Sunday thoughts about Automakers BK

As GM crawls towards what others describe as unavoidable bankruptcy I am drawn to the historic figures of US auto industry founders. How would Henry Ford or Billy Durant have handled this crisis.

The more I speculate the more sure I become of the answer. Their actions would be like that of the tech Mavens of today.  They boldly would stand up and demand more of every member of their team, their supply chain, and ultimately move the entire industry forward surfing the wake of crisis. They would have stepped forward welcoming competition, harsh medicine of the downturn, and would have cast their lot with the American consumers needs.  Their solution would be simple: Progress!

Progress in my definition is simple.  More for less.  Less cost, less impact, and in turn the creation of more value.  

What is the need of the American auto consumer. It is a simple three prong test: Stylish function, bottom of the market cost, and reliable utility.  

That is the secret formula used first by the Oldsmobile as it built market share at the dawn of the automobile.  Again it was the secret strategy of Henry Ford in his quest to displace the horse with his ever less expensive Model-T.  As well it was the come to market strategy of all other car makers gobbling up GM's lunch since Billy Durant launched his own come to market coup with the Chevrolet.  Again, ironically the comeback of Chrysler was marked by this same strategy in the 90's and is why Kia is still a safe bet for dealers who picked up the brand as they pursue it today.

Unbelievably the pundits blame it on fuel economy and the lack of demand for their cars. Though it isn't demand that's dried up in the world. Its credit, income, and of course crude oil's availability.   Who doesn't want a H2?  Only the social sensibilities and excess pull back this shinny toy of the wasteful urbanite.

I can't help but notice that Toyota, Honda, and Nissan manufacture huge SUV's and full size toy-hauling pick-ups.  The difference is their market share make up not their Environmental credentials.  Again we come back to affordable, stylish, and reliable.  

Look at the markets.  When you buy American and inexpensive your purchase reminds you of your income. Your options smack of cost cutting.  The upgrade also is substantially different as well.  Japanese designers on the other hand provide a consistency with value.  

The Japanese hold their consistent come-to-market units true to their roots.  They offer a middle ground to their consumers.  

GM Supports the Expansion of E85 Pumps

GM has recently become a champion for ethanol in the US. Not just a positive PR when its useful type supporter of biofuels but a full on advocate. Most recently I just saw a news report from Bloomberg where GM and the National Governor's Association will work together to get an expansion of available E85 pumps throughout 15 US states.

This is more than just talk from GM its actual market development. They aren't just developing E85 flex fuel vehicles they are also making lower cost and domestically made ethanol a real option for consumers attracted to their vehicles.

Major Automakers Back Away from Fuel Cell's

Check it out.... GM and Toyota dismiss Fuel Cell's as viable.

Yep, that's what I thought. Go hybrid powertrains, electric technology, and of course my favorite - Clean Diesel. The far off mystical new fuel is exactly what it is billed as. Far off and mystical.

NOTE: Yes I am totally biased against fuel cells as a viable on-road power train. I personally see fuel cells as a bad idea for on-road vehicles. They just don't make logical sense to me when the real technology required for fuel cells to work is a superior electric power train. I do think fuel cells hold a great deal of promise for commercial and industrial facility use.

The Rand Institute Points to Diesel

God I love diesel, and so does the Rand Institute. (Loves in the most clinical, scientific and unbiased sense of the word)

Though this is the research paper which points to ethanol as the weakest of all liquid motor fuels I still like their analysis. (See GM post below)

Check out the Press Release. Also worth checking out is the actual working paper itself: The Benefits and Costs of New Fuels and Engines for Cars and Light Trucks. It offers some in depth cost analysis which lends itself well to citation and simplex presentation.

GM Responds to USA Today on E85

I was really surprised to see this. GM officially defending ethanol as an extension of their product line.

It looks like the engineers over at GM are looking differently at fuel. In fact on the GM website there is a blog post where a GM official representative points to Brazil as a model for potential ethanol availability.

GM came out in response to a USA Today report that E85 was inferior to all other motor fuels including gasoline. As reported in USA Today:

Graham's team calculated the individual and societal costs and benefits of conventional gasoline vehicles, gasoline-electric hybrids, high-tech diesels and flex-fuel vehicles burning E85 full time. Conclusion: Unless gasoline prices, averaging $3.10 a gallon now, rise above $4 and average $3.50 or more the next few years, or ethanol prices drop a lot, diesel's the best overall solution; E85's the worst.

On Firday, GM stood by the premise of ethanol as a viable substitute/blend-stock to petroleum gasoline. What excites me is the fact that GM is siding behind ethanol as a long term fuel. This is the first I have ever seen a major manufacturer actual come to defense of a biofuel beyond making PR laps whenever oil prices rise.

I saw it first at DomesticFuel.com and followed it over to GM's own page.

“We believe ethanol as a renewable fuel is the best near-term alternative to oil as a transportation fuel and replacing gasoline with ethanol positively contributes to lowering greenhouse gas emissions,” said GM Chief Economist Mustafa Mohatarem in the statement. “You cannot take a snapshot in time and define a mature market.”

This snapshot being a reference to where ethanol can go as a fuel technology. Where the "next generation" ethanol technologies will drive future energy prices (downward) and the performance of vehicle engines able to use the higher octane cleaner fuel (upward).

And again another excerpt from Reuters on the same subject:

"By 2012, it will be easier to say which GM vehicles are not E85-capable than to list which ones are FlexFuel," said Beth Lowery, GM vice president of Environment, Energy and Safety Policy. "And we are just as committed to helping build the infrastructure for E85."

For more on GM's E85 Flex Fuel Vehcile support check out their official E85 website: Live Green Go Yellow.