It hardly seems like yesterday that I was here in Geneva checking out the latest models and talking to colleagues, gathering the buzz. Last year most manufacturers were displaying their latest models in white, the "new colour of success". Wow, how things have changed in a year! Now the whole industry is teetering on the edge. The world economic meltdown has made the motor industry start to grasp reality. This year, whilst the specialist tuners are showing matt-finished paintwork as the new uber-exclusive fashion, the motor industry is distinctly off colour as the banks and finance companies refuse to fund the production of copious unsold new models. In the UK, the normal number of annual registrations of new cars runs from 2.1 million to 2.4 million units. The actual number of sales is more like 1.6 million units but the difference in these numbers is usually taken up with demo cars, pre-registration and daily rentals. The trouble is that capacity remains in excess of 2 million units and real sales at this time are probably less than half. Without the finance to fund unsold cars, the manufacturers are having to put the brakes on production lines. For the first time that I can remember, the Bentley stand was not roped off. Not that it mattered anyway: there were far fewer visitors than usual. They were showing the new Bentley Continental Supersport that produces 621bhp, tops 204mph and gets to 60 mph in 3.7 secs – all on eco-friendly bio-ethananol. Aston Martin was not to be out-smarted. Its new V12 Vantage has shoehorned the 6.0 V12 DB9 unit into the smaller two seat Vantage. Also launched was the DBS convertible, offering the James Bond car with open-air motoring. The trouble is that with Jaguar announcing its potent 5.0 supercharged engines for both the XF and XK , there’s just no excuse to buy the Aston for nearly twice the price – even without the credit crunch! Also on display at the Aston stand was the One-Seventy Seven offering the ultimate Aston for $1.75m for 77 lucky owners! Apparently, a number of expressions of interest are on the table… A clue to the future direction of Aston Martin was the second-day reveal of a concept Lagonda. The imposing four-door, four-wheel drive design takes its lead from the handsome Vignale concept from a few years back. Clearly this secondary platform will enable Aston to avoid relying solely on the sports car market. At the top end of the market the Ferrari California was one of my favourites. Purists balk at the thought of a proper automatic convertible Ferrari with an electric tin roof, but Ferrari has produced a car that will surely account for the majority of its sales. A car that can offer the DB9 Volante and Bentley GTC owner something to step up into. The performance is similar to an F430 but this is a 2+2 convertible that men and women will love to drive. Typically the lead time for new model Ferraris stretches forward for three years but we normally do a brisk trade in the here and now premium cars. However, with the current market, we are advising speculators to cancel their orders unless they have the means and will to take delivery. The lack of easy credit will mean that this car will still have a lead time but at best it will be 12 months. Audi showed the R8 V10 which, for £100,000, offers a slightly detuned Lamborghini engine in the RB, turning the current superb V8 into the ‘base model’. This is not as ridiculous as it seems: there is nothing available sub £140,000 that can touch the V10 Audi as an out-and-out sports car. As wonderful as the Lamborghini LP560 is, it is not worth 50 per cent more than the similar-engined Audi. The other car that in normal circumstances would be an exciting additional model is the new Rolls Royce EX200…a baby Phantom. Rolls hink this car will be a welcome addition to their client’s garage. I disagree. The existing Phantom is like nothing else. An automotive Sunseeker! The problem is that "less is more" in today’s car buyer’s psychology. The days of conspicuous consumption are over. The new ‘baby Rolls’ is still a large car but the captains of industry are using it to show they are tightening their belts; spending £180,000 instead of £280,000 on a car that displays the same status. The key new products or concepts were all along the alternative energy theme. It was good to see the Lightning sports car on display. We were lucky enough to have this prototype on show in our showrooms after the London motor show and we found that many customers believed it to be a production-ready Aston. Except it is yet to be built. Hopefully they will shortly secure the funding to take it to production – having already sold three of them! Although the Tesla was first to production, my money is on the Fisker Karma as the real alternative-fuel executive express. Fisker is a brilliant designer and has produced a handsome executive car in the mould of the Mercedes CLS but driven by electric power. It has a small four-cylinder petrol engine motor on board which acts as a generator to charge the batteries on the move. Likely to cost the price of a high spec 7 series BMW i.e. circa £60,000 but with the presence of a car costing twice this, I can see this being a great success as they seem to have the funding and the infrastructure in place. In the mass market, Honda showed its sleek Insight – a five-door hybrid drive car which at £14,995 offers Toyota its first genuine competitor. Brabus, the famed German Merc tuner, showed its tuned electric Smart car complete with selectable external sound track, with a choice of potent V8 burble or a futuristic space age sound. A practical step if you ask me – I was nearly run over by a Prius the other day. You cannot hear the electric car coming! The Tata press conference heralded the new Tata Nano display in a tease euro version, yet Mr Tata could not confirm that it would be available in Europe for three years. This much-heralded simple car would have an on the road price of £1,500. This is exactly the kind of cheap transport we need, undercutting every other budget basic hatch. Then VW could kill Seat and make Skoda its mid-range VW-owned brand! Talking of thinning out ranges brings me to my former franchised brand Chrysler Jeep or as it is now known; Chrysler Jeep & Dodge. The raft of additional models has not brought Cerberus (the current owner) additional sales in the UK or Europe but rather a further requirement for storage, even before the credit crunch bit. When I was the London dealer, we basically had Cherokee, Grand Cherokee and Grand Voyager as the core-selling models. We accounted for about eight per cent of the UK sales volume of 15,000 units. In 2008, the range included Chrysler Sebring, Crossfire, Grand Voyager, Jeep Patriot, Compass, Commander, Cherokee, Grand Cherokee, Dodge Journey, Avenger and Nitro (rebadged Cherokee). Chasing market share caused the business to stall long before it conked out. Now the firm is at the mercy of the US government for survival. Chrysler has always been on the verge of going under. During this time (1992 to 2004), when Mercedes Benz "merged" with Chrysler to create Daimler Chrysler, it was obviously to those in the know that this was never a merger but an opportunity for the top directors to cash up share value for themselves. Chrysler was effectively taken over and was to Mercedes what Rover was to BMW. The sick patient was sold off to Cerberus so that the financial owners could do a "Rover" all over again. They need to rationalise the range back to the core models and bring the handsome-looking 200C hybrid concept to market for any future, leaving the Dodge brand to the States where it is a household name. Looking at the others in the "big three", it is clear to see why the other two players are where they are. Ford has made the best decisions. Long before the credit crunch they appointed a ‘non-family’ chief executive and made the bold move to sell off Aston Martin, Jaguar and Land Rover for market sums and focus on their core business. It produced some class-leading products: the Edge; the new Fiesta; and, in the US, the Flex, a full size seven-seater that does 24mpg. Ford is deserving of state aid and, unsurprisingly, is further from death row that Chrysler or GM. The GM press conference called upon the UK government to prop up Vauxhall plants. In fairness, GM Europe through Vauxhall and Opel have class-leading products such as the Corsa and Astra, but suffer from the same inefficiencies as most car manufacturers. Representations by GM Europe to European governments to inject cash could be an opportunity for the European division to be hived off into a separate entity part-owned by the European governments with GM retaining a minority stake. However, the US model line-up is a result of the "head in the sand" approach: continuing to produce gas guzzlers long past the sell by date. GM continually gets it wrong. Sat in their Renaissance Tower HQ in Detroit, they believe that their brands are global. I have witnessed this misconception first hand in the UK with the repeated failure to launch the North American brands. As I was already the London Chrysler dealer when GM announced the right-hand drive Cadillac STS and Chevrolet Blazer in 1997, the addition of these made me potentially the best retailer. I cancelled the agreement within seven months as they (GM) had not resourced this properly. As a petrol head you can imagine my excitement when GM announced that it was going to bring Cadillac to Europe and the UK on a much bigger scale in 2002. I got in touch with Bob Lutz and said that if they were going to resource it properly, with relevant models, I would love to be involved. As it happened, GM decided to partner up with Pendragon to be the sole dealer/distributor across the UK. Once again they did not commit proper support and left it to Pendragon to fail spectacularly, selling a handful of cars nationally, leaving hundreds unsold. To be fair to Pendragon, without relevant models – there were no diesel derivatives – and without a strong manufacturer marketing plan or budget, the Cadillac brand has remained all Elvis and tailfins to the British public. Why bother anyway? We have enough products in those segments. Why restyle Saabs masquerading as Caddy’s? If both brands disappeared in the UK that would no real problem for the UK driver. The Hummer brand has also seen an official launch here in the UK. Again without relevant diesel power the exercise has been a waste of time. Now they are apparently trying to sell Hummer to the Chinese. The US government could provide the funds by way of vouchers to American consumers, redeemable only against cars available at US dealerships. At least the money would flow through the dealerships rather than straight into the Gulfstream fuel tank! Typically "off message", the arrival by corporate jet of Rick Wagner together with the other senior executives seeking White House aid infuriated all. He returned for the follow-up meeting in a prototype Chevrolet Volt as a sign that GM has a future. Funny how Toyota have been producing the Prius for more than ten years now! GM should spin off GM Europe into a new company co-owned by the countries with production plants in return for new working capital, perhaps retaining a small share for the existing plants and infrastructure. The motor industry is suffering like many sectors. A common cause for the influenza is the lack of credit both for the supply chain and the consumers. Whilst the governments of the world and, in particular, of Europe and America are being asked to provide support for the motor industry (as they have done and continue to do for the banking sector) there needs to be a reality check for the industry. Financial support without a radical cull of brands and a reality check on actual market potential will just leave the industry rearranging the deck chairs on the Titanic. Look back not so long ago at the case of British Leyland and thereafter Rover. How much tax payer’s money was thrown away to keep a failing brand and products alive to avoid political damage by job losses which eventually happened anyway? Whilst we are still thinking about it, the German car dealers have seen a 22 per cent increase in new car sales this year after the introduction of scrappage incentives. Finally, in a tough economic climate it is easy to see why people are not buying many new cars. At best they will be buying used cars. The value of most used vehicles has already increased by 6 per cent this month. To stimulate the market, the introduction of a banded consumer one-off, trade-in payment to exchange old motors for new cars makes a great deal of sense. Typically people with ten-year-old cars do not trade in for new car but for a ‘newer example’. Imposing a minimum of a four-year newer car could attract a payment of £1,000 rising by £250 per annum. This kind of incentive would encourage upgrading right up to new. The balance of the payment could be secured by the government, providing a guaranteed support for the hire purchase agreement on a sliding basis linked to credit score. At least this would be a contingent liability for the government rather than an absolute payment/write off. The RMIF (Retail Motor Industry Federation) could easily administer such a programme as they represent the majority of dealers and could, with some professional help, set up a dealer finance brokerage. By passing most of any financial support to the consumer, the whole supply chain could benefit. This is surely better than throwing good money after bad at the manufacturers. The government needs to hire a strong industry trouble-shooter to review the funding requests from the growing number of manufacturers. A review of market performance before the credit crunch will quickly establish which ones should be reduced or closed. Why should it be held to ransom for jobs? Although, there is another solution. Let’s all return to coach and horses. All this carbon off-setting stuff would be completely irrelevant: the soil would be enriched by nitrates instead! Related articles Geneva Motor Show loses its colour "Car sales are plummeting" What next for the financially hard-up motorist? Picture source
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