Fiat’s "Little Mouse" with a Serbian Accent to Target Smart?

Fiat’s "Little Mouse" with a Serbian Accent to Target Smart?

By Andy Bannister


An all-new baby Fiat built in Serbia should be on the market by 2010 and is already being compared to the company’s classic “Little Mouse”, the Topolino (right), a hugely influential small car launched by the company back in 1936, which was the smallest mass-produced car of its era.

The new vehicle is set to be the first non-sporting Fiat car for many years to be offered in a two-seat version.

In that form it should be the first serious mainstream competitor for the Smart car, on sale in Europe since 1998 and now into its second generation.

The Smart is a big seller in cities across the continent, including Fiat’s home town, Turin, and Italy’s capital , Rome.

The move comes after Fiat and the Serbian Ministry of Economy and Regional Development signed a memorandum of understanding to create a new company that will take over Zastava, the troubled automaker currently owned by the Serbian state.

Zastava produces small numbers of a range of old Fiat-derived cars, including the model known to Americans as the Yugo. It has recently introduced a relatively modern Fiat, the previous-generation Punto hatchback, which is exported to neighbouring countries under the name Zastava 10.

Fiat will hold a majority stake in the company and be responsible for a massive boost in planned production at the factory in Kragujevac. It is set to become the manufacturing centre for around 200,000 Fiats in 2009, and in 2010 should see the launch of the small B-compact model Fiat is currently developing, which should add another 100,000 units.

It is already being termed the “new Topolino” harking back to the original front-engined Fiat 500, made in various forms until 1955.

This model, designed by the brilliant Fiat engineer Dante Giacosa, was a true Italian “people’s car” and would have sold in far greater numbers than the 520,000 it achieved had it not being for the outbreak of the Second World War, which stopped sales for years.

It was mainly famous as a two-seater with styling some have dubbed “art deco”. A later and slightly enlarged Belvedere estate derivative could squeeze four people aboard.

The new Serbian-built model may be as small as the existing Smart Fortwo, with two-seat and four-seat versions like the original Topolino. It will sit on a shortened version of the existing Panda and 500 platform.

As well as opening up new sales at the lower end of the market, it also sounds like the effective replacement for the old Seicento (600), Fiat’s smallest recent car, pictured right.

An elderly design, dating back to a previous model launched in 1992, it has been overtaken by newer and more stylish small cars from rival companies.

A better equipped version of the new model, sporting the badge of Fiat’s luxury Lancia division, could also be built at the Serbian factory.
Fiat has a long track-record of working in eastern Europe, and currently builds the successful 500 and Panda at its plant at Tychy in Poland. Zastava, like the former FSO concern in Poland and Lada in Russia, built Fiat derivatives in the communist era as joint ventures with the Italian company.

This latest move seems like another example of the gradual shift eastwards in European car manufacturing, away from the higher wage economies of countries which use the Euro.

For Serbia, politically and economically isolated for years, this looks like very good news, rewarding the country’s success against the odds in managing to keep a trickle of Zastavas in production throughout the disintegration of former Yugoslavia and the resulting series of painful wars.

While the deal may help strengthen Fiat’s recovery from a recent period of decline where it seemed to fall behind key European rivals, the big number of cars to be manufactured at Kragujevac is potentially less good news for workers in Fiat’s Italian homeland.

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Chery’s New Line of Trucks Has Western Tastes in Mind

Chery’s New Line of Trucks Has Western Tastes in Mind

Have you driven a Higgo… lately?

by David Surace


A very short blurb in (subscription required) hints at Chery Automobile Co.’s hopes to ply Western markets with a model it showed at Auto Show China a couple weeks back. According to the article, the Brave Warrior Higgo2 is all set to go on sale in Australia, an automotive market which is very similar to our own.

The Chery press release is a bit more vague, since it’s in somewhat rough English, but you get the idea that the Higgo3 SUV and Higgo2 pickup were made to win Western hearts:

“Brave Warrior Series” is composed of new Higgo. SUV Higgo3 carries various power assembly and two transmissions of MT/AT to meet the different tastes of the customers. Pickup Higgo2, while adopting flexible power assembly scheme, integrates the popular elements of Crossover Vehicle and Lifestyle which are popular in North America. Being a sturdy and practical tool car, it is also a family vacation wagon carrying culture of pickup.

Now class, before we make fun of the name, just remember Volkswagen with its Tiguan, Touareg, Phaeton, Sharan, Bora, Lupo, etc. Chery’s full press release from Auto Show China after the jump.

Chery Will Exhibit 26 Models under 6 Series at the “2008 Beijing International Automotive Exhibition”

Recently, the reporter got to know from Chery that as China’s national leader in the automotive industry, Chery will exhibit 26 models under 6 series at the “2008 Beijing International Automotive Exhibition” for an exhibition focusing on the latest research and development achievements of the company in fields including model development, hybrids and new energy vehicles, and power train system.

It is known that the exhibition area of Chery is 2,500 square meters. The exhibits include 26 models under 6 series. Both the area and vehicle quantity exceed the scale of the previous years.

With six series, the exhibition scale reaches a new high

Faira Series” undoubtedly is Chery’s biggest highlight. Following Chery’s concept of making high-quality small cars, Faira, born on a new generation of small car platform of the company, covers different models including three-box car, two-box car, sports car and SUV. As a gift to the Beijing Olympics by national auto maker, Faira adheres to energy-saving, emission-reduction and adopts 1.3 L displacement with high-tech human-oriented equipment.

“European Style Family Sedan Series” is another major highlight on Chery’s booth. It is composed of A3 and Storm 2. A3 will come out again since becoming the focus of attention in 2006 at its global debut at the Beijing Auto Show. A3 series of cars including three-box car and two-box car will be exhibited together for the first time, which indicates that A3 is ready to enter the market. While Storm 2 carries the dream of Chery to create a new generation of national car.

“Silver King Series” is composed of the new high-end commercial vehicle of Chery Eastar6. This vehicle is powered by 2.0 TDGI or 3.0L V6 engine. This is a high-end and high-quality official vehicle created by Chery with its designing idea of integrating eastern and western advanced mainstreams through five years of development and 500,000 km road test.

“Brave Warrior Series” is composed of new Higgo. SUV Higgo3 carries various power assembly and two transmissions of MT/AT to meet the different tastes of the customers. Pickup Higgo2, while adopting flexible power assembly scheme, integrates the popular elements of Crossover Vehicle and Lifestyle which are popular in North America. Being a sturdy and practical tool car, it is also a family vacation wagon carrying culture of pickup.

“Sports Passion Series” is composed of two modified racing cars which are respectively 1.5 VVT sports version A1 and 1.8S sports version A5.

“Oasis Series” is composed of five vehicles of diesel engine, hybrid, fuel cell and flexible fuel etc, which are respectively applied on QQ6, A5, Tiggo3, Eastar and Cross Eastar. This series will focus on demonstration of Chery’s capability in energy saving and environmental protection.

Brand system shows strength with simultaneous attention on three aspects

The future product lineup of Chery can be seen from the company’s exhibits at this auto show. The brand strategy with simultaneous attention on three aspects including launching new brands, building mature brands, and upgrading the current brands demonstrates the complete structure, grand vigor, and maturity of Chery brand system.

The all new brands represent its strength. The new brands including Faira and Higgo are representatives of the further abundant product lineup innovated by Chery. Faira, as gift to the Olympics, reflects Chery’s determination to become the king of small car. Modern small car will bring fiercer market competition. Higgo fills the blank of Chery on SUV and pickup. We can expect it to make tremendous contribution to Chery in its market segment, just as Tiggo.

Value return of old brands: As a historic hero, the older generation Fulwin, together with Cowin derived from it, have made indelible achievements for family cars’ to enter ordinary families and is widely and warmly welcomed by the public. New generation of Storm 2, carries the dream of Chery to build a new generation of national car.

Upgrading of the existing brands: Chery A3 following A5 and A1 further enriches the A series and makes A series a main brand of Chery. Eastar6 injects fresh blood into the Eastar brand. High-quality & high-end commercial vehicle MPV Riich5, multifunctional light passenger vehicle and existing product Riich2 will jointly enrich Riich brand.

According to the exhibits of Chery at this auto show, Chery products lineup will be further expanded, basically covering all areas of the passenger vehicle market segments and expanding to the commercial vehicle field, while the abundant and diverse products essentially support the Chery brand. It seems that Chery will plan and realize upgrading of technology, products and brand, and will continue to march toward “independent international brand”.

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Quick Drive- 2008 Cadillac CTS

Quick Drive- 2008 Cadillac CTS

The details are important

By Kevin Miller


I’ve wanted to drive the second-generation Cadillac CTS ever since it was introduced. I was quite envious when from GM’s press fleet in March, especially because of the high praise he lavished on the CTS. The press photos showed a handsome car with a very well executed interior. As luck would have it, Avis upgraded me to a CTS on a recent business trip to Salt Lake City.

The rental CTS was a base-level car; it had no sunroof, remote start, navigation system, sport suspension, or up-sized wheels. It was equipped with heated (but not cooled) front seats, a Bose stereo with XM and a 6-disc CD changer, and ambient LED interior lighting. Driving the entry-level CTS allowed me to see what basics Cadillac’s designers got right, and what features a potential buyer might want to upgrade.

Although I love the overall shape of the CTS, the styling falls apart for me around the back half of the rear doors. The shape of the window opening at top of the rear door kinks downward suddenly, looking like it is manufactured from cheap, straight segments of metal (though it isn’t). The chrome trim around the rear door’s window looks like two pieces (one at the top, one at the bottom) because it is; the upper chrome is mounted to the vehicle body, while the lower chrome is mounted to the door. The overall look is one of a bunch of parts being slapped together, and it looks anything but premium. The 2008 Chevrolet Malibu, which costs about half as much as the CTS, has a much more stylish window trim treatment on its rear doors. It’s disappointing that Cadillac got so much right with the CTS’ styling, yet seemed to have dropped the ball in this detail. Perhaps the upcoming CTS Coupe will escape this styling issue, as its C-pillar trim doesn’t need to split for a door opening.

The first interaction with any car is the key, and Cadillac chose to use a standard GM key blank with the Cadillac crest glued on, and a separate remote locking fob. The fob is a premium-looking unit, but it is HUGE, much larger than the standard GM unlocking fob used on less expensive brands. The fob is bigger (both longer and wider) than the actual ignition key (a CTS with Cadillac’s EasyKey system has only this fob, which has a cut key hidden inside, necessitating the large fob size). I guess this will keep male CTS drivers without EasyKey from wearing too-tight pants, as the key and fob in a front pocket would leave a definite impression on any passers-by. The fob--key nonsense is a powerful argument for ordering the CTS with the EasyKey option. Frankly, when I was handed the keys for the CTS, I found it a little disheartening to see a standard-issue GM key and a larger-than-necessary fob, when several less-expensive GM products such as the Saturn Astra have unique keys.

When I first sat in the CTS, I immediately noticed the stitched upholstery detailing on the dashboard and door tops. This was paired with a faux carbon fiber accent band and charcoal-colored lower dash/door inserts. It is a very handsome look and lends a premium air to the interior. The CTS’s center stack has been lauded before for its modern layout and nice materials, and I’ll add to the car’s praise. The controls on the center stack are nice to look at, nice to touch, and are intuitive to use. The audio display is among the best satellite radio units I’ve seen, as the unit makes it easy to scroll through the stations, and artist, title, and station are all displayed on the screen. My one complaint on the center stack is about the location of the temperature and heated seat controls on the beveled edges of the center stack. As I sat in the car, the driver’s side control was partly obscured by my knee. I found reaching behind my knee to be an awkward reach for the temperature control.

I had the opportunity to spend an afternoon carving some of Utah’s canyons between Orem and Park City; I covered about 120 miles in three hours. During that time, the seats remained comfortable, though the bottoms are fairly flat and the bolsters on the seatback were designed for somebody with a torso wider than mine. I used the automatic transmission’s sport mode, and the Driver Shift Control (manumatic) feature. The CTS was the first manumatic I’d driven that “blips” the throttle on downshifts, it worked very well on approaches to tight bends. While the standard V6 pulled strongly to its redline, making sounds that were far from unpleasant, the high elevations and 85 octane fuel in Utah conspired to sometimes make the engine sound a bit wheezy at lower RPMs.

My drive began with a bottle of water and a bottle of soda in the front drink holders. Unfortunately, those holders weren’t particularly deep and neither the center console nor the front door pockets were large enough to accommodate a 20 oz bottle; I ended up shoving one in the glove box and the other in a seatback pocket so I could easily reach the shifter. While the CTS’ interior is stylish, there isn’t a ton of space for gadgets, and without a standard Bluetooth system, one’s cell phone needs to be in easy reach. Once the drink bottles were out of the cup holder, I finally had a place to put my sunglasses and cell phone where they could be easily reached; it wasn’t easy to reach them in the under-elbow console box.

The one thing that really let the CTS down in the twisties was its base suspension. It allowed the car to feel large and heavy (which it is), and while the CTS was always surefooted, the chassis didn’t communicate very much road feel to the driver’s seat. On the other hand, the steering turned in quickly and offered good feedback. On my run through the canyons, setting the StabiliTrak stability system to Competition Mode helped a bit, by allowing some predictable, easy-to-control wheelspin from the rear tires. Experiencing the car in that situation really showed off how well balanced the chassis is, even without the sport suspension.

While the Cadillac’s Bose stereo had good sound quality, the steepness of the canyon walls often blocked out the XM signal on my drive so I turned off the audio system and just listened to the sounds the car makes. Because the CTS offers incredible sound isolation and is therefore very quiet inside, I opened the windows to better hear the engine and the tires in the canyons. Since the chassis wasn’t giving me much feedback about what was going on with the tires, I used my ears with the open windows to discern grip levels, which were quite high even on the standard tires.

It’s not every day that the car rental gods smile upon you and hand you keys to the Motor Trend Car of the Year rather than a Pontiac G6. If you are considering a CTS and have any appreciation for driving enjoyment, I recommend opting for the upgraded FE2 suspension package, which eliminates much of the undesirable softness and floatiness that I encountered during my time in Utah’s canyons. Aside from a few questionable ergonomic choices (such as the awkward temperature controls and the shallow cup holders), even the base CTS has a very attractive, upscale interior with many comfort features. The base engine is about 15 percent down on power from the V6 with direct injection, but the six speed automatic was able to keep the engine in its power band most of the time. Just remember, if you want a CTS with all of the “good stuff” (meaning the things they show you on the press photos or in advertisements), be prepared to pay a lot more than the base price.

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Time to Revive the Spirit of the Citroen 2CV?

Time to Revive the Spirit of the Citroen 2CV?

By Andy Bannister


At the Paris Museum of Science and Industry from now until November is a major exhibition celebrating the 60th anniversary of that most French of cars, the Citroën 2CV.

While sadly disappearing from everyday use nowadays, and a less common sight on Europe’s roads than it once was, the 2CV – or deux chevaux – had a remarkable career stretching from its 1948 launch to 1990, when the car finally went out of production at its last remaining plant in Portugal.

Few cars are as loved or loathed in equal measure. Enthusiasts adore the charm of the tiny air-cooled twin cylinder engine, the “push-pull” gear change, the almost complete absence of interior trim and features like the huge canvas sunroof, the enclosed rear wheels and the flip-up windows.

To others, the 2CV is an abomination which should have been put to death in the 1950s – an ugly, wheezing, unsafe contraption often seen clogging up roads by being driven so slowly by its self-righteous owner.

In appearance, the 2CV was old-fashioned before it saw the light of day, its narrow, upright body, separate wings and tiny doors owing more to the 1930s when the car was taking shape. Its birth was almost stifled by the invasion and occupation of France in 1940, with prototypes hidden away during the war years only to be dusted-off after the Nazis were safely defeated.

Laughed at by many even at launch, the 2CV nevertheless struck a huge chord because it provided what motorists in France and much of the world needed at that time – a simple, cheap, robust car which anyone could maintain, contained in a roomy body well able to cope with rough roads.

Unlike later “bubble cars”, the 2CV was a decent sized vehicle which could carry four big adults and lots of luggage, despite its small engine – just 375cc at launch, eventually expanding to a heady 602cc.

Pierre Boulanger, father of the 2CV, wanted to drive the horse and cart off the roads of France, then very much a peasant country. He specified his new low-priced car should be able to seat four people at up to 40mph or so and cross a ploughed field carrying a basket of eggs without breaking any. The passenger seats also needed to be removable to allow animals to be carried – all in all, a true workhorse for the country-dweller.

Today, with cars become more and more loaded with safety kit and convenience features that only a few years ago would have been options even on luxury models, a really basic vehicle seems many people’s idea of a nightmare throwback to a dark age of motoring. Tata’s recent Nano, however, shows such innovation is not dead, however, and India’s desire for affordable transportation for the masses could be compared to the situation in early post-war Europe.

Ironically, especially after the near-bankrupt Citroën was taken over by arch-rival Peugeot in the 1970s, the presence of the 2CV in the company’s showrooms increasingly became an embarrassment for the company, even if sales remained surprisingly healthy.

In the UK, where the car was reintroduced in 1974 after years off the market, it became an unexpected hit, and British sales were stubbornly high right up until the end, being loved for its quirkiness by urbanites who actually could have afforded a much pricier car.

Despite proof that idiosyncrasy has its fans, Peugeot, has often seemed determined to beat every drop of individuality out of Citroën, by plugging the yawning gaps in its range with increasingly ordinary cars.

First step on this road was the launch of the miserable 1976 Citroën LN, which had a 2CV engine in the very square-looking shell of a three-door Peugeot 104, a slow-selling rival for the market-leading Renault 5.

The company’s later small cars like the AX and Saxo, although sales hits, reinforced that trend. More recently, Citroën has rediscovered its styling individuality, in models like today’s C2 and C3 – the latter having a hint of 2CV in its curved roof profile – but they are still nothing more than Peugeots in alternative bodies.

Unlike the Mini, Beetle and Fiat 500, the extraordinary physical peculiarity of the 2CV would seem to militate against any retro revival. In 2005 a student design study called the Evoque seemed to prove the point that the shape doesn’t easily translate into a modern setting.

There have, however, been persistent rumours of a revival of some kind, with one British magazine last year confidently predicting a new 2CV by 2009, complete with the car’s trademark corrugated bonnet. This car, if it ever happened though, would most probably be just another designer pastiche with ordinary underpinnings and a sky-high price tag.

Interestingly, the current Paris exhibition twins the classic 2CV with the company’s latest small car concept, the C-Cactus, first seen at Frankfurt last year.

Citroën claims the C-Cactus and the 2CV share a common theme of innovation, being inspired by the same concern of how to do more with less. The prototype, however, is still a substantial model and miles away from being a minimalist design solution.

If the 2CV has any modern equivalent today in Citroën’s range it is probably the Berlingo MPV, a converted van which has been a great sales success even though it is not nearly the price-leader at the very base of the market the 2CV was.

With Europe’s car makers under siege from the threat of recession, fierce competition from China looming on the horizon, the increasing demands of safety legislation and environmental limits on emissions, the time could be right for someone to launch a car which goes right back to the drawing board.

Renault – which arguably stole the 2CV’s idea and made it work better with its 1961 4 hatchback, another hugely influential car which sold far better than its compatriot – seems to have come closest with its Dacia Logan, relying above all on cheap assembly and relentlessly paring costs to provide an acceptable, if anodyne, family vehicle.

Yet Logans are unlikely to be celebrated in a science museum any day soon, never mind in another 60 years.

If the 2CV is finally getting the acknowledgement it deserves as a truly pioneering design icon, will Citroën – or any of its European competitors – have the courage to follow it example and truly go back to basics?

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The Future’s So Bright, I Gotta Wear Shades

The Future’s So Bright, I Gotta Wear Shades

Automotive lighting technology on the bleeding edge of good taste

by David Surace


This morning I had a very strong urge to pick up my neon pink highlighter and rub it all over my screen. I’m actually not much smarter than that. Anyway, this is the quote which nearly voided my monitor’s warranty, from an (subscription req’d) about Dutch technology firm Philips opening their first automotive lighting engineering center in China:

“The Shanghai center will also help Philips learn about the special needs of the China market, says Harry Linssen, regional market manager and manager of the Shanghai application center.

For example, Chinese drivers use their bright lights almost all the time, putting more strain on the lights, he says. There is also an education element to the center, such as explaining why driving with brights all the time is not necessary and can be dangerous, says Linssen.”

I can just see the greatest Dutch minds in automotive lighting now, sitting around their morning kaffe with their brows collectively furrowed, pondering how to make their high-beams brighter and more durable for market demand while simultaneously encouraging people to quit using them.

Fortunately for you and me and those guys, not all the new developments in lighting technology pose such Zen-like quandaries.

Because I’m a romantic, I envision a future with automotive lighting embracing the entire spectrum from glaringly efficient to subliminally subtle, and everywhere in between. The horsepower wars are soon to be over; there have to be other ways to get consumers’ emotional attention. Cars will need to express such exquisite lighting nuance as to make Rembrandt weep in his grave.

And part of that is the case already. There’s another from a few days back which talks about the state of interior lighting tech in the industry right now, and a few of the clever production features that auto suppliers are cooking up for the near future. Like what, you say?

Like, how about the complete replacement of incandescent and gas-discharge bulbs with light emitting diodes, or LEDs? They weren’t good for much even as recently as 20 years ago, but they get brighter and better with each passing generation. Today, right now, they’re smaller, they’re cheaper, they’re almost infinitely adjustable in terms of brightness and color, they last at the very least a couple hundred times longer, and they use an order of magnitude less voltage than their conventional brethren. In fact because of all of these things, designers can package LEDs in places we’re not used to seeing lights, like behind doorhandles and under seats and even inside soft materials.

LEDs are already being used as taillamps by many manufacturers, and daytime-running-lights by Audi and Porsche, and these are soon to spread across the GM lineup as well. The real trick, which is just now being put in production in the Audi R8, is to make real headlamps out of LEDs. They’re not so bright by themselves (yet) but when they’re grouped together in arrays their effect is magnified. And since they’re so small and take up so little voltage, they open up a new door for designers and engineers who might see a better use for the space and voltage that halogen and xenon headlights had taken up before.

And that’s just the light source. There are new ways to transport and bend that light and put it in even crazier places, like in the interior roof lining. From the : “Rolls-Royce provides its customers with the starlight headlining in its Phantom sedan and coupe. One man hand-makes the headliner at BMW’s Dingolfing plant with 1,600 individual fiber optic leads in a random star-like pattern across the roof. Customers can have their own star sign, and one Japanese client got his company logo.”

Fiber optics are just the tip of the iceberg; there is an entirely new class of light-tubes and light-guides that can spread light evenly across an entire dashboard or an entire headlamp or taillamp assembly, a technology already in use with Mercedes-Benz, Cadillac and SAAB. Most current light-tubes are made of hard clear plastic or polycarbonate, with an LED at one or both ends. But 3M Automotive, a relative newcomer to the automotive lighting business, is also plying designers with a new flexible light-tube, the likes of which could fit in all kinds of unexpected places, like perhaps as the “piping” on seats and soft surfaces.

And that leaves the most interesting, and perhaps bizarre, lighting technology yet to be mined: electroluminescent (or “EL”) materials, the kind that Timex patented as Indiglo(tm) for its watches, which give off light across the entire surface once a small electrical charge is introduced. It can be cut into many different shapes, in flexible or rigid sheets and even thin strips and rods.

These have found all sorts of uses in the gauge clusters of most new cars already on the road. Chrysler also utilizes EL material inside its cupholders on many passenger vehicles including the Dodge Caliber and the Sebring/Avenger twins, and Jaguar puts the EL material to good use behind the sleek console buttons on the new XF. But what about on the outside of the car, like the glowing accent strips on the 2007 Buick Riviera Concept? Well, there are a couple problems.

Endurance racing series like the American Le Mans Series, and the Le Mans Endurance Series in Europe, have already latched onto EL number panels which make the numerals easier for officials and spectators to read during night racing. The only problems that have been encountered thus far relate to an inherent weakness in the face of impacts and water seepage, issues which can cause the EL material to short circuit in short order. EL material also becomes exponentially harder (and more expensive) to illuminate in larger sheets and strips, as it requires more voltage per additional square inch. So until steps have been taken to ensure EL panels can stand up to long-term wear and tear, inside your car they will stay.

If by now you are picturing automobiles of the future just blinking and glowing furiously at the night sky like little rolling homages to the Vegas strip, you might well be right. We have the technology to go that direction, yes. We could use our newfound lighting prowess to blind each other silly, just like the problem Philips faces in China.

But an important thing to remember is that many of these lighting instruments are used by designers in a secondary, indirect role. Good design–not just responsible design–uses light as an indicator, a way to illuminate things that are necessary. When they get it right, it’s a soothing, calming and altogether safer way to drive.

But if your necessary things just happen to be blinding or gaudy, that’s your problem. And that’s– wait a minute, who stole my pink highlighter?

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Check Your Mirrors

Odds and Ends About Cars and the Car Business

By Brendan Moore


Well, it has been a long time since I did one of these; hopefully I’ll remember the succinct style that proved successful before. Herewith, a quick overview of some small but noteworthy things happening in the world of cars.

DAIMLER kept almost 20% of Chrysler when it paid Cerberus to tow the rest away in 2007. That 19.9% stake was valued on the books at that time at $2.18 billion USD. In what has to be an embarrassment to Chrysler LLC, Daimler has now written the value of that stake down to $851.2 million USD, owing to Chrysler’s poor financial performance and a subsequent decline in its value. Chrysler, for it’s part, sputtered a little bit about how international accounting methods are very different from American methods, and stated that Chrysler has “enjoyed positive operating earnings” ever since the Cerberus acquisition.

TOYOTA has gone on record as warning owners of its Prius hybrids that replacing the factory battery pack with a lithium-ion battery pack from A123System may void the factory warranty. The aftermarket battery pack is designed to boost the all-electric capability of the car using a plug-in platform that may let users realize a potential 100 mpg. Says Bill Kwong, Toyota’s spokesperson in Torrance, CA, “We don’t recommend customers modify our vehicles. It wouldn’t automatically invalidate the warranty, but if they put this in and it fries the electrical system, for example, obviously that would not be covered.” A123System is the same supplier that is the acknowledged vendor the future Chevrolet Volt plug-in hybrid and the TH!NK electric vehicles.

HONDA has agreed to supply 100 Honda Civic Hybrids to British Airways fleet services for use by BA employees. “Environmental performance was the key consideration in British Airways’ decision to invest in the new fleet,” said Gary Meades, environmental manager, British Airways. “The hybrid technology not only meets the highest environmental targets for vehicle emissions but will also deliver greater fuel efficiency.” It is anticipated that each employee driving a Honda Civic will reduce their CO2 emissions by 33% in every year of use. The BA deal is the second-largest hybrid fleet deal in the UK; the largest was the purchase of 400 Prius models by Sainsbury earlier in 2008.

SATURN boss Jill Lajdziak said last week at an evening event for bloggers that, knowing what she knows now, she would not have shut down Oldsmobile. Ms. Lajdziak stated that, armed with current hindsight, that the decision to close Oldsmobile “probably didn’t result in a gain for GM, but a net loss in customers.” The reason the subject of Oldsmobile came up during a Saturn media event was that the head of Saturn was asked whether Saturn considered picking up the last-generation Aurora at the time of Oldsmobile’s death and re-branding it as a Saturn. Ms. Lajdziak replied that no consideration was given to that move at the time, even though she though said that the last-generation Aurora was a fine car among its then-contemporary competition. Ms. Lajdziak also spoke at length about the challenge of changing Saturn’s image as more and more Opel-based product shows up on Saturn lots.

RENAULT says that a Gulf state is very interested in their environmentally friendly electric car project. Renault CEO Carlos Ghosn would not disclose the name of the Middle Eastern country, but stated in a news conference that Renault was in serious discussions with that country to launch an EV. Renault has plans to put a production EV on the road by 2010, and Ghosn says that with oil around $120 USD a barrel, the business case for an electric is more or less a walk in the park in terms of value justification. According to Thomson Financial, Ghosn said “”The electric car of the past was huge with a big battery … Today [they have] very attractive designs. [They are] sexy cars with attractive designs with no emissions. An electric car has to be at normal cost or lower … [the] battery and electric charge has to be cheaper than gasoline. At 120 dollars per barrel, it will be very easy.” Renault already has an agreement on developing electric cars in Israel, and is in talks with several other countries, such as Denmark.

DANICA PATRICK, fresh off her IndyCar win two weeks ago, has now stated that she would like to test for F1 if possible. “Every driver would love to drive a Formula One car at some point in their life, so yeah,” she told Autosport. “I don’t think there’s anything wrong with a real, proper test. I was asked to do a demonstration lap at Indy in 2005, and I said, ‘No way. You’re making me a show. That’s embarrassing.’ But I would say that a real test is absolutely something I would do.” The lure of having a competent female driver would be huge for a couple of teams, so now that she’s made her desire known, here’s betting she gets her test soon.

FORD has announced that it has appointed a new Managing Director of Ford India. The new man is Michael Boneham, formerly the Executive Director of Operation for Ford India. The previous Managing Director, Arvid Mathew, is being given a position with Ford in Detroit in their Global Product Development Team. Ford has a total investment plan of approximately $875 million USD for India and has very high hopes for market expansion in the next five years. Ford intends to have production capacity of around 300,000 units by 2013, as well as plans for an engine plant with capacity of 250,000 units annually.

NISSAN is going to sell the Cube in the U.S., and apparently, Europe as well. Nissan has confirmed that the future-generation Cube will be sold in Europe in 2010. The Cube has a 105 bhp gasoline engine and a CVT engine and seats five within it’s distinctive box shape. There is a seven-seat model sold in Japan, and it is an open secret that an electric version is being strongly considered. The Cube is based on the Nissan Micra platform, and is cheap to produce, thereby making it a profitable (and desirable) car for Nissan to sell everywhere they can. Expect to see one on a road near you in the near future.

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Gas Tax Holiday Is a Stupid Idea

Gas Tax Holiday Is a Stupid Idea

Who needs satire when you have politics?

By Brendan Moore


It’s a pretty safe bet that most of you reading this know that Hillary Clinton and John McCain, candidates for the U.S. presidency, have put forth the idea of a “gas tax holiday” this summer whereby the federal gas tax of 18.4 cents per gallon will be suspended. And Barack Obama, the other presidential candidate, has come out as opposed to the idea.

You read the title of this article so you already know what I think about it, but let me elaborate. A gas tax holiday is an incredibly stupid idea. Not as stupid as ethanol from corn, but still blindingly stupid.

First of all, if you want people to drive less and use less gasoline, as almost everyone now states is in our best collective interests, including the two candidates pushing for the gas tax holiday, you raise the price of gasoline, not lower it.

Second, there are not enough stocks of gasoline available to make up for any sudden and short-term increase in consumption. The price of gasoline will quickly adjust itself upward as gasoline becomes more scarce, which means that the oil companies will get the margin between the previous market price and the new market price, which will probably be very close to previous price before the tax suspension. That margin is pure profit for them. The savings envisioned as going to consumers will simply be more profit going to the oil producers.

Third, that tax pays into the Highway Trust Fund, which builds, maintains and improves roads and bridges all over the United States and is already facing a 3.4 billion dollar deficit at this moment. This activity not only employs a lot of people, it makes travel safer and faster. How many people are employed by road and bridge construction? The federal transportation department says every $1 billion in highway spending creates 34,779 jobs, which means the gas tax holiday could cost 300,000 construction jobs. And safer and faster travel means less people die or get injured in vehicles, and, it means less gasoline is consumed while those vehicles are traversing the highways of this great land. It allows people to not use (and buy) as much gasoline as they would otherwise.

Its things like this that make me loathe politicians at times. Even the most cursory analysis of the situation will produce the conclusions I laid out above, and those conclusions produce the assessment that it’s not a good idea. Since Hillary Clinton and John McCain are both smart people, you have to believe they came to the same conclusions without much trouble and are therefore willfully ignoring what would be the right course of action in their angling for votes. It makes me a little crazy, frankly. It’s hard to respect any politician that pushes this sort of ridiculous premise to a desperate electorate.

I’m not alone in my point of view concerning the reasons that a gas tax holiday is a stupid idea.

To wit:

“That would mean the 18-cent decrease in gas taxes would represent a temporary subsidy to the oil companies”, says James Hamilton, an energy economist at the University of California San Diego.

Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington, stated, “You are just going to push up the price of gas by almost the size of the tax cut.”

Greg Mankiw, noted Harvard professor and a former chairman of President Bush’s Council of Economic Advisers, said, “In light of the side effects associated with driving … gasoline taxes should be higher than they are, not lower.”

Gilbert Metclaf, a economics professor at Tufts University currently working with the National Bureau of Economic Research said about the gas tax holiday proposal, “I think it is a very bad idea. If we want people to invest in energy-saving cars, we need some assurance that the higher price paid for these cars is going to pay off through fuel savings,” he said. “It is a very short-sighted, counterproductive proposal.”

No one has ever claimed that politicians get elected appealing to voters’ logic and grasp of the facts, but let’s hope that enough voters passed Economics 101 so that this staggeringly poor idea is not rewarded at the ballot box.

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GM Posts Q1 Loss of $3.25bn

GM Posts Q1 Loss of $3.25bn

…which is not actually as bad as it sounds

by David Surace


First the bad news: this morning, thanks in no small part to the UAW strike at American Axle & Manufacturing, Delphi’s bankruptcy, a big chunk of interest spent on money-losing GMAC, and plummeting automotive sales thanks to high gas prices, the hardest-hit being light truck and SUV sales.

Now before I go on, I’d like to put that in perspective. If I lost $3.25 billion in the first three months of this year, you would find charred pieces of me in several different states. Or rather, you wouldn’t find me, because my wife is very clever at hiding things.

But, because we’re talking about GM, there is still a silver lining.

The good news: most of that loss stems from “one-time items”, like the $1.45bn change in GMAC’s value before its spin-off, and another $731 million reflecting an increase in GM’s liability of Delphi’s bankruptcy, and the two-month strike at American Axle, which cost $800 million.

With all that aside however, the actual operating loss is pegged at around $350 million, or 62 cents a share. Now, Wall Street analysts had expected an operating loss of more like $1.50-$1.60 a share, all the one-time baggage to go with it.

A big reason for the discrepancy between expected losses and actual losses is that GM did far better than expected outside the US. Sales soared (a 20% increase overall) in places that aren’t affected as much by our not-really-a-recession. In fact, the Asia-Pacific and Latin America-Africa-Middle East regions had actually doubled their earnings.

And in response to the American Axle strike (which cost some 100,000 vehicles) and depressed US and Europe sales on soaring oil prices and a slowing economy, GM announced it will cut production on its light-duty trucks and SUVs, and also lowered its sales expectations for the year, too.

So in early trading this morning, shareholders applauded, and GM gained 4.3%. All’s well that ends well? We’ll see.

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