At Beyond the KM, we find that automotive news is a love-hate sort of relationship. We loved the new Porsche Turbo, but we hate the new Kia Rondo (and every Kia for that matter). We love new safety devices like Mercedes S-Class radar-guided cruise control, but hate when it fails.

Thus the relationship continues this week when Ford announced that it was resurrecting the Taurus name. As we stated months prior, we LOVED when they ditched the Taurus, and we HATE that they are bringing back the nameplate.

It is not to say that Taurus is the worst name for a car, certainly, the Sable (also being resurrected) is worse, and Lamborghini does name many of their cars after bull fighting legends (think Murciélago and Miura). The problem we have always had is that the Taurus name, while having seen heavy investment over the years, still stands for mediocrity. Would a food maker name a new flavor of cheese “the moldy, stinky jack” ??? We don’t think so.

In essence Ford is trying to resurrect a car that is not selling well hoping that the mediocrity of its predecessor will not drive buyers further away. The move by Ford proves mediocrity in the marketing organization and will likely show that no matter how fanciful the name, if you are producing junk, people won’t buy it. American carmakers still don’t seem to take cue from the Europeans and Japanese that quality is more important than nameplate. Chevy NOVA anyone?

The big news today was of course DaimlerChrysler has announced massive layoffs – 16% or 13,000 – of their total US workforce at the Chrysler division. One article here. The layoffs come as Chrysler division struggles to bring costs under control and at the same time roll out highly successful products. Of late, Daimler’s US brand has successfully rolled out well-designed products, some of which have certain cachet to American buyers. Still, they have struggled to find mass-market appeal in key vehicles such as the Chrysler Crossfire and the Aspen. Most successful has been the 300C. A large part of this success can attributed to the designers – and the customizers who seem to “pimp” nearly every Black 300C to hit the road. God knows they aren’t buying the car for the amazing handling and braking (perhaps the 300C is meant to be a drag racer).

To return to the main point, European manufacturers are looking to cut costs. Most notably the changes are affecting Peugeot. Both Renault and PSA Peugeot-Citroën have gone from strong product lineups a few years ago to abysmal performance today. Sales are off and both companies are working to improve. Renault with the key ownership of Nissan is in a much different position than Peugeot. 2006 results showed that Peugeot sales slipped .7% to 1,960,000 from 1,995,000 the year prior. In line with these results Peugeot axed the CEO at the beginning of the year and has installed former Airbus and Saint-Gobain executive Christian Streiff.

Unlike Nissan-Renault’s Carlos Ghosn, who seeks to develop broad global alliances, Streiff is seen as a master of cost cutting. It is widely speculated that such cost cutting could come in the form of plant closure in France, Spain, or the UK as noted by the Financial Times earlier this month. Streiff could take two different approaches or a hybrid. One option would be to sell or spin off certain parts of Peugeot’s vertically integrated infrastructure, thus freeing up cash flow and at the same time driving cost competition among suppliers. A second, less likely, approach would be to adopt the aforementioned alliance schematic that Ghosn has adopted at Nissan-Renault.

We will continue to research and write about this topic for future articles, but we would close by noting that the auto industry is nearly cyclical in nature. VW with its governance problems, and Fiat with problems in every area, were considered in recent years to be quite poor off. VW has made a great comeback with 9.3% sales increase and Fiat’s turn around is also worth noting. Bottom-line is that the French automakers may be a bit down, but they are certainly not out.

Sources: Financial Times, January 9, 2007.
Examples of the latest Peugeot

The January 29, 2007 edition of Forbes magazine boasted of new technology to be seen in future automobiles. The article outlines a sort social networking for cars – a sort of MySpace if you will. To summarize, carmakers hope to charge consumers a premium to include technology, which allows cars up to 750 feet away to send data to each other such as vehicle location and rate of speed. Indeed the cars communicate with each other to identify an impending crash. In a way it is the same principle that Mercedes radar technology is employing in the latest S-class. In essence this is a sort of early warning system.

Other benefits might include marketing and entertainment opportunities say for example a sort of file sharing between cars as with video or audio files. Imagine pulling into a gas station and receiving a free video download for buying petrol and a car wash.

The downside is that data could be use in negative ways, for example, in a court case to prove speeding. Such wireless systems could also conceivable used to control a car remotely. Another side is that such technology could take a long time to proliferate, and it does not work so fantastically with only a small percentage of users. The Forbes article does point out that “significant improvements” will occur with as little as 7% of America’s 241 million vehicles on the road. Needless to say this technology is a long way off, but it’s this sort of innovation that will drive product growth in the future.

Forbes Article Here

Of all the senseless laws, speeding may be one of them. Still, it is a legal reality, and speeding is a social norm, worldwide. When we saw this article about a driver caught speeding at 172 m.p.h. in a Porsche Turbo, we couldn’t help but smile. Nice ride, nice speed. See the article here: BBC News.

The reason we analyse the story in this edition of BeyondTheKM isn’t because we are jealous (we are), rather the analysis to be made is the correlation to automotive advancement and the speed limit.

Point one: speed kills. A legal argument that is commonly made by legislators is that increasing speed limits increases the number of deaths related to speed. We have never seen irrefutable studies to this point, but we have to concede that driving, in general and at any speed, can kill. We can generally assume that a positive correlation exists between the increased speed and increased deadly accidents. It is also true that despite increased speed limits over the years, cars have gotten safer and deaths from speed is not correlated to that increase in some cases from 55 mph to 75 mph in many US states.

Point two: countries with high speed limits or none at all have a competitive business advantage. Talk to any Japanese GT race car driver and they will argue that Japan which has a lower average speed limit than Germany is slower to develop new car technologies related to performance and handling than their German counterparts. The anecdotal argument is simple. In a country with roads where people can travel 300 KM per hour, people will travel that, even at the risk of spending a little bit more on petrol. At those speeds, drivers must be better trained (a solution for legislators everywhere) and car companies must produce better cars.

We think that the advantages in handling, performance, and technology that Germans have over Asian and American counterparts give them an advantage in the marketplace. This is the reason why buyers will pay so much for BMW M, Audi S, and AMG series vehicles. Cars are better built, stiffer, have better engines and brakes because consumers demand to drive 300 KPH. Simple as that.

Lexus has recently launched an AMG division of it’s own called the F series. It seems that while decades behind the Germans, the Japanese are finally getting the hint. Speed may kill, but it also pays.