Here Come the Koreans
Korean automakers Introducing Key New Products

Look out Chrysler, here come Hyundai and Kia. The Los Angeles Auto Show kicks off the new year's Auto Show Season this week. (It used to be the Detroit show the first week of January, but like in so many other areas Detroit has lost its leadership.) Hyundai and Kia look to be among the stars.

The 2011 Hyundai Sonata will make its official North American debut in Los Angeles, and will be on sale early next year. This Sonata promises to add another level of refinement and more standard equipment. The biggest feature is a next-generation, direct-injected 2.4 liter engine with class-leading horsepower, torque and fuel efficiency. The Theta II engine is set to deliver 200 horsepower and 186 lb./ft. of torque, Coupled with a new 6-speed automatic transmission, the expected EPA numbers in the mid to large-sized Sonata are 23 MPG city and 35 MPG highway. For comparison's sake, its closest competitor, the Chevrolet Malibu, has a direct-injected engine of the same size that yields 182 horsepower and 172 lb ft of torque, just a half-step below the Sonata. Last year the Malibu was top dog, but this year, it not only gives up the power lead but also trails the Sonata by 2 MPG city & highway. For another comparison, the Chrysler Sebring uses an earlier version (172 HP) of the same engine as the Hyundai and a 4-speed automatic transmission,and the Chrysler only has an EPA rating of 21/30. The Theta II engine cost Hyundai $140 million do develop. Chrysler's lack of such an engine and lack of a competitive transmission to attach to it are huge reasons why Chrysler is oozing red ink in the billions.

Kia is bringing out a completely redesigned Sorento CUV. They just started building this model in a new factory in Georgia. The Sorento is a direct competitor to the Dodge Journey and Chevrolet Equinox. In a year or so, Hyundai will come out with a redesigned Santa Fe that's built on the Sorento's platform.

Kia recently came out with a new compact sedan, the Kia Forte, which replaces the not-so-loved Kia Spectra. IMHO, the Forte is the best looking small car on the market, and from the photos, the interior is at least competitive with the better end of the class. Whereas the Spectra was a generation behind the leaders with its engine and transmission. New engines and transmissions make the Kia Forte competitive with today's Civic, Corolla and Mazda3, and on the same level as the upcoming redesigned ford Focus and Chevrolet Cruze. Chysler doesn't even compete in the compact sedan segment.

Look for both Hyundai and Kia to gain market share during the coming year. Look for Chrysler to be the biggest loser.

This is apparently the 1,748,674th Most Influential Blog on the Web
Coverage of Aerosmith Lead Singer Controversy is Picked up Semi-Internationally

Last Wednesday, I posted an exclusive that Lou Dobbs was replacing Steve Tyler as Aerosmith's new lead singer. Amazingly, this turned out to be not exactly true, but nevertheless, the gist of my story was repeated November 13 in this post at newchristianvoices.com.

I maintain there was a kernel of truth in my report. Tyler will be gone for awhile, and Aerosmith will be looking for a replacement at least temporarily. (You know, like Tom Brady was a temporary replacement for Drew Bledsoe.) YOU may have a chance at the job. Do you have what it takes. The competition is tough, as you can see.

GM reduces Quarterly Loss to $1.2 Billion
Starts Year-end "Blowout" sale

GM announced that its 3rd quarter loss was down to $1.2 billion, due in part to Cash for Clunker sales. Fritz Henderson outlined past results and future plans. Judging from the picture of Fritz Henderson here from Canada's Globeandmail.com, GM's loss this year compares to a loss of $4.2 billion in last year's 3rd quarter. If you remember the heady days of November 2008, that was when GM officially announced to the world that it was running out of cash and begged the government for a bailout.

According to GM, next quarter will result in much worse cash flow. GM will have to pay billions in connection with Delphi's exit from bankruptcy, billions to the German government for the cancelled Opel sale, and will actually spend a billion on real restructuring.

GM also announced that it was beginning to pay off its debt to the United States' and Canadian governments. This would be a big deal except The company is just shifting money from the government-funded cash reserve trust fund to the governments to pay off some of the debt obligation. In other words, we're being paid back with our own money. I think Bernie Madoff gave them the idea.

As to the immediate future sales forecast. Henderson said that markets are turning upwards elsewhere in the worlds, but are running flat in the U.S. He estimates total light vehicle sales in the USA at around 11 million to 12 million next year. That compares to 13.2 million in 2008 and 16 million in 2007. Judging from the picture from The Globe and Mail, new Henderson marketing plan will involve marrying Prince Herbert off to Princess Lucky to get HUGE TRACKS OF LAND.

For more info on GM's financial position, check out this article at autonews.com.

Hof's Blog Exclusive: LOU DOBBS TO REPLACE STEVEN TYLER



Your intrepid reporter has put the pieces together for the bombshell story of the week, the month, the year. CNN anchorman Lou Dobbs will replace Steven Tyler as the lead singer of Aerosmith. Earlier this week, Steven Tyler dropped hints that he was leaving Aerosmith indefinitely to focus on solo projects (projects like meeting an important connection two or three times a day). Tyler tried to defuse the rumors by making a surprise appearance on stage with fellow "toxic twin" Joe Perry in Perry's side band, The Joe Perry Project, but Perry did not accept Tyler with open arms.



The real story came into focus today when CNN Anchorman and Aricept(tm) semisuccessstory, Lou Dobbs made a surprise announcement that he is retiring from CNN effective immediately. Initially there was speculation that Dobbs' immediate departure was due to a once-in-a-lifetime opportunity to use his vast expertise on the subject of birth certificates by taking a position with the vital records department of the State of Hawaii. Within the last hour, the story has come into sharp focus. Perry and the rest of the band is looking for an experienced frontman, one that could make a fool out of himself without falling off the stage and has at least 25% of his braincells left. Lou Dobbs fits these minimum qualifications -- barely, but he fits them. At first the band was concerned because Dobbs is 3 years older than Tyler, but he has fewer miles and his own microphone.

Photo credits: Dobbs, From the Left Blog. Tyler, theinsider.com Both used without explicit denial of permission.

The Chrysler Business Plan - The Good the Bad and the Ugly

I'll give new Chrysler CEO Sergio Marchionne credit where credit is due. Yesterday's 7-hour presentation on Fiat's plan for Chrysler was much more thorough and complete than the incompetent half-assed non-plans thrown up by the Old Chrysler and GM on Capital Hill last spring. That being said, all the Powerpoint slides in the world can't make up for the fact that first Daimler, then Cerberus, nickeled and dimed suppliers until Chrysler earned the worst quality ratings in the industry and at the same time gutted Chrysler's new product development pipeline. Marchionne had the unenviable task of convincing the world that the Chrysler Group has the horses and men to put Humpty Dumpty back together again.

Chrysler's core plan calls for a doubling of market share over the next five years. The company plans to be operationally solvent in a year, and in 5 years to have raised enough money to pay for a full line of product development and integration of Fiat-based vehicles, and at the same time, fully paying back government TARP money by 2014. How realistic is this plan? The key slide is this one, which I got from ttac.com.

It shows Chrysler's total sales of just under a million vehicles a year, and just under10% market share. This is the low point according to the business plan. By 2014, sales are projected to double to 2 million vehicles/year and a 14% market share. It's easy to draw a bar graph, but it's harder to sell 2 million cars a year, especially when your competitors aren't standing still.

Marchionne is forthright in admitting deficiencies in Chrysler's current models, and the product plan calls for quality improvements, nips and tucks in interior and exterior styling of current models, with these changes holding the line for at least the next three years until new models make an impact. The fact is, that other than a new Dodge Grand Cherokee coming out next year and a mini-compact Fiat 500 coming in just over a year, Chrysler has nothing new in the pipeline for the next three years, and Fiat-based models and others to come after that will have to be financed by hypothetical money to be raised by positive cashflow generated by sales of current models. (Marchionne bragged that Chrysler's cash on hand rose from $4 billion upon exit from bankruptcy in June to $5.7 billion at the end of September, but some speculate that the cause of that was an increase in accounts receivable that could neutralize the whole gain and then some.) Since Fiat has said it will not invest cash in the company, and the debt and equity markets aren't a realistic option for Chrysler, the only place left to go for capital is through internal cash flow generation, and in better times than we're now in Chrysler has not been able to generate anywhere near the cashflow needed to simultaneously revitalize its entire product line on an emergency basis.

I want to take my remaining space in this post with a quick analysis of some of Chrysler's current product lines and their competitive positions. So Chrysler thinks that a "refresh" of its higher volume products and the "wannabes" (Sebring, Avenger) will guide them to doubled market share? The obvious falsity of this assumption is what will kill the Chrysler business plan.

Let's start by looking at minivans. I drive a Chrysler minivan. I like it, but I'm not in the market for a new one, so I'm irrelevant. Toyota will unveil it's first full redesign of the Sienna since 2003 at the Los Angeles Auto Show in December, for introduction next year. Honda has a major update of the Odyssey set for next year as well. Chrysler thinks it will double marketshare with its current powertrains and some styling tweaks? Nagahappen.

The new Dodge Caliber will feature a new dashboard. Good luck going against next year's Euro-level Ford Focus and Chevrolet Cruze. What about the next generation Civic which should arrive sometime within the next 24 months?

The Ford Fusion already kicks the tail of the Avenger & Sebring. If Ecoboost is half that Ford says it is, the carnage will get worse. The new Sonata is supposed to be pretty good as well, rumored to be getting a direct-injected version of the "world engine" that's a generation ahead of the Chrysler cars.

The Grand Cherokee? There will be no shortage of premium quality SUVs with engines at least as competent as the new Pentastar V-6, and with better transmissions as well.

The Jeep brand as a whole will continue to get loyalist buyers, in roughly the same proportion that it now does -- unless, of course, oil prices spike, and then sales will go down.

The 300/Charger/Challenger? Again, some loyalist buyers, but for the most part, these cars have had their day in the sun and are fading out. Just about all of the full-sized competitors have come out with newer, more advanced models since the 300-series was introduced. Many of them will be on the second refresh before the 300 is updated.

Finally, saving the biggest dog for last, the Ram truck. The Ram 1500 was brand new last year, and the consensus is that it is a much better vehicle than the model it replaced. Unfortunately, due to brand loyalty, probably the hardest segment to gain market share in is the full-sized pickup niche. Look at Toyota, it put an all out effort recently and it returned middling results. The Ram is a good truck, but so are all of the major competitors. Lack of faith in the brand and a shrunken dealer base will make retaining current market share an uphill battle.

New product is the key to gaining market share. Look at the vehicles who had a great month in October. Hyundai, Kia and Subaru all had great results. They all have significant new models. Among the domestic makers, Ford and General Motors posted sales gains, but Chrysler was down 30%. The Ford Taurus, Buick LaCrosse, Chevrolet Equinox, all feature brand new metal and all did great. Chrysler had no new product and got creamed.

I wish Chrysler the best. I feel for the workers that I see every day. Chrysler stakeholders have to look at the world with impartial eyes and figure what will likely happen to the company, and how that will effect their future. In my opinion, I don't see how Chrysler is going to make it. I actually see this as a positive thing for General Motors and Ford. If they can pick up Chrysler's market share, and if they no longer need to compete with Chrysler's suicidal pricing, they will both likely benefit from Chrysler's departure from the market.

Chrysler Is Unveiling 5-Year Plan



In a press conference that is supposed to last from 11:00AM to 6:00PM EST (7 hours!) today, Chrysler CEO Sergio Marchionne is supposed to unveil the company's 5 year plan for getting on its feet. Autoblog is covering the conference with a live minute-by-minute play-by-play as if it were a Steve Jobsian WWDC dazzler. Marchionne may need to borrow Jobs' reality distortion field if the plan is going to be taken as credible by the auto industry and financial press. Chrysler's biggest problem will be surviving a new product drought that won't end until Fiat-based models start coming on line about three years from now. October 2009 sales seem to indicate that Chrysler will have increasing problems holding onto market share. While Ford, General Motors, and the industry as a whole reported slightly higher sales in October 2009 over October 2008, Chrysler's sales were down 30% for the period.

Nevertheless, Marchionne is quoted in the New York Times as saying Chrysler's financial condition is improving, stating that Chrysler had $5.7 billion in cash-on-hand at the end of September, compared to $4.0 billion that the company had in June when Chrysler emerged from bankruptcy. In separate news, Chrysler also announced a new buyout offer to 23,000 hourly workers, which is almost all of its remaining hourly workers. I haven't had the time to get into it. More later . . . .