round. Still, the Saturn would be just $400 more if both sold at list, a very fair price for the extra bling.

But of course both don’t sell at list. Instead, the G6 can probably be bought for around invoice. Let’s assume $250 over invoice, to be safe. At this price, the Pontiac G6 GXP will cost about $1,500 less than an Aura XR. Even adjusting for the Aura’s additional features, the gap remains a sizable $1,200. And the upcoming new Malibu will be cheaper still.

The Saturn Outlook crossover faces an even tougher battle against the GMC Acadia, since while the G6 is positioned below the Aura, the Acadia is positioned above the Outlook. The Acadia SLE lists for $1,500 more than the Outlook XE. But in this case only the Saturn has a rebate, for $500. So the gap at list price is $2,000.

So why is the GMC far outselling the Saturn? Well, partly because there are more GMC dealers than Saturn dealers. But the reason many buyers have given me (especially back when neither had a rebate) is price. The GMC might start out $2,000 higher, but it includes about $700 more in standard equipment, and at $500 over invoice (it’s a stronger seller than the G6) it’ll cost about the same as the Saturn. More stuff, higher status brand, same price (even with the rebate on the Saturn). The outcome is predictable.

GM has tried to compensate for Saturn’s no-haggle policy by reducing the dealer margins on Saturns and making the list prices a bit lower than they’d otherwise be. But with today’s large discounts, the pricing adjustment isn’t large enough.

One solution would be to reduce the prices on Saturns, so that at list they’d be more competitive with both their siblings and competitors from outside GM. But this requires knowing in advance how large the discounts will be on competing vehicles. Which isn’t easy to do–hence the $500 rebate on the recently introduced 2008 Outlook.

A simpler solution might be to abandon no-haggle pricing. It worked before the era of huge rebates and discounts, back when Saturn’s products were truly unique. But today, it’s hurting them more than it’s helping. Cars and SUVs that seem attractively priced at sticker don’t seem so attractively priced when out-the-door prices are compared.

I was just stunned to learn that Jim Press has been lured away from his top position at Toyota of North America to take charge of sales, marketing, and product development at Chrysler. Like Tom LaSorda, who remains in charge of manufacturing and supply, he’ll be a vice-chairman and president. Both will report to recently hired CEO Bob Nardelli. Press played a key role in Toyota’s success in North America, and in the eyes of many he and Toyota were inseparable. Apparently not.

What this tells me more than anything is that investment firm Cerberus, which recently purchased Chrysler from its German parent, is willing to do just about anything to spark a quick turnaround. They’ve now hired two very high profile executives to form a triumvirate with broad experience at the top. These guys are no doubt being promised huge bonuses if Cerberus can sell Chrysler at a huge profit in a few years. They’ve made a number of other appointments a level or two down in the organization, such as hiring a Lexus executive to serve as chief marketing officer. In a similar vein, Chrysler recently announced a lifetime powertrain warranty (not transferable, alas).

What’s next? The only thing that seems clear is that more big surprises are coming. These people are willing to think well outside the box, and do whatever seems necessary for rapid change.

This forms a stark contrast with Ford. Ford has been touting “bold moves” for over a year now, but not a single one of these has created the shockwaves Chrysler has today by hiring Press. In contrast, the strategy at Ford seems to be to use the existing team, with the addition of a CEO from outside, to make steady, relatively undramatic improvements in the way the company operates and its products. A similar strategy has been pursued at GM, though hiring Bob Lutz back in 2001 was a truly bold move that also rocked the industry. One big difference: Lutz wasn’t a top executive at another auto maker at the time.

Will slow and steady win this race for Ford? It has been working for GM, if not as well as many hoped. Or will glory go to those swinging for the fences at Cerberus and Chrysler?

The next year or two are going to be exceedingly interesting.

The new Chrysler Town & Country and Dodge Grand Caravan have exterior styling dictated by interior packaging (i.e. they’re very boxy) and their interiors look and feel lower in quality than those of many competitors. But if kids were making the buying decision, Chrysler’s minivan market share would probably be close to 100 percent.

Kids don’t care about exterior styling or interior materials. What they’ll notice with the new minivans are the optional second-row seats that swivel around to face the third row, the table that can be set up between these seats, the dual DVD systems–each with its own player, the aimable reading lights, the available satellite TV with three kids channels, and so forth. (Please disregard the adults in the Chrysler-supplied photo; they don’t fit so well. But there’s enough space between the swiveled seats for kids’ legs.) To keep the kids fed, parents can slide a cup-friendly center console from the first row to the second; no more reaching back over the seat. It’s the ultimate family travel vehicle short of a full blown RV.

Which is why parents uninterested in buying one of these vans should do their best to keep their kids uninformed about what they’re missing in the current vehicle. I made the mistake of telling my three kids about these features, and might come to regret doing this.

If I was a Chysler marketer, on the other hand, I’d be advertising these minivans and their features on kids’ shows.

I’d like to update pricing for the 2008 Dodge Avenger. But I cannot find a source of information that is both current, complete, and free of errors.

The Dodge site currently shows the base price of the Avenger SE as $19,020. Edmunds also shows this price. Some other sites, including Consumer Guide and Autobytel, are one price increase behind, at $18,895. Others, including Cars.com and CarsDirect, are a price increase ahead of Dodge’s own site, at $19,265.

With the latest price increase, satellite radio appears to have become standard. But at the same time many options appear to have become unavailable on this trim level. Or is the latest information simply not complete?

ABS is shown as neither a standard nor an optional feature. It’s standard on the related Chrysler Sebring, which lists for only $100 more despite the more premium brand, so I suspect it’s also now standard on the Avenger. But no site currently shows it as such.

These cars are made not far from where I live. Maybe I should ask the plant. Someone there must know if ABS is now standard.

Chrysler’s frequent price increases only further complicate the situation. Knowledgeable car buyers can take advantage of them, though. Look closely on a dealer’s lot, and you might find cars at two or even three different price levels. Buying a car that’s been on the lot for a few months longer could save you hundreds of dollars.

In three 2007 models (Chrysler Sebring, Dodge Nitro, Jeep Wrangler) and in most of its 2008s Chrysler offers what it calls a “MyGig Infotainment System.” It looks like a great system for media-savvy car buyers. But it’s pure hell for those of us maintaining a car pricing database.

The miracle of MyGig is that it can combine a large number of features into a single system:

• Media hard disk drive (with music management system)
• Navigation system
• Voice control for the navigation system
• Satellite radio
• Traffic information system
• Bluetooth hands-free phone integration
• DVD player (when the car is in park)
• Aux and USB connections
• Voice recorder, for memos
• Rearview monitor
• Auto-dimming rearview mirror (includes microphone for features that require one)

The trouble is, in different models different features are offered, and some of these features can be offered separately, either as standalone options or as part of an options package. If the latter, then the price of MyGig varies by which other packages it is ordered with. 

None of this would pose a problem if Chrysler put out clear, complete, and correct pricing information. Unfortunately for me and anyone seeking to price a Chrysler product, it doesn’t. Instead, the pricing information put out by Chrysler tends to be unclear, incomplete, and even contradictory. I’ve spent a considerable amount of time on the phone with them trying to sort it out, without success.

As a result of this complicated mess, I’m currently looking at three other pricing sites, each of which has a different price for this system in the Chrysler Sebring. The Chrysler site has a fourth price, but the prices on the Chrysler site pre-date the most recent price increase.

What to do? I might have to do what I did with the 2008 Chrysler 300 a couple months ago. After spending hours trying to make sense of the pricing on that car, I tabled it. You still won’t find it on the site.