GM’s Fuel Economy “Misprint” Somehow Shows Up At EPA Website

The correct fuel economy rating for this vehicle, from the EPA's website today.

The correct fuel economy rating for this vehicle, from the EPA’s website today.

GM has told its US dealerships to stop selling 2016 model-year large crossovers while it replaces Monroney stickers that show incorrect fuel economy ratings, according to a huge Automotive News [sub] scoop.  The stop-sale documents obtained by AN call the mislabeling an “inadvertent error,” and a GM spokesman tells them “an ‘inadvertent data transmission’ was responsible for the mistake.” This excuse would be thin under any circumstances, but two factors make it seem especially implausible. The first is the timing: GM was just caught using an apparent “defeat device” in Europe after months of allegations of emissions cheating. The second is the nature of the misprint: the incorrect ratings were just 1-2 MPG better than the correct numbers, strongly indicating GM was trying to get away with slightly too-good-to-be-true numbers.

But there’s even more direct evidence that GM’s “misprint” story isn’t true: a Daily Kanban review of the EPA website using the archive.org Wayback Machine shows that those (higher) incorrect numbers were displayed on the EPA website before being changed sometime this year. In other words, the fuel economy ratings that GM says were a “misprint” were submitted to the EPA and listed as the official rating before being changed to the new, lower rating.

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Despite Barra’s Denials, GM Diesel Test Results Indicate VW-Style Cheating

DUHzafiraWEB

We’ve suspected for some time that more automakers would be caught up in the Volkswagen emissions cheating scandal, and the first new perpetrator has apparently been identified: General Motors. GM CEO Mary Barra’s insists that VW-style software cheating on emissions tests “is not a condition that exists in our vehicles,”  but the German environmental group Umwelthilfe has sponsored tests that throw that claim into serious doubt [English press release in PDF format here].

In testing of the Opel Zafira 1.6 CDTi, performed at the Bern University of Applied Sciences, GM’s diesel engine passed NEDC cycle NOx tests performed on a two-wheel (single-axle) rolling road but emitted two to four times the Euro6 limit for NOx when the same test was performed on a four-wheel rolling road. This strongly indicates that a software “test mode” exists for this engine, although Opel insists that “The software developed by GM does not contain any features that can detect whether the vehicle is being subjected to an emissions test.” But, says International Transport Advisor Axel Friedrich,  “I have no normal, technically plausible explanation for the emission behavior of the Opel vehicle.”

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NHTSA Shrugged

There's a new sheriff in town... and he's big on self-enforcement.

There’s a new sheriff in town… and he’s big on self-enforcement.

As the GM ignition switch scandal snowballed over the last year, there has been much debate about just how much blame NHTSA bears for not catching the decade-old defect. The House Committee on Energy and Commerce staff report [PDF] analyzes NHTSA’s failure to prevent the deaths of 84 Americans (and counting), and concluded that a number of factors prevented NHTSA from detecting patterns that GM’s own top executives claim to never have known about. With headings like “information silos ” and “organizational tunnel vision,” the failures identified in the report are strikingly similar to the culture problems blamed for GM’s malfeasance; there’s even a “NHTSA shrug” to match the “GM shrug” identified in GM’s Valukas Report.  But the report’s final page gives the ultimate version of what we might as well start calling the “American shrug”:

There are no simple solutions to the failures exposed by this recall.

Which is true enough, as far as it goes. Again, if GM’s own leadership couldn’t identify the problem amid ten years of evidence it’s fair to say NHTSA didn’t have a chance. So rather than wondering why NHTSA isn’t capable of catching the worst-case nightmare scenario, perhaps we should be setting the bar a little lower. For example, let’s ask if NHTSA can at least ensure recalled cars don’t get sold before being repaired and if it can apply its efforts consistently. Because apparently even these modest standards are too much to ask…

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The Ballad Of Dirty Harry

Go ahead punk, make my day

Go ahead punk, make my day

This week’s news that activist investors are seeking $8 billion in stock buybacks from General Motors has reignited a nearly half century of concerns that the once-dominant automaker continues to prioritize short-term results over long-term strategy. Already behind the competition on global platform rationalization, fuel efficiency, pricing power and luxury-brand margins, GM clearly has better things to do with its cash than give it away to investors. But while analysts and investors wrestle with these issues, taxpayers face an even more troubling question: how is it possible that they lost over $10 billion on GM’s equity only to have Wall Street strip $8 billion in cash from the company with the help of a member of the president’s auto task force?

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GM brings on the strippers

The tide goes back out...

The tide goes back out…

In a 2011 interview, Bob Lutz summed up the product philosophy that guided the product turnaround GM had hired him to lead as follows:

The product development guys, whether at Ford, BMW, Chrysler or GM, liked my leadership because I insist on good rather than cheap. And it’s definitely paid off. The average transaction prices of GM cars are up so much it more than offsets, way more than offsets, the maybe thousand bucks I put into the vehicle.

Lutz’s argument, that it is better to buy market share by investing in quality than by discounting, is unassailable in the abstract and absolute catnip for car writers (myself included, at the time).  And given the profound mediocrity of GM’s products before Lutz joined GM in 2001, it’s impossible to argue that his philosophy hasn’t had some kind of positive effect. As Lutz pointed out, GM had seen transaction prices rise throughout his tenure… but that trend appears to have turned.

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GM Korea: The Twilight Empire

I met a traveller from an antique land
Who said: “Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
‘My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away ~Shelley, “Ozymandias”

Ed note: Jordan Terry of Stone Street Advisors recently asked me on Twitter what I thought of the “bad” situation at GM Korea, noting that it seemed “underreported.” Having written about the subject in the past at TTAC, that was hardly a surprise: not much hard reporting comes out of GM’s “International Operations” black box. That said, there is a broader context here that is underreported, and which I will try to lay out here…

General Motors Korea, formerly GM-Daewoo, has been a key design, engineering and export hub for GM’s global empire since the early 2000s. Specializing in smaller cars, developed and produced at lower price points than GM’s European Opel division, GM Korea was the main conduit for many of GM’s developing-market efforts, as well as the “home room” for many global products. For the perennially small-car- and cost-challenged GM, Korea was the key to offering affordable small cars for export to developed markets like the US and Europe in complete form, as well as in the form of CKD kits for developing market operations like GM Uzbekistan and GM Egypt.

But GM Korea’s long-term problems with union unrest, currency volatility and domestic market sales declines are catching up to it, creating a financial crisis just as it becomes increasingly expendable to the GM Mothership. GM’s deep alliance with China’s SAIC Motors has made GM Korea all but irrelevant to its strategy, and as The General plots its increasingly China-centric future it’s clear that Korea is losing out. With the loss of key export markets and future development work, GM’s once-crucial Korean empire is fading into obscurity and financial woes.

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The Car, The Phone And The Platform

Who needs a car to do this?

Who needs a car to do this? (courtesy: General Motors)

I remember the first flashes of the technological blossoming we are currently living through, in the five formative years I spent growing up just South of California’s Silicon Valley. Though we were hardly a technology-focused family (the television was kept in a wardrobe), my dad already had his first 8086 “laptop” PC by the time we moved to Los Gatos in 1987. Some time around second grade I remember a friend showing me something called “Prodigy,” which he claimed had allowed him to “accidentally” place an order for a bulk volume of dog food through his home computer. But the most convincing evidence that we were living on the cusp of a glorious future was my father’s Mercedes 300E. I was, of course, to young to truly appreciate the car itself, but inside the leather-scented bank vault of its interior were hidden great technological wonders of the age: a Sony Watchman portable TV and a car phone. To my young mind, such extravagant connectivity was undeniable proof that we already living in the future.

More than twenty years later, it’s remarkable how far those then-high-tech talismans were from the actual future. Both television and telephony are rapidly being subsumed by the internet, the cathode ray tube is as dead as the eight track and having either a telephone or a television physically attached to your vehicle is absurd in the modern technological environment (with the possible exception of the flip-down video system babysitters offered in minivans and CUVs). Though Dad’s early 90s TV executive toolkit was a harbinger of our hyper-connected, screen-centric, distracted driving-plagued age, it was a vision of the future seen through a glass, darkly.

The revolution in connectivity and computing power of the last twenty years has long since wiped away the Watchman and car phone (not to mention Prodigy), and increasingly consumers find themselves distracted from their cars by high-tech devices, both in the literal sense and in economic and cultural terms. For automakers already navigating intense global competition, finding relevance in the information age (or at the very least, an accommodation with it)  is a critical challenge to long-term viability.

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Does Beijing-Shanghai Tension Spell Trouble For GM and VW?

Jiang Zemin and the Communist Youth League, in happier times.

Jiang Zemin and the Communist Youth League, in happier times.

 

Ever since the dramatic 2012 downfall of the colorful Chongqing party leader Bo Xilai, the Western press has been fascinated with China’s “princeling” plutocrats and the Central Government’s efforts to restrain them. No wonder: the battle is China’s basic political division, pitting the bureaucratic and ideological power of the Beijing Central government against the economic power of Southern Chinese entrepreneurs centered around Shanghai. Under former Shanghai mayor Jiang Zemin, China opened rapidly to the foreign investment that spurred decades of florid economic expansion… and sowed the seeds of China’s major political problems, corruption, inequality and environmental ruin. The downfall of Bo Xilai, a protege of Jiang Zemin’s Shanghai clique and member of its successor “Princeling” clique, was taken as a sign that Xi Jinping is serious about continuing Hu Jintao’s campaign against the ill-gotten gains of the Shanghai boom… a signal that is growing louder as the investigations widen.

Why the ten-cent lecture on Chinese politics? Shanghai’s automotive star rose alongside Jiang Zemin’s, and the city with which the he is synonymous has become one of China’s biggest automotive players and partner to the two biggest foreign presences in China, Volkswagen and GM. If Xi Jinping’s reform movement continues to target Shanghai and  its Princelings, and especially if the investigations draw closer to Zemin himself, automakers could find themselves on awkward ground. Caught between the guanxi (connections) culture of the world’s new largest market for cars and the Foreign Corrupt Practices Act of what is still the most profitable market for cars, automakers with Shanghai exposure have reason for concern.

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