Chrysler has decided to make its Dodge car and truck units two independent businesses. Many industry insiders have speculated that this would, in fact happen, and now they have confirmed it. Fred Diaz Jr., formerly Director of the Denver Business Center will be the new head of the RAM brand.

Here is Chrysler’s press release:

“Chrysler Group LLC today announces brand and commercial organization changes.

“The brand-focused strategy has been refined further with the unbundling of the Dodge Brand which now consists of the Dodge RAM Brand and the Dodge Car Brand organizations. This reorganization will allow us to protect and develop the unique nature of the product offerings within the Dodge Brand,” Mr. Sergio Marchionne, Chief Executive Officer, Chrysler Group LLC said.

Fred Diaz Jr. is appointed President and CEO, Dodge RAM Brand with profit and loss responsibility for the Dodge RAM product portfolio. Mr. Diaz will also be the lead executive for the Sales organization in the United States. He was previously the Director of the Denver Business Center. Mr. Diaz has been with the Company since 1989 in positions of increasing responsibility. The Company will announce Mr. Diaz’s replacement with a separate announcement.

Ralph Gilles is appointed President and CEO, Dodge Car Brand with profit and loss responsibility for the Dodge Car product portfolio. Mr. Gilles will continue to lead the Product Design organization of Chrysler Group which he joined in 1992.

Olivier Francois is appointed President and CEO, Chrysler Brand, with profit and loss responsibility for the Chrysler product portfolio. Mr. Francois joins the Company from Fiat Group Automobiles where he serves as head of the Lancia Brand, a position he retains. Mr. Francois will also be the lead executive for the Marketing organization with responsibility to coordinate worldwide marketing strategies, brand development and advertising for the Chrysler, Jeep®, Dodge Car and Dodge RAM brands. He will continue to lead these functions within Fiat Group Automobiles. Mr. Francois joined Fiat in 2005.

Michael Manley will continue as the President and CEO, Jeep Brand with profit and loss responsibility for the Jeep Brand product portfolio. Mr. Manley will also be the lead executive for the international activities of the Company outside of NAFTA and will be responsible for implementing the co-operation agreements for distribution of Chrysler Group products through Fiat’s international distribution network. Mr. Manley has been with Chrysler since 1998.

Joseph Veltri joins the Management Team as Head of Product Planning. Mr. Veltri started with the Company in 1988. His career has included positions in product planning, marketing, business strategy, and finance. He served most recently as Product Planning Lead and Head of Truck/SUV Planning.

Peter Fong, head of the Chrysler Brand has resigned for personal reasons. Michael Accavitti, head of the Dodge Brand has resigned to pursue other interests.”

The CCX super car, by Koenigsegg Automotive. Not your father's Saab!

Perhaps you’ve heard of Koenigsegg Automotive . They are one of the select few automakers to make a car that goes over 200mph, right off the showroom floor. 806hp will do that for you, you know.

Safe to say that while they deliver spectacular performance, gas mileage isn’t their strong suit. Knowing a business opportunity when they see one, this tiny maker of specialty supercars announced a few hours ago that they had purchased Saab, an automaker that makes around 100,000 cars per year, although that has been dropping of late.

Does that mean the Saab 9-5 will one day beat a 911 around the ‘Ring? Probably not.  Koenigsegg’s big challenge for the present is to make Saab profitable. Known for their quirky, small luxury cars, Saab didn’t benefit from their years under the GM umbrella, as fellow Swedish car maker Volvo has under Ford’s ownership. They cars have been rated mid pack and priced near the top of their segment; not a great recipe for success, unless they have enough intangibles to draw buyers.

We will see if  Koenigsegg can provide those, and restore Saab to the position it once held. Not too long ago, people wanted to drive a car made by a company that also made top of the line jet fighter planes and police cars for the Vail, CO police force.

GM has been looking to unload all it’s secondary manufacturing units, of which Saab was one, and leave itself with only its core brands, Chevrolet, Cadillac, GMC Trucks, and Buick. Why GM would ax Pontiac and retain Buick, when the former sold many more cars per year is an open question. I would postulate that The Chief’s performance oriented image didn’t sit well with the General’s new bosses in Washington. After all, who needs a V-8 powered sedan with over 400hp?

Americans want small, fuel efficient cars, and Pontiac makes primarily politically incorrect, performance oriented vehicles. If one looks at Toyota Prius sales figures for the first part of 2009, you will see that this isn’t necessarily true, although that’s not what the administration would have you believe. The position that Americans would buy mainly small, fuel efficient cars if given the choice doesn’t hold water if one examines the number of such cars Americans actually did buy when given the chance.

January sales of Toyota’s Prius, poster child for the small, fuel efficient car movement, were down 33.6% in January and 29% in February over the same months in 2008. The Honda Civic Hybrid, a more sporty hybrid than the Prius, experienced declines as well. In January, the Honda Civic Hybrid’s sales were off over 40% year over year, and in March, 2009, only 2,869 Honda Civic Hybrids were sold. All in all, 40.9% fewer hybrid vehicles of all makes were sold than were sold in the same month of 2008. That doesn’t sound like a class of vehicle that is especially popular with American buyers.

When fuel prices are high it is another matter entirely, which is why many are predicting that increasing fuel taxes, or using other means, such as restricting domestic oil production (by limiting new sources of supply from being exploited), will be employed to inflate fuel prices. High fuel prices will force American drivers to seek out more fuel efficient vehicles, such as hybrids, which sales figures amply demonstrate American drivers eschew in other cases.

Will maker of extremely politically incorrect cars, Koenigsegg seek to do what Saab has always done, make mid-level luxury cars, just revitalize the line with exciting, new models? Or, will they take Saab in a new direction, and remake Saab into a producer of smaller, more fuel efficient vehicles, albeit upmarket ones? Perhaps they’ll do a bit of both. If they want to experience a resurgence in the U.S. market, they need to appeal to Americans taste for quirky luxury, with more than a splash of performance, while retaining Saab’s “Green” reputation.

The new Tesla Motors Model S electric sedan. Zowee!! Count me in!

Tesla Motors, the car company famous for the Lotus derived electric super sports car, has found one way to deal with it’s cash flow and money problems created in part by founder Elon Musk’s falling in with the wrong management crowd. Such problems in the management have since been remedied, and now Daimler AG comes along and drops $50 million into Tesla’s coffers.

One would presume that a cash infusion isn’t all the aoutomaker will be getting. Obviously Diamler is world reknowned for their engineering prowess, and it’s only logical that some of that expertise would make it’s way to San Carlos, allowing further improvements to Tesla’s autos and production facilities. In addition, the much needed capital provides the financing Tesla needs to continue development on their new Model S.

Like their sports cvar, the new Model S sedan looks to be a stunning performer, with a 0-60 time promised  in the mid 5 second range. Speaking of range, the Model S should get about 300 miles before the last juice drains from the batteries, although I doubt you’ll be doing too many mid 5 second 0 – 60 runs and still going 300 miles between charges.

Speaking of the batteries, Diamler also will use tesla’s Li-Ion batteries for their electric  car efforts. The real thrill is the fact that Tesla will now be able to get their Model S production underway. Priced at about half the going rate for the roadster, or between $50,000 and $55,000, Tesla’s Model S is an electric car that could prove to be the kind of electric vehicle that could finally woo drivers from their fossil fuel powered vehicles. It looks great, has more than adequate performance, and holds 5 people and their luggage in comfort.

That’s a car people can really get behind, and they’ll have to, because it won’t need to stop for gas and it beats most vehicles in an acceleration contest to freeway speeds. That means you’ll either be in one, or chasing it. Although it is still far too expensive for the average driver, remember that President Obama’s announcement today of increased fuel efficiency standards means that traditional cars will quickly become more expensive. They will have to in order to pay for the technology required to rapidly implement the new fuel mileage rules. When setting such things, politicians would do well to remember the development cycle of the modern vehicle (about 3 – 5 years), and the fact that an advanced technology vehicle will typically have an even longer cycle.

This price increase will narrow the gap somewhat. Performance electric vehicles will continue to drop in price as more manufactiurers introduce their own designs, and production facilities ramp up. In addition, electric cars are elligible for a tax rebate, which not only makes them more affordable, it makes sure that your neighbor, who may not have been able to spring for a $50,000 car, helps you pay for yours. Ahhh, the joy of Government subsidies! After all, when the government helps someone pay for something, we’re all helping to pay for it.

By the way, when the government starts telling car companies how much they can spend for marketing (as they recently did to Chrysler), all businesses should look around. Sure, they bailed out the car manufacturers, big time, but how do the Feds think the car companies sell their cars anyway? Marketing, anyone?

The 67 Goat 389, from Pontiac's heyday

Well, GM finally did it. After months of speculation, the General finally decided their most performance oriented brand could last no longer. It make me wonder how much of that was a PC oriented move, and how much of it was based on purely business considerations. When you’re taking so much money from a federal government that has indicated the public needs to start buying fuel efficient vehicles, how does it look to make vehicles such as the Pontiac G8? Especially that new G8 GXP with the breathed on V-8.

The brand that brought us the 389 Goat and the Smokey and the Bandit Trans Am will go in that good night, but will all performance offerings from GM do likewise? Due to budgetary concerns, they already killed their performance engineering division (PVO) that was responsible for the CTS Caddys and the ZR1 Corvette. Time will tell if the Corvette is the only performance oriented vehicle left at GM. I only hope it can hang on. After all, it is about the most fuel efficient, true, high performance vehicle in existance.

They killed off Oldsmobile a few years ago, and now Pontiac is gone. How has Buick managed to escape the chopping block for so long?

So long Chief!

New 2010 Cadillac CTS Coupe - The last of the good ones from GM?

So, the Obama administration has decided they no longer like having Rick Waggoner as CEO of GM, so he should resign. It’s somewhat reminiscent of the mob “suggesting” that the local shop owner should pay them insurance money because the world is a dangerous place. Now the Obama administration can step in and tell a company that the administration knows more about their business than the company’s board of directors does, so they should be the ones to decide who leads and who doesn’t.

Where does this stop? Will any number of companies have to seek the administration’s approval before appointing people to management roles. What criteria will the government use to decide who is worthy to run a company and who is not? Will one of the primary criteria be who is more likely to toe the administration line on policy and procedure? A frightening thought, that. It points to the reason why taking federal money is a dangerous gamble, with plenty of strings, and no guarantee of success.

Precisely how much does the Obama administration know about running a large motor vehicle producer? As one of the major supporters of the administration are the Nation’s unions, it raises the question weather or not Rick Waggoner’s decision to renegotiate GM’s union contracts in 2007 played any role in the administration’s decision. In fact, GM probably should have declared Bankruptcy long ago so they could have gotten out from under the parasitic agreements that greatly contributed to their downfall.

What role has Waggoner played in the decline in the General’s fortunes? Why precisely does he deserve to be removed as leader of one of our nation’s greatest companies? He has been criticized auto industry insiders and analysts for being hesitant to close plants and streamline the company in an effort to restore profitability in the face of declining sales.

Many have condemned him for relying on large trucks and SUVs as a main profit center for GM, such that when fuel prices rose dramatically last year the company was left with expensive, unsold inventory. Many of these same people and others really feel that the average citizen has no place piloting such mammoth vehicles. They are concerned that that such modes of transportation consume far more that their fair share of resources. However that is determined….

The consensus from many environmentalists, those in the administration, and others is that GM brought about their own demise by relying too heavily on such large vehicles. When gas prices rose, they got a well deserved whacking about the knees.

The ironic thing is that GM has been losing money and the aforementioned large vehicle sales were actually making a handsome profit for the firm. Should they have stopped production of such vehicles, only to see their revenues and profits decline even further? That probably would not have been a sound business strategy. I can see it now..”Well, product line ‘A’ is making us the majority of our profit, but some people don’t like it, so we should probably shut down production.” “But Jack, the customers love them, and they keep buying them.” Yes, but that’s not really important right now, is it.”

It wasn’t like some people would have you believe. GM was not like a drug peddler at a junior high school. They didn’t force these vehicles on consumers. No, they built them in response to consumer demand. They couldn’t just their product mix change at a whim when fuel prices rose 35% in a year. Consumer demands can change much more quickly than the products they want to buy.

For those of you unfamiliar with product development cycles in the automotive business, they typically take many years. Motor vehicles are complex pieces of machinery, subject to any number of regulations and customer demands. You can’t just slap them together in a few months in response to any market condition that happens by.

Waggoner has done more than any GM CEO in recent times to reverse the General’s problem of just plain producing generally inferior products over the past 30 years. That’s right, for the most part, GM made crap with 4 wheels. There were exceptions, such as their pick up trucks, but mainly there was quite a bit of garbage rolling off the assembly lines.

Waggoner has, in great measure, changed that. Since the beginning of the millennium there have been some nice, even world class machinery leaving the lines at GM. Cadillac has seen a resurgence, releasing the redesigned and highly regarded CTS last year. This mid-sized luxury sedan has been favorably compared with the best from BMW, Lexus and Mercedes. GM’s trucks are better than ever. The Corvette provides world beating performance and handling for a fraction of the cost of other sports cars. The new Chevy Malibu looks good, has a nice interior, and gets over 30mpg on the highway, while holding 5 passengers in relative comfort.

Something else; wonder of wonders, GM finally learned how to design a nice interior and cockpit. No more ugly interiors in American autos. The new truck and Cadillac interiors are fantastic. The Chevy Malibu is a great place to spend time behind the wheel, and the Corvette finally lost the diso, video game look to something more like you’d find inside a real sports car.

The new Chevy Traverse and GMC Acadia is an attractive, large SUV for those who don’t need to tow heavy loads. It returns the best fuel economy in it’s class while seating 8 with a decent amount of room.

It’s not to say that every vehicle GM produces is fantastic. But it’s too bad just as they are finally producing some great vehicles again, they may be led around by the administration like a dog on a chain. They’ll be able to dictate who leads, how they do their marketing, where they have their corporate retreats, how they travel, and which vehicles they produce. That doesn’t sound like a recipe for success. It sounds like a 5-year plan in the Soviet Union, circa 1935.

If this is any indication, industries will be led by those who know nothing about them, have never run a business before, and beholden to any number of interests besides the share holders and employees. If the share holders and board of directors decide that Waggoner has been doing a rotten job and want him fired, that’s fine, kick him out post haste. However, the leadership of the country should not also be the leadership of our major (and possibly minor) businesses.

In this case, they’re probably booting out the wrong guy. He’s actually done a decent job and whoever they appoint to replace him may not do nearly as well. If the government can lead him around like a bull with a ring through his nose, they’ll probably be much happier.

Maybe those in Congress should hold themselves to the same standard. Wouldn’t that be a change. When congress has a 10% approval rating, as they did a few months ago, perhaps they should resign. Chris Dodd, (D-CN) indicated that it was time for Waggoner to move on. Maybe Dodd should take his own advice. At least maybe he could help all of us get a better mortgage interest rate. Are the likes of Dodd who we want at the helm of or businesses or our nation?