Grant's Auto Rants

Phaeton: The People's Chariot

As with just about all the major manufacturers today, the recent comings and goings at Volkswagen AG present ideal fodder for a very intriguing business case study, if not a motion picture drama. When one considers the sheer number of major issues and events the company is concurrently dealing with, it's a wonder they get around to putting together any cars at all.

Consider, for a moment, some of the VW headlines over the last two years alone: A major supplier issue of ignition coils and subsequent image-damaging recall; aging model line and declining sales in both Europe and North America; unprecedented strength of the Euro vs. the US dollar; labor issues including executive management all the way through the unions; and finally, the legacy of a very proud and recently departed (to the advisory board) Porsche family member.

Volkswagen has risen from humble beginnings and near extinction to become one of the largest auto manufacturers in the world comprising other brands (Audi, Bentley, Bugatti, Lamborghini, Seat, and Skoda). While there are some very high-end brands here for sure, VW built its foundation on basic, affordable transportation, hence the "people's car" moniker. Fast-forward to present day, and VW has been enjoying increasing market share in several categories and continues to build on record-breaking models.

The current issue VW is facing, however, has to do not only with jostling their many brands to appropriately cover all segments globally, but also with the timing of their new model delivery. With mega-models like the venerable Golf and Passat, redesigns and introductions are a very big deal and should be exploited individually. Here we have the highly anticipated new Jetta and Passat coming out at basically the same time. And this while VW is trying to push their entire brand up-market, which has provided several resounding duds recently, including the R32 and W8.

It's almost as if there is a major shift in the focus and management of the company underway, but the people and models, which are on their way out, are trying to do one last good thing before they go (read 4Motion and extra horsepower for the above mentioned models). In no place is this fragmented strategy more prevalent than with outgoing chief Ferdinand Piech's Phaeton pet project.

Before departing, Piech had to prove that VW was capable of building it's own luxury models. So, it was surely a victory when German chancellor Gerhard Schroeder chose the Phaeton as the executive transport over longtime provider Mercedes-Benz. In typical German fashion, it wasn't just the car but how it was built that also counted, thus requiring the $200 million, state-of-the art Dresden facility, which resembles more a surgery ward that assembly line.

And just how does one place a $65,000 dollar "people's car" in a very crowded luxury segment, you ask? Well, there's an old story about a couple of golfers who came across a very large bear during a round that might help to answer that question. In a somewhat panicked state, one golfer immediately dropped his gear and took off for the hills. The other confused golfer yelled to his departing comrade, "Wait, don't run! You'll never outrun a bear!" To which his friend replied, "I don't have to outrun the bear, I just have to outrun you." This sentiment seems similar to what VW was thinking in launching what by many professional accounts is the premium luxury German sedan regardless of cost. It didn't have to blow everyone else away. It just had to be as good and come in at a lower price.

From a sales perspective, the Phaeton is a failure. Automotive journalists and industry folk alike are quick to attribute this to the well-ingrained notion that VWs are strictly a student or young person's affordable, entry-level ride. Just about everyone who has owned or driven a Phaeton agrees, however, that it is quite possibly the best all-around German sedan. Yes, the owners have some small quips -- they would like to see a short wheel base version, some Navigation updates and larger wheel package -- but they generally love the understated exterior styling matched with elegant interior trim.

Unfortunately, it looks as if the Phaeton is still going to suffer the same fiery fate that its namesake did. "Phaeton" was the mythical son of the Sun god Helios, who against his father's wishes took the family Chariot for a ride. As the crazed horses streamed out of control across the Earth, the unbearable heat singed valleys and dried up lakes, wreaking havoc on everyone in its wake, leaving Zeus no choice but to strike down the ride with a well placed thunderbolt.

Even though the thunderbolt didn't come from Mercedes-Benz or BMW, or even close cousin Audi, there may be more strategy here than you think. VW is already considering the Dresden factory to take over additional production from Bentley's at-capacity Crewe plant in England (Bentley sales of the Continental GT are through the roof). Additionally, there is talk of a new model placing above the Passat but below the Phaeton, which will certainly have paved the very slippery slope up-market.

Whether the Phaeton goes down in history as an elite car for the very few people in the know, or as a sacrificial lamb in a much larger company reorganization, is yet to be determined. Regardless, it will always remind us that the Porsche family is very clever. Lest we forget, they made an SUV out of a sports car.

W&W: Automotive's Unsung Heros

The Norwegian company Wilhelm Wilhelmsen and it's wholly owned subsidiary Wallenius Wilhelmsen are some of the unsung heroes of the automotive industry. Unless you've special-ordered a vehicle from Europe, or, more sadly, happened to have read the international news back in December of 2002, you likely don't even know who they are. In short, with more than 13,000 employees and a fleet of over 250, W&W is one of the largest transportation and logistics companies specializing in international automotive transport in the world.

Some of you may remember the headlines around Christmas of 2002 when one of W&W large RO-RO (roll on – roll off) auto transport ships, M/V Tricolor, was struck by the Bahamian flagged container ship Kariba roughly 20 miles off the French coast in the English Channel. Even with the enormous amount of worldwide shipping traffic and sailings, marine disasters are not very common today and rarely receive press unless there is a large loss of life or oil involved. This story, however, had several unique aspects that warrant my talking about it here, more than two years after the accident.

The most compelling part of this story is clearly in the ship's cargo, which consisted of 2,871 new, assorted BMW, SAAB, and Volvo cars. There have been other wrecks with new automobiles, including one off of Japan with more than 4,000 cars, but the thought of a bunch of civics just doesn't quite capture the imagination the way the BMWs do. The total value of the ship itself was roughly $40 million, and the value of the cars, roughly $50 million.

You can bet there was some nice hardware on that boat.

As a result of the collision, the Tricolor sustained heavy damage and quickly capsized in roughly 90 feet of water in the center of the English Channel, putting the side of the ship just beneath the water's surface at high tide. This left the company somewhat optimistic at first, as they thought there might be a possibility of re-floating the vessel. The location of the incident, however, placed the wreck directly in the path of constant shipping traffic. On several occasions the sunken ship was struck by passing ships, once by a ship carrying about 25 million gallon of oil. It was clear that the company was going to have to either recover or salvage the wreck.

The idea of salvaging or recovering a ship that is well over 600 feet long with a gross displacement of nearly 50,000 metric tons is simply inconceivable. The ship had to be cut into several pieces by a system designed to help raise the Russian submarine Kursk in the Barents Sea. For a full description of the incident and amazing pictures of the recovery, which was just completed this fall, please click here.

You'll never think of automotive transport the same way again.

Apples and Autos

Whether you buy into the white computers or not, there's no denying Apple is on a roll. To date they have sold over 10 million iPods, more than 8 million of those in 2004 alone. Placed end to end, that's enough iPods to stretch well beyond the 600 miles from New York to Detroit.

In what may be an even more amazing feat, by offering iTunes Apple has also simultaneously transformed what might possibly be the largest copyright infringement battle of all time into a genius marketing coup worthy of the Harvard Business Review.

What do technology and the automotive industry have to do with one another, you ask? Well, with all of the advanced electronics littering the insides of our vehicles (as well as many of my recent posts), the answer is: plenty.

If that isn't enough, Ford recently announced that it will offer a free Dell Desktop computer with the purchase of any 2005 Focus. Yes, a free computer.

Never mind that PCs have replaced toasters as the current cadeau du jour, I can't think of anything Ford should be avoiding more right now than some cheap marketing gimmick that might further erode their already fragile consumer confidence and loyalty. Heck, if they're going to go ahead and give something away, why not an iPod? That's obviously what everyone wants.

The relationship between portable electronics and the car business has always been an interesting one, so much so that there is an actual industry group dedicated to just that. The reason for this is that electronics manufacturers and automotive companies seem to be caught up in an endless race to offer trendy equipment. Generally, electronics companies introduce the products first, leaving the car manufacturers to play catch up by introducing their own versions expressly for vehicles. Before there was a tape deck in your car, for example, there was the walkman (the Telematics Research Group (TRG) is the association whose task it is to keep score of who is introducing what).

Should you opt for the non-factory installed components and still want to stay up to date, consider the limitless tangle of wires, adapters, and chargers that would impede your ability to operate a motor vehicle. Think cell phone/charger, headset, navigation unit, radar detector, MP3 player, and DVD (backseat entertainment), and it’s a wonder anyone is able to drive at all.

While Bluetooth technology and Telematics like On-Star will certainly alleviate some of the clutter in areas where the auto manufacturers simply can't keep up, happily, some manufacturers are not completely paralyzed with bureaucracy. According to TRG, 17 manufacturers (up from 7 in 2004) will offer Bluetooth in model year 2005.

With regard to the iPod, Apple just announced that it has teamed up with Mercedes-Benz, Volvo, Nissan, Alfa Romeo, and Ferrari to offer iPod integration in their vehicles in 2005. BMW and Mini seem ahead of the curve in this department. They began offering integration in 2004.

*Useless feature alert: Push button Start/Stop. Look for it in more and more models.

For information on the Bluetooth technology, see their site www.bluetooth.com.