TrueDelta

In January, Hyundai addressed consumer uncertainly by providing job loss insurance with every sale. Lose your job? Then return the car, and they’ll make up the difference between the trade-in value and what you owe, up to $7,500.

But only if you lost your job within a year of purchase.

Later they enhanced the plan. Lose your job, and they’ll make up to three payments while you look for another one. Don’t find a job? Then return the car.

This plan was given credit for a slight gain in Hyundai sales.

GM and Ford, desperately in need of sales, figured they’d better offer similar plans, since nothing else seems to be working. How do the GM and Ford plans compare?

First off, with neither of the new plans can you return the car if you lose your job. Instead, they’ll make more payments while you look for a new one. GM will make nine payments of up to $500 each. Ford will make 12 of up to $700 each. GM will do this if you lose your job within TWO years of buying the car, double the length of Hyundai’s plan. That’s good. Ford doesn’t say, so probably just within a year of purchase.

GM adds a second benefit: if the car is “upside down” when traded, they’ll make up the difference. Well, most of it. This is something like Hyundai’s original plan to cover negative equity, but with a number of important differences. First, you don’t have to lose your job. That’s good. Second, you have to have made at least half of the payments. Not so good. Your odds of being “upside down” are much lower in the second half of a loan. Third, you must trade the car in on another GM vehicle. Fourth, when assessing how much you’re upside down, they use “NADA clean retail.” And no dealer is going to offer anywhere near NADA clean retail on a trade unless you’re paying (at least) MSRP on the new car.

So, while GM’s value protection sounds good at first glance, it will be of limited value to anyone. Instead, it’s a way for GM to advertise something that seems valuable, at very little cost to them.

There’s room for a lot more value in all of these plans, so perhaps we’ll see better ones on coming months.

The Presidential Task Force on Autos released it’s New Path to Viability for GM and Chrysler. The administration has concluded that GM can come back strong after a restructuring, but that Chrysler must link up with someone else, specificially Fiat. So far, so good.

The problem:

“The new GM will have a significant focus on developing high fuel-efficiency
cars that have broad consumer appeal because they are cost-effective, have good performance and are
reliable, durable and safe.”

There’s a similar emphasis on fuel economy in discussing the products Chrysler will get from Fiat.

What’s with the fixation on fuel economy as the solution? These companies, especially GM, did not fail because their cars’ fuel economy is not competitive. Aside from a brief recent blip, car buyers are not heavily basing their buying decisions on fuel economy. TrueDelta operates a
real-world gas mileage survey. When people focus on fuel economy, we get more traffic. From this perspective, we’d love people to be fixated on fuel economy. Fact is, while some car buyers are, most are not.

If McDonald’s was in danger of going under, would the solution be limiting its menu to salads?

Washington clearly wants to believe that the only reason Americans aren’t buying more fuel efficient cars is that Detroit doesn’t offer them. This simply isn’t the case. McDonalds offers salads, and GM offers fuel-efficient cars. Bottom line is that most people simply aren’t buying them.

Force these companies to offer only highly efficient cars, and unless gas shoots up in price these companies will fail.

Just announced: due to pressure from the Obama administration, GM CEO Rick Wagoner will soon resign.

Personally, I don’t fault Wagoner, at least not more than I’d fault any conventionally-minded CEO. The problem wasn’t Wagoner per se, but the typical American way of doing business: decisions from the top when those with the most knowledge are much lower in the organization, rotating executives so often that they rarely have the knowledge and relationships necessary to do a great job, and so forth.

I’m not very hopeful that any new CEO will change these fundamental aspects of GM. But I’m ready to be surprised.

J.D. Power has reported that for the first time in 14 years Lexus didn’t get the top average score in their Vehicle Dependability Study (VDS). Instead, Buick and Jaguar tied for the top spot.

How did Lexus fall so far? Well, they didn’t. They’re only four problems per 100 cars (1/25 of a problem per car) behind the leaders. Not a meaningful difference.

But hasn’t TrueDelta been reporting a high repair rate for Jaguar’s latest model, the XF? Yes, but this is not a contradiction. The new VDS results include only 2006s in their third year of ownership. (Not the first three years, as many thing: the first and second years are not covered.) There was no 2006 XF.

More to the point, there were no new Jaguar designs in 2006. And what “they” say about car designs in their first year is often true.

In comparison, Buick had one mostly-new model in 2006, the Lucerne, and Lexus had two all-new models, the GS and IS.

So let Jaguar enjoy their top position while it lasts. The 2007 XK will probably put a dent in next year’s score. And in three years the 2009 XF will have an impact.

And Buick and Lexus? The Enclave will factor into Buick’s scores in two years. Based on TrueDelta’s current data, Buick will likely fall from the top but remain above average. The Lexus LS was redesigned for 2007, but they tend to avoid first-year bugs with this one.

Above all, it’s important to note what any survey covers. This one covers the third year of ownership. Want repair rates for cars after the warranty ends? Then you’re already in the right place.

Back in the 1980s GM, Ford, and Chrysler transitioned nearly all of their rear-wheel-drive cars to front-wheel-drive. The primary reason: front-wheel-drive cars inherently weigh a little less because there’s no need for a driveshaft running about half the length of the car, and reducing weight helps fuel economy. Other reasons included the superior space efficiency of front-wheel-drive cars, since the transmission and drivetrain don’t intrude into the passenger compartment, and safer handling on slippery roads.

These were major advantages in the 1980s. But do they remain true today?

Weight: here front-wheel-drive cars maintain an advantage, as there’s no gettiing around the extra weight of the driveshaft.

Space efficiency: here the disadvantage of rear-wheel-drive isn’t nearly what it was. Domestic cars traditionally had non-independent “live” rear suspensions. If both wheels hit a bump at the same time, the entire axle and driveshaft moved upwards with the wheels. So the floorpan of the car had to bulge upward quite a bit over these components to provide sufficient clearance. Result: a huge “hump” and greatly reduced cargo volume.

Modern rear-wheel-drive cars, on the other hand, have independent rear-suspensions. With these, the driveshaft and differential do not move when a wheel hits a bump, so the floorpan can fit much more tightly around them.

The transmission still extends rearward into the passenger area, but this is only a major factor for cars with bench front seats. These are very rare in recent years. Instead, even front-wheel-drive cars have large center consoles, sacrificing much of their additional space efficiency in the name of styling.

Winter driving: here as well the advantage of front-wheel-drive isn’t nearly what it was back in the 1980s. First off, modern suspensions, more precise steering systems, more balanced weight distributions, and today’s all-season tires all add up to far better handling than that of traditional domestic cars. Beyond that, you can buy excellent winter tires these days–I recommend them for any car that will frequently be driven in the snow–even those with all-wheel-drive. Finally, more and more cars have stability control as standard equipment. This electronic system selectively modulates the brakes to keep the car from fishtailing or otherwise deviating from your intended course.

How well does it work? This winter in Detroit I personally drove a Lexus GS 400, a powerful rear-wheel-drive car. It’s a 2000, so its stability control system is not as advanced as that on a new car. Even so, I experienced no trouble driving the car on snowy roads. Better than that, with rear-wheel-drive it’s possible to have a little fun in turns by giving the car just a bit more gas than is wise. Well, I had fun. My wife in the passenger seat, not so much.

Morale of the story: many of the advantages of front-wheel-drive are now history. But when will public perceptions catch up?

Back in 2002, Jaguar had to restate the power output of its engines in the U.S. because it had been using the DIN (German) rather than the SAE (American) formula for horsepower. Since 100 DIN horsepower are equal to 98.6 SAE horsepower, Jaguar’s “400-horsepower” supercharged V8 ended up being credited with a less impressive 390. (Why not 394? Apparently it wasn’t quite making 400 DIN.)

Well, it seems that VW never got the memo. I’ve been adding European powertrains for European cars, because we have some members outside North America who have been requesting them. To keep things consistent, I decide to enter SAE horsepower for these engines into the database. And it turns out that the figures VW and Audi publicize in the US are DIN, not SAE.

I’m not going to correct their official US figures, because this would be confusing. But as a result the figures will be a bit off for the US engines when these are viewed by European members.

Of greater concern: American car buyers aren’t getting quite as much horsepower as they think they are.

Honda announced pricing for the 2010 Insight hybrid today, and I rushed it into the database. The 2010 Honda Insight’s base price of $20,470 is over $2,000 less than the MSRP of a base 2009 Toyota Prius. This is the cornerstone of Honda’s strategy with the car.

But the 2009 Prius includes about $1,000 in additional standard equipment, and Toyota has a $500 rebate on it currently. Comparing the two with these adjustments, the Insight is about $975 less comparing base models and $625 less comparing loaded cars. So a gap, but not a large one. Especially when you consider that the Prius is much roomier.

The latter comparison, without the rebate:

Honda Insight vs. Toyota Prius price comparison

Not apparent here, because invoice prices aren’t known: Toyota dealers’ profit margins tend to be much broader, and they’re very willing to deal on the 2009s. So you might well pay less for a 2009 Prius than for a 2010 Insight.

With the price advantage not all that large, handling might instead prove the Honda Insight’s key selling point. I haven’t driven one yet, but read that the Insight handles considerably better than the Prius. Of course, that’s the old Prius: it’s being redesigned for 2010.

It wasn’t long ago that luxury cars were available with a cell phone built in. But, for many reasons, this isn’t the future. Instead, with cell phones and, more recently, music players like Apple’s iPod, the trend is to have these devices integrate with the car’s controls and audio system, but not to have them built into the car. Might the same eventually be the case with nav as well?

There are a few arguments in favor of building electronics into the car, chiefly lower risk of theft and no need to mess with cords. The main motivation for the car manufacturers: it’s more profitable to sell an electronic device than a port.

Of course, the last carries no weight with car buyers. And the arguments against built-in electronics are much stronger. People want to simply carry the same device with them all the time, whether or not they happen to be driving. They want to be able to upgrade their technology without buying a new car. And they don’t want to have to pay twice for two different phones or media players, when one will do.

And so, in the past few years, cars have increasingly offered ways to connect to portable electronics as options or even standard equipment. First we had aux-in ports and wireless Bluetooth, the former chiefly used for music players and the latter chiefly used for phones. The aux-in ports were usually free. The Bluetooth cost as much as $700, insane when you consider that Bluetooth earpieces can be bought for under $20. But a car maker’s got to make a buck, right? Also, some nav systems have come packaged with memory card readers, but these aren’t a convenient way to enjoy your music.

Most recently, owing to the success of the iPod, some cars offer full iPod integration. As I understand it, this requires either a proprietary port or a combination of USB and aux-in ports, a special cable, and software to integrate with the car’s controls. As an option, iPod integration can cost $400.

But this is clearly a product of the same line of thought that offered Bluetooth for $700. USB ports are very cheap, and the software isn’t complicated. So once the initial wave of profit skimming passes I suspect that iPod integration will be standard in most cars.

Well, it was bound to happen.Factory-to-dealer incentives have reached $10,000 in the past for some very expensive luxury models that failed to sell. But I’ve never come across a $10,000 rebate–until now. Saab is on it’s deathbed, with just a slim chance of surviving. So GM has amped up the rebates on remaining 2008 Saabs. The 9-3 Aeros and the 9-5 now have $8,500 rebates. And the 9-7X, which should never have been a Saab in the first place, gets a $10,000 rebate.

So if you’ve been wanting a thoroughly conventional midsize, oh-so-American SUV with a thin veneer of Swedishness…

Manufacturing productivity guru Jim Harbour recently suggested that GM’s and Ford’s problem is not manufacturing cost but that “they have a legacy of poor quality in the past, so they have to put $3,000 on the hood of a car because of lingering perceptions.” This is an argument heard frequently from Detroit’s backers lately, that GM and Ford (Chrysler not so much) are being evaluated based on cars they made decades ago, not cars they’ve made recently.

Is this true?

First, consider the real question:

How often, or at least how soon, does a car model have frequent enough or costly enough problems that the owner concludes that the car is a piece of junk?

Guess what: no one currently provides the stats needed to answer this question. Not even TrueDelta.com. Counting the number of (usually minor) problems during the first 90 days, as the industry’s most-watched metric does, isn’t going to answer this question. So people–on both sides of the issue–are basing their opinions on a handful of personal experiences or a limited amount of tangentially related information, at best. More often: hearsay, or even just what they want to believe to be true. To put it another way: we have no solid alternative to Harbour’s “lingering perceptions,” so people continue to rely on them.

We’d love to provide this information–but need more participants to do so. Even then, most of Detroit’s products that have low repair rates are still too new to tell how they’ll do over the long haul. We’re still years from being able to conclude how the Ford Fusion will hold up, to give one example.

Oddly, even though no one really knows how often various cars prove to be unbearably troublesome, few people seem to feel the need for better car reliability information. Why not?