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Five Thoughts about the Auto Industry for May 13, 2011

Submitted by on May 13, 2011 – 4:46 pm | 2,657 views

It looks like I am going to be saying goodbye to my E34 5-Series BMW next week, as I have found a buyer who is interested in using both the engine and transmission in two different turbocharged project cars.  I have owned my 525i five-speed longer than any other car, and it will be sad to see it go.  At the same time, I am happy that it will live on in high performance form and provide someone else with the same level of enjoyment that it gave me.

With that eulogy out of the way, it’s time for this week’s edition of five thoughts about the auto industry.

1 – An All-Wheel Drive BMW M5

BMW walks a very tricky line when it comes to product image.  When speaking to enthusiasts, the company puts its game face on and talks about tradition, building The Ultimate Driving Machine and providing the sportiest possible ride in each market segment.  When faced with the realities of being a small car company in a big world, BMW is forced to abandon much of its rhetoric – and past design practices – and instead produce cars that it can sell in large numbers at high profit margins.

A perfect example of this philosophical about-face at BMW can found with the next-generation BMW M5.  Already, purists have taken to the streets to decry the decision to remove a standard transmission from the mix and replace it with a dual-clutch automatic unit.  The next blow is the revelation that the BMW M5 will harness the output of its turbocharged V8 engine through the use of an all-wheel drive system.  While all-wheel drive might help BMW sell vehicles in snowy parts of the world where the fair weather driving season is often too short to justify the purchase of a high end automobile by non-enthusiasts, it will certainly deaden the driving feel of a vehicle that has grown increasingly heavier, larger and less connected to the road since it first debuted in the late 1980s.

Perhaps the most compelling argument to be made against the production of an automatic, all-wheel drive BMW M5 is to ask what will separate the model from any of the high horsepower luxury saloons currently built by Audi’s S division or Mercedes-Benz’s AMG?

2 – Saab Rejected By Yet Another Suitor

Saab, which only last week announced that it had managed to do all but dot the lowercase j’s on a partnership with Chinese automaker Hawtai Motor Group, was forced to recant this Thursday with a statement that the deal has fallen through.  As I explained in my article for Autotropolis, Hawtai was unable to get “stakeholder approval” for the $172 million deal.

The most disturbing aspect of the failed arrangement between Saab and Hawtai, other than the Swedish automaker continuing its trend of being always a bridesmaid and never a bride, was the surprisingly cavalier attitude displayed by Saab chairman Victor Muller concerning the safety of the Chinese cars that Saab was to have imported to the U.S. as part of the deal.  Muller stated that although these sub-$10k vehicles would not be able to achieve 5-star crash ratings, their lack of passenger protection wouldn’t matter since the cars “look good” and offer extensive comfort features.  Not exactly the kind of attitude that inspires confidence in a product that has yet to even be introduced to the North American market.

3 – Japanese Automakers and Parts Suppliers to Abandon Japan?

That seemingly alarmist headline accurately encapsulates the sentiment expressed by major players in the Japanese auto industry as related by an article published by The Detroit Bureau this past week.  Some executives are suggesting that in order to speed up recovery and prevent future losses from earthquake-related disasters, relocation outside of the country’s borders should be considered.  The move, which could cost the country thousands of jobs and eliminate a substantial portion of its industrial base, is reportedly being evaluated by homegrown and foreign manufacturers alike who currently operate within the country.

Even if companies are not explicitly interested in seeking the shelter of a less disaster-prone region, they may be forced to reconsider any plans to rebuild in Japan should car companies elect to reshuffle their supplier relationships so as to reduce their reliance on Japanese-sourced components – a reliance that has had a chilling effect on automotive production around the world since March.

4 – Hummer, Pontiac and Saturn Buyers Abandoning General Motors

In a story that surprised almost no one, the Wall Street Journal has published findings that while some owners of brands which were orphaned by the GM bankruptcy reorganization of 2009 were content to purchase a Chevrolet or Buick to replace their Hummer, Pontiac or Saturn, more often than not these shoppers handed over their hard-earned cash to another automaker.

Despite the existence of rebates and discounts totaling as much as $1,000 to attempt to lure abandoned members of the GM family back into the fold, over the course of the past year 70 percent of Pontiac customers and 71 percent of Saturn drivers went somewhere else for their new cars, trucks or crossovers.  The Journal also reports that Ford hasn’t had much better luck with Mercury, with 65 percent of owners bowing out of the Ford family.

Drivers have long memories, especially if they feel they have been somehow wronged by the brand that built their vehicle.  The WSJ numbers would seem to illustrate that quite clearly.

5 – A Radically Redesigned Chevrolet Corvette?

Rumors abound that the next-generation C7 Corvette will abandon its traditional front-engine, rear-wheel drive layout and adopt a mid-engine design that could even replace its vaunted LSx V8 with a twin-turbo V6.  Sound familiar?  That’s because we have been hearing similar rumblings about the fate of the Corvette for at least twenty years, as two camps of enthusiasts fight it out in the shadows: those who want to transform the Corvette into a high-tech American exotic, and those who wish to preserve its traditional charm.  Needless to say, despite claims that the next edition of the car will look “completely different” than the current iteration, it will be quite some time before we are given a look at what the real future of the Corvette has in store.

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