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General-motors

Ford to Unleash New Police Interceptor

There is no question that the Ford Crown Victoria Police Interceptor occupies a unique niche in the automotive market. Although the vehicle’s platform, which dates back almost 30 years, has been deemed too archaic to remain a part of Ford’s consumer lineup, it still represents a strong income stream in the form of fleet sales – particularly to police departments. It turns out that the Ford Crown Victoria’s ancient body-on-frame design gives law enforcement the reliability and ease of repair they need from a vehicle that sees significant miles and abuse over the course of its service life.

All good things must come to an end, however, and every indication was given that when the Ford Crown Victoria rode off into the sunset in the near future, the company would no longer be in the position to accommodate police fleets. It was only after the announcement that General Motors, sensing an opportunity to leap back into a more significant law enforcement role, would release a fleet-only edition of its overseas market Chevrolet Caprice that decision-makers at Ford admitted that it too would produce a specialty police vehicle to replace its venerable warrior.

Slated for sale in 2011, details on the new Ford Police Interceptor are still vague, but it will follow a rear-wheel drive, V8 design along with many optional police upgrades including bullet-resistant door panels, heavy duty accessories and a fire suppression system. The company plans on the new Ford Police Interceptor helping it to maintain the nearly 75 percent market share it currently enjoys in terms of sales to police departments.

Jeep, Mitsubishi Issue Recalls

It seems that hardly a week has gone by this fall season without yet another sweeping recall being ordered by a beleaguered car company responding to a serious safety issue. Perhaps the only solace that automobile owners can take is that the blame has been spread around to so many different brands, making it hard for anyone to escape a dealership visit.

The latest vehicles to be affected by the recall bonanza include those manufactured by Jeep and Mitsubishi. Specifically, 161,000 Jeep Wranglers fitted with automatic transmissions are missing a system designed to monitor the temperature of transmission fluid, which could theoretically become hot enough to boil and eventually start a fire. Jeep’s solution is to have those vehicles fitted with a warning chime and gauge that indicates overheated fluid, giving Wrangler owners the chance to park and wait things out. The recall is targeted at vehicles built in the 2007-2008 model years.

Mitsubishi’s recall is slightly less dramatic, but could have equally hazardous effects on the health of drivers. 29,353 Mitsubishi Lancer and Lancer Evolutions built in 2008 and 2009 may have issues related to the corrosion of their front-impact sensors. The problem is restricted to vehicles which have been sold or are registered in the so-called “rust belt,” that unfortunate grouping of states which deal with serious winter conditions involving the use of road salt. The sensors are sensitive to becoming coated with salt and water and then corroding to the point where they are no longer capable of properly deploying airbags in time. Mitsubishi is installing upgraded impact sensors on all affected vehicles.

General Motors to Start Paying Back Government Loans

In an announcement sure to warm the hearts of taxpayers, General Motors softened the blow related to news that the company had lost $1.15 billion in the third quarter of 2009 by simultaneously stating that it will start the repayment process associated with the government bailout it received earlier in the year. Total federal investment in GM has reach $50 billion, with the loans themselves representing $6.7 billion of that total.

While the company’s reported losses might seem staggering, they are composed largely of payments related to restructuring costs and the cost Delphi’s bankruptcy. The bright side of the equation is an almost $5 billion revenue increase compared to the second quarter of 2009, along with a surge in global sales numbers. GM’s decision to begin making loan payments now is well ahead of the scheduled due date in 2015.

Nissan Doubles Warranty Coverage on Expensive-to-Repair CVTs

Continuously-variable automatic transmissions (CVTs) are an order of magnitude more expensive to repair than their traditional automatic cousins. This is due to the fact that the mechanical innards of these devices must replicate a theoretically infinite number of gear ratios, versus the simple four to seven found in most other autos.

Nissan is a brand which has been pushing the use of CVTs quite hard across almost its entire product lineup, and as a result it has recently made a fairly bold move to extend the warranties on all of its CVTs from five years / 60,000 miles to ten years / 120,000 miles. Not only that, but the company will actually reimburse any current Nissan owner for their documented repair expenses related to any CVT work performed out of warranty and prior to the extension. This act of good will should not only generate positive vibes for Nissan amongst its existing customer base, but it will most likely also encourage more than a few potential buyers to take a chance on a continuously-variable transmission in a future Nissan purchase.

HUMMER to Launch H4, H5 Models

Hummer’s sales are currently experiencing the full extent of the anti-SUV backlash, with 64 percent fewer vehicles sold thus far in 2009 compared to 2008. That hasn’t discouraged the off-road brand’s new ownership group, Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd. from forging ahead with plans to flesh out the current Hummer lineup with some fresh blood. The company hopes to more than triple sales in 2010 with the addition of a more compact, two-door H4 model intended to appeal to lone wolf outdoor adventure types currently served by the Jeep Wrangler, and another smaller model dubbed the H5, which would be positioned as the company’s fuel saver.

Let's go straight to the bottom line here, shall we? Yes, General Motors claims revenue in the third quarter of 2009 improved by some $4.9 billion compared to the second quarter, as the company lost "only" $261 million (before special items). And operating cash flow was — in theory — in the black to the tune of $3.3 billion. And the General now purports to be sitting on a $42.6 billion pile of cash. And the company is even making noise about how it will start whittling down its government loans with a $1 billion payment next month.

But the most important thing to keep in mind when analyzing these results is that they are not being tallied using ye olde "generally accepted accounting principles." GM, recall, is no longer technically a public company, despite being owned by the U.S. public, so it doesn't have to worry about little things like that. And yet even with this advantage, the company was unable to rejigger its financial results to show anything comparable to Ford's third-quarter profit. I'm not sure if this is a failure of the imagination or something worse.

After all, even Toyota, which has had a relatively GM-esque year so far, claimed a profit in the third quarter, as did Honda, and Nissan was able to spin its losses into "better than expected" results.

Of course, GM has long been known for its rather lackadaisical approach to keeping its books, and this looks to be more of the same. But now more than ever there's just no excuse for it. Considering how much federal aid has been heaped on the General's plate, the company should be crystal clear with its financial reporting, not trying to take advantage of its status as a "privately owned" company to get around U.S. accounting standards.

It's especially frustrating because GM products seem to be gaining momentum in the marketplace, but it's hard to get a handle on how much momentum we're talking about when the financial results seem so hinky.

The General's mid-size crossovers — Chevrolet Equinox, GMC Terrain and Cadillac SRX — are turning in pretty spectacular results. October sales of the Equinox were up 176.9 percent and SRX sales increased 279.6 percent. The Terrain is a new entry, but it still racked up 2,994 sales in October, and if you play the game where you combine the sales of all three, GM's new mid-size crossovers accounted for 14,339 sales. For comparison, the combined October sales of the Ford Escape/Mercury Mariner were at 15,073 units; at Honda, putting together the Honda CR-V and the Acura RDX gets you to 16,619 sales. Simply put, GM is doing a very credible job in this very important segment.

In fact, General Motors recently announced a $90 million (Canadian) investment in the Equinox/Terrain plant — and is bringing back about 150 employees — to boost production of these two vehicles.

Even GM's aging car lineup has to be considered as holding its own: The Chevrolet Impala and Chevrolet Malibu are still among the top 20 best sellers. Not bad at all when you remember the Impala hasn't had a major redesign since 2006 and the current Malibu is already about three years old. Further, for all the buzz around the success of the Ford Fusion, the October sales score was 12,086 for the Chevy (up 11.1 percent) vs. 13,445 for the Ford (up 24.1 percent).

The Chevrolet Camaro debuted to big-time demand, too, moving more than 8,000 units in October. That's a lot of sales for what many considered to be something of a niche product, and, (don't need this comma--could use hyphens before and after numbers) if it continues to deliver these kinds of numbers, the Camaro could easily crack November's top-20 list.

As a result, despite axing four different divisions and going through bankruptcy, GM's third-quarter U.S. market share stayed flat as compared with the company's share in the first half of 2009.

And all of this is before the launch of cars like the Chevrolet Volt, Chevrolet Cruze, Chevrolet Spark, Cadillac CTS Coupe, Cadillac Converj and Buick Regal. All of these vehicles, even the delayed Cruze, should both attract customers and boost consumers' perception of GM overall.

Now, I've generally been a supporter of GM's upper management, but at this stage in the game, the contrast between the company's product/marketing efforts and the way it handled its third-quarter financial "results" is too great to ignore. This is a flat-out management problem, as was GM's mishandling of the Opel situation — not so much for backing out of the sale as for doing it in a way that will put a huge financial burden on the company as it tries to restructure its European division without German help.

So, when it comes to management, I've changed my mind: GM can — and must — do better if it hopes to turn things around in the U.S. market.