TrueDelta

TrueDelta’s survey and analysis have been fine-tuned to yield reasonably accurate vehicle reliability stats even with a fairly small non-random sample. But, when you have 179 results, a few are bound to be off. Those I suspect are off are noted as such in the comment you’ll see if you hover over the result.

My initial reaction on seeing the initial result for the 2008.5 and 2009 Mazda3 was that it had to be one of these errant results. This was especially likely, since only 17 responses were received and this result is asterisked for a small sample size. Every previous model year of the Mazda3 has had a low or at least lowish repair rate (the 2004 has been drifting into average territory). So why is the slightly tweaked 2008.5 running about twice the average, with 105 successful repair trips per 100 cars per year?

Click on the model name on the results page, and you’ll be taken to the Mazda3 repair histories page, which displays all repairs reported for the car. It turns out that the revised audio system has often lost bass at high volume, and many cars have had the unit replaced.

So, no fluke. Even with a sample size of 17 cars the Vehicle Reliability Survey has uncovered a common problem with the car. Is it a major problem? No, it’s not. But then we provide this information as well.

Last month Nissan garnerd quite a bit of publicity for the Versa by adding a decontented sedan powered by a smaller engine to the line and pricing it at $9,990–before destination.

Of course, this is Hyundai’s turf, so the Korean automaker felt compelled to respond. The chosen response, they’ve cut the price of the Accent hatchback by $1,100, to $9,970–again, before destination. They did not cut standard features, but the price of the automatic has remained unchanges–so it now costs $2,100 more than the manual.

The Accent has had a $500 rebate–that’s probably off the table with the manual now. So the actual price reduction is probably $600.

TrueDelta provides the quickest, most thorough way to compare the prices of these and other models: car price comparisons. The Versa and Accent are close, even after adjusting for feature differences.

Of course, if you want an automatic in the Hyundai or a hatchback in the Nissan, the price will be thousands higher.

My people have suggestions for Detroit. These suggestions tend to center around replacing senior managment and cutting brands and dealers.

Dealers–these companies do have too many dealers. But this hurts the dealers more than it hurts the companies. In the short term at least GM, Ford, and Chrysler would not save much from cutting dealers.

Brands–how many brands of jeans are there? And of toothpaste? The problem isn’t the number of brands, but how they’ve been managed.

Executives–Ford might be getting its act together. At least that’s the impression they give off. GM and Chrysler–not so much. But replacing the current executives with a new bunch, without changing the fundamental structure and culture of these companies, would just yield more of the same. It’d be like replacing one Third World dictator with another–not real change.

So why do critics tend to focus on executives, brands, and dealers? Because those are the things they can see. The classic metaphor of the drunk looking for his keys near the street light, because that’s where he can see? It applies here.

Just a few months ago seemingly everyone was criticizing Detroit for failing to foresee $4.00 gas and develop fuel efficient cars accordingly. Even today we hear that these companies should refocus on alt fuels.

But how many of those who claimed that Detroit should have spent billions of dollars to develop more fuel efficient vehicles predicted that fuel prices would fall by more than 50 percent in just a few months?

If gas remains below $2.00, or even below $3.50 (which seemed to be the tipping point), who will buy these alt fuel cars? After all, they’re going to cost a lot more than conventional cars, especially at first.

Talk is cheap, hindsight is 20/20, and when events move too quickly even for hindsight, there’s always amnesia. Has anyone who chided Detroit a few months ago for not offering fuel efficient cars stepped forward and said, “Well, I was wrong. Fuel prices are back down, and then some, so the solution isn’t as simple as it seemed?”

In reality, with fuel prices so unpredictable and currently low, investing in fuel efficient and alt fuel cars is much more like buying health insurance than the core of a viable business. Now, health insurance is always good to have. But Detroit has been like a family just barely scraping by–keeping up with insurance payments takes a back seat to paying the mortgage and putting food on the table.

What do people do when they haven’t paid for health insurance, then get sick, and can’t work enough to pay the mortgage? They ask for government assistance, of course.

GM, Ford, and Chrysler have been begging for loans from the federal government in order to avoid declaring bankruptcy. But the government has been reluctant to grant them these loans without a viable restructuring plan. So far, it’s hard for anyone to see how these companies can avoid bankruptcy and (in Chrysler’s case) even liquidation even with the loans.

Many people blame the unions for everything–at least when they’re not blaming Detroit for failing to offer competitive products. In comparison, I’m no union-basher. I’m aware that the unions came into being because of how poorly manufacturers treated their workers pre-union, and how poorly they’d treat them again if the union went away.

But the fact of the matter is that Detroit cannot avoid bankruptcy with the current wages and the inflexibility forced upon them by the need to keep paying workers even when they’re not working and the rigid job classifications in the plants.

These companies also cannot be competitive paying for the healthcare of hundreds of thousands of retirees the way they do.

So, major concessions from the UAW will have to be part of any viable plan. We hear that if Detroit can only survive until 2010, when the 2007 labor contract’s savings really kick in, they’ll be okay. Well, how about pulling that contract forward to 2009? Why does it fall to the U.S. government to pay out the terms of the old contract for another year?

Actually, that contract mostly helps by letting the manufacturers hire new workers at a much lower wage. But there aren’t going to be any new workers unless sales really pick up. What they really need: a wage reduction for current workers, and the ability to let those they don’t need go without huge payouts.

Taxpayers earning lower wages and enjoying no such job security have little desire to help maintain the wages and security enjoyed by UAW members.

The retiree issue is supposedly handled by the VEBA fund, where the UAW will get a lump-sum payment in the tens of billions and pay for these costs going forward. Can Detroit afford to fund VEBA, though? Clearly not. VEBA is in danger of lining up with other creditors if and when an automaker declares bankruptcy. So for some reason the U.S. government gets to fund this one, too.

Of course, GM did agree to pay these costs in decades past. They fell down by not properly calculating these costs, and failing to put nearly enough money away towards paying these costs back when they were still making it. The current healthcare costs of a guy who worked on the line in the 1960s and 1970s should actually have been covered by revenues during those decades, not current revenues.

Of course, the Social Security system suffers from the same fundamental flaw, and threatens to bankrupt the U.S. government. But that doesn’t make it right.

In a perfectly just world, the executives and stockholders who received larger bonuses and returns than they should have back in those past decades would foot the bill. But of course this never happens.

All we’re left with is the least unjust of a number of unjust solutions. Detroit wants the U.S. government to enable it to keep going pretty much the same way it has been going, with no one taking a severe hit. That’s not going to happen.

So we have two other alternatives:

1. The various parties involved sort out how they can sacrifice their way to a viable operation, and so avoid bankruptcy.

2. These companies go into Chapter 11, at which point a bankruptcy judge forces them toward an outcome similar to #1.

I suspect that, in the current job climate, Detroit’s white collars will sacrifice quite a bit to keep the companies afloat. In a stronger economy, they could jump ship, but not now. So pay and benefits cuts should be easily doable.

Same with suppliers. Of course, they’ve already been squeezed, and then squeezed some more. But in an economy on the brink of deflationary, more squeezing should now be possible.

What concerns me is that I haven’t heard a hint of concessions from the UAW, with regard to both current workers and retirees. It’s time.

Anyone who has paid close attention to the EPA ratings–or the real-world fuel economy figures on TrueDelta, has probably noticed that compact cars don’t tend to get much fuel economy on the highway than midsize or even large cars.

Take Toyota’s offerings, for example: 

Yaris – subcompact:  29/35

Corolla – compact: 27/35

Camry – midsize: 21/31

Camry V6 – midsize: 19/28

Avalon – fullsize: 19/28

So, the tiny, 106-horsepower Yaris manages to go only 25 percent farther on a gallon of gas than the large, semi-luxurious 268-horsepower Avalon. Compared to the also much larger, 158-horsepower Camry, the subcompact’s advantage is just 13 percent.

What gives? Well, aside from the fact that the main fuel economy hit of additional weight is getting that weight up to speed, not keeping it there, gearing makes a huge difference. Smaller cars usually have fewer gear ratios in their transmissions–four vs. give or six in this case. And to compensate for their relative lack of power the overall gear ratios (gear ratio multiplied by final drive ratio) in these cars are usually shorter (numerically higher). As a result, the engines in these cars turn more rpm on the highway. The EPA highway test includes a maximum simulated speed of 60 MPH. Even at this speed these smaller engines often turn around 3,000 rpm, while the larger engines when paired with taller gearing are spinning in the low 2000s. Engine efficiency starts to dive around 2,500 rpm.

Drive the 70ish speeds common on today’s highways, and the real-world difference likely shrinks even more. My 2.0-liter Mazda Protege5 gets 27 to 28 on the highway–because the speed limit where I live is 70. I’ve read that the same car, driven at a constant 55, gets close to 40 miles-per-gallon.

The obvious solution: transmissions with six-plus speeds for smaller cars. No doubt they’re coming. Each gear ratio adds about $100 to the price of a car, and given our recent experience with fuel prices many people should be ready to spend another $200 for a five-to-seven MPG bump in highway fuel economy.

Thanks to Matt K of The Auto Writer for asking the question that led to this post.

With Detroit’s leaders before Congress begging for money, many people have been suggesting that cars with improved fuel economy be part of any bailout.

This is ridiculous, the same way that the Corporate Average Fuel Economy (CAFE) regulations have always been ridiculous. Improved fuel economy cannot effectively be legislated.

Why not? Because this route forces companies to develop cars they don’t want to develop and then find ways to sell them to people who don’t want to buy them.

The only thing that does work: inducing car buyers to demand higher fuel economy. If people decide which car to buy based on fuel economy, then the auto industry will deliver vehicles with higher fuel economy.

The way to create this demand: higher fuel costs through a higher gas tax. This is what has worked for decades in Europe and Japan. And it’s what would work here.

Of course, people who are having trouble making ends meet would be hard-pressed to pay a higher gas tax. But this could be handled through a tax credit.

I’ve long felt that a higher gas tax is the way to go, and the time has come to make it happen.

In one of Peanut’s classic gags, Lucy told Charlie Brown time and time again that she’d hold the football for him so he could kick it, only to pull it away at the last minute.

American car buyers like to do this with GM. They say, “If only you offered the products you sell overseas in the U.S., we’d buy them.”

So GM gave this strategy another shot. The Holden Commodore is now available as the Pontiac G8, and the Opel Astra is available as the Saturn ASTRA.

Days supply–the number of cars in inventory divided by the number being sold each day–is around 60 when supply and demand are well-matched. With sales way down, this figure is up for everyone: the average for the entire industry is now 100 days. But the G8 and ASTRA still manage to stand out. Pontiac dealers have enough G8s on hand to last for 283 days. And Saturn dealers have enough ASTRAs on hand to last for 411 days–more than an entire year.

I’ve never seen a days-supply figure over 365 before. Well, at least they’ll have cars on-hand if the government does as some are suggesting and provides a tax credit for people who buy fuel-efficient American cars. Except that the ASTRA is made in Europe.

A year ago, and again nine months ago and six months ago, the 2008 Buick Enclave, GMC Acadia, and Saturn Outlook–GM’s ”Lambda” large crossovers–had about half the repair rate of the 2007 Acadia and Outlook (the Enclave wasn’t offered as a 2007). A clear case of waiting for the second model year of a new design, right?

Maybe not. Three months ago there was a modest uptick in the repair rate for the 2008s, from 44 successful repair trips per 100 vehicles per year to 53. Meanwhile, the 2007s had dropped a bit, from a high of 100 a year ago to 84.

And in the latest results of TrueDelta’s Vehicle Reliability Survey, the 2008s increased again, to 63 successful repair trips per 100 vehicles per year, while the 2007s improved again, to 74. The 2008s still require fewer repairs, but the difference is no longer substantial–about one extra repair trip for every ten vehicles.

Both model years now have average repair rates.

This isn’t entirely bad news for the 2008s. If the 2007s are actually requiring fewer repairs in their second year on the road, then the 2008s should do at least as well as they age. Their repair rate should not continue to increase, and might even decrease now.

We’ll find out with the next set of results, in February.

The November results of the Vehicle Reliability Survey have been posted.

Two of the 179 full results are especially intriguing. Other sources of vehicle reliability information give the 2008 Infiniti EX35 and 2008 smart fortwo high marks–the Infiniti even placed first in its segment in one study.

Yet in TrueDelta’s latest results both models receive our new “red light,” to denote a high repair rate. What gives?

Most likely, the recency of the data. Others’ data was collected last winter or spring, when these vehicles were still very new. Our data covers through the end of September.

In the interim, fuel pumps started failing in EX35s, and shifters started getting stuck in park in fortwos. These failures don’t affect every car, but enough of them that the smart has an annualized repair rate of 88 successful repair trips per 100 vehicles, and the Infiniti racks up 136 per 100.

Neither is a major failure, but both sometimes require a tow. In both cases there have been other, scattered problems. But without these the cars would have received much lower (better) scores.

Both are also the sort of problem that an astute manufacturer will have already identified and corrected on recently produced cars. With TrueDelta’s quarterly updates, any improvement will be reflected soon after it occurs, quite possibly with the next set of results in February.