Big companies are beautiful in the world of cars. Automakers that dominate the industry have the most flexibility and are generally profitable. That wasn’t always true, but after GM restructured in 2009, even the general makes money.

The Serge Factor

Sergio Marchionne, CEO of both Fiat and Chrysler, has turned around the latter even as the former continues to weigh heavily on his mind. Marchionne is not satisfied with just Fiat and Chrysler, and has made known his intention to seek another partner to share the burden reports the Wall Street Journal. Marchionne made his remarks following the North American International Auto Show in Detroit, with Renault’s Chief Operating Officer Carlos Tavares agreeing that his competitor’s comments make sense.

Tavares already has a three-legged deal in place with Japan’s Nissan and Russia’s AvtoVAZ holding up the two other legs with Renault. Moreover, that alliance has brokered a deal with Daimler, one where the German automaker will partner with Nissan to build cars and engines.

European Challenges

The big problem for Fiat is that overcapacity in Europe is draining its operation. Too much capacity and a costly workforce will continue to hamper profitability in Europe even as the company makes money in other regions including North America. Chrysler will likely be formally absorbed by Fiat at some point, although its operations may be distinctive enough for the long term.

Fiat has expressed interest in Opel, which is owned by GM, but GM says that Opel is not for sale. Opel was up for sale following GM’s bankruptcy and restructuring, but was later removed from the sales floor. Opel has been problematic and unprofitable for GM, but the automaker still has plans to put in place a corrective solution.

Peugeot Rumors

So, who should hook up with Fiat and Chrysler? Peugeot is one option, a French automaker that also owns Citroen. Rumors that Peugeot would become the third leg of this pending stool have surfaced several times, including as recently as this week following the NAIAS. Marchionne, however, denies that talks with Peugeot are being considered.

There aren’t many companies left that would consider an alliance at least not one involving Fiat and Chrysler. The Ford Motor Company is too close of a competitor to be considered; Honda seems to prefer to go it alone and Hyundai-Kia is bent on world domination, thank you very much.

How ‘Bout China?

Toyota might surprise everyone with an alliance, but it seems to prefer smaller, more limited arrangements such as collaborating with Ford on large vehicle hybridization. Beyond that, Marchionne may find that his best bet is in China where the market is now the largest and its home-grown manufacturing base is looking to expand abroad.

Takers anyone?

No doubt that the Ford Motor Company’s Lincoln brand has been a ship adrift. Its products aren’t unique to the brand nor does Lincoln possess even one model that gets everyone to sit up and take notice. With the Ford brand getting all of the loving — and some great models too — Lincoln has languished and its dealers have witnessed the death of Lincoln’s junior stable mate, Mercury. Unless Lincoln dealers also sell Ford products, their inventories are limited to just a handful of models.

Marshaling Its Resources

Ford management has reiterated its commitment to the Lincoln brand and recently established a boutique creative agency to handle Lincoln’s affairs apart from the Ford brand. Moreover, the company has committed to bringing forth seven new or updated models over the next few years and managed to lure designer Max Wolff from Cadillac to lead Lincoln’s design team.

Wolff’s imprint will first show up in a pair of 2013 models that are set to go on sale this spring. Its large MKS sedan and its 7-passenger MKT crossover are receiving mid product cycle refreshs to reflect Lincoln’s changing design direction. Those models, however, are not fully representative of where Wolff wants to take Lincoln, with the next generation MKZ sedan offering the clearest and freshest example of those changes.

Lincoln MKZ Concept

A concept MKZ was shown at the 2012 North American International Auto Show in Detroit this week, a four-passenger sedan that still shares the same platform that powers the capable, but middle-of-the-road Ford Fusion, while managing to offer a distinctive look inside and out. Concepts generally aren’t the real thing, but with the 2013 Lincoln MKZ due out this fall, what was presented in Detroit is likely an excellent representation of what is to come.

The concept’s face takes its styling cues from the 1938 Lincoln-Zephyr, incorporating a refined and contemporary version of that vehicle’s split-wing grille. The differences between the concept and the current model are evident in the sweeping roofline, a style that isn’t too unlike what you’d see in a Lexus. Perhaps as Lexus modeled its first models after Lincoln, Lincoln is ripping a page out of the Lexus playbook to remake itself.

Inside, the Lincoln cabin offers 2+2 seating, dispensing with the rear middle seating area to give back row passengers more room as well as a dedicated console area. A push button transmission selector, a unique and modern center console along with poplar wood and aluminum trim are further distinguishing characteristics of this sedan. What we’ll find under the hood is a mystery, but this sedan will include at least one of the automaker’s popular EcoBoost engine products. What’s more, Lincoln’s new suspension system along with many advanced safety features will be included.

Reviving Brand Lincoln

None of this automatically translates into success for the Lincoln brand, but it does show everyone that Ford has dedicated itself to reviving a brand that as recently as 1998 led the luxury segment in sales. Now in a distant 7th place among its competitors, a fresh approach for Lincoln just may help this tired brand gain some much needed moo or at least stem the losses long enough to bring forth several inspiring, new products.

Photos: Ford Motor Company

Civic demand will continue to assist Honda sales.

American Honda Motor Company reported that its sales were down for 2011, registering a 7.1 percent drop over 2010. Blame a March earthquake and heavy flooding in Thailand this past fall with hampering U.S. sales for one of the most consistent and trusted automakers in the world.

Honda may be down, but this company is certainly not out. It has had other setbacks too including the tepid reception received for its all-new compact Civic. Once a segment leader, the Civic is now being outmaneuvered by several competitive products including the Hyundai Elantra, the Ford Focus and the Chevrolet Cruze. The next generation Dodge Dart will present yet another challenge for a car that critics have found to be dull and uninspiring.

Consumer Reports

Some models, however, continue to outperform all others. This month, Consumer Reports put the subcompact Honda Fit at the top of its best new-car value list, beating out scores of other models. The Fit scored highest last year too and is holding off new competitors including the Kia Rio, the Ford Fiesta, the Madza2 and Chevrolet’s Sonic.

Honda may not win many beauty awards for its vehicles, but the automaker routinely finishes at or near the top in reliability. Toyota and Honda generally rank a very close 1-2 in reliability, two automakers that suffered the most when its manufacturing and distribution base was hammered by Japan’s quake last year. Reliability tops looks for many car buyers including a large segment of Honda loyalists who abandoned the Big Three and its quality issues of the 1970s and 1980s.

Honda’s bright spots are many and the following vehicles besides the Fit will likely help this automaker shine in 2012 and beyond:

Accord — This midsize sedan and coupe remains one of the best-selling cars in America year after year. Its competition includes the top-selling car in America: the Toyota Camry. New models from Hyundai and Kia and upcoming vehicles from Ford and Chevrolet will continue to press in. The Nissan Altima may be its toughest competitor and the Volkswagen Passat is showing much strength. Still, the Accord is a known quantity, one that Honda faithful will stick with for years to come. An updated model is likely for 2013, enabling this trusty model to stay near the top of the heap.

CR-V — Besides the Toyota RAV4, the Honda CR-V leads in the compact crossover segment. Its 2012 re-do won’t win design awards, but as has always been the case with this five-passenger front- or all-wheel drive crossover SUV, its reliability just isn’t ever in question. Newcomers and next generation models such as the Ford Escape, Chevrolet’s Equinox, the Hyundai Tucson and the all-new Mazda CX-5 will keep Honda on its toes. Honda will continue to push its SH-AWD or super-handling all-wheel-drive system that provides enhanced torque to the outside rear wheel when making turns. This technology makes equipped vehicles maneuver smoothly, providing a safer driving experience as well. Honda owners prize the automaker’s safety initiatives and good fuel economy when shopping the brand.

Odyssey — The van segment continues to shrink as crossover SUVs grow in popularity as the family vehicle hauler of choice. The Honda Odyssey nevertheless continues to do battle with the Dodge Grand Caravan, Toyota’s Sienna, Chrysler’s Town & Country and the Nissan Quest for customers. Honda’s only other big people hauler is it Pilot crossover, thus the Odyssey doesn’t have much in-house competition. The Honda Odyssey routinely outperforms the competition including in the 2011 Cars.com “Ultimate Minivan Results test.

Pilot — Honda sold 116,297 Pilots in 2011, up 13 percent for the year. That in itself is quite a feat given the problem Honda had for most of the year in supplying parts for many of its models. Honda will stick with a vehicle that has grown more rugged and roomier since its introduction nearly 10 years ago. The current generation model has been sold since late 2008, a refresh seems likely by late next year. Along with the Odyssey, the Pilot provides what families want and its 3.5-liter V-6 delivers the needed power without sucking gas.

Ridgeline — Rumors that the Ridgeline will be discontinued surfaced frequently in 2011, but Honda has refuted that talk. Sales dropped by nearly 40 percent for the year, falling to just below 10,000 units. Even the Ford Ranger managed to top 70,000 units in its final year of build, but Ford’s strategy is with its F-Series while the Ridgeline represents the lone truck in Honda’s line up. Look for this model to updated in 2013 and perhaps aimed at those customers who no longer have a Ranger or a Dodge Dakota to consider when shopping for a new truck.

Honda may also have several aces of its sleeve, one that we’ll see this month when the 2013 Honda Accord coupe concept is introduced. True to Honda practice, its concepts are generally very close to the real thing, what consumers will see on the market within a year.

Source: American Honda Motor Co., Inc.

U.S. sales data for Ford are in and the news is quite good: the Ford brand topped 2 million units sold for 2011, the first time that has happened since 2007.

This news is important for Ford for two reasons: the brand is rebounding faster than the market is recovering. And, closing Mercury at the end of 2010 hasn’t hurt the automaker. In fact, even if Mercury owners have not made the switch to Ford, the brand has made up that loss with conquest sales from other brands.

No brand is invincible and Ford definitely may find itself stumbling at some point. Still, with many new vehicle lines in place and more to follow, Ford’s outlook for 2012 and beyond is very good. Even with outside pressures such as global economic problems, Ford is in much better position today to weather a financial storm than the automaker was in 2008 when bankruptcy seemed near.

Let’s take a look at some of the highlights of the Ford brand in 2011 and what we can expect going forward:

Pickup trucks — The Ford Ranger is no more, a compact pickup truck that was discontinued at the end of 2011. Sales finished strong, suggesting that demand for smaller trucks remains. Ford will watch this segment closely especially as Chevrolet promised to replace its current Colorado truck with a new model. Regardless, F-150 sales remain robust and easily topped 500,000 units again in 2011, taking the #1 position for 34 consecutive years. A new big truck will likely be released by the 2014 model year.

Out with the old… — …and in with the new…Escape, that is. In its final year of sales, the Ford Escape shined brightly and along with the F-Series and Ford Fusion was a top ten selling model in calendar year 2011. The 2012 model will soon be replaced by an all-new 2013 edition this spring. The new model drops the V-6 and the hybrid, and will rely exclusively on a family of three four cylinder engines to power this compact crossover including two EcoBoost engines. This writer has seen and sat in the new Escape, although it wasn’t available to drive.

In with the new… — …C-Max, that is. Perhaps Ford’s riskiest move in 2012 will be the introduction of its dedicated C-Max electric vehicle line. Like Toyota with the Prius, the C-Max will feature hybrid vehicles exclusively. We’ll see two models later this year — a standard hybrid and a plug-in hybrid. The C-Max rides on the same platform that underpins the Ford Focus and will replace the Escape Hybrid. Sales, however, may be quite small as demand for hybrids other than the Prius is minimal. Ford will need to manage expectations with this vehicle.

Understanding crossovers — One area where Ford might run into problems is with its crossovers. When you include the body on frame Expedition in the mix and the upcoming C-Max, Ford will have six crossver/SUV models in its line up. Is there some overlap? Yes, and plenty of it. Critics have said that the boxy Flex would be discontinued, but Ford has proven otherwise, taking the wraps off of the 2013 Ford Flex this past November. Ford is using each of its models to meet customer demand, providing market penetration that demonstrates the brand’s leadership in the all-important “utilities” market.

Competitive small cars — The Fiesta and Focus have given Ford two very strong entries in the small car market. These cars are attractively designed, well-equipped and offer good value for shoppers. Ford will again be watching Chevrolet as its main American competitor brings the diminutive Chevrolet Spark to the market this spring. That car, an A-segment model, will compete against the Smart ForTwo, the Scion IQ and the Fiat 500. Microcars haven’t sold particularly well in the U.S. to date, but Chevrolet thinks that there is a market for its Korean-built Spark. If Chevrolet succeeds, then the Ford Ka may not be too far behind.

Niche models — There was a time when a brand’s full-size model and its sport coupe were top sellers. No more. Today, both the big Ford Taurus and the sporty Ford Mustang are niche models, vehicles that sell only a fraction of what they used to sell. Still, both models are very important to Ford for two reasons: they serve as halo products and are also very profitable. The Taurus will be refreshed for 2013 while the Mustang earns some new engine choices. What we’re waiting to see is the 2015 Ford Mustang, the 50th anniversary model that will be all-new and released likely in April 2014.

One area where Ford needs to exercise restraint is to avoid being all things to all people. Chevrolet ran into this problem, building cars it didn’t need to have including the HHR, its answer to the Chrysler PT Cruiser and the SSR, a retro truck. Concentrating on what you do best leads to higher profits and fewer problems, with time and money sucking distractions avoided.

Photo Credit: Sannita

Fiat 500 sales have fallen far short of expectations.

Fiat’s tiny 500 model took the market by storm one year ago with high expectations of sales success. Indeed, Fiat/Chrysler put its first year numbers at 50,000 units, but when 2011 sales figures are tallied later this week that number is expected to come in closer to 20,000 units.

Why the shortfall? Blame it in on unrealistic expectations than on anything else. The Fiat 500 is a capable small car, but Fiat’s execution strategy actually hampered the car’s success. Fiat may yet hit 50,000 annual units, but it will need to rectify several problems that were apparent in 2011. Let’s take a look at what those problems were and offer some solutions:

Dealer Network — Very few dealer networks were in place when the Fiat 500 went on sale in January 2011. Moreover, those dealers had to promise to set up shop in Fiat-exclusive showrooms. Its 130-dealer network wasn’t in place when the year began, thus many customers couldn’t find the 500 available in there area until later in the year, if at all. Fiat might have avoided this problem and reached its goal had it simply made the 500 available through partner Dodge or Chrysler dealerships.

Production Delays — Not helping matters for Fiat were some production delays early on. This model relies on a plant in Dundee, Michigan, to produce engines and a plant in Toluca, Mexico, to assemble the car. Production problems in Mexico slowed initial availability. But, with demand well below expectations, layoffs at the Michigan engine plant have kicked in.

Safety Ratings — The Insurance Institute for Highway Safety has recognized the Fiat 500 with its “top pick” award as a result of testing involving frontal offset, side impact, rear collision and roof safety. However, the National Highway Transportation Safety Administration only gave the 500 3-stars out of a possible 5. Why the difference? Different testing methods, according to Consumer Affairs. The NHTSA uses both a stationary pole and a side barrier to test its cars. The 500 scored below average in its side impact test, pulling down its score. Likely, a higher score won’t come until the Fiat 500 is redesigned. Unfortunately for Fiat, customers may hear more about the NHTSA score than the IIHS rating.

Marketing Campaign — Months after the Fiat 500 went on sale, the company launched its first national marketing campaign. The campaign’s late arrival was problematic for two reasons: its dealer network wasn’t in place and delivery was still limited by production problems. Although some criticized Fiat for waiting too long to launch its national ad campaign, it really had no choice — the Fiat 500 wasn’t widely available yet.

Broken Promises?

Sergio Marchionne has done wonders for Chrysler, but his Fiat and related brands continue to suffer. Some dealers are angry that promised follow up Fiat or Alfa Romeo models aren’t on the horizon. The 500 Abarth edition, a turbocharged model that makes 160 horsepower will bring some excitment to Fiat dealerships, but with no other models in sight, expect more grumblings from dealers who aren’t seeing a return on their investments.

The Fiat 500 is classified as an A-segment model, and is among the smallest cars on the market. The Smart ForTWo kicked off this segment when it made its debut four years ago, but what we have here is a 16-year-old subpar offering from Daimler, a two-seater with a raspy three cylinder engine. Offering better competition in a limited segment are a pair of new or soon to arrive offerings: the Scion iQ and Chevrolet’s Spark. With only so much demand in this segment, its competitors will be looking to snap up sales. Those sales could come at Fiat’s expense, making the dream of reaching 50,000 annual units a never-ending quest.

The UAW is about to launch a unionization effort, one that this once powerful automotive union hopes will bring thousands of new rank and file members into its fold. The effort, reported by Reuters on Thursday and long rumored, mean that the UAW will go after hostile factories to achieve its goal.

That makes for a fool’s errand in the opinion of this writer, an effort that will only serve to cast the UAW in a worse light and could have ramifications that extend into the political sphere. Many Americans blame the problems that have beset GM, Ford and Chrysler on the unions, criticizing the UAW for pushing for exorbitant wages and benefits that have cost the industry dearly.

German Targets

The UAW appears ready to target Volkswagen’s new plant in Tennessee as well as a Daimler factory in Alabama. Both companies may be easier targets than Japanese and Korean automakers that also have factories throughout much of the south. BMW, another German manufacturer with a plant in South Carolina, is not being targeted.

UAW President Bob Kingsley has called on the support of German unions in its effort to unionize Volkswagen and Daimler. That appeal may make it easier for the UAW to appeal directly to American workers as company officials bend to the pressure. Presenting the union’s case to workers is one thing, finding workers receptive is an entirely different matter. Daimler, which has had many more years of producing cars at its plant in Alabama, can count on a happy workforce that will likely not be receptive to the UAW’s initiative. Volkswagen may be more vulnerable as the plant is new, but its workforce comes from communities in the Chattanooga area that are not fond of unions. Anti-union forces will also make a case against unionization and will likely point to troubles that the Big Three have had with unions.

All or Nothing

King insists that unionization is up to the companies. He has been involved in behind-the-scenes negotiations with Volkswagen and Daimler officials, in hopes of finding a common ground moving forward. However, King’s “do or die” viewpoint regarding unionization may implode — King believes that if the southern plants, dominated by transplant automakers, remain unorganized then the union will die. That all or nothing approach is likely to have its intended effect, with King on the losing end.

Politically, expect Republican candidates to make hay of unionization efforts as they run for local and state office next year. U.S. congressional candidates may also weigh in with neither party backing the UAW’s effort for fear of losing votes. If things get ugly, look for the Republican presidential candidate to use unionization as a wedge issue, doing his best to equate unions with every real or perceived failure of the Obama administration. If the political mood turns especially sour, King could find his union efforts doomed, the UAW on its deathbed and himself out of a job.

Four Lessons

In truth, Saab has had one foot in the grave since the 1980s when its parent company realized that it could no longer keep up with the changes necessary to help Saab keep pace in a fast changing world. GM’s ownership, never lauded for its astute management, nonetheless extended the life of a brand that would have died in the 1990s without outside intervention. There are some lessons to be learned from Saab’s demise, with automotive senior executives needing to apply these to how they operate:

1. Only the strong will survive — Three years ago, Fiat and Chrysler chairman Sergio Marchionne boldy iterated that there would only be six major automotive players in the world in coming years, each needing to produce at minimum 5.5 million units annually to be profitable. Initially, I dismissed his assertions, but now I believe that he is correct or at least has provided a framework for what will work down the line. Short of outright mergers, alliances such as the one crafted by Nissan and Renault will be the best assurance of long-term success. Saab was too small to survive apart from a much larger operation.

2. Innovate or die — Innovation drives change and change is coming at a much faster rate these days. Back in the 1980s, automakers were abandoning carburetors for fuel injection and developing smaller engines and automatic transmissions with overdrive. Today, automakers must build cars on smaller platforms and power these with modern, direct injection engines with turbochargers and have state-of-the-art transmissions, and also have a hand in vehicle electrification. The stepped up pace of change means that collaboration is a minimum requirement, something Saab desperately needed once it left GM’s fold. Spyker was the wrong owner for Saab, an exotic car manufacturer with no experience running a major production line.

3. Quirkiness restricts volume — Saab has been heralded for its quirkiness, but quirks don’t sell cars. Small quirks such as placing the ignition between the front seats aren’t typically a problem. Having to shift your car into reverse or into first gear to remove the key is an annoyance. Jet-like wraparound windshields, rear decks with bustle-back styling and similar design highlights set Saab apart early on. Newer Saabs lost many of those quirks, but shoppers often overlooked the brand because of its earlier idiosyncrasies.

4. Money is the answer to everything — Ecclesiastes, the preacher, had it right when he said ” a feast is made for laughter, and wine makes life merry, but money is the answer for everything.” That is true: food and drink will take you only so far — having cash on hand opens the door for you. Saab’s financial position has long been dependent solely on others. When you have cash on hand, you can ride out the storms that are certain to come along. Toyota and Volkswagen are the most monied automakers in the world, with both companies sitting on tens of billions of dollars in reserves according to the Wall Street Journal. Post bankruptcy GM and Ford are also up there and are named among successful companies such as GE and Apple. Only large corporations can amass huge amounts of cash; small automakers must play the beggar when times are tough.

Classroom Study

Saab will become a case study for business majors who will also learn why other smaller automotive manufacturers failed to thrive, died or merged. In the 1980s, American Motors was absorbed by Chrysler. In more recent years Daihatsu’s main owner became Toyota; Hyundai now has a large stake in Kia; and Chrysler’s survival has been assured by Fiat, particularly by the hard work of Mr. Marchionne himself.

Outright mergers are still likely, but smaller manufacturers will also seek alliances as Tesla Motors has done with Toyota, helping to electrify the RAV4 in exchange for Toyota’s cash investment and stake in the company.

The Korean car manufacturer is very conservative and loathe to build new plants for fear of being stuck with too much capacity. That was the problem of General Motors, Ford and Chrysler, with all three companies slicing and dicing over the past five years to reduce capacity. Hyundai has only opened up one plant in the United States, in Alabama, and is also relying on its corporate cousin, Kia, to supply assembly for its Santa Fe crossover at its lone U.S.. manufacturing plant in Georgia. Both companies are experiencing record demand stateside with Hyundai sales up by 21 percent and Kia up by 35 percent. Hyundai-Kia plants in Korea, Europe and elsewhere are running at full-tilt and Automotive News reports that its U.S. operations will only grow by 8 percent next year, held down by production limits, not demand.

Well, there are some quick ways for Hyundai to expand production and we’ll discuss those options here with you:

Buy a shuttered plant — The Big Three still own a lot of real estate in the U.S. including manufacturing plants that were mothballed in the past 2-3 years and still need to be unloaded. Unfortunately, most of these plants are old and are in states with strong union footholds. Hyundai could snap up a plant for a steal, but then they’d have the UAW organizing its factory workers even before the first car was assembled. Uh, not going to happen.

Take over a competitor — If you can’t beat ‘em, then buy ‘em. That mantra has been used for years, but hasn’t been heard of much lately. However, Hyundai has a lot of cash and could easily buy out another manufacturer or at least team up with one. China’s expanding auto industry is filled with companies that are partnered with foreign manufacturers. At least one should be available. Heck, Hyundai could buy Saab and simply gut its Trollhatten plant to build Hyundais. Hmmm….

Fast-Track a new plant — If Hyundai wanted to build a new plant and get it opened fast, they could do so without much red tape. Hyundai already has a presence in Alabama and can work with state officials to identify the land they want to purchase and submit plans that would be fast-tracked by the governor. You can bet that Hyundai, as well as Mercedes-Benz, has the ear of the governor who could assign a top aide to handle everything. Betcha’ that a plant could be up and running within 18 months of Hyundai making a decision to build. What’s holding the company back? Fear, that’s all.

Outsource the work — Short of taking over a competitor, Hyundai might consider teaming up with a manufacturer and using its current, under-utilized facility. Ford’s Flat Rock plant is shared with Mazda, but Mazda is moving on. That plant is underutilized and could be retooled to build the Veloster or expand Elantra production. Hyundai should look around the world to find plants that aren’t running at full capacity, such as in western Europe, where it can make its cars. Some of those models could be shipped stateside or free up capacity elsewhere to import cars from China or eastern Europe.

Personally, I’m surprised that Hyundai is in this predicament. An 8 percent growth rate in 2012 will look terrible especially if industry sales shoot up much higher than the current 10 percent rate. Hyundai-Kia’s quest for world domination may soon unravel with fast-moving competitors such as General Motors, Volkswagen and Toyota building some distance between Hyundai-Kia and themselves.

No Cruze hatchback, but what about a coupe?

I have no idea how the recent Volt battery-related fire incidences will impact GM, particularly its Chevrolet brand. Seven out of 10 GM cars sold in the United States are Chevrolets, with the Volt barely a blip on its sales screen. The car shares its platform with the gas-powered Cruze sedan, but that is the only similarity between these two models. The sales ratio for Cruze to Volt is 40-to-1, but when it comes to making news, both models are about even. Credit the Volt’s unique battery system with giving it out-sized reporting, something GM probably wishes wasn’t the case today in light of several highly publicized fires that have caught the attention of NHTSA regulators reports the Wall Street Journal.

Volt Fixation

Likely, GM will figure out a way to “fix” the Volt, but this will come at some cost, both to its bottom line and to its image. To keep the Chevy name from becoming tarnished, GM will need to address the Volt’s problems thoroughly. They can also help brand matters by investing more of the company’s resources into expanding the Cruze line, a compact model that has even greater potential should GM choose to tap it. Let’s take a look at how GM can reduce its Volt fixation while expanding its popular Cruze model line:

Go Diesel — GM has already committed to introducing a diesel model to the Cruze line in 2013. This is an excellent move as it will allow GM to sell an engine choice popularized by Volkswagen, but not sold by anyone else at least in this segment. There is no telling how many diesels will be bought, but if this model gets at least 45 mpg on the highway, then the Cruze diesel will be a hit. It should also bring in some profits too as customers will pay a premium for a well-appointed turbocharged diesel.

Time for a Coupe — You can only buy the Cruze in one body style — a sedan. Past GM compact lines have included a coupe, a convertible and a wagon. Apparently, GM wanted to ensure the Cruze’s success by concentrating on a sure-hit sedan. Now that the sedan has been a proven hit, a coupe should follow. Coupe rumors have surfaced before, something we reported on as recently as this past June. Chevrolet needs to get past possible concerns that a Cruze coupe would be compared to Cobalt and Cavalier coupes — the Cruze is light years ahead of these models.

Performance Cruze — Chevrolet killed off its SS performance line in 2009, choosing to go a more selective route when it comes to power. The Corvette remains the pinnacle performance model followed by the Camaro. Below that, there isn’t a single Chevy model that can stoke the heart of performance enthusiasts, particularly on the small car level. A model to do battle with the Civic Si seems like the best approach to take and could be a successful one at that. This means giving the “Cruze SS” its own interior, one that should include textured aluminum pedals, black cloth seating surfaces with embossed lettering and special instrument panel backlighting. A performance engine, perhaps the same 2.0-liter turbocharged four used in the Buick Regal and soon in the Buick Verano seems logical. Pair that with a smooth-shifting 6-speed manual transmission and add in a helical limited-slip differential, MacPherson struts and a multi-link rear suspension, and you’ll have a car that accelerates and handles the way an “SS” should.

Ragtop Cruze — If the Cruze can go coupe, then it can go convertible. A limited production Cruze convertible makes sense and can be sold as a performance model, one designed to complement the Camaro convertible. It need not be a volume vehicle, but it should be enough of a contender to bring in the sales. My advice is to lose the second row seat, expanding the storage area and making the Cruze convertible a roadster.

The Cruze has done for Chevrolet what GM has expected to do, but there is room for one or more encores. A coupe body style is a bit of an investment, but that money can be recouped by building several models. Done right and the Cruze could quickly become the best-selling compact car line, finishing ahead of the Toyota Corolla and Honda Civic, while holding off the Hyundai Elantra and Ford Focus. If not done at all GM could miss out on building small, but profitable vehicles that would attract a loyal following and do more for Chevrolet than what the Volt could possibly do.

Ally Financial, formerly GMAC and the sole financing arm for General Motors, has launched a new car loan program that is sure to please. Its “Buyer’s Choice” program will allow owners to sell their vehicles back to Ally for a price that will at least cover the balance of their loans. This initiative, now being tested in five key markets, will involve Chrysler and General Motors products only. Ally is Chrysler’s main lending partner and remains a key financial partner with GM as well.

Fixed Price

The Ally financing program began on Nov. 1 in five markets: New York, California, Florida, Illinois and Texas, and applies to any Chrysler Group or General Motors vehicle. Loan terms range from 60 to 84 months and a predetermined sale price is set for when such loans reach the end of the 48th month. Borrowers who want to get out from underneath their loans can do so with Ally’s assistance or they can seek a higher price by selling their vehicle privately and paying off their loan.

“Ally Buyer’s Choice is a true differentiator in the market and provides great flexibility and choice for consumers,” said Tim Russi, executive vice president, North American Operations for Ally Financial. “Ally is committed to bringing industry-first products to market that offer consumers more choices and help dealers sell and service more vehicles.”

Financing Options

Ally Financial expects its Buyer’s Choice program to provide a flexible financing option for dealers to offer its customers, enabling them to broaden their lending options for new car buyers. Ally states that Buyer’s Choice can reduce the customer’s buying cycle time, increase dealer floor traffic and provide more vehicle service opportunities.

The financing company expects to expand its program to other states over the coming months. Customers interested in Buyer’s Choice can inquire at any Chrysler Group or General Motors dealer to explore their choices.

Used Cars

Buyers, of course, are not required to sell their cars back to Ally Financial after 48 months. This financing option may offer peace of mind to people who fear being stuck with a car they no longer need or want. Unemployment, changes in a job or simply a desire to buy something new can help car shoppers avoid a financial catastrophe and move on with their lives. Moreover, the Ally initiative should help increase the pool of used cars available for the market.

See Also — Detroit Free Press: Ally Financial to Launch Unique Buyer’s Choice Car Loan in 5 States; Greg Gardner; October 31, 2011

Source: Ally Financial