Toyota does the aftermarket right

Like the famed Direct Connection which morphed into Mopar Performance, Toyota’s TRD - Toyota Racing Development in case you wondered - has established a strong reputation for itself, far out of proportion to its actual sales. Their current direction should be strongly studied by the Mopar people.

TRD sold a rather tasty $2.5 million dollars worth of performance equipment in July, according to Automotive News,, which recently published an article on that division’s future direction. The largest source of revenue was supercharges, but suspension parts, wheels, and exhausts were also substantial.

Three years ago, TRD merged its aftermarket accessories department with that of Toyota Motor Sales, separating it from the racing business as such. TRD engineers suddenly had access to CAD files and vehicles under development, where they had previously been forced to reverse engineer their components. This opened up a whole new world for them, one which Mopar buyers are already familiar with - that is, having performance parts available for new cars. The problem is, unlike Toyota, Chrysler often does not really have performance add-ons available at launch; and they tend not to make it quite as easy on buyers. For example, TRD now sells superchargers for the 2.4 liter Camry/Corolla/Scion engine, its 4-liter V6, and its big 5.7 liter V8s. These parts are covered by Toyota’s regular new-car warranty - and dealers have a tool that lets them reflash the automotive computer, so that all reprogramming is done quickly and easily, with no need to buy expensive computers to go along with the parts. Imagine that - street legal, warranty-covered aftermarket performance parts!

The profit margin for TRD units is, according to that article, typically 33%, making it attractive to dealers. My suspicion is that Mopar performance parts have a similar markup, if not a higher one.

Toyota copied quite a bit from American automakers over the years - the basic design of their early trucks (essentially Dodge trucks with Chevrolet engines), for one. Maybe it’s time we copied something from them, and got the Mopar people to make hi-po parts available to us, when cars and trucks debut - without voiding warranties or emissions rules. Yes, it would probably cost more, but Chrysler needs all the street cred it can get.

The return of SCORE?

Back in the 1990s - in the heady days of favorable reviews, high profits, rising quality, and increased retention and new-customer captures - Chrysler used to run a program called SCORE, along with its Extended Enterprise system. The basic idea behind these programs was that Chrysler would lean on particular, carefully chosen suppliers more for engineering and design work, and expect these suppliers to come up with ideas for saving money; in return Chrysler would share the cost savings and give those suppliers a favored status. The idea saved Chrysler literally billions of dollars while allowing things like a practically free traction control system on the 2000 Neon (when traction control was still very new).

Such frills were slashed by the Daimler overseers, in their infinite wisdom. They preferred to simply pay suppliers less, year after year. Oddly, this did not result in increased profits or reduced costs. Perhaps they never read the articles on Allpar which explained the difference between saving money on parts, and saving money on overall systems. Spending an extra dime on a unit in order to cut a quarter off assembly and warranty costs is a cost savings, but the Daimler people would put it down as tomfoolery.

Some have wondered about Chrysler’s relationships with its suppliers now that the cord has largely been cut. Like everything else, there are two sides. The good side is that Daimler is on the sidelines. The bad side is that Steve Feinberg put Bob Nardelli in charge, and Nardelli brought over the team that expanded and then started to destroy Home Depot with cheap, poor quality Chinese parts. (Not that China can’t make things well; it’s just that, like any factories, they’ll make whatever you ask them to make. Ask for cheap and you’ll get cheap. Ask for good and you’ll get good. That might be one reason why Apple scored so far above HP, Dell, and Acer recent surveys, though they all use components or whole systems from China.)

Some news is starting to trickle out. The ex-Home Depot purchasing maven, Campi, said that Chrysler plans to select up to ten key suppliers for a new “Supplier Choice” program. These companies would be exempt from competitive bidding but would work with Chrysler to set a market price for the contract, and would be involved in vehicle development.

This sounds something like SCORE but without the same method of sharing cost savings.

The first company to join the program, incidentally, is Denso, which is partly owned by Toyota - Denso is essentially Toyota’s version of Delphi. Except, of course, that it makes money.

Campi also said that the company would finally stop its insane (he didn’t use that word!) required annual cost reductions. These were started by Daimler on the assumption that, no matter what raw materials cost, parts suppliers can cut prices by 5% - 15% every year, year after year, without fail. Because, of course, steel is just like computer memory.

We might be seeing some progress.

Sorting it out

We know there is a replacement for the Grand Cherokee coming to the North Jefferson plant, based on Tom LaSorda’s statements. This should really be no surprise. It is planned to be lighter than the current model, also no surprise, given gas mileage issues and the reason why the current model is as heavy as it is (rumor has it the Mercedes people demanded changes based on their own needs). This vehicle will most likely end up being worked over and produced as a Mercedes, as the current one is.

Most likely some other vehicle will be built with it á la Nitro/Liberty. Prime candidates are the Aspen and/or the Commander. Maybe the Durango… it all depends how they want to play it. If the Grand Cherokee is the luxury version, a companion Dodge would make more sense than a companion Chrysler. On the other hand the Commander could be the true-luxury version, and the Grand Cherokee the sortakinda Oldsmobile version. They could also make a “lifestyle Dakota” from this.

Small cars… are a big open question. I suspect Chrysler has numerous paths under way and is trying to figure out which will work. There are two pacts in China, one with Chery and one with Great Wall, which might come to nothing or be the next small Chrysler, replacing the Horizon. There is the possibility of using the Fiat 500 chassis, and there is the thought that maybe engineers from Chrysler have been working on their own A-class car and that no matter who builds it, it is still coming from the plans that started to be drawn up last year or the year before. And then there’s the B-car, coming from the future Nissan Cube… and to confuse matters, the Nissan Versa spinoff to replace the Hyundai Atoz.

D-class (Sebring/Avenger) cars are coming, and I believe that they will be sourced from Chrysler, especially since they seem to be planning a whole series of vehicles at long last (the same plans were apparently made for numerous other projects). They’d want to keep control in-house if they were making sedans, coupes, hatchbacks, minivans, and crossovers all from the same source.

Hanging over all these future projects is the question of model cuts. It would not be insane to think that maybe the Durango and Aspen and Nitro will all be allowed to die. The Liberty may not even be needed, if the Grand Cherokee replacement can be built in two varieties - think Cherokee and Grand Cherokee. The old Jeep used to do things like that. I don’t know if the Liberty has a real following, but I doubt the Nitro does.

By the way, I’d appreciate it if your comments focused on what is likely to happen, not what you’d like to happen. You know my opinion, but here it is again:

Dodge - muscle cars (Challenger/Charger), Ram, Dakota, Caravan (sporty suspension tuning).
Chrysler - 300C, extended-wheelbase 300C (”New Yorker”), true-luxury T&C.
Plymouth - small crossover (”PT Cruiser”?), small cars, low-end, V6-only big car.

Labor costs and production costs: where factories are sited

With regard to why American factories are closing and the reasons why:

Considering that less than 10% of the total cost of a vehicle goes into wages, I would suspect that there has become a huge disadvantage in taxes from an operating standpoint, which I find ironic. Our unfavorable business taxes have been the main reason that lobbyists like the Chamber of Commerce and the Business Roundtable have been promoting off-shoring and outsourcing for years. Labor differences have also been present, but have been insignificant in comparison to the tax benefits. It has just always been more P.C. to blame labor cost differences, as opposed to being upfront and honest about trying to skirt our tax laws, and exploit weaknesses and loopholes. As with any business, it has always been less about how much you make, and more about how much you get to keep for yourselves in the end. The new “Globalization” mantra makes it all seem all right: they are just trying to be competetive.

By citing labor differences, corporations count on a certain amount of resentment from consumers who believe they are paying too much for their cars, and narcissism from jealous laborers in other industries of lesser pay scales, or skilled/educated labor with similar annual incomes. It seems to work well enough: automakers are able to shift the blame and any public resentment for them moving, or outsourcing, right onto the workers themselves.

Professionals that make comparative incomes and are resentful tend to forget the fact that they do not work weekends and work a fraction of the hours it takes to put a factory worker at that income level. They are seldom at risk of harm or repetitive movement injuries, and are unaware of the dangers that are always present inside the plants. They tend to forget that they work in air-conditioned offices, have comp time, flexible hours, and a whole slew of benefits and perks that U.A.W. workers would kill for. They do not know what it is like to be moved, bumped or man-powered from shift to shift, let alone be forced in on weekends that could mean hardships for major family functions, not to mention marriages. Most employees outside of the industry would be in shock at the attendance policies and procedures that have been put in place at many of these plants.

Many do not know what it is like to work inside with building temperatures exceeding 100 degrees Fahrenheit , let alone while wearing mandatory personal protective gear. Many assume that all U.A.W. workers do is push buttons, having never set foot inside a plant to see different. Granted they are not all hard jobs either, and not all U.A.W. workers are deserving of the jobs they have either. There are always exceptions. What is unfortunate that it is those exceptions that always seem to attract the most attention. Negative publicity and perception gets sensationalized and winds up portraying the U.A.W. and all of it’s membership in that same manner. Suddenly every worker at every plant is cast in the same image and is under the same amount of scrutiny. It’s so easy to believe the bad stuff. The cold hard reality is that those exceptions are no different than the bosses kid or relatives that happen to be a screw ups at any other place though. Due to the size of these plants and the number of workers in them I do not believe that the number of screw-ups are disproportionate with that of any other place though, when you calculate the percentage of screw ups versus the number of good workers.

I am by no means complaining or trying to sensationalize how hard the workers in these plants have things, but to bring about an awareness of issues that are seldom portrayed in the media. I know that there are workers in other industries that experience the same hardships for less. I am merely trying to present a human side of the story where, more often than not, the UAW worker is portrayed as a villainous greedy monster.

Most workers are just trying to earn a living and support our families in the same manner expected of everyone else. They show up for work on time and do their jobs to the best of their ability. Most do care about quality and how well the company does as well. They try to hit their production numbers that have been set for them by management and try their best to look for defects and other problems that can cost the company money and create havoc latter. It is in their best interest to do so.

Please bear in mind though that they are not the ones behind poor designs, inferior materials, bland styling, lousy components, cheap plastics, or bad gas mileage figures… the list could go on. They do what they are told to do and work with the materials that are provided to them. They work within the control limits that are given to them by management.

The 2009 Jeep Patriot is a step forward

The Jeep Patriot seems to have it all: gas mileage, offroad capabilities, reasonable pep, and a lifetime warranty, with numerous interior features. Sales have, though, been slower than one would expect during these frugal, gas-sipping days. The factory that makes the Patriot, Compass, and Caliber is still on limited capacity. Hopefully, customers will give the Patriot another look now that the Patriot’s gotten an interior workover; the “bulky look” is gone now, replaced by more curves and better-looking materials. We won’t be able to report on personal impressions for a while yet - we do have them! - but we can tell you just from the pictures that this is a much better interior than the current Patriot has. Pay particular attention to the treatment of the glove compartment; the blocky look is gone and textures seem to have been fixed, with chrome accents relieving the plastic. Overall, everything is still in roughly the same place - it’s clear that this was no “unlimited budget” or “from scratch” makeover - but the details have been cleverly reworked for a massive improvement.

You may wonder how we can release this photo (and more at our Jeep Patriot page). First, the details we have on the Patriot were leaked to us before we were bound by the media embargo; second, Chrysler has violated its own embargo with brochures and actual cars showing up at dealerships just a tad early. Is there really a point to our withholding photography when you can go to a Jeep dealer and see the real thing? We sure hope not, because we don’t want them to be mad at us again!

Chrysler Aspen Hemi-hybrid tested

We have a video, and are working on a written review of the Chrysler Aspen Hybrid [now posted], the first of the Hemi Hybrids along with the Durango. A 2010-model-year Dodge Ram hybrid will most likely use a nearly identical system, which is based on a transmission/electric motor pack developed by General Motors with Chrysler and BMW input.

The system makes good on its promise to greatly increase city-cycle gas mileage in the massive Aspen, a vehicle that can tow 6,000 pounds while holding six people in comfort (or eight people who don’t mind each others’ company). Highway mileage isn’t much better though the electric motors help to keep the Hemi in four-cylinder mode; but city mileage is a major improvement in terms of gallons saved. It isn’t going to get you 40 mpg, but for the guys and gals who have to drive something big (or something that can seriously tow), it’s either this or the Suburban. Whether people will choose a big hybrid over a diesel-powered SUV is an open question; but since the latter aren’t due from any of the Big Three until the 2010 model year, the Aspen and Durango have a window of opportunity.

Read the full Chrysler Aspen review.