Toyota’s problems seem to multiply everyday. The latest in the saga of Toyota’s quality issues involves other car companies, namely General Motors and Ford. Yesterday, GM added an extra incentive to its existing ones specifically for Toyota and Lexus owners, giving them an extra $1000 which they can apply in three ways: 1. Those who choose to lease a vehicle may waive three payments for up to a total of $1,000. 2. Qualifying customers who are financing a vehicle purchase can receive 0 percent financing for up to 60 months. 3. Cash buyers can receive $1,000 off their purchase. It is noteworthy that GM did not “announce” this new incentive. They didn’t want to appear like they were gloating over Toyota’s situation. Ford followed suit shortly thereafter, but with a twist. Ford’s program targets people who own Honda, Acura, Toyota, Lexus or Scion vehicles that are 1995 models or newer. The owners of eligible vehicles would get $1,000 for trade-in assistance on either a purchase or lease of a new Ford, Lincoln or Mercury vehicle. That money is stackable on any other incentives already on a Ford Motor product.

In straw #2, the suppler of the pedals in question, CTS, (sort of) fired back at Toyota. Toyota, you might remember, was quick to drive a bus over CTS by naming them as the supplier of the faulty pedals, prompting some reporters (me) to question where the buck stops at Toyota. Mitchell Walorski, head of CTS Corp. investor relations, said the Elkhart, Ind., supplier is not part of the problem. CTS has “no knowledge of any accident or injury” stemming from the accelerator assemblies it supplies Toyota, he said. Walorski told Automotive News that CTS engineers are assisting Toyota, “but this is their recall.” CTS was not consulted about Toyota’s decision to issue the recall or to halt certain vehicles’ sales, he said.

In straw #3, the National Auto Auction Association announced that all of its member auctions would be required to make an announcement concerning the affected vehicles at their auctions. This is regular procedure for any auctions that have issues, and NAAA said Toyota is no different. The reason is simply full disclosure so everybody knows what they are getting. The impact is that Toyota’s residual (resale) values just took an immediate and substantial hit, which will affect trade-in values and, further down the road, lease payments. A lower residual value makes the lease payment higher, absent additional incentives. So lower residuals will hurt sales (especially leasing) or make them more costly to Toyota.

Straw #4 is an update to #3. The NAAA changed course and advised its member auctions to halt the selling of the affected Toyota models until the issues are resolved. This takes the ramifications in #3 and magnifies them significantly.

Straw #5 concerns rentals. All of the largest rental companies -  Hertz, Enterprise, Alamo, National, Avis, Budget, Dollar and Thrifty - all said they would stop renting vehicles covered in the recall.

In Straw #6, Toyota yesterday said it would recall an additional 1.1 million autos in the United States to fix floor mats that may jam accelerator pedals and cause unintended acceleration. The action is an extension of last fall’s recall, in which Toyota recalled 4.3 million vehicles in its largest-ever U.S. safety action. Today’s amended recall involves 2008-10 Highlanders and 2009-2010 Corollas, Venzas, and Matrixes, Toyota said in a statement. The action also covers 2009-2010 Pontiac Vibes made in a joint venture with General Motors Co. This brings the total units recalled for the 2 separate problems to over 6 million.

Lucky Straw #7 goes overseas. Toyota announced that it will extend the recall to an estimated 2 million units in Europe and about 75,000 in China. Let’s see, that now makes over 8 million units worldwide, about the same as Toyota sells worldwide in a year.

For Crazy Straw #8, Ratings agency Fitch, placing Toyota on watch negative, said the recalls and production suspension damaged Toyota’s reputation for quality and could hamper its recovery. If they ultimately lower Toyota’s credit rating, this will make borrowing to fund operations more costly. If it is only a short-term hit, then it will be unlikely to affect Toyota very much, as Toyota has more cash on hand the the pharaohs did.

I wonder if the camel’s back is getting weary yet?

As you might expect, all these straws are having an effect on Toyota’s stock. It has fallen over 15% since last week, reducing the camel’s market capitalization by $25 billion. That’s not going to make the shareholders very happy.

That’s what I think - how about you? Please leave your comments below.

Every year, Ward’s Auto has published its 10 Best Engines list.  Considered the most prestigious award for powertrain excellence, the 10 Best Engines award is highly coveted by automakers.  The criteria include many objective and subjective factors.  They all must be available in a regular production model priced no higher than $54,000 by early 2010.  There were 34 nominees this year.  2009 winners and any all-new or significantly changed engines are eligible.  Lest you think Ward’s only includes high-powered, sports car engines, this year’s list is highly diversified, with engines of every major type and geography represented.

The list includes engines from German (4), US (3), Japanese (2) and Korean (1) automakers.  The engines have 4-cylinders (6), 6-cylinders (3) and 8-cylinders (1) and are powered by gas (6), Diesel (2) and hybrid (2) power.  They use natural aspiration (4) and turbo (5), and 1 supercharged.  5 winners are repeats from last year and 5 are new on this year’s list.

The engines have a huge range of horsepower (98 - 375) and an even larger torque range of 105 - 425 lb.-ft.  Specific output, or horsepower per liter, is considered a measure of how well the engineers have wrung power out of the engine.  A few years ago, 60-70 hp/L was considered excellent.  The lowest figure on this year’s list (54) is a hybrid, whose horsepower figure does not include the extra power provided by the battery.  The highest non-forced induction engine is 82.  The forced induction engines range from 88 - 111.

Enough of the stats!  Here are the winners this year:

Never one at a loss of words, Bob Lutz has publicly spoken what many have said or thought privately - GM may keep the G8 after all. “The G8 has finally been discovered by a broader percentage of the buying public,” Lutz said on GM’s FastLane blog. “The owners are ecstatic about them, many calling it the best sedan they’ve ever driven. We consider it too good to waste. So we’re studying the feasibility of bringing it in as a Caprice for both law enforcement and the public.” Tom Stephens, who replaced Lutz as head of product development, made a similar comment a few weeks ago.

The G8, by most measures, is a great car. Some call it a better BMW than a BMW - and cheaper. So the idea of keeping it makes a lot of sense in many ways. One way it does not is the CAFE way. A big, powerful rear-drive sedan will hurt the company’s CAFE numbers. It will also help sales and (presumably) profits. So what’s more important - satisfying the government’s (read: majority owner’s) need for fuel economy, or that same government’s need to be paid back?

Bob and whoever else is part of this decision need to be aware that maybe the recent sales spike isn’t what it appears to be.  While it is true that June sales were up 136% from last year, a close look at G8’s sales chart might be interesting:

G8 has only been for sale for 16 months, perhaps the most tumultuous 16 months is GM’s history.  It can easily take that long to establish a new nameplate in the US auto industry - under ideal circumstances.  G8 was launched just as gas prices were starting to spike last year, and you can see that right after the first full month, sales started to creep back down, despite the positive reviews.  After a brief increase in August, sales started to fall again, probably due to all the bad press surrounding GM’s bleak financial situation last fall.  Sales spiked in February, and except for an April slide, have increased since.  Bob would like to call this being “discovered by a broader percentage of the buying public.”  Maybe, but I doubt it.  This is more likely the result of the announcements concerning Pontiac’s (lack of a) future.  Recall that it was in February that the General announced that Pontiac would be reduced to a “niche” brand.  This prompted many to go out and buy the car, as its future was uncertain (speculators, maybe?).  The dip in April is likely because there were no more people who were nervous about the G8’s future.  So why the increase in May and June?  GM announced in very late April that it would kill the Pontiac brand and all of its nameplates.  This has brought out even more pull-ahead sales, as people rush to make sure that they will get their G8 before they’re gone.

So does this mean that the G8 will not be successful as a Chevy or even a Buick (see below)?  Of course not.  It just means that Bob and his band of merry men better be careful reading too much into the sales chart.

So say we assume that GM will keep it in the lineup.  Next question is what do you call it?  Chevy Caprice, as Bob suggested, is a good fit.  The last Caprice was a big, RWD sedan.  It also didn’t win any beauty contests or warm the hearts of any enthusiasts, unlike the G8.  Other suggestions might include Chevy Impala, but the General is already working on a replacement for that car, or Chevelle, a name from the past that might work.  You could go really simple and name it Chevy G8.  How about Buick Grand National?  Buick is in need of a shot of adrenaline, and the G8 would certainly provide that, while resurrecting Buick’s performance heritage.

There are many decisions that GM must make, but let’s hope that they don’t get bogged down in too much research.  GM has long been known to become paralyzed in research, only to make a decision that is too watered down to excite anybody.

GM confirmed today that the United Auto Workers (UAW) union has approved modifications to its national contract that “…will enable GM to be fully competitive and has eliminated the gap with our competitors.”  GM claims the changes eliminate the wage and benefit (cost) gap with its competitors.  It also includes changes to the agreements regarding the Voluntary Employee Beneficiary Association (VEBA) trust for retiree healthcare.

Separately, GM announced a plan to utilize a UAW-represented idled assembly and stamping facility for future production of an unnamed compact/small car in the United States to meet future fuel efficiency regulations.  GM did not specify the facility to be used, but the re-tooled plant will be capable of building 160,000 cars annually, which can be a combination of both small and compact vehicles. 

GM already has a strong manufacturing presence in the United States. Currently, about 67 percent of GM cars and trucks sold in the U.S. are built in the U.S. With this announcement, GM anticipates that U.S. production levels will increase beyond 70 percent by 2013, augmenting its already automotive industry-leading U.S. manufacturing footprint.

This is clearly a bone thrown to the UAW and the federal government.  The UAW has complained very publicly about GM’s plan to close US plants and increase imports.  This has put pressure on the feds because the public believes the $19.4 billion in loans that GM has received should not be used to subsidize the elimination of US jobs in favor of foreign-based jobs.  GM (and the other Detroit automakers) has long stated that high costs prevent them from manufacturing small cars in the US profitably.  Could the new contract really save them enough to make this turn around, or are they just saying this for PR or are the y just willing to continue to lose money to please their new overseers in DC?

GM has teamed up with Segway, the maker of the Segway PT, to introduce the PUMA (”Personal Urban Mobility and Accessibility”).  The idea is a small, electric runabout that is easy to drive and park, and is easy on the environment as well.  It can travel up to 35 MPH (56 KPH) and for 35 miles (56km) on a charge.  While certainly an interesting engineering exercise, one has to question the practicality of such a “vehicle.”  At a top speed of only 35MPH, where is it even legal to drive?  There are not many details available, but the prototype in the video (see below) that GM released has no doors, lights, mirrors, bumpers or any other obvious safety equipment besides the seat belts.  Yes, seat belts.  The PUMA seats 2, though if they are not good friends before the ride, they will be after.  The prototype says “experimental” on it, so you have to assume that GM/Segway will address these issues before they (attempt) to sell it to the public.  But given that the PUMA looks like a science experiment that attempted to mate a phone booth, wheel chair and a skateboard, you have to assume their market is small.  Segway’s lack of any success in marketing the PT needs to be factored into the calculations as well.

You have to give credit to GM & Segway for trying to break the mold of transportation to find new markets.  But given GM’s well-publicized troubles, you’d think they would have a better place to spend their scarce resources.  GM says that they have been developing the PUMA with Segway for 18 months.  Is it coincidental that they choose to tell us about it now, when the loan officer-in-chief seems to be calling the shots at GM?  Is Fritz Henderson, GM’s new CEO, just sucking up to the would-be boss?  I fear that the PUMA is just the first (and most ridiculous) of many so-called green cars that GM (and Chrysler if they survive that long) will be forced to produce as a condition of their loans without any regard to what the customers actually want.  If we had any semblance of an energy policy, then maybe PUMA would make some sense.  With gas around $2, there is no hope for PUMA.

Our spy photographers, always on the lookout for a scoop, spotted this undisguised 2010 Cadillac SRX in suburban Detroit on Friday, January 2. As you can see, the new SRX takes its styling cues from the new CTS. It has the bold, larger front grill area and fog lamps in the front. The rear is also reminiscent of the CTS, with similar taillamps and license plate area. Notice also that the top of the tailamps are not flush with the body panels.

The new SRX will move from the rear-wheel drive platform that it currently shares with the CTS and STS to a front-wheel drive platform.  Production moves from Lansing, Michigan to Ramos Arizpe, Mexico.  All-wheel drive continues as an option. The AWD system includes an advanced electronic limited-slip differential (eLSD) that distributes torque as needed from side to side along the rear axle, as well as from the front to rear axle. The pre-emptive, active-on-demand system provides an extra measure of capability in wet or icy conditions.

The standard engine will be a 3.0L V6 with direct injection, making 260hp (5hp higher than the present standard engine).  It is a smaller version of the 3.6L powerplant in the CTS, where it makes 306hp.  The optional engine is a turbocharged 2.8L V6, making 300hp.  Why not just use the 3.6L from the CTS?  GM is trying to improve fuel economy, and while EPA numbers are not yet available, it is likely that the 2.8L turbo gets better fuel economy that the 3.6L - with the same power.

The 2010 SRX features numerous advanced electronic systems. Highlights include a “pop-up” navigation

screen with three-dimensional imaging; adaptive forward lighting that swivels the headlamps in synch with vehicle steering; power liftgate with adjustable height setting; integrated hard disc drive for audio storage and a dual-screen system for rear entertainment. Bluetooth compatibility is standard, as is OnStar’s turn-by-turn navigation service for buyers who do not select the car’s navigation system option.

18″ aluminum wheels are standard on all versions, while 20″ wheels are optional. 4-wheel disc brakes are standard with ABS and stability control.

The new SRX is shorter than the outgoing model, losing a little more than 4″ in length to 190.2″. It is shorter in height by 2″, but is wider than the outgoing model. One downside of the shorter length is that the new SRX will no longer have a 3rd row as an option, but Cadillac still has the Escalade for those that really want 3 rows.

The new SRX should better appeal to buyers in the luxury crossover segment. It is better looking and will get better fuel economy while providing more standard power. It’s new front-wheel drive platform will get better traction for those not upgrading to all-wheel drive. Pricing is still TBD, and Cadillac will show the new SRX at the North American International Auto Show next week.

You’ve seen it here first, faithful readers: the newest, baddest Corvette ever - the ZR1. 2 of The Slandy Report’s top reporters spotted the car in a parking lot in Farmington, Michigan tonight. They were overheard exclaiming, “Yellow Corvette!” They are shown here with their prize “catch”. When asked what they were going to do with the $105,000 car, they said they would mount it on the wall of their bedroom because they can’t field dress a moose (or afford the gas).

Ford unveiled a new logo for its iconic sports car, the Mustang, last week. If you look carefully, you might even notice the difference. Ford has essentially made the pony logo look sleeker and faster than the previous logo. It also sports a new “subtly toned tinted-chrome finish”.

“We wanted to give the Mustang pony a more realistic feel,” said Douglas Gaffka, chief designer for the 2010 Mustang. “We lifted the head to make the pony more proud, tipped the neck into the wind to give it a feeling of greater speed and better balance.

“It’s more chiseled and more defined and looks more like a wild horse,” Gaffka added. “It’s more realistic in terms of proportion to an actual Mustang.”

The new logo will make its debut on the 2010 Mustang, which will go on sale next year. The 2010 Mustang will be redesigned along with the logo.

An interesting aside: the original Mustang pony was facing to the right (because that made it look like the pony was running forward), not the left as it is today. When presented to Ford management for approval, the team was told that the pony should be facing the other direction. Why? Because left is usually associated with “west”, and a wild Mustang is associated with the old west. That’s just a little insight into the decision-making at Ford.

By now, you’ve probably heard the term, “crossover.” You might even think you have a pretty good idea what a crossover is. Generally, a crossover is considered to be an SUV built like a car. George Pipas, Ford’s chief sales analyst, says that Ford defines a crossover as “a light truck built on a car platform (except for minivans)”. A “platform” is the under-body or structure upon which a vehicle is built. Most people neither know nor care anything about the platform of their vehicle. What does it mean to be a “car platform” vs. a “truck platform”? Generally, it means a unibody vs. a body-on-frame design. Wikipedia defines a unibody as a, “construction technique for automobiles in which the body is integrated into a single unit with the chassis rather than having a separate body-on-frame.” A Body-on-Frame mounts, “…a separate body to a rigid frame.” So crossovers are unibody and SUVs are body-on-frame, right? Not so fast. There are exceptions. The Jeep Grand Cherokee would never be considered a crossover, but it is, and always has been, built on a unibody platform. The Mercedes-Benz M-Class, perhaps the original luxury crossover, was originally a body-on-frame design (it’s now a unibody).

Why have crossovers suddenly become so popular? Well, certainly gas prices have been a big part, especially in the last 6 months, as fuel prices have skyrocketed. Crossovers tend to achieve better fuel economy that their SUV brothers because they are lighter so need smaller engines. SUVs get poor fuel economy, but crossovers get better. True, but they are playing the perception game. The OEMs are like a heard of buffalo scrambling to avoid the use of the term SUV – they all want to call their products crossovers instead – to give their products the image of a fuel-efficient product when it isn’t. The Ford Escape used to have a slogan that said, “100% SUV” because it really isn’t a traditional SUV, but wanted to be thought of as one. Now, it’s just the opposite. George Pipas told me that the Escape is a crossover.

The trend started several years ago, though, so there has to be more to it than fuel economy. SUVs became popular starting in the early 1980s, but really took off in the early 1990s with the popularity of the Ford Explorer and Jeep Grand Cherokee. Baby boomers are credited with driving SUV sales, much as they have with many other products. So are baby boomers now to “blame” for SUV sales falling? It’s a reasonable assumption, as one of the main advantages of a crossover is that it’s easier to get in and out vs. an SUV. We’ve all read ad nauseam about the “graying of America” as baby boomers get older. They are simply finding that they can’t get in and out of their giant SUVs any longer.

The other reason for the switch to crossovers is handling. A crossover, because of its unibody design, handles more like a car, because it is, well, a car. The whole Ford Explorer – Firestone debacle of 2000 increased awareness that SUVs are not cars, and cannot be driven like one. They are taller and heavier with a higher center of gravity (CG). What this means is that they have to be driven slower around corners and that, in extreme conditions, are more likely to roll over. Crossovers, on the other hand, are lower than SUVs, so have less chance to roll over (or fetch).

So for all these reasons, crossovers are a different kind of vehicle than an SUV, right? Maybe, but we here at The Slandy Report disagree. Most crossovers, to us, are the natural progression of the SUV segment. They can do just about anything an SUV can do (obvious exceptions are heavy towing and serious off-roading), but they do it better for most people because of the points made above (fuel economy, handling and ingress/egress). Just because a “crossover” is built differently doesn’t make it a different kind of vehicle. Case in point: when cars began to use unibody designs instead of frames, or when they began to use front-wheel drive, they weren’t deemed to be a new kind of vehicle. They were just different cars.

The same is true for some other ”crossovers”, which we believe are just the new way of designing station wagons. The Ford Taurus X (nee Freestyle), Chrysler Pacifica and the new Ford Flex and Dodge Journey are just new-fangled station wagons. I don’t think I need to prove this – just look at them. They don’t look like your grandfather’s station wagon, but neither does a 2009 F-150 look like your grandfather’s F-100. The automakers are just afraid of the term station wagon. When Ford was launching the Freestyle a few years ago and I suggested to the Freestyle marketing manager that it was a station wagon, she quickly corrected me.

So are the automakers going to see the light and deep-six the name crossover? Don’t bet on it. They have come across a new type of vehicle (even if it isn’t), and they are going to milk it as long as they can. My only hope is to shine the light on this, so you know what you’re getting. I remain your faithful servant.

Follow the link for the video of the driving school I just attended. No, just kidding. This is a youtube video of some crazy, but very talented driving. The drivers really know what they’re doing. It goes to show you that the scariest drivers are not really the ones who drive fast - it’s the ones who drive worst. Speed doesn’t kill - it’s variance of speed that kills. What does that mean? It means that if every driver is driving 80 MPH (128 kph), there is less likelihood of a problem than if one driver is driving 70 MPH (112 kph) and another is driving 45 MPH (72 kph).

Pay special attention to learning to change your tire while the car is still moving!

Kids, don’t try this at home (or anywhere else):

http://youtube.com/watch?v=kv5d2mXy7dY

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