Greg Migliore
Autoweek — January 19, 2012 – 11:44 am ET

DETROIT — Corvette’s future is crystallizing as the temperature drops. The C7 was captured by spy shooters in cold-weather testing in the Great White North, and the profile indicates a wedge-like silhouette, curvy, slightly flared fenders and a potentially longer wheelbase.

Production of the next-generation 2014 Chevrolet Corvette will begin next year. These shots advance previous knowledge of the C7, which now appears to have been photographed in an actual body shell. Older pictures indicated the wider wheelbase but were C6-bodied.

These fresh shots from KGP Photography, posted by Autoweek, an affiliate of Automotive News, show the quad exhaust in the rear, the distinctive taillights and a prominent air intake in front. We also expect the C7 to employ an all-aluminum frame and perhaps some carbon-fiber techniques.

But, insiders have noted that the Corvette is a reasonably light car already, and Lamborghini or McLaren-style techniques might not be necessary.

The engine is also a source of much speculation, and a twin-turbo 5.5-liter V8 is a strong possibility. Currently, the top-end Corvettes run 6.2-liter V8s. A seven-speed manual transmission is also a possibility.

Interestingly, these shots appear to offer an authentic first look at the styling direction of the C7, as it’s heavily clad with both camouflage and dark armor.

The sightings come as Chevy announced plans last week for a 427 convertible, which draws Z06 power into an open-air configuration, and a 60th-anniversary edition to celebrate the final run of the C6. This car will have a shortened model year.

General Motors said in May that it will spend $131 million and will add 250 jobs to improve the Bowling Green, Ky., factory that builds the Corvette. That’s a dramatic increase from the $39 million spent in 2005 when the site changed over to produce the C6.

Pop quiz: Which brands and nameplates died in 2011?

December 29, 2011 – 12:58 pm ET

Rick Kranz is product editor for Automotive News.

The auto industry runs fast and furious. Each year there are winners and losers.

If you are looking for a New Year’s Eve game to test your friends’ automotive IQ, here’s an idea. Get some pencils and paper, and ask them to write down what automaker, brands and nameplates were dropped in 2011.

Give 10 points for naming the automaker correctly, eight points for naming each brand, and five points for each nameplate.

This calendar year marks the end of one automaker, two brands and 26 models, according to a list that appears on the Motor Trend Web site.

Specifically, Saab’s automotive history ended when the automaker filed for liquidation in a Swedish court recently.

Daimler AG pulled the plug on Maybach, its ultrapremium brand, and Ford Motor Co. dropped Mercury, a brand that was little more than a Ford.

By the way, while the Lincoln Town Car sedan was killed off, the Town Car name will appear on a livery version based on the MKT next year, so I did not include it on this list.

These are the nameplates — some with a legacy of decades — that were abandoned in 2011:

Buick Lucerne

Cadillac STS

Chevrolet Aveo

Chevrolet HHR

Dodge Caliber

Dodge Dakota

Dodge Nitro

Ferrari 612 Scaglietti

Ford Crown Victoria

Ford Ranger

Honda Element

Mercury Grand Marquis

Lotus Elise

Lotus Exige

Mazda RX-8

Mazda Tribute

Maybach 57

Maybach 62

Mitsubishi Eclipse

Mitsubishi Endeavor

Saab 9-3

Saab 9-4X

Saab 9-5

Tesla Roadster

Volvo S40

Volvo V50

I hope you and your friends enjoy playing the game.

Happy New Year!

You can reach Rick Kranz at rkranz@crain.com.

December 8, 2011 – 11:05 am ET

WASHINGTON (Bloomberg) — The number of people killed on U.S. highways fell for the fifth consecutive year in 2010, marking the longest streak of declines since records began in 1899.

Fatalities dropped 2.9 percent to 32,885, the lowest since 1949, the Washington-based National Highway Traffic Safety Administration said today in an e-mailed statement. Deaths of motorcyclists, pedestrians and large-truck occupants increased.

“While we have more work to do to continue to protect American motorists, these numbers show we’re making historic progress when it comes to improving safety on our nation’s roadways,” U.S. Transportation Secretary Ray LaHood said in the statement.

LaHood, who has made distracted driving his signature cause, also narrowed the way U.S. regulators quantify whether distractions such as talking on a mobile phone or sending text messages contributed to the reasons for a crash. Using the new measure, 3,092 deaths, or 9.4 percent, of 2010 road fatalities were related to driver distraction.

The fatality rate, or the number of people killed per 100 million vehicle miles traveled, fell to 1.1 last year from 1.15 in 2009.

In 1899, when the government first reported the statistic, 26 people died in motor-vehicle crashes.

Steve Rothwell
November 18, 2011 – 1:49 pm ET

LONDON (Bloomberg) — McLaren, the U.K. motor-racing team that trails only Ferrari in Formula One victories, is switching its pursuit of the Italian icon from the track to the road.

McLaren on Thursday opened a 50 million-pound ($80 million) factory that will allow mass production of a 200-mile-per-hour street-legal model selling for 168,500 pounds ($266,000) as it seeks to translate sporting success into 4,000 car sales a year.

Only a handful of teams in the history of motor sport have managed to leverage triumphs on the track to build a manufacturing business. Ferrari’s cross-over success remains unique among competitors in Formula One, the world’s richest race-car series with annual revenue of $1.1 billion and a television audience averaging 50 million for each grand prix.

McLaren will “find it tough because there are lots of well-established brands already in that sports-car space,” said Mark Jenkins, co-author of “Performance at the Limit: Business Lessons from Formula One Motor Racing” and a professor of business strategy at Britain’s Cranfield University. “Motor sport technology is very, very high end and to move into road-car production you’ve got to be far more low-cost.”

Tony Jardine, who was a manager at McLaren before Executive Chairman Ron Dennis took over in 1981 and also worked for Lotus and Brabham, reckons the new MP4-12C model, which will sell at 35 dealers worldwide, including nine in the U.S., is a winner.

“They’ve done a massive amount of work to ensure the car is really amazing,” he said. “It looks like a fantastic product.”

‘Difficulty of survival’

McLaren opted to begin volume production with a program it estimates will cost about $800 million after efforts to harness race-bred technology for other uses had limited success. While the company’s electronics are used throughout world motor sport from Formula One to Nascar and IndyCar, the market is worth only about 20 million pounds a year, Dennis, 64, said in an interview at the new factory in Woking, England, pushing it to take a bolder step to safeguard the future.

“When you look down the pit lane, as I’ve been doing for a great many years, and you see that the only brand consistently there is Ferrari, you realize the fragility and the difficulty of survival,” he said. “So that meant diversification.”

2,000 sales

Dennis said he’s continuing to seek new investment after cutting his stake in McLaren Group, owner of the Formula One team, to 25 percent and spinning off the production-car venture as McLaren Automotive, in which he has an 18 percent stake. Bahraini sovereign wealth fund Mumtalakat Holding Co. is the biggest shareholder in both enterprises.

Established by New Zealander Bruce McLaren in 1963, McLaren entered Formula One in 1966 and won its first race in Belgium in 1968. Forays into manufacturing to date have been limited to a venture with one-time investor Mercedes and the F1 supercar, which had a production run of 106 vehicles and was the costliest auto of the 1990s at 540,000 pounds.

With a 240 mph top speed, it was also the fastest until the Bugatti Veyron in 2005. McLaren’s new model will arrive in U.S. showrooms by year’s end as production accelerates. The company has presold 2,000 cars, with 250 already delivered to European clients from existing facilities at the adjoining McLaren Technology Centre, where its Formula One racers are made.

Ferrari blueprint

“McLaren is following the Ferrari path of building a brand around racing and exporting that into the road-car sector,” said Jenkins. “They came at it a different way with the F1, which was a very specialist supercar, not mass market, and really are now trying to more seriously develop their brand in that area.”

Ferrari, founded as a race team in 1929, didn’t make a road-going auto until 1947, three years before the first Formula One championship. Based in Maranello, northern Italy, it has won 15 driver’s championships, three more than McLaren.

Most other specialist race teams have stuck with the track, and those embracing mass production have generally struggled, among them Lotus of Norwich, England, which was rescued first by General Motors Co. and then Malaysia’s Proton Holdings Bhd. Ferrari itself was bought by Fiat S.p.A., Italy’s biggest manufacturer, in 1969, providing funds to help develop cars such as the Dino, its first high-production model.

Toyota flop

Other carmakers come to Formula One as established global manufacturers looking to bolster the prestige and sporting credentials of their road cars. Ford Motor Co. bought a team from former driver Jackie Stewart in 1999 to promote the Jaguar brand it then owned before selling the team in 2004 to Austrian drinks company Red Bull GmbH, which subsequently won the world title.

Dennis reckons Toyota Motor Corp. spent 3 billion euros ($4 billion) over eight years without winning a single race. Renault SA and Daimler AG’s Mercedes unit are among 12 teams competing in this year’s world championship.

McLaren’s push into manufacturing envisages developing eight models and variants in coming years, it said Thursday. Dennis’s goal is to build 4,000 cars a year within five years, equal to almost two-thirds of Ferrari’s anticipated 6,500-vehicle output for 2010 and three times deliveries at Volkswagen AG’s Lamborghini unit.

Sales of ultra-luxury brands are projected to rise 19 percent to more than 28,000 this year, seven times the 2.7 percent gain in overall deliveries, according to consultant IHS Automotive, with companies insulated from a slowdown by limited production runs that aim to restrict supply and buoy prices.

Early glitches

The first examples of the MP4-12C suffered glitches including malfunctioning satellite-navigation systems and software that drained batteries. Those issues, which McLaren says have been resolved, are not unusual in early-build supercar models, according to Jardine.

“Ron Dennis’s attention to detail is legendary and I expect to see that philosophy in the road cars,” he said. “If you want a raw gear change and raw noise you’ll buy something more basic, but with McLaren you’re going to get sophistication.”

Williams Grand Prix Engineering Ltd., the third-ranked Formula One team with seven drivers’ championships, is sticking with McLaren’s old strategy of technology transfer, contributing to the C-X75 electric supercar being developed by the Jaguar Land Rover luxury unit of India’s Tata Motors Ltd., which will sell from 700,000 pounds and reach 60 mph in three seconds.

China, India

The success of McLaren’s MP4-12C in the showroom may hinge on Formula One’s penetration of emerging markets, particularly in the Middle East and Asia, according to Cranfield’s Jenkins. The series has added races in China, Singapore and South Korea in recent years and last month staged the inaugural India Grand Prix at the Buddh International Circuit near New Delhi.

That in turn increases the pressure to win on the track and build a bigger following. With one grand prix left, McLaren’s Jenson Button ranks second and Lewis Hamilton fifth in this year’s championship, which was already won by Red Bull’s Sebastian Vettel with four races remaining.

Dennis says it’s McLaren’s long-term success that counts.

“The Formula One team is our advertising budget,” he said. “Since 1966 we’ve won one in four of the races we’ve competed in and had a driver on the podium half the time. That’s a very good statistic when you’re trying to attract investment, and it supports the concept that we make good sports cars as well.”

Jake Lingeman
AutoWeek — October 25, 2011 – 2:23 pm

DETROIT — Details about the high-performance 2012 Chevrolet Camaro ZL1, taken from the dealer ordering guide, are spreading on the Internet courtesy of fans on the Camaro5 message board.

A GM spokesman today confirmed the leaked specifications were authentic.

Here are some of the highlights:

• The LSA supercharged 6.2-liter V8 will deliver 580 hp and 556 lb-ft of torque on premium fuel. It will connect with a Tremec six-speed manual transmission as standard, while a Hydra-Matic six-speed automatic will be optional.

• The Camaro ZL1 is longer and wider than the current Shelby Mustang GT500 and weighs in at 4,120 pounds.

• The ZL1 gets an aluminum hood with carbon-fiber “Mohawk” insert, which GM says needs to be cared for carefully.

• The lighting package will be unique and will include dual fog lamps, separate daytime running lights and HID headlights with halo rings. A lower splitter will reduce lift while the larger and lower front grille opening will provide more cooling power.

• GM also notes that the Camaro ZL1 sits lower than the Camaro SS, so buyers will need to be careful around high curbs.

• For wheel packages, the ZL1 offers two 20-inch options, a 10-spoke and a five-spoke wheel. Both measure 10 inches wide in front and 11 inches in back. The five-spoke set has a polished face with a high-gloss clearcoat. The Goodyear Eagle F1 Supercar G2 tires come with an extra bit of rubber overhanging the rim to prevent damage on curbs.

• The ZL1 will have a head-up display. Shift lights are included, as are a lateral g meter that holds the value to give you a chance to look before the next corner. A gear indicator is available on cars that have automatic transmissions.

• In addition to the Magnetic Ride Control that is also used in the Cadillac CTS-V and the Chevrolet Corvette, the ZL1 also will get Performance Track Management. PTM features five modes ranging from wet with a touring suspension setup to race mode with track suspension stiffness. Brembo brakes will bring everything to a halt.

• Buyers have a choice of nine colors.

• The Camaro ZL1 coupe will arrive at dealerships early next year with a price expected to fall in the low-$50,000 range.

Meghana Keshavan
and Bernie Woodall
Automotive News — October 17, 2011

DETROIT (Reuters) — A bright red Ford Focus sits illuminated on a platform just outside the automaker’s Wayne, Mich., assembly plant, a proud symbol of the company’s success in reinventing itself under CEO Alan Mulally.

The plant, which is just a 15-minute drive down Michigan Avenue from Ford Motor Co. headquarters, has become an emblem of the automaker’s turnaround under Mulally.

So when workers at the Wayne plant voted to reject a proposed four-year contract negotiated by the UAW, it registered as a jarring slap to the CEO’s vision for a unified company he calls “One Ford.”

“I think they’ve finally pushed us to the point that we have to do something,” said Kevin Branham, a 49-year-old metal finisher at the plant. “This vote, it’s a matter of people speaking out.”

The Ford contract seemed set for ratification after UAW leaders stepped up their lobbying for the deal. By Sunday, the “yes” votes had accounted for 62 percent of all those cast.

But the surprisingly fierce debate over proposed, four-year contracts at Ford and smaller rival Chrysler Group LLC over the past week has exposed a rift between lower-paid, entry-level workers and veterans, as well as anger over CEO pay.

The argument over wages and benefits for 67,000 unionized Ford and Chrysler autoworkers comes just two years after the Obama administration intervened to save General Motors and Chrysler from liquidation. The gratitude that many Detroit workers felt just after the bailout has given way to a frustrated sense that blue-collar workers have not shared equally in the industry’s comeback.

“There is a lot of anger at Ford right now, and also a lot of anger at the union,” said Brandon Gustafson, a 40-year-old assembly line worker at a Ford plant in Minnesota slated for closure just before Christmas.

With the national unemployment rate stuck at around 9 percent and the risk of a renewed economic downturn, UAW officials led by President Bob King have said the proposed contract is the best they can get.

Last month, GM workers ratified their own four-year deal by a 2-1 margin. But the debate over parallel deals at Ford, the strongest of the Detroit automakers, and Chrysler, the weakest, has turned bitter.

A final ratification vote tally is expected by Wednesday for Ford and later this month for Chrysler.

‘Wait until 2015′

In union halls and on Facebook, UAW officials have said that rejecting the Ford contract would risk a strike, where workers would take home only $200 a week.

By contrast, the Ford contract would give workers $16,000 in bonuses over four years, including $6,000 at ratification.

Many veteran Ford production workers are unhappy with the lack of a base wage raise since 2003; they now make about $28 an hour. Mulally’s compensation, including a 2010 package worth $26.5 million, has also been a flashpoint, workers say.

“We know Ford is profitable,” said Scott Houldieson, secretary-treasurer of UAW Local 551, which represents the Ford Chicago assembly plant that makes the Explorer SUV and the Taurus sedan. “We know they are paying their executives handsomely. We know that a decent wage for us would not hurt Ford’s bottom line.”

Another sore point: Many Ford workers had hoped the contract would resolve a grievance over pay that salaried employees received, but hourly workers did not. An arbitrator is expected to decide on the issue in mid-November.

Analysts have said the contract at GM and the proposed deal with Ford would cap costs and link the pay of blue-collar workers more directly with performance. But there is a risk for investors that the kinds of deals negotiated in recent months will not hold up in 2015, when workers at GM and Chrysler will have won back the right to strike.

“Wait until 2015, when the chains come off,” one Chrysler worker wrote on the union’s Facebook page.

The undercurrent of frustration stood out at Ford’s Wayne plant, where the automaker invested $550 million for retooling at the peak of the auto industry’s crisis in 2009.

The bet at the time was that a once wildly profitable hub for full-size SUVs could be made over to produce the small Focus and a battery-powered, electric variant.

Directing the anger

Ron Andrus, 56, a Wayne worker, said many at his plant were on edge over the prospect of a strike. “It’s all scary as to what’s going to happen,” he said.

Some union officials have suggested workers direct their anger to the national economic debate. The UAW has endorsed the Occupy Wall Street protest and helped stage an “Occupy Detroit” rally.

“The Ford workers are angry for the same reasons a lot of the people are here,” said Jaron Garza, a UAW-represented GM worker as he stood in a downtown Detroit park with more than 1,000 others in support of the Occupy Wall Street protesters.

“A lot of the bigger companies, banks and whatnot, have been taking, and the middle class has been bearing the brunt of the recession and the aftershocks that we are still feeling now,” Garza said. “People are angry, and they think they’ve got something coming.”

GM says the ’69 Camaro influenced styling for the fifth-generation Camaro, which was introduced in 2009.
Mike Colias
Automotive News — September 14, 2011 – 11:08 am ET

DETROIT — Chevrolet fans have spoken: The greatest Chevy ever was the 1969 Camaro.

That was the winner from votes cast by 124,368 people in a four-round, bracket-style tournament. The ’69 Camaro got 25,058 votes, edging the 1970 Chevelle SS in the final round, General Motors said in a statement today.

Other vehicles that went deep in the tournament were the 1957 Bel Air and the 1953 Corvette. General Motors ran the contest to coincide with Chevrolet’s 100th anniversary next month.

Tom Peters, Chevrolet design director, said the ’69 Camaro represents “timeless design” and influenced styling for the fifth-generation Camaro, which was introduced in 2009.

Print Respond to Editor Reprints Marketing
Bradford Wernle
Automotive News — September 9, 2011 – 12:12 pm ET
DETROIT — Dodge is launching a new TV and digital ad campaign for its Journey crossover today, positioning the vehicle as the “Search Engine for the Real World.”

The campaign features a treasure hunt: Dodge has hidden three Journeys around the country and customers who find the vehicles get to keep them.

The first vehicle is hidden somewhere in the western United States. The TV spots will encourage customers to go to www.youtube.com/dodge for clues. The clues will feature bits of scenery and other local hints — perhaps a motel or a cup of coffee in the cupholder from a local coffee shop — to help searchers find the vehicles.

Dodge believes the first vehicle will be found in the West before the hunt for the second Journey begins Sept. 16 in the Midwest. The final Journey will be hidden in the East starting on Sept. 23.

The campaign — created by Dodge agency Wieden+Kennedy of Portland, Ore. — shows Journeys traveling through scenic American landscapes. It features the edgy voice of TV actor Michael C. Hall encouraging drivers to break away from their wired lives and get out to explore the real world.

The voiceover says: “People don’t make a list of the Web sites they wanna see before they die. They don’t fill photo albums with pictures from an online search. Like being there is not like being there. It’s OK. The Internet will be just fine without you. That’s why we built the first search engine for the real world — the Dodge Journey. And then we left three somewhere out there. If you can find one, you can have one. You won’t find any of them online, but it might help you figure out where they might be.”

Fall ad blitz

The Journey is one of seven core vehicles Chrysler Group is focusing on during an autumn 2012 ad blitz. The others include the Chrysler 200, 300 and Town & Country; Dodge Grand Caravan; Jeep Grand Cherokee; and Ram pickup.

The strategy was announced to dealers by Reid Bigland, who was named CEO of Dodge brand and chief U.S. sales executive in June.

Bigland kept his title as CEO of Chrysler Canada.

One of Bigland’s early moves was to simplify trim packages in the Dodge lineup. One of those packages is the entry level American Value Package, which starts at $19,795, including shipping. That compares with an entry-level price of $22,995 for the 2011 Journey Express.

Dodge is working to position the Journey as “the most affordable mid-size crossover in America.”

Sales of the Journey are up 6 percent this year through August to 36,304 units.

Jesse Snyder
Automotive News

U.S. light vehicle sales eked out an 8 percent gain in August despite Hurricane Irene, economic headwinds and a maelstrom of Congressional debt debate.

As forecast, the seasonally adjusted annual selling rate came in at 12.1 million. That was higher than May and June, a tad lower than July, and well below the 13 million-plus pace at the start of the year.

Among the biggest players, Chrysler Group, including sales from the Fiat family, led the winners with a 31 percent increase; inventory-short American Honda had the steepest decline, 24 percent. Hyundai-Kia climbed a notch in the rankings at Honda’s expense, while Chrysler advanced at Toyota’s.

It’s still unclear how much Hurricane Irene hitting 13 Atlantic states last weekend affected auto sales. Paul Taylor, chief economist at the National Automobile Dealers Association, estimated Irene lopped 3 percent off the industry total, which wound up at 1.07 million units. General Motors said it lost about 1,000 units, while Nissan North America counted 3,000.

There was plenty of other bad news for buyers to overcome before that. The month started with Congress’ vicious debt-ceiling debate, followed by Standard & Poors’ downgrade of the U.S. credit rating, precipitous falls in public performance ratings for the President and Congress and a steep plunge in consumer confidence.

In that light, August provided some hope.

“There is a lot of pent-up demand,” said GM sales boss Don Johnson in a conference call today. “Consumers are being cautious but they are not out of the market. We think that will continue the rest of the year.”

Analyst Jesse Toprak of TrueCar.com says buyers are becoming more resilient to the steady drip of bad news.

“Consumers are getting accustomed to buying cars in a constantly volatile market,” he said.

Jeff Schuster, chief auto forecaster at J.D. Power and Associates, said the pace of sales faltered the third week of August, “but a flurry of late incentives gave us a bit of a lift.”

Hyundai-Kia outsells Honda

Hyundai-Kia Automotive’s 16 percent sales gain in August propelled it past quake-hit American Honda in U.S. auto sales for both the month and the first eight months of 2011.

The Korean twin automaker sold 99,693 units in August. Combined Honda and Acura sales fell 24 percent to 82,321.

For the year to date, Hyundai-Kia narrowly took over the No. 5 U.S. sales position, edging American Honda, 772,659 to 770,072. Hyundai-Kia’s sales rose 29 percent, while Honda’s slid 6 percent.

Chrysler (with Fiat) outsells Toyota Group

Including the Fiat, Ferrari and Maserati units of its new majority owner, Chrysler Group outsold Toyota Motor Sales U.S.A. in August.

Chrysler sales jumped 31 percent to 130,467 vehicles, while its quake-bit Japanese competitor slipped 13 percent to 129,482 Toyota, Scion and Lexus units.

That makes Chrysler No. 3 in U.S. sales in August, behind General Motors and Ford Motor. But for the first eight months, Toyota Group still has a substantial lead, 1,073,072 to 884,676.

Supply defines winners, losers (again)

Sales results for major players split again in August sharply by supply: double-digit losses for Toyota Motor Sales and American Honda, double-digit gains for everybody else.

American Honda’s 24 percent decline dropped its total to 82,321. Toyota Motor Sales fell 13 percent. Both automakers are firmly in negative territory so far this year: Toyota is off 8 percent and Honda is down 6 percent.

Chrysler Group, including Fiat sales, led the winners with a 31 percent increase — 28 percent when only Chrysler’s domestic brands were compared.

Nissan North America, less harmed by the quake than its main Japanese rivals, gained 19 percent. General Motors sales rose 18 percent, and it widened its lead over Ford Motor as the U.S. sales leader.

Ford sales rose 11 percent from a year earlier. The Ford brand was up 16 percent, and Lincoln volume climbed 25 percent. Volvo was sold in August 2010, so that comparison no longer hurts Ford. But year-earlier sales of another discarded brand, Mercury, are still hurting comparisons. Hyundai-Kia Automotive jumped 16 percent, led by a 27 percent jump at Kia.

Other brands mixed

Among the smaller players in the U.S. market, August was a mixed month.

Mitsubishi and Suzuki posted the largest percentage gains. But both are coming off very low bases after poor years in 2010, so the jumps of 86 percent for Mitsubishi and 32 percent for Suzuki still leaves them with low market shares.

Volvo gained 17 percent and Volkswagen 11 percent. Mazda was 15 percent higher. Porsche matched the industry’s 8 percent increase.

Daimler, maker of Mercedes-Benz and Smart vehicles, edged up 3 percent while BMW Group sales were flat. Overall, Jaguar Land Rover lost 9 percent, but that averaged out from a 10 percent gain by Land Rover and a 43 percent fall for Jaguar.

Subaru, still product-short after the quake along with Toyota and Honda, fell 6 percent.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20110901/RETAIL01/110909970/1448#ixzz1XBt6DvfZ

Automotive News Europe — August 30, 2011 12:49 CET
DETROIT — BMW AG, facing higher fuel-efficiency requirements under the Obama administration, is bringing four-cylinder engines back to the United States 12 years after it quit offering the slow-selling option.

BMW says it will offer a four-cylinder engine in its Z4 roadster and 5-series mid-sized sedans when they begin arriving at U.S. dealers in October, and the company says more nameplates will get the smaller engine with the Munich-based automaker’s TwinPower turbo.

BMW dropped the engine from its 3-series line in 1999, when gasoline cost $1.14 a gallon.

“It wasn’t in line with our image, because it didn’t have the performance of the six cylinder,” said Jim O’Donnell, head of BMW’s U.S. operations. “We were selling ourselves as the ultimate driving machine and really it wasn’t. Now that the engines have developed so far, it’s not an issue at all.”

BMW, this year’s top-seller of luxury autos in the United States, joins Daimler AG’s Mercedes-Benz and Volkswagen AG’s Audi in bringing new turbocharged, four-cylinder engines to the world’s second-biggest market as the Obama administration pushes the industry for increases in fuel efficiency to reduce dependency on imported oil.

The U.S. corporate average fuel economy, or CAFE, requirement is rising to 35.5 mpg by 2016 and to 54.5 mpg by 2025. It increases to 30.1 mpg this year, according to the U.S. Environmental Protection Agency, up from 27.5 mpg in 2010.

Regulatory driven

“CAFE is definitely driving this,” O’Donnell said in an interview in Monterey, California. “This is huge for us. If we get this wrong, it screws up all of our plans in the U.S.”

BMW’s CAFE rating for passenger cars was 29.9 mpg in model year 2011 and 25.5 mpg for its light trucks, according to the National Highway Transportation Safety Administration’s Web site. Daimler’s CAFE for passenger cars was 26.9 mpg and 21.1 mpg for light trucks.

Failure to meet U. S. requirements produces fines of $55 per mile below the requirement multiplied by the total number of vehicles sold, Greg Schroeder, a research analyst at the Center for Automotive Research in Ann Arbor, Michigan, said in a telephone interview.

Selling 200,000 vehicles with a CAFE 20 mpg below the target, for example, would lead to an annual fine of $220 million. “As the fuel economy doubles they have to change their plan,” Schroeder, the industry analyst, said. “They’re going to have to improve fuel economy, they can’t just sit and pay fines forever.”

Mercedes paid fines totaling $2.94 million in 2009, according to NHTSA’s Web site. BMW paid $5.1 million in fines in 2006, the site said.

Ignoring customers

While consumers have been demanding more efficient vehicles as gasoline prices approached $4 a gallon this year, it isn’t clear that fuel prices will remain high enough to keep demand in line with rising fuel-economy standards.

Analysts including Tom Libby of R.L. Polk & Co. see a risk of the government pushing the industry to make cars that people don’t want to buy.

“A lot of these powertrain decisions and product programs we’re seeing going forward, people will be thinking, ‘Gee, why would a customer want that?’ ” said Libby, who studies the industry for Woodcliff Lake, New Jersey-based Polk.

As the market shifts to smaller engines, brands such as BMW may have some advantage with image of “being more fun or emotional than some of the other luxury brands,” he said. The average cost of regular unleaded gasoline in the U.S. was $3.61 on Aug. 28, down from $3.99 on May 4, according to the AAA’s Daily Fuel Gauge Report.

3-series engine

BMW’s 3-series line, which includes coupe and wagon versions as well as the sedan, will be sold again with a four-cylinder engine, said a person familiar with BMW’s plan. Within two years, the smaller engine may make up half the 3-series models sold in the United States, said the person, who asked not to be identified because the plans aren’t public. As much as 40 percent of the company’s U.S. sales may end up being four-cylinder models, the person said.

Robert Filipovic, BMW advanced market research and strategy manager, declined to comment on planned uses for the smaller engine. BMW is on pace to become the top-selling luxury auto brand in the United States this year. Deliveries through July rose 13 percent to 135,114, placing it 5,182 sales ahead of Mercedes. Deliveries by Toyota Motor Corp.’s Lexus brand, No. 1 in the U.S. for 11 years, fell 19 percent to 102,549 through July because supply was limited by Japan’s earthquake and tsunami in March.

Mercedes, Audi

Mercedes will offer a new gasoline direct-injection, four-cylinder turbocharged engine in the entry level C-class sedan and coupe in October and SLK250 roadster early next year. Volkswagen AG’s Audi brand has added a small engine to its redesigned A6 mid-sized sedan, joining a lineup of four-cylinder models.

“It’s a more efficient engine in terms of fuel economy,” said Schroeder, the analyst at the Center for Automotive Research. “They have to do something to improve fuel economy and that’s one of the easier ways to do it.”

In 1999, BMW’s final year with four-cylinder engines in the U.S., it sold fewer than 900 of the 3-series cars with the smaller powertrain, down from 21,078 of them in 1995, according to BMW.

“The challenge really is for us as a company and you as media to look at how we describe performance, which tradition would tell is the number of cylinders and how big they are, and that determines a premium car or a high-performance car versus another car,” Ian Robertson, head of BMW sales, said in Carmel, California. “That is not the relevant measure anymore.”

Faster, Thriftier

Consider the new Z4. While the horsepower in the new four-cylinder Z4 falls 6 percent to 240 hp from the previous version’s six-cylinder, the torque increases 18 percent. As a result, the roadster equipped with a manual transmission can accelerate from zero to 100kph (62 mph) in 5.5 seconds, 0.1 second faster than the 2011 model with six cylinders, the company said in a presentation.

BMW hopes to get almost a 20 percent fuel-efficiency improvement with the Z4, said Filipovic, the strategist. The mid-sized 5 series, which begins production with the small engine in September, will probably have similar horsepower as the previous six-cylinder version with 13 percent more torque, BMW said. It should accelerate faster, slicing 0.4 seconds from its zero-to-100kph time. BMW expects to get better than 32 mpg, Filipovic said. Mercedes’s last four-cylinder offering in the United States came in the 2005 model year C class.

“The consumer trend really demanded the V-6,” said Sascha Simon, manager of advanced product planning at Mercedes-Benz in the United States. “People didn’t want to touch the four cylinder.”

Better technology

Advances in engine technology allow for better performance from smaller engines, executives at both BMW and Mercedes said. Mercedes expects mileage on the C-Class with the four-cylinder to improve to 31 mpg on the highway from 24 mpg with the six- cylinder vehicle, Simon said.

They’ve “really enabled us to harness more of the power that is in the chemicals that you burn in a combustion engine,” Simon said. “Future four-cylinders that we are going to launch in the next years will have higher output and horsepower than today’s V6s and at the same time, while you get that higher output, you can actually save fuel.”

Source: Bloomberg