Economic Downturn Hits Automakers Hard

The economic downturn that has been pounding the U.S. lately, along with tightening of the credit industry, has hit automakers hard. In this last month, every automaker took a beating. Sales across the board dropped 27% over the same time last year and the casualties are piling up:

• Chrysler has put the Viper brand up for sale
• GM put a For Sale sign on Hummer
• Ford is dropping Jaguar
• GM's oldest American dealership, Bell Motors, founded in 1923, has closed its doors.
• GM's largest dealership, Bill Heard Enterprises, which at its peak, had revenues of $2.5 billion, has filed for bankruptcy and has closed it remaining 13 stores.
  
• Dan Towbin's Hummer dealership in Las Vegas (one of the largest Hummer dealers in the U.S.), is the 8th Hummer dealer to close. Don't despair though, Dan is reopening - selling Smart cars and Vespa scooters.
• Volvo, Ford, and GM are closing plants that make low selling vehicles.
• PPG has closed plants.
• Dura Automotive has filed for bankruptcy.
• Holley has filed for bankruptcy protection.
• ASC, Delphi, and others have also filed for bankruptcy protection.
• GM reported a $15.5 billion second quarter loss; Ford lost $8.7 billion.
  

Unfortunately, the forecast is looking pretty gloomy. It is estimated that as many as 400-500 U.S. car dealers could close their doors within the next few months. Auto sales are expected to remain flat or drop even lower, until at least 2010 as consumers struggle with tight credit, high gas prices, and the troubled housing market. While September posted huge losses for just about every manufacturer, the North American Three have seen sales down between 16 and 24% for the first eight months of '08 as well.

What does the future hold? While the news media have been following the $700 billion bailout of the U.S. banking industry, the $25 billion package for American automotive manufacturers seemed to pass by almost unnoticed. The bailout, signed by President Bush yesterday, allows automakers to borrow much-needed funds at half the market rate with no repayment schedule for 5 years.

All I can say is "hang on, it's going to be a bumpy ride."

Small Pickups Fail IIHS Side Impact Testing

Thinking about safety? Don't think about a small pickup if that's the case. If you've got a Chevy Colorado/Canyon, you might want to consider upping your life insurance policy.

The Insurance Institute for Highway Safety (IIHS) recently performed their first side impact tests on five of the most popular small pickups and for all but one, the results were nothing to brag about. In this day and age, most manufacturers should hide their heads in shame.

Point Number 1: The IIHS only has three grades for its tests; Good, Marginal, and Poor.
Point Number 2: The five trucks tested were the Dakota, Ranger, Frontier, Colorado/Canyon, and Tacoma.
Point Number 3: The Ranger, which has been around since the K car, did better than the Colorado.
Point Number 4: According to the IIHS, small pickups have the highest driver death rate of any vehicle on the road. Let me repeat that; small pickups have the highest driver death rate of any vehicle on the road.

Okay, so here's the scenario: it's a side impact test where the truck is stationary and a moving barrier with a deformable front end (representing the front of a pickup or SUV) strikes the pickup on the driver's side at a 90 degree angle at 50 kph (31 mph). Two important matters to bring to your attention (especially if you own, or are considering owning, a Colorado), the height of the barrier is below the heads of the dummies and the tests do not assess the risks of head injury from side impacts for SUVs and pickups. Now stop and reread this paragraph; that last sentence is really important, especially if you look back at Point Number 4.

So that basically is the test. One thing to add to this and that is that if side airbags are an option, the IIHS will, as a rule, test a vehicle without them unless the automaker wants to rerun the test with them and is willing to pay the cost of the vehicle to be crashed. The Ranger doesn't offer side airbags (it's the only one that doesn't), the Tacoma has them as standard equipment, but surprisingly, none of the other three automakers requested a test with airbags.

So let's take a look at how they performed. They only truck to get a Good rating was the Toyota Tacoma; the only one with side airbags offered as standard equipment. The Dakota, Ranger, and Frontier all squeaked by with a Marginal rating. The Colorado was the only one to get a Poor rating. Why? Well, remember when I mentioned about the height of the barrier and that they don't assess head injuries? This is where it all ties together. The dummy's head in the Colorado actually came in contact with the moving barrier during the crash. The barrier was lower and outside the vehicle and the dummy's head came in contact with it. Take a minute and work on that visual image for awhile. Think about the forces on the dummy's neck but don't think about it too long if you own one of these vehicles.

So what can we learn from this? Well, here's my summary of today's class:
Lesson 1: Don't buy a small pickup if you're concerned about safety.
Lesson 2: If you are concerned about safety, cough up the bucks for the side airbags. Feel free to berate the dealer for not having them as standard equipment ... that is, unless you're at the Toyota dealership.
Lesson 3: Don't buy a Colorado unless you're Chuck Norris.

In their press release, issued today, July 24, the IIHS stated that the crash worthiness for all but the Tacoma was "dismal" and that "most small pickups aren't good choices for people looking for safe transportation."

In case you're wondering about your chances of having a side impact crash, they are the second most common type of fatal crash, killing close to 9,000 people in the U.S. in 2006.

Autographed Foose F-150 on ebay

Chip Foose was in Moncton, NB as a special guest of The Atlantic Nationals. After the show was over, he, along with his wife and two children, stayed in the Maritimes for a week-long vacation.

Taylor Ford in Moncton supplied Chip and his family with a new '08 Ford F-150 Foose Edition truck. This truck was designed by Chip for Ford and along with the Foose styling cues, the truck also features a 450-horsepower supercharged Triton V8 that puts out 500 pound-feet of torque at 4,000 rpm, making it the most powerful Ford F-150 since the 2004 Ford SVT Lightning.

Chip and his family put roughly 1,600 kms on the truck (I wonder how he did with the kph speedo?) and autographed the truck in a number of places. That means that this truck goes from being #82 out of 500 produced to being 1 of 1.

Here's a link to the auction:
Foose F-150 truck on ebay

Saint John says 'NO' to automotive tourism?

The Atlantic Nationals is Canada's largest car show and takes place annually on the second weekend in July in Moncton, New Brunswick. Celebrating its eighth year, the show has annually attracted over 1,500+ cars to New Brunswick and in excess of 100,000 people to the downtown show on Friday and the Centennial Park show on Saturday and Sunday. The show is a not-for-profit event and has been instrumental in building the largest kid's splash park east of Toronto. The park is also fully-accessible for those with disabilities. The Atlantic Nationals and the Greater Moncton Street Rod Association (the show organizers) generously support the Friends of the Moncton Hospital, the Georges Dumont Hospital, the Children's Wish Foundation, the Juvenile Diabetes Research Foundation, the Kids Help Phone, Camp Goodtime for Kids with Cancer, the Canadian Cancer Society, the Moncton Zoo, local sports teams, the Santa Claus Parade, and countless other worthwhile charities and endeavors.

From a tourism perspective, the Atlantic Nationals is the largest tourist event in the province, bringing visitors from every single Canadian province, and from states as far away as California, Texas, and Florida. Moncton has played host to the Pope, the Rolling Stones, and will soon add the Eagles and Elton John to that list. My Classic Car has featured the Atlantic Nationals twice, just about every hot rod magazine has written an article on the show, Courtney Hanson (of Spike TV) has been a special guest and so has the living legend of hot rod design, Chip Foose. Chip and his family were so impressed that they stayed in our province an extra week to tour it. Moncton's paper, The Times-Transcript recognizes and appreciates what the Atlantic Nationals means to their city and to the province. In the past few weeks no fewer than 30 articles have been written in that paper on the show; each and every one of them positive. On the Friday of the show, virtually the entire front page was dedicated to the Atlantic Nationals and four pages of photos and highlights were contained within.

New Brunswick has one provincial paper; the Saint John based Telegraph Journal, which for the past eight years, has chosen to completely ignore the Atlantic Nationals. That was until today, Saturday, July 19th.

On page 4 of the Telegraph is an article titled 'Louder, bigger, faster...greener?' written by Adam Huras. Does it mention any of the positives of the Atlantic Nationals? No. It contains an interview with an environmental activist saying that the environmental footprint is regressive; "a celebration of carbon", and that that "it's hard to comprehend celebrating a problem."

It's rather ironic that just a few days earlier, a photo and story celebrating Rosie O'Donnell visiting the port city took up half the front page. The story didn't mention that the cruise ship that brought Rosie there burned 10 tonnes of fuel an hour.

It's a shame that the Telegraph can't say anything nice about the Atlantic Nationals. No, it's more than that; it's an embarrassment.

Here's a link to the article:
http://telegraphjournal.canadaeast.com/actualites/article/359066

Please read it, and using the Contact link at the top of the site, send a note to the newsroom telling them that they should be ashamed of their lack of appreciation of our province's largest tourism event.

GM Puts Hummer Up For Sale

With its stock trading at historic lows and demand for trucks in freefall, General Motors has announced that the Hummer line is now for sale.

GM is still manufacturing trucks under the Chevrolet, GMC, and Cadillac monikers for the time being, but that may change as the automaker continues to cut production in response to declining demand.

In addition, GM has also announced that it will reduce its white-collar workforce, suspend dividends, make further production cutbacks, and reduce spending on marketing.

All of which, except for the last item, makes sense. When times are tough, you don't decrease your marketing, you increase it.

Overall, GM is hoping to reduce spending by close to $10 billion and bring in another $4-7 billion from asset sales and new financing.