GM-VOLT : Chevy Volt Electric Car Site

Since early this month GM of Canada has been ramping up its Volt marketing activities, creating interest, and taking pre-orders for the first deliveries expected in the third quarter of this year.

The Canadian roll-out is happening a little later than GM predicted it would when last April Lyle reported on the subject.

This past weekend, the “all-new 2012 Chevrolet Volt” was included in GM’s National Test Drive Tour along with other GM cars at London, Ontario. The Volt will be on tour every single weekend through to its launch, said GM of Canada Corporate Communications Manager, Jason P. Easton.

Canadians are expected to welcome the award winning car on about the same scale as the Americans.

The first regions in Canada were selected for the same reasons that initial regions in the U.S. were – they are progressive areas where hybrid cars previously were well received.

These are Vancouver, Victoria, Toronto, Oshawa, Ottawa-Gatineau, Montreal, and Quebec City.

In Canadian dollars, the Volt has an MSRP starting at $41,545, and reactions to the first test drives have GM’s people hopeful the car will be received as well as it has been in the U.S., Easton said.

“We put our first Volts into those [test] fleets this weekend and got tremendous response in London, Ontario so we’re very excited to get going with it,” Easton said, “Outside of the seven launch markets we will be expanding our rollout in the spring of 2012 to a number of secondary markets. Essentially the next wave of urban centers which include places like Calgary, Edmonton, Winnipeg. There’s a bunch of major cites in the prairies as well as some on the Atlantic which will start seeing the Volt in the spring of 2012 and within 12 months of our initial launch it will be available at dealers across the country.”

The car will be outfitted essentially the same as in the U.S. This will include one very well equipped standard trim level, as well as two option packages: a Premium Trim Package and a Rear Camera and Park Assist Package.

Aside from this, Easton said, minor changes to meet Canadian safety regulations were made.

It won’t be long before Canadians are driving their own Volts.

“In general, the option packages are exactly the same but there are some slight regulatory differences – from bumper standards, some variation of seat belt standards,” Easton said, “There’s about 28 different safety regulations that are just slightly different, but in general they are the same spec of vehicle.”

As for consumer incentives, Easton said Ontario rules were changed a bit since Lyle reported last July on subsidies that upset Toyota.

Unfortunately, Canadian incentive plans are still spotty with some buyers eligible, and others not.

“There are no federal government subsidies in Canada. Traditionally it has been the provinces that have taken leadership in this area,” Easton said, “We saw that with hybrid credits so currently there are only two jurisdictions in Canada that have incentives for plug-in electric vehicles.”

Ontario will have a subsidy and Quebec will as well, Easton said. Both will offer a sliding scale based on battery sizes ranging from 4 kWh to 17 kWh.

This means the Volt’s 16 kWh battery is close, but not at the top.

Despite changes, Ontario was the first province to put incentives in place. It scaled them down however from an initially reported $10,000 cap.

Don’t you believe it. This photo was from last year, and was a premature celebration in Ontario by GM that had Toyota angry for perceived favoritism. Subsidies are a little less than the sign reads now, and Quebec also has similar subsidies.

“When they finalized that incentive they actually reduced the range so it came in finalized as an incentive between $5,000 and $8,500,” Easton said of Ontario.

The Volt is eligible for $8,230 in Ontario and a few hundred dollars less in Quebec, Easton said.

“The other jurisdiction with incentives is Quebec. And Quebec, which would come through the markets of Montreal, Quebec City, as well as Gatineau,” Easton said. “The Ottawa-Gatineau area is our national capital region but it straddles two provinces. So Ottawa falls on the Ontario side, and Gatineau falls on the Quebec side.

“But in Quebec they recently announced a scaled incentive. The maximum on their incentive is $8,000, but again they put a maximum battery capacity on theirs at 17 kWh, so the Volt will actually qualify for $7769,” Easton said, “Additionally Quebec also implemented a credit for home charging installations for 240-volt home charging installations where they would provide a rebates for 50 percent of the cost up to a maximum o $1,000.”

We asked if there were any loopholes or ways consumers from outside the eligible areas might try to game the system to get an incentive on a Volt.

Easton said GM’s analysis has led it to believe the process is fairly robust.

Ontario will probably have a mail-in process in place to apply for the subsidy, Easton said, and Quebec is supposed to be at point of purchase.

A nice clear map of our neighbors’ country to the north.

“But we actually won’t have a good sense of that until we see people actually starting to buy these vehicles,” he said, “Both jurisdictions actually announced an intention to be point of sale but Ontario at this point has not yet demonstrated the ability to do a point of sale, so at this point we believe it’s going to be a mail in.”

Canada only has a population of around 32 million, so the allocation will be slimmed proportionally to about one-tenth what the U.S initially received, or maybe 1,000 units, although Easton would not specify the number.

On the somewhat positive side, the initial launch will be a to significantly higher proportion of the entire country’s population compared to the seven states in the U.S. in which GM launched the Volt. Easton estimated a good one-third of the country or more will have access to the limited supply on the initial roll out.

As it is, GM expects strong demand, and a waiting list is likely.

To better enable potential customers to sample the Volt in advance, the company has a Web site with the test drive schedule listed. Over the summer months, GM will make three times the number of Volt demonstrators available.

While the Obama administration, and other governments around the world are strongly urging and incentivizing smaller, fuel-efficient vehicles, it may be that Congress did not get the memo.

This year the IRS tax code really sweetens the deal for some in business to buy or lease a heavyweight gas guzzler costing over $30,625.

For vehicles used purely for business purposes, it is now possible to write off 100 percent of the vehicle’s cost in the first year.

The Volt is still eligible for the $7,500 federal credit, and the Department of Energy and others are pushing to make it a direct refund at time of sale.

And as if this wasn’t good enough, if depreciation caused a loss it can be used like cash back in the form of a refund. Or, depreciation loss can be used against other wages.

This news came over the weekend from the Wall Street Journal, which likens the offer to a “bonus depreciation” special on vehicles that weigh more than 6,000 pounds. Examples would be a Cadillac Escalade or Nissan Armada but there is a long list of eligible vehicles.

The deal is less generous for cars weighing under 6,000 pounds. Cars that sell for over $15,300 are eligible for first-year depreciation of $11,600 in 2011, but if the vehicle cost more that $30,625 it is eligible for more write-offs in years two through six.

As an example, consider two hypothetical vehicles bought for business use in December 2010. One cost $20,000, the other cost $31,000. For 2010, each gets $11,060 worth of depreciation. For 2011, the more expensive one gets a deduction of $4,900, while the less expensive one gets only $3,200.

“Congress is clearly biased against smaller cars,” said Joe Kristan, a CPA with Roth & Co. in Des Moines to the WSJ.

The rules come from two changes in the law Congress made last year. They apply to vehicles bought after Sept 8, 2010 and before Jan. 1, 2012.

Vehicles that are used for personal use – such as driving from home to work – would not be eligible for the whole write-off.

Other pros and cons for tax itemizers come into play with regard to un-reimbursed expenses such as tolls and parking fees and more.

Whether to buy or lease depends on crunching the numbers for one’s individual situation including the lease terms.

In general, the incentives are better for buying instead of leasing cars weighing less than 6,000 pounds. The opposite is true for vehicles over 6,000 pounds. The deal may not be so good if you plan to lease a sub-6,000 pound car and replace it every two years or so.

“Many factors go into this decision, and you always have to crunch the numbers,” said Daniel Moore, a CPA practicing in Salem, Ohio to the WSJ.

If the vehicle is not used entirely for business, as is customary, a percentage would apply.

Taxpayers intending to take advantage of the new rules should be prepared to document a vehicle as purely used for business. Claiming a vehicle as a 100-percent business use could raise a red flag with the IRS, and taxpayers might be asked whether the vehicle is parked at the business at night, not driven home.

In other news, filed under Mixed Messages, Pike Research reported that more than 1.3 million plug-in EVs will be in corporate and government fleets by 2015.

As it is, the marketing advantages for big gas guzzlers are already clear to companies like Land Rover, which is touting the new law as a potential sales incentive.

After speaking with tax experts, the Wall Street Journal interprets this year’s tax law as a way to “juice certain activities – like car buying – in ways that make a big difference.”

In theory, depreciation is supposed to be reflective of actual depreciation over the usable life of the vehicle.

In fact, no vehicle will be all used up its first year, so this is essentially a stimulus deal to prompt certain business consumers to buy heavy gas guzzlers and not worry about it.

So while in other sectors talk of fleet purchases of hybrid and electric cars and even mandates by the president to increase fuel efficient vehicles are ongoing, U.S. policy clearly has a conflicted agenda.

[Source: Wall Street Journal]

While the Chevrolet Volt may be ineligible for Chinese subsidies intended to make that country the world’s number one electric vehicle market, there is little doubt GM has a strong interest in growing its business there.

In this article, we will look at some facts of a much broader story, but will confess up front: Some of our information is sketchy. But then, some details of policies being formed to spur Chinese New Energy Vehicle (NEV) investment are “opaque” even to the office of the U.S. Trade Representative (USTR) Sen. Ron Kirk, whose staff we spoke with on background.

But before we get to that, we’ll note that in April, the Chinese reported they intend to dominate the world advanced-tech transportation market – most notably hybrid and battery electric vehicles – by a large margin.

GM China Group President and Managing Director Kevin Wale drives the Chevrolet Volt on its unplugged journey (China).

In doing so, while there are some who disagree, it appears possible the Chinese government-owned industry will continue a longstanding policy of getting intellectual property by hook or by crook.

Last month it was reported China has begun a development plan for the next 10 years that will invest $15.28 billion (100 billion yuan) toward making EVs more prevalent.

According to an April 8 China Daily article, in light of the Chinese government’s heavy investment plans, Chen Qingquan, chairman of the World Electric Vehicle Association, said he expects by 2020 China will lead the electric-vehicle sector with an estimated 15 percent market share for hybrid and pure-electric vehicle sales in the world’s biggest automobile market.

As soon as 2012, China expects to have 100,000 NEVs on the road, which in turn will spur more life into its battery industry there worth 6 billion yuan.

Of hybrid and electric vehicles specifically, the China Daily said by 2020, “China is aiming for the top position in the global new-energy vehicle sector with sales volumes of 5 million units.”

The plan, which has been expected for some time, was drafted jointly by China’s Ministry of Industry and Information Technology (MIIT), Ministry of Science and Technology, Ministry of Finance, and the National Development and Reform Commission, and was expected to be finalized soon according to the April article.

The Chinese intend to be the world’s largest car market, and within this, the world’s largest EV market. It is heavily subsidizing its own industry and consumers to make it so, while doing all it can to attract top foreign investment.

Fitting in with these plans, consumers in Beijing are being offered tax breaks and other incentives to make BEVs akin to the only game in town.

You may recall Beijing, which has a population about the same as Australia, has overcrowded streets. Until 2010, it was registering as many as 2,000 new cars a day, and bought about 700,000 vehicles last year. But the government declared stricter limits on license plate issuance and now allows only 240,000 per year dispensed by lottery – except, that is, for domestically made battery electric vehicles which were subsequently called for to be made exempt.

The combined incentives for Beijingers to go electric could be as high as $18,200 per BEV – a huge amount by Chinese standards – and waiving the license plate restriction for domestically produced EVs makes them a no-brainer given that buying an electric car may be the only way for most people to get any kind of car on the road in Beijing at all. This plan is said to be a model for other Chinese cities to follow.

At the same time, other issues are percolating toward the bright and glorious electric vehicle future in the People’s Republic.

A couple days ago, officials at the USTR’s office told us that while China is open to all sorts of “new energy vehicles” it really wants to go straight to BEVs. While hybrids and other alternative vehicles are part of the mix for its NEV proposal, they are keenest on gas-free BEVs.

These initiatives are part of China’s 12th Five-Year-Plan (for 2011-2015) still being working on.

In question is how the Volt would fit in. As a $40,000-plus car, it would also be subject to an additional 25-percent import tariff, and not eligible for breaks – due to its gasoline engine – that other BEVs made in China would take advantage of.

How it will sell compared to much lower priced domestic EVs or even GM’s own $10,800-$13,800 gas-powered Baojun 630 intended for outlying areas – and based on the Buick Excelle platform – remains to be seen.

The Chevrolet Volt begins its journey on the morning of March 24 from GM China’s headquarters in Shanghai (China).

We would have liked to be able to tell you, but written and phoned-in requests for comment by GM for the past two days were not returned.

Why, we do not know.

What we do know is GM intends to get the Volt to China by year’s end and since last year has been doing photo ops and driving tours to promote the car.

And while we’re on these topics, we’ll mention another murky issue confronting not just GM, but any automaker or possibly OEM parts suppliers wanting to do business in China.

The USTR officials said China, as does other nations, has a strong desire to attract leading-edge technologies to its market, including, of course, those in the advanced-tech vehicle industry.

In China, it has been a policy that automakers wanting to sell there must establish up to a 50-percent joint venture, a concession GM has made already for its petrol-powered cars, most notably SAIC-GM-Wuling and FAW-GM.

The murkiness surrounds new questions regarding OEM components makers. Previously, they were not required to create a JV with a Chinese “partner” (read: government-owned company).

Going forward, whether they will need to do such things as create a joint venture, or make other technology transfers in order to get at the honey pot that is China is not clear.

According to an article by The Truth About Cars (TTAC), some political excitement revolving around these questions is much ado about nothing. At the end of last month, two Michigan-based, Democrat U.S. senators wrote Trade Ambassador Kirk a stern letter warning of the evils of China trying to co-opt America’s intellectual property.

The Truth About Cars said this is just ignorant saber rattling – and may be correct. If so, the USTR still hasn’t caught on yet. Also, the respective senators’ staffers told us they are still waiting for a reply. We got one by calling and asking. Paraphrased, USTR officials said, “Thanks, we’re on it.”

TTAC found documents from a legal firm stating a re-write to proposed NEV policy in China had already taken place, thus fears and “saber-rattling” were unfounded.

But in fact, China’s policy is still not settled. We thus remain unsure, and must say that the USTR’s office might know something not readily found by TTAC, or else the USTR and the Michigan senators really are as ignorant as TTAC alleged.

Since we have no evidence either way, we will report what the USTR officials told us two days ago. They said they do not get complete information from the Chinese regarding their formulation of regulations for the proposed NEV policy. They said they have a number of communication channels, have their ear to the ground, and they remain vigilant toward potential regulations that could adversely affect OEM hybrid and EV component makers.

We asked them what new measures could cost American companies wishing to do business in China.

“The question is in order to produce and market NEVs in China what would U.S. automakers need to do that they would not otherwise choose to do?” said the USTR official. “So basically it [China’s policy] sets the terms and conditions for foreign companies as they invest, and establish production facilities in China, assemble the automobiles – these NEVs – and then market and distribute those vehicles in China.”

In 2008, the Chinese were told by the World Trade Organization (WTO) to back off aggressive policies alleged to have the aim of strong-arming intellectual property, and China did comply.

However, the USTR officials told us they still are getting grape-vine reports of one-on-one confrontations between Chinese government representatives and foreign companies. An example could be something like a U.S. or other international company wanting permission to expand in China will be asked to do such things as set up a research institution, form a JV, or directly hand over proprietary information or other trade secrets it would not otherwise have wanted to.

2011 Chevrolet Volt April 26, 2011 (China).

In addition to cutting no breaks to the Chevy Volt, the Chinese may or may not be looking at new policies that could add EV component makers to the list of those who may be asked to fork over trade secrets, form joint ventures and thus share profits with Chinese companies as a condition of doing business.

“So the regulations you know, if there is ultimately a regulation [that would be finalized and made law] which forces them to produce all the major components in China where they would not have otherwise have done that that would raise the cost,” the USTR official continued, “It would make it more difficult for them to use the sort of broader production strategy that they might otherwise pursue, you know, if they have to establish a new brand and they can’t market an existing brand; that can be very costly.”

The USTR officials were careful in their language but said China has continued to cause “concerns” for allegedly “inappropriate” tactics, and potential “discrimination.” The U.S. government has made its concerns loud and clear. They said they think China has heard the U.S. concerns.

Coming back to the question of what GM is doing, thanks to its joint ventures, China is already its number-one market. The way GM can make this claim is when it issues financial reports, GM keeps a percentage of the profits based on the JV split, but declares 100 percent of the Chinese-American companies sales as its own.

This you can see, as follows: “General Motors and its joint ventures sold 203,367 vehicles in China in April,” GM of Shanghai said, “It was the third time in 2011 that GM’s monthly sales in the world’s largest vehicle market have exceeded 200,000 units.”

The company said in April it sold 44,292 Chevrolets, 53,085 Buicks, and Cadillac increased 77.1 percent to sell 2,550 units. The Buick and Chevrolet sales represent increases in the middle 7-percent range, and the other half of GM’s “largest” market came from its JVs.

“Domestic sales by GM’s other manufacturing joint ventures, SAIC-GM-Wuling and FAW-GM, totaled 100,262 units and 6,470 units, respectively,” GM said, “SAIC-GM-Wuling continued to lead China’s mini-commercial vehicle segment. GM and its joint ventures have sold a record 888,950 vehicles in China in the first four months of 2011, representing an increase of 6.3 percent from the same period last year.”

Chevrolet Volt 118 kilometers from Hangzhou (China).

As for the humble Volt, GM’s marketing plan is unknown, at least to us, so we will just end this with questions and comments we wish GM would have answered.

How will the Volt fare without GM turning over intellectual property rights to China?

Whether GM wants to or not, it appears China is making it painful not to.

Because the car is not now made in China, it has a competitive disadvantage against domestic Chinese BEVs. In fact, because it is a plug-in with a gas generator, it would not be eligible for the better incentives available to pure BEVs anyway. These could potentially be available to the Nissan LEAF, or Mitsubishi MiEV.

So, will GM build one or more BEV just for China? Would it also look to export them to the just-as-lucrative India market, as it is doing with other Chinese-made cars?

As we reported in March, GM already is looking at building small, inexpensive BEVs in India.

If it did this in China, would it be labeled a Chevrolet or Baojun or something else?

And meanwhile, who will buy the American-made Volts expected to be imported there at significant cost, only to be priced three to five times more than a domestic BEV? We already know it intends to assemble Volts somewhere in Europe. Would it export them from Europe to China, or follow the trend to set up shop in the country of consumption?

Will GM’s comfortable arrangement with its JVs evolve to include the Volt? Would it agree to turn over intellectual property in such an arrangement? Since the Chinese are adept at reverse engineering designs anyway, will it be seen as a minor concession to give them delayed release of GM’s in-house information?

And beyond GM, we are waiting to see what will happen with many other EV automakers and component suppliers, some of which are sitting on the sidelines of what otherwise looks like a great growth opportunity.

China has said it will be number one. It is playing for keeps. Our apologies for raising as many questions as answers. We will keep digging and let you know more when we do.

Sources: China Daily, Global Times, GM Shanghai, TTAC

Adding to its already having been declared a Michigan Clean Corporate Citizen, yesterday the Detroit-Hamtramck assembly plant broke ground on a solar panel field to help power the facility.

The 264,000 square-foot, 516-kilowatt photovoltaic (PV) array in a six-acre field will be the largest in Southeastern Michigan. GM quantified its energy output as “capable of charging 150 of the electric cars with extended-range capability every day for a year – a total of 54,750 Volts.”

The $3 million array will be owned and operated by DTE Energy under its SolarCurrents program, and should be completed by the end of this summer. DTE’s pilot project intends over the next five years to install PV systems on other Southeastern Michigan rooftops, and at educational and business locations.

Already equipped with a number of environmental measures, the Volt-producing Detroit-Hamtramck Plant is becoming greener as we speak.

In all, DTE Energy’s regional, multi-location solar project is expected to generate 15 megawatts of solar electricity for Southeastern Michigan.

As for GM’s piece of this project on its six acres at DHAM, the dollar figure attached to its energy output is an estimated $15,000 annually over a 20-year easement agreement.

The DHAM facility was chosen to receive PV first of all, because it has the space, GM said, and because it is home to the advanced-tech Volt.

“This array will significantly decrease energy consumption by combining solar power with ongoing efficiency tactics such as lighting and equipment upgrades and automating equipment shut-down,” said Bob Ferguson, vice president of GM Public Policy. “Making sustainable choices is good for both the environment and our bottom line. Obviously cost savings is critical for GM, and the ability to save $15,000 per year while being environmental serves us well.”

GM said the PV panels will face true south to maximize solar energy output, and these add to other environmental considerations already in existence at the plant.

These include a 16.5-acre certified wildlife habitat and an oxidizer that was voluntarily installed to reduce carbon dioxide and carbon monoxide emissions.

A rendering of the proposed solar panels for Detroit-Hamtramck.

As Ferguson alluded to, the company also estimated it will save an about $3 million per year through efficient lighting upgrades and other energy efficiency projects.

Company-wide, GM said 1.4 percent of its U.S. plants’ energy consumption comes from renewable resources, and it is one of the leading users of renewable energy in the manufacturing sector.

In addition to solar, the company also derives energy for manufacturing operations from hydro, and landfill gas resources.

GM’s long-term alternative energy investments are more than a feel-good exercise, it said. They also are good business decisions.

In other news surrounding the Detroit-Hamtramck assembly plant, GM CEO Dan Akerson announced a couple days ago it is one of 17 GM facilities that will receive new employees out of 4,200 total new hires going to eight states. The question is how many will go to Detroit-Hamtramck, and will that mean more Volt production?

“Clearly, we will play a part in that,” plant manager Teri Quigley said, “How big, I don’t know.”

One Detroit paper reported almost half of the new hires will go to DHAM, particularly for Malibu production and possibly Volt production.

The Detroit-Hamtramck Plant already has a solar-powered canopy charging station.

We will wait and see what concrete information we can learn, however, as false reports about increased production at the plant have already been made in recent months.

What is certain is the newly profitable GM is ramping up its company-wide production capabilities, and with the new solar arrays at the The Detroit-Hamtramck Plant, committing one more step toward its long term environmental policy.

“We strive to reduce the impact our facilities have on the environment,” Ferguson said, “and Detroit-Hamtramck continues to make progress in sustainability.”

GM

Most people know the Chevrolet Volt is a revolutionary kind of car, but at a recent Silicon Valley conference, an IBM executive said the car is very complex and the fact that it made it to market as soon as it did is more than a little remarkable.

The computer-controlled EREV uses an estimated 10 million lines of code and runs about 100 control units. This is a marked increase from a typical 2009 model car which uses an estimated six million lines of code, or one from 2005 which might use only 2.4 million lines of code. Consider also that the Volt was developed in half the usual time.

And according to Meg Selfe, a vice president for complex and embedded systems at IBM Rational, her company was a major contributor toward enabling GM to bring the Volt to market.

Shown is the first Chevrolet Volt available for sale (sold online – vehicle identification number BU10002). Getting this car to market as fast as it did took a lot of effort from the computer development side of the equation.

“Software is becoming the most strategic asset and its use is growing astronomically,” said Selfe during a keynote address at the Embedded Systems Conference last week.

Her division was acquired by IBM in 2003 and is credited with pioneering the Unified Modeling Language (UML) that helped with the Volt’s design.

UML “is a visual language for specifying, constructing, and documenting the artifacts of systems. Complex software designs difficult for you to describe textually can readily be conveyed through diagrams using UML. Modeling provides three key benefits: visualization, complexity management, clear communication,” says IBM’s Web site.

To augment GM’s own sense of urgency, Selfe said IBM helped the automaker cut the time to the Volt’s production from a customary 60 months to just 29 months.

“They focused on time to market, and they had to because it was a life or death moment for them,” said Selfe, “They were in a near-death experience, so they brought together their best thousand engineers.”

The degree of accomplishment this represented was increased by the fact that the Volt used a new battery pack, electric drive unit and cabin electronics. Selfe said the effort took a lot of quick adaptations on GM’s part to meet its goals.

“They were changing the way in which they did engineering,” said Selfe, who previously worked as a systems engineer at GM and Delphi.

She said the Volt Team was moved to a new product development platform. Along the way, it streamlined the details of bringing the new kind of car to market. This included having to decide which among thousands of tools and process it would keep, and which to abandon.

The “tools” included automatic code generators – something many in the embedded world are still coming to grips with, Selfe said.

“It was like a battle of tools,” Selfe said. “But they weren’t afraid to pull teams together and make decisions using new governance procedures” so in the end everyone could agree on how to move forward.

GM’s number of test procedures was also cut from more than 600 to about 400, Selfe said.

“Testing is something all of us can still waste too much time and energy on,” she said.

To acknowledge the increasing importance of its in-house software, Selfe noted that GM gave each Volt its own IP address.

“They use it for a few things today, like finding a charging station, but they hope to use it to push more software out to the vehicles in the future,” she said.

Selfe said GM put more of the Volt’s design in house, particularly the software design.

“It was a risk on their part because they are a very old company, but they needed to do it different and they did,” she said.

EETimes

A confluence of events have some noting a “paradigm change” and predicting the “Detroit 3” automakers are poised to re-assume a leadership role they have not enjoyed for many years.

In light of a positive recovery from near financial disaster for General Motors and Chrysler, and with the Japanese auto industry still reeling from a natural disaster – the March 11 earthquake – U.S. automakers look like they have room to keep going, barring further potential complications.

In April, Automotive News reported that Detroit’s market share was 46.5 percent, up 1.5 points from a year ago. Japanese brands by comparison were at 35.5, down 3.4 points.

Although this is a Chinese Chevrolet drawing, with more profits, GM will be freer to build new Voltec platform vehicles for the U.S. market like this Volt MPV Concept Vehicle.

Last quarter, GM reported a substantial $3.2 billion profit – its largest since 1999. Chrysler posted a modest $116 million – its first profitable quarter in five years. Also to Chrysler’s credit, its CEO, Sergio Marchionne, has said the company intends to repay $7.5 billion in U.S. and Canadian government loans by end of second quarter, or by June 30. And Ford too is looking quite healthy, having posted a $2.55 billion profit – its highest first-quarter earnings since 1998.

At the same time, due to supply constraints, Nissan and Toyota predict losses for the next six months. Toyota’s CEO, Akio Toyoda, further said that company will not be back to full production until the end of 2011. Similarly, Honda will be restricting Japanese production in June and July, with world supply affected now and going forward, and will be monitoring the situation ongoing.

As for the Europeans, their sales are up too, particularly the German brands, BMW, Mercedes-Benz, Audi and VW. Automotive News reported Mercedes and BMW have pulled away from Lexus in luxury car sales, with BMW leading the way. However, for another change in the order of things, Hyundai and its affiliate Kia have outsold the combined European brands in the U.S. for the first time, and are holding on to just short of 10 percent market share.

Indeed it is a different U.S. automotive world than just half a decade ago, and optimistic eyes remain on the American brands.

“The renaissance of the Detroit 3 is well on the way,” AutoNation CEO Mike Jackson told Automotive News last week. “The profit results, product lineup and consumers’ opinion will allow the domestics to have market share growth for the second year in a row. We will see a remarkable recovery in market share as the domestics drive toward 50 percent.”

And while all of this news pertains to a market dominated by internal combustion vehicles, it also means that continued profits should be available for continued domestic research and development of hybrids and electric vehicles.

Chevrolet U.S. Marketing Vice President Chris Perry accepts the Urban Wheels Urban Car of the Year award for the Chevrolet Cruze Sunday, Jan. 9, 2011 in Detroit. This car has been taking sales from Honda Civics and Toyota Corollas among others.

Certainly the underlying incentive to develop more economical vehicles is there, as U.S. consumers are already purchasing increased percentages of smaller, more fuel-efficient vehicles from both domestic and import automakers.

This gas-price-spurred sales spike for smaller vehicles is another big change from recent years in which larger vehicles once led the charts.

The strength of the U.S. position was also confirmed by a Bank of America-Merrill Lynch annual “Car Wars” report that predicts an increase in Detroit automakers’ new model introductions through to 2015.

According to the report, the significance of new model introductions is they are a leading growth indicator.

“We believe the replacement rate drives showroom age, which drives market share, which in turn drives capacity utilization, profitability, and stock prices,” the report said.

GM and Ford are expected to lead, and between 2012 and 2015 each will have an estimated 29-percent replacement rate. During the same period, Honda is expected to follow closely with a 28-percent replacement rate with Toyota at 27 percent and Chrysler trailing at 22 percent.

In contrast, between 2001 and 2011 the replacement rate for GM was 12 percent, and for Ford, it was 14 percent. Honda and Toyota were coming out with new models more frequently during this same period, and were at 18 percent each.

As for the South Korean brands of Hyundai and its affiliate Kia Motors, the report said they too have increased their replacement rate, but appear to have topped out, and may reverse.

“Although Hyundai and Kia quickly gained market share in 2010 and 2011, the Korean [automakers] have the lowest replacement rate in the industry for the next four model years,” the report said.

GM’s U.S. market share grew to 19.6 percent through the end of April, from 18.7 percent in the first-quarter of 2010.

The Car Wars report conservatively predicted GM’s current U.S. market share could increase a little, and will at least stabilize over the next three years.

Chevrolet Volt MPV Concept Vehicle sketch (China) – we too are waiting to see what U.S. Voltec creations will be next.

“Ford’s recent gains should continue, but at a more measured pace, supported by a solid, consistent product cadence,” the Car Wars report said. “Chrysler’s product cadence appears to be improving, but in a competitive market, share may tread water. Japanese [automakers'] product cycles are generally converging to the industry average, indicating large share gains are over.”

While new model increases are expected to be dominated by small cars, luxury and crossover models, again, anything that helps the U.S. auto industry rebound should only help their advanced-tech future possibilities.

Pundits also observe unfortunate setbacks for the Japanese are temporary, and the resolve of the Japanese industry remains strong. Even so, it appears the Detroit 3 have advantages to put more people in their vehicles, an opportunity Automotive News reported is not lost on GM President North America, Mark Reuss.

“What we need to do is really make sure that the quality, reliability and durability of our cars is an unexpected surprise for people,” Reuss said last week. “It’s sort of a once-in-a-lifetime opportunity for us to get people into our cars and trucks and have them experience the excellence of the product that they may not have given us consideration for in the past. We’re taking it very seriously.”

Detroit News
Automotive News