CAFE Battle, China Rethink, Plymouth Burial, Etc.

by Bob Hagin

July 9, 2001

Just when I think that the car world is calming down, new battles and corporate decisions crop up. Here's the latest happenings:

CONGRESSIONAL BATTLE AGAINST FUEL ECONOMY LOOMS - An increase in the Corporate Average Fuel Economy (CAFE) standards is a nightmare waiting to come true in the minds of most auto and truck makers. It could pull the plug on some of the most profitable sport/utility vehicles and pickups that come from the manufacturers, but this well may be in the immediate future for the makers of big vehicles. The Republican- controlled House of Representatives is rumored to be including higher CAFE benchmarks to upcoming legislation on energy matters. Although the Bush administration advocates increased resource production (read that as make and sell more fuel), House members see the public as favoring conservation as eschewed by the Democrats in Congress and don't want to look "bad" at election time. Current CAFE standards have been frozen for six years at 27.5 MPG for passenger cars and 20.7-MPG for light trucks - SUVs fit into this category. Most Americans think of CAFE as a place to eat but to auto makers, it's a fire-breathing dragon.

VW KILLS TINY CHINESE "WORLD" CAR - Apparently American buyers aren't the only consumers who want their next vehicles to have as much size and luxury as possible. A new Volkswagen sub-mini entry-level car to be built in China for the world market has been in the planning stages for a couple of years, but that German company has finally come to the realization that the Chinese who can afford their own car want something more than a half-step above a bicycle. Although Volkswagen makes and sell its tiny 50-horse Lupo in Europe, this is too small for Chinese buyers and the Sino-VW of choice there will be the next-step Polo which in Europe can be had with as much as 125 horsepower. Obviously its going to be a long time before every home in every Chinese village will house a vehicle.

PLYMOUTH FINALLY BURIED - Last year we eulogized the passing of Plymouth as a brand name after the powers-that-be at DaimlerChrysler decided that like Oldsmobile, it was a redundant brand whose model names could easily be transferred to other in-house makes. Hence the "Plymouth" PT Cruiser became the Chrysler PT Cruiser. But unlike General Motors who is planning a grand send-off for the 100-year old Oldsmobile name, the last Plymouth-branded vehicle rolled off the assembly line late last month without so much as a by-your-leave. If it hadn't been for the nostalgic inclination of a Chrysler group president, it would have gone onto a showroom floor somewhere as just another silver Plymouth Neon sedan and from there into obscurity. As it is, it's now in his private collection. Many other auto makers set aside their last-of-the-line cars into a museum somewhere, but the folks at DaimlerChrysler aren't that sentimental, it seems.

CADILLAC GET SERIOUS - We've all seen those stylish TV makeovers of other obviously Plain Janes and Johns who, in the hands of a fashion guru and an upscale hair dresser, are transformed from dowdy to dandy in just a few hours. Now General Motors is planning the same scenario for Cadillac in the hopes of transforming this darling of the geriatric set (average buyer circa age 65) into an upscale challenger in the BMW, Lexus, Infiniti and Mercedes league. And the changes are starting at the top. General Motors has wooed and won a hard-charging corporate advertising man away from a soft-drink company with orders to "go get 'em!" To this end, GM has pledged $4-billion to a program that hopefully will win the hearts of baby-boomers and change the Cadillac image. So you can look for more TV ads that capitalize on Cadillac's strong presence in world-class sports car endurance racing and other "with-it" youth-oriented activities. Maybe it can paraphrase that old Oldsmobile motto and state that "This isn't your Grandfather's Cadillac."

VW CUTS ROLLS-ROYCE LOOSE - We've followed the ongoing animosity between Volkswagen and BMW over the surgical separation of the joined-at-the-hip Rolls-Royce/Bentley Siamese twins and the operation is taking on some of the aspects of a knife fight in a back alley. VW owns both names, but in a complicated court battle, lost the Rolls-Royce name to BMW. And although BMW owns the name, the current Rolls-Royce models are made in the VW-owned Rolls factory in Crewe, England. That ends early next year and from then on Bentleys will be the only product made at that plant. After that, BMW is on its own and doesn't expect to be able to produce a Rolls until 2003. Not only that, VW says it won't provide BMW with the 80-year old customer database or let it sell its new products in Roll-Royce showrooms worldwide. "We're not going to make it easy," said a company spokesman."

It seems that nothing in the auto world is "easy" anymore.