A Chebby In The National Driveway & Lesson In Healthcare Messaging

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24365333-d0ce332479a4cfa5f9580b59294330344a8c6481-scaled.thumbnail.jpgBarack Obama is bad and he’s nationwide. And he’s got a brand new ride. Check out the sled he has rolled up in the driveway of the South Portico of the White House (image by Mark Knoller). I guess when you own GM it ain’t that hard to get a Chevrolet.

Say what you will about NASCAR, they are the absolute masters of brilliant product placement, fan involvement and brand messaging. They never miss an opportunity, and always have the discipline, to be on message, be consistent, sell their ideology and run a forceful and effective PR ship. Today, that ruthless efficiency was brought to the White House and Barack Obama. From the LA Times:

Wednesday afternoon President Obama appeared live on the ESPN2 show "NASCAR Now." The show originated from the White House because three-time NASCAR Sprint Cup champion Jimmie Johnson was being honored for, well, being a NASCAR champion, on the South Lawn of the White House.

"NASCAR Now" host Nicole Manske and talented analyst Brad Daugherty grilled our president about who might win the Sprint Cup championship this year and what he thought about Johnson. We were rewarded with a penetrating answer to that question that included the quote: "He looks like a pretty young guy."

Like I said, brilliant. NASCAR got their champion driver, Jimmy Johnson, in the White House, rolled his #48 Rick Hendrick Lowe’s/Kobalt Tools Chevrolet Impala up for some glamor shots and prime video footage and they managed to get it all covered by ESPN for their proprietary NASCAR show, NASCAR Now.

Now that, folks, is how you sell your product. Were it only that the Barack Obama White House had a fraction of these skills in selling their national healthcare policy. Not so much. In fact, it has been an astoundingly flimsy and ill conceived pitch almost from the start, and we still don’t know what in the world Obama and the White House really stand for on the topic. As Adam Green at Open Left put it:

One could parse, and say Rahm’s quote could still include the possibility of bipartisanship, but still: there’s something called message discipline. The last four days have seen: statement, backtrack, statement, backtrack.
…
Seriously. Can someone describe for me some master plan that might be at play here? If not, White House communications team — WTF?

No kidding. As Adam noted, Jon Stewart sums it up beautifully:

Mr. Read more →

The Poetry Of Detroit Auto

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Danny Heitman has a quirkily fascinating op-ed up in the New York Times on the attempt in the mid to late 50s by Ford Motor Company to enlist a poet laureate to help sell its products:

The question is brought to mind by the story of Marianne Moore, the famous American writer, who served for a brief season as the Ford Motor Company’s unofficial poet laureate.
…
A Ford executive wrote that the company was launching “a rather important new series of cars,” but his team was stumped to think of a name for the latest product line. Could Moore, an icon of American letters, help them out?

Moore embraced the assignment with relish, not surprising for a poet who enjoyed — and whose writing was frequently inspired by — popular culture, whether it be baseball, boxing or bric-a-brac. The correspondence became a cultural fixture of its own after it was published in The New Yorker two years later.
…
These days, poetry and commerce are rarely on such good speaking terms. Poetry doesn’t sell well, and poets almost never attain the celebrity that touched Moore, Robert Frost and Carl Sandburg half a century ago. If some Detroit executive got the bright idea to consult a poet for marketing advice today, one rather doubts he’d know whom to call.

It’s nice to think that the two groups — poets and carmakers — might find new relevance through collaboration, but history is not encouraging.

I share Heitman’s conclusion that such a collaboration is probably not in the offing in today’s society and marketplace. I think, however, Detroit is going to rebound with a different kind of poetry.

Poetry in motion.

If Detroit is to rebound, it will not be from fancy words or catchy phrases to hawk their products; it will be from engineering excellence, desirable design and competitive, if not superlative, production values. They are much further along this path than many people give them credit for being though.

The Ford Fusion and Fusion Hybrid, Ford Focus, Ford Escape and Escape Hybrid, and the new Ford Taurus are all absolutely killer vehicles, both on their own and compared with foreign competitors. These cars are all world class in their segments. Add them to the always top of the segment Ford Truck line, especially the F-150, and you have a company that is here to stay and ready to take on all comers.

Financially, Ford had the jump on the old GM; Ford leveraged Read more →

Cash for “Assembled in the USA” Program

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Yesterday, I showed that the only "made in America" car (including engine and transmission) that would get someone trading in an Explorer the full $4500 Cash for Clunker benefit was a Ford Focus (though I shortchanged the Chevy Malibu and Saturn Aura, which are assembled in the US though may have an engine or transmission made in Canada or the US).

The point being that manufacturers don’t make many efficient cars in the US.

That said, if we look at whether the cars bought in the Cash for Clunkers are assembled in the US, then the story is more positive. Here’s the list of the top 10 vehicles bought with a Cash for Clunkers credit:

1. Ford Focus
2. Toyota Corolla
3. Honda Civic
4. Toyota Prius
5. Toyota Camry
6. Ford Escape FWD
7. Hyundai Elantra
8. Dodge Caliber
9. Honda Fit
10. Chevrolet Cobalt

All but the Caliber and Camry would have qualified for a full rebate under my scenario (if I used a 4WD Ford Explorer, which was the most traded-in vehicle, rather than a 2WD, then the Camry would get you the full benefit, and note the Escape qualifies for the small truck benefit, which is less stringent). 

Here’s the list again, with the assembly location:

1. Ford Focus, Wayne, MI
2. Toyota Corolla, Fremont, CA
3. Honda Civic, Greensburg, IN and Canada
4. Toyota Prius, Japan
5. Toyota Camry, Georgetown, KY and Lafayette, IN
6. Ford Escape FWD, Claycomo, MO
7. Hyundai Elantra, South Korea
8. Dodge Caliber, Belvidere, IL
9. Honda Fit, Japan
10. Chevrolet Cobalt, Lordstown, OH 

So in addition to all the local jobs based out of dealers, this program is supporting jobs in MI, CA, IN, KY, IN, MO, IL, and OH (as well as Korea and Japan). Claire McCaskill, you still hate Cars for Clunkers?

Why Not a Cash for Ford Focus Program?

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fcc09_pg_006_ext_sm.thumbnail.jpgWith the wild success of the Cash for Clunkers program, I’ve seen a number of people asking why the program didn’t also come with a requirement that the new car be made in the US. So I did an experiment. I pretended I had a 1999 V6 Ford Explorer–just the kind of car this program aspires to get off the road. I started with this list of cars assembled in the US, then cross referenced those cars with the CARS.gov site to see what would get me a full $4500 rebate. I always opted for the smallest automatic engine I could get and I looked only at 2009 models.

And here’s what–doing a quick review–I could get:

Car Union Engine Transmission
Chevy Cobalt Yes US Canada  
Chevy Malibu (and Hybrid) Yes US/Canadal US/Canada  
Ford Escape (and Hybrid) Yes US/Mexico US/Japan  
Ford Focus Yes US US  
Ford Ranger Yes US France  
Honda Civic No US Japan  
Honda Element No US Japan  
Mazda B Series Pickup Yes US France  
Mazda Tribute (and Hybrid) Yes US/Mexico US/Japan  
Nissan Altima No US Japan  
Pontiac G5 Yes US Canada  
Saturn Aura (and Hybrid) Yes US/Canada US/Canada  
Subaru Outback No Japan Japan  
Toyota Corolla Yes US Japan  
Toyota Camry Hybrid No Japan Japan  
Toyota Venza No US/Japan US/Japan  

In other words, if you wanted to make sure the Cash for Clunkers program went into a car that was assembled in the US with a US engine and transmission, you’d be requiring consumers to buy a Ford Focus. (And, in fact, Ford Focus was the most popular car under the program.)

And maybe a Saturn Aura or Chevy Malibu, Toyota Venza or Ford Escape (in the latter two cases, you’d be using the program’s lower requirements for MPG improvements for small trucks). 

A couple of caveats about this. First, I’m sure I missed something–probably a hybrid, or someone’s small truck or crossover that qualifies under lower standards for MPG improvement (I apologize in advance for whatever I missed). Which of course demonstrates that for several of these–Escape, Ranger, B Series, Tribute, Outback, and Venza–a new buyer would only get the benefit because of the lower requirements for trucks. Also, if someone had an even bigger clunker than a Ford Explorer, they’d get the full $4500 benefit from more cars, including things like Accords and Camrys and Malibus (the Ford Fusion is assembled in Mexico) that are assembled in the US but do not improve MPG enough over the 16 MPG Explorer to qualify for the full bonus.

You see, manufacturers–whether they’re American or Japanese, union or non-union–simply don’t build many efficient cars in this country. There are a lot of reasons for that, but the basic reason is that the margins on efficient cars are much smaller, and with higher labor and–more importantly–health care costs in the US, it is a lot harder for a manufacturer to build small cars profitably in this country than to build trucks. Read more →

Consumers Can’t Save $750 by Driving a More Efficient Gun to Work

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Everytime I do TV, there’s one line I immediately wish I had used as soon as the opportunity passes, and that’s the line I wish I had used to rebut Bob Franken’s inane argument that we ought to replace the Cash for Clunkers program with the Gravy for Guns program. "Consumers can’t save $750 a year driving a more efficient gun to work." I also wish I had had about 20 minutes to be able to rebut the stupid arguments about GM and Chrysler shutting down dealers so they can compete with Toyota.

Nevertheless I had a bit of fun arguing in favor of the Cash for Clunkers program.

McCain Is A Clunker, Can I Trade Him In?

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graphic by twolf

graphic by twolf

John Sidney McCain III, the blue blooded husband of a beer heiress, has decided he will be the Republican face of opposition to continuance of the wildly successful Cash For Clunkers program. The man who cannot remember how many houses he owns is going to kill the program helping regular people put a decent and efficient new car in front of their humble middle class homes. From FOX News:

Fox has learned that Sen. John McCain, R-AZ, will oppose any move to take up the House bill. Around here, we call that a filibuster.

McCain told Fox earlier today, "I not only wouldn’t vote for the extra two billion, I was opposed to the initial billion. "

McCain, the 2008 GOP presidential nominee who ran as a deficit hawk, said, "Within a few weeks we will see that this process was abused by speculators and people who took advantage of what is basically a huge government subsidy of corporations that they already own. "I can’t imagine that any taxpayer of America would have thought that the TARP, the financial recovery money, would be used now to subsidize the sale of automobiles in America."

This is a pile of bunk; John McCain is not a deficit hawk, he is a narcissistic publicity hawk and he hasn’t had enough lately and saw an opening. What is really rotten, however, is he is trying to take down the one program that has demonstrated immediate and tangible systemic benefits. In other words, the precise stimulus the economy is dying for.

Wildly successful is almost an understatement for the Cash For Clunkers program as Marcy indicated in this post. Quoting from the official website:

According to www.CashForClunkersInformation.org, 79% of clunkers being traded in so far are SUVs, trucks and vans with over 100,000 miles and most are being replaced with new passenger vehicles. The average age of a trade-in model is almost 13 years old, and the average odometer reading is approximately 138,000 miles. The most popular clunker trades are Chevrolet, Ford and Dodge and 84 percent of the new vehicles purchased are passenger cars.

This is economic stimulus at its finest. Customers are flocking to dealerships, dealerships are selling cars, service bays are active, manufacturers are moving inventory, financing shops are making loans, accessories are being sold, manufacturing suppliers are being paid and kept in business – it is one heck of an economic spur to a major sector of the economy and a fantastic lead in to the critical opening of the traditional new model year that annually starts in Read more →

House Adds $2 Billion to Cash for Clunkers

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The House just put another $2 billion into the wildly popular Cash for Clunkers program; presumably, the Senate will follow suit before they leave today.

From the comments made during the House discussion on this, it sounds like the program was wildly more successful than even reported yesterday–largely because (in spite of an arguably crappy design) it is working to do what it’s supposed to: get people to trade in old gas guzzlers for more efficient passenger cars. Here’s the early pitch from the program:

Early statistics from automotive dealers on the CARS Program, commonly known as Cash for Clunkers, show clunker consumers getting a 69% mile-per-gallon (mpg) improvement which saves them an average of $750 in gas bills a year by replacing their clunker with a new fuel efficient vehicle. "After gas and repair savings many consumers will spend less to drive a new car then they were spending to keep their clunker on the road," says Sharon O’Connell, the director of www.CashForClunkersInformation.org. "If consumers miss their old cruiser they can buy another one with the $750 they save in gas." The organization interviewed some of the largest dealers in the country who have been selling vehicles to clunker consumers for almost a month and their findings were released today in their "clunker report."

According to www.CashForClunkersInformation.org, 79% of clunkers being traded in so far are SUVs, trucks and vans with over 100,000 miles and most are being replaced with new passenger vehicles. The average age of a trade-in model is almost 13 years old, and the average odometer reading is approximately 138,000 miles. The most popular clunker trades are Chevrolet, Ford and Dodge and 84 percent of the new vehicles purchased are passenger cars.

In the sample, 64% of the government funded credits were for $4500 and 36% for $3500. "Lower priced cars have a better chance of qualifying for the larger $4500 rebate because smaller vehicles typically have better mpg ratings," adds O’Connell. The rare exceptions are hybrids that cost more but often qualify for the $4500 because of their higher mpg ratings. "The best deals for the Cash for Clunkers program are the less expensive vehicles that cost $10,000-$18,000. A list of these types of vehicles is available on www.CashForClunkersInformation.org."

Based on a 69% mpg improvement, www.CashForClunkersInformation.org estimates that personal fuel consumption could decrease by approximately 300 gallons per year, reducing personal fuel costs by almost $750 annually at average gas Read more →

Seven Days, 250,000 Cars

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Seven days ago, the Cash for Clunkers program went into place. At midnight, the program will run out of money, having already supported the trade-in of 250,000 old cars.

The U.S. government will suspend the popular cash-for-clunkers program after less than four days in business, telling Congress that the plan would burn through its $950-million budget by midnight, several sources told the Free Press.

[snip]

A survey of 2,000 dealers by the National Automobile Dealers Association, the results of which were obtained by the Free Press, found about 25,000 deals not yet approved by NHTSA, or about 13 trades per store. With 23,005 dealers asking to be part of the program, auto dealers may have already arranged the sale of more than the 250,000 vehicles that federal officials expected the plan to generate.

Bill Golling, owner of Golling Chrysler-Jeep-Dodge in Bloomfield Hills, said his store had sold 80 vehicles already under the program.

I can’t tell you how much difference 80 vehicle sales would mean for your average car dealer in this climate.

Understand, this was a highly imperfect program. Dealers are now waiting impatiently for their reimbursement from the government. And DiFi is–rightly–demanding that if the program is refunded, it must require a higher MPG improvement for the trade-ins. But for the 110 House Republicans and the all but 4 Senate Republicans who voted against this bill–and for the majority of Republicans poo-pooing the ability of government stimulus to have a positive effect on the economy? 

The Party of No doesn’t get to claim credit…

Update: Here’s Crazy Pete Hoekstra admitting he was wrong about the program (though, as a Michigander, he was one of the Republicans who voted for the program).

No, DiFi, the Competition Is with Canada (and Mexico)

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I’ve been meaning to cover the likely closure of the joint Toyota-GM plant in Fremont, CA for some time. But this comment from DiFi is worth a post in itself.

Sen. Dianne Feinstein, D-Calif., led a delegation of state lawmakers who said Thursday that they were exploring the use of stimulus funds among other moves to keep Toyota in California.

"But one of the things California has to come to grips with is that the competition here is Kentucky and Mississippi, and you have this high cost-of-doing-business problem," said Feinstein, who phoned Gov. Arnold Schwarzenegger to talk about Nummi.

The NUMMI (New United Motor Manufacturing Inc) plant was opened as a joint venture between Toyota and GM in 1984. Back then it was a shiny new-fangled plant–the future of auto assembly in the United States. It’s also, notably, Toyota’s only unionized American plant. GM has pulled out of the partnership as part of its bankruptcy which has led Toyota to consider closing the plant altogether. DiFi and the rest of CA’s politicos are scrambling to save the 4700 high-paid union jobs.

And, apparently, DiFi has created a myth for herself that she is competing with (just) Kentucky and Mississippi for these jobs.

To the extent that CA is now putting together a set of incentives to convince Toyota to stay–a model pioneered by southern states–she is correct. And to the extent that Toyota might move the Corolla and Tacoma production to their currently vacant MS plant (which was originally slated to assemble the Prius), she is correct that she’s competing against MS.

But the more likely location for the production currently done in Fremont, CA is–for the Tacoma–Mexico and–for the Corolla–Canada, where factories that already produce those models are currently running below capacity.

In addition, Toyota has plenty of unused production capacity in North America — including factories in Mexico and Canada that make the Tacoma and the Corolla, said George Peterson, president of Tustin consulting firm AutoPacific.

[snip]

Toyota’s sales in the U.S. are down almost 38% this year as the auto industry suffers its worst slump in decades. As a result, the automaker has excess production capacity at its North American auto plants, which can produce more than 400,000 vehicles a year.

Read more →

Auto Decline Not Bringing Local Media Down–as Much as It Could Have

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Since I elaborated on my auto industry/news industry analogy the other day, I wanted to point to this article describing how the auto industry’s woes haven’t brought down local media as much as it might have. As I’ve been pointing out for some time, auto advertising accounts for a huge chunk of local advertising.

Local traditional media — television, radio and newspapers — are more reliant on automotive advertising than any other medium. In 2008, TV stations got 23 percent of their total advertising from auto, followed by local newspapers at 17 percent and radio stations at 14 percent, according to a Sanford C. Bernstein & Company report released this month.

And the amount of advertising manufacturers, co-op, and individual dealers are buying has declined by numbers that almost match the decline in auto sales.

Local automotive ads come from three sources: Companies like Ford and Toyota take out some ads on local television to promote their new models, in addition to their nationwide ads. Local dealers also pool money, helped out by the corporation, to promote their brand of cars regionally. Then, each dealership takes out television, radio and newspaper ads to list its autos for sale or special discounts.

The ads from automakers — running nationally and locally — fell 19 percent in the first quarter of 2009, compared with a year earlier, according to research firm TNS Media Intelligence. Ads from dealer associations fell 62 percent, while ads from the individual local dealers declined almost 40 percent.

[snip]

Auto advertising in local media declined more than twice as fast as it did in national media in 2008 compared with 2007, according to Bernstein. But it has been so bad already this year that local media managers say they believe they have absorbed much of the pullback in auto advertising.

But the recent further cutbacks associated with the Chrysler and GM bankruptcy have not hit local media still further, largely because the dealers that got closed really weren’t selling that many cars, and because the ones that are left are increasing their advertising. Plus the dealers that shifted into used sales are re-introducing themselves to consumers.

Obviously, the auto industry is so big that it’s linked with everything. That’s particularly true, however, of the auto industry and media. This is an interesting snapshot of how that’s working out.