Above: The Mitsubishi eK Wagon, one of the cars at the centre of the company’s latest scandal.
One thing about creating and running Autocade is that you gain an appreciation for corporate history. Recently, I blogged about Fiat, and the troubles the company is in; it wasnât that long ago that Fiat was the designersâ darling, the company known for creating incredibly stylish vehicles for all its brands and showing how you could use Italian flair to generate sales.
That was the 1990s; by the turn of the century, Fiat had lost some of its mojo, and by the time I got to Milano in the early 2000s, the taxi ranks had plenty of German and French cars. Once upon a time, they would have been nearly exclusively Italian. Today, a lot of Fiatâs range is either made by, or on platforms shared with, Ford, GM, Chrysler (which it now owns), Peugeot, Mitsubishi and Mazda. Sharing platforms isnât a sin, but a necessity, but Fiat seems to have taken it to a new level, looking like a OEM brand whose logo is freely slapped on othersâ products.
Mitsubishi is the other car company to find itself in trouble in recent weeks. The company admitted that it had lied about the fuel economy figures for its kei cars, the micro-cars that it sells predominantly in Japan.
It wasnât as troublesome as Volkswagenâs defeat device which fooled the US EPA, running differently when it knew the engine was being tested. Mitsubishi kept things simple, and overinflated tyre pressures.
It would have got away with it, too, if it werenât for Nissan, a company to which Mitsubishi supplied, under an OEM deal, kei cars. The customer started to ask questions and tested the cars for itself.
Mitsubishi had supplied 468,000 cars to Nissan, all of which are affected. It had only sold 157,000 under its own marque. Production of the cars, from the eK range, and the OEM equivalent for Nissan, the Dayz, is now suspended, while Mitsubishiâs shares plunged 15 per cent on the news last week. Sankei, the Japanese newspaper, believes that Mitsubishi used the wrong test method on the I-MIEV electric car, RVR (ASX), Outlander, and Pajero, which are exported.
You have to wonder what the corporate culture must be like for these matters to recur so regularly. But then, collectively, people tend to forget very rapidly, and companies like Volkswagen and Mitsubishi must bank on these.
VW isnât the first to cheat the EPAâUS car makers have attempted less sophisticated defeat devices in the latter half of the 20th centuryâthough it has had a chequered past. Just over 10 years ago, there was a scandal involving VW colluding with a union leader to keep wage demands down, and a few low-level employees took the rap. Go back to the 1980s and the company found itself in a foreign exchange scandal. But these were known mainly among specialist circles, principally those following car industry news.
Mitsubishiâs scandals, meanwhile, were more severe in terms of the headlines generated. Last decade, when the media called Mitsubishi Japanâs fourth-largest car makerâthese days they call it the sixthâthe company was implicated in a cover-up over the safety of its vehicles. Japanese authorities raided the company in 2004, and revealed that Mitsubishi Motors Corp. hid defects that affected 800,000 vehicles, and had done so since 1977. Nearly a million vehicles were recalled. Affected vehicles were sold domestically as well as in Europe and Asia. Top execs were arrested that time, including the company president, although it was hard under Japanese law to punish Mitsubishi severely. There was no disincentive to conducting business as usual. The company was ultimately bailed out by its parent, the giant Mitsubishi Group, when it found itself facing potential bankruptcy.
People were killed as a result of Mitsubishiâs cover-ups, and at the time it was considered one of the biggest corporate scandals in Japan.
Go back a bit further and Mitsubishi Materials Corp., a related company, had used slave labour in World War II, including US troopsâsomething the company did not apologize for till 2015, even though the Japanese government itself had issued apologies in 2009 and 2010. While it was a first among Japanese corporations, and US POWs got what they had long awaited, descendants of Chinese slave labourers still have a lawsuit pending against a connected Mitsubishi subsidiary.
The other major difference between Volkswagen and Mitsubishi is that the Japanese marque is relatively weak in terms of covering its market segments. Itâs SUV- and truck-heavy, and its kei cars had sold well (till now), but it has little in the passenger car segments, which it had once fielded strongly. The Mirage (and the booted Attrage) and the Galant Fortis (exported as the Lancer to many markets) are whatâs left: the latter is now nine years old, though still fairly competitive, and in desperate need of replacement. Its only other car is its Taiwan-only Colt Plus, still selling there as an entry-level model despite having been withdrawn from every other market. In the big-car segments, Mitsubishi is actually supplied by Nissan in Japan, but doesnât make its own any more. âSixth-largestâ is shorthand for third-smallest, at least among the big Japanese car companies.
Mitsubishi looks set to quit the C-segment (Galant Fortis) since neither Renault nor Nissan, which it had approached, wanted a tie-up. And the company survives on tie-ups for economies of scale, and thereâs now a big question mark over whether potential partners want to work with it. Automotive Newsâs Hans Greimel questions whether the MitsubishiâFiat truck deal will go ahead (though I had thought it was an inked fait accompli).
But, most seriously, Mitsubishi hasnât completely recovered from its earlier scandal.
It is within living memory, and the timing and nature of the latest one, tying so closely to what rocked Volkswagen, ensured that it would get global press again, even if the bulk of the affected cars were only sold domestically. And when consumers see a pattern, they begin wondering if thereâs a toxic corporate culture at play here.
Weâre too connected in 2016 not to know, and while Mitsubishi is likely to be bailed out again, it will face the prospect of shrinking car salesâand sooner or later one will have to question whether the company will stay in the passenger-car business. Isuzu exited in the 1990s, focusing on SUVs, pick-ups and heavy trucks, forced by an economic downturn. Since Mitsubishiâs own portfolio is looking similarly weighted, it wouldnât surprise me if it chose to follow suit, its brand too tarnished, with too little brand equity, to continue.
General Motors’ fine in 1995 for 470,000 cars using defeat devices against EPA testing: US$11 million. Volkswagen’s fine in 2016 for 580,000 cars using defeat devices against EPA testing: potentially US$40,000 million (or $40 billion, as the Americans say). The local companies get off far easier in the US. In fact, GM can even get a US$49,500 million bail-out from Uncle Sam. I realize there’s a difference between a settlement and a claim, but I wonder if Volkswagen’s going get away with paying less than a figure in the milliards.
The last few times Autocade reached a milestone, I blogged about it, and since this one is a bit of a Duesy, it deserves to be recorded.
The car cyclopĂŠdia has reached 2,000 models, with the Opel Kadett D getting us there.
It also passed 2Âœ million page views during DecemberâI noticed it was about to cross 2 million back in March 2012. Not huge numbers if you break it down per day, but for something that was meant to be a hobby site, it’s not too bad. I also notice that it gets cited in Wikipedia from time to time.
The history has been noted here before, especially when I first started it in 2008. It was meant to be an editable wiki, but, sadly, in 2011, the bots became too uncontrollable, and I made the decision to lock down the registration process. A small handful of peopleâI count four, including myselfâhave contributed to the site with content and programming, among them Keith Adams of AROnline and Peter Jobes. A fourth contributor, whose name I have forgotten, provided some early info on Indian cars.
It’s still a bit light on American cars, mostly due to the issues of converting from cubic inches. Some of my references aren’t that accurate on this for the same reason, and I want to make sure that everything’s correct before it’s published. Most US sites just record cubic capacity in litres when metric measures are given, and we need to be more accurate. But we will get there.
Of course, over the years, we have recorded some oddball cars. So, as I did for its fourth birthday, here is a selection. My thanks to Keith and Pete, and to all our readers.
And since I blog less these daysâFacebook (including the fan page), Twitter, Instagram, Tumblr and the rest seem to take more of my attentionâI imagine this is my last entry for 2012. Have a wonderful 2013, everyone!
Rambler by Renault:after Renault bought IKAâs operations in Argentina in the mid-1970s, it inherited a design based on the Rambler American.
Ford by Chrysler:Simca took over Fordâs operations in France in the 1950s, and the model it inherited, the Vedette, stayed in production long enough in Brazil for Chrysler to put its own badges on it when it bought Simca out.
Chrysler Esplanada.1967â9 (prod. unknown). 4-door sedan. F/R, 2505 cmÂł (V8 OHV). As with Regente, rebadged when Chrysler took over Simca Brasil. Power reduced to 130 PS; comments for Regente apply here, with the principal outward difference being Esplanadaâs higher trim level. Slightly more powerful engine.
Chrysler by Volkswagen:this one is perhaps better known. Chrysler found itself in such a mess by the end of the 1970s that it sold its Brazilian operations to Volkswagen, which eventually rebadged the local edition of the Hillman Avenger.
Volkswagen 1500/Volkswagen 1500M.1982â91 (prod. 262,668 all versions). 4-door sedan, 5-door wagon. F/R, 1498, 1798 cmÂł (4 cyl. OHV). Facelifted version of Dodge 1500, itself an Argentine version of the Hillman Avenger. Had a good history as a Dodge in the 1970s, and sold on that goodwill as well as robustness; but largely seen as an economy model for VW in the 1980s. Five-speed gearbox from 1988, with air conditioning on more models.
Volkswagen by Ford:as part of the Autolatina JV in Brazil, Volkswagen and Ford rebadged each otherâs models. A similar experiment was happening in Australia between Ford and Nissan, and Toyota and Holden, around this time.
Ford Versailles (B2).1991â6 (prod. unknown). 2- and 4-door sedan, 3- and 5-door wagon. F/F, 1781, 1984 cmÂł (4 cyl. OHC).Volkswagen Santana (B2) with redone front and rear ends, and addition of two-door sedan and three-door wagon. Part of the Autolatina tie-up in South America between Ford and VW, replacing Corcel-based Del Rey. No different to Volkswagens in that market, with same engines. Wagons called Royale, but five-door only added in 1995. Fairly refined by early 1980sâ standards but ageing by time of launch, though better than Del Rey.
While weâre looking at South America, the Aero-Willys probably deserves a mention. Autocade doesnât have the Ford-badged versions there yet, but it will in due course. Thanks also to acquisitions, Ford wound up with Willys in Brazil, and built a Brooks Stevens-penned design till it was replaced by its own Maverick in the 1970s. Here is that car, with an old platform, but more modern (compared to the 1950sâ version) styling.
Aero Willys 2600 (213).1963â8 (prod. unknown). 4-door sedan. F/R, 2638 cmÂł (6 cyl. OHV). Rebodied Aero, considered one of the first all-Brazilian cars, originally shown at the Paris Salon the year before. US platform as before, and modern styling by Brooks Stevens, but this shape was unique to Brazil. Engine now with 110 hp. Rear end altered in 1965, and spun off upmarket Itamaraty model in 1966.
Here’s an article from Autoblog that combines several of the themes I enjoy writing about: cars, leadership, management and education.
I’ve already hinted at this on my Facebook fan page, where I seem to post some of the pithy things these days. I sometimes try to avoid blogging about the same thingâa lot of what you see here are ideas that haven’t changed, especially a lot of the posts about social responsibility and branding.
I don’t want to dissuade anyone from getting higher education but one has to remember: education, especially tertiary education, is meant to open your mind to other possibilities and to get you thinking about them critically. It’s why I enjoyed papers at law school like public law and jurisprudence: both had lecturers (Prof Sir Geoffrey Palmer and Assoc Prof Ian Macduff) who enjoyed a well reasoned argument, even when it didn’t agree with their own thinking. It’s also why I didn’t appreciate banking law, or several other papers, where you had to agree 100 per cent with the lecturer, and to hell with independent thinking.
The MBA, then, can be a blessing and a curse. A blessing for those who treat it as it should be: a skill set, providing a framework, from which to analyse things. A curse for those who believe that certain case studies must be followed religiously, failing to take into account the conditions of their own organizations. Which brings us neatly to the Volkswagen case.
It may be a bit of a simplification to say that MBA thinking killed GM, and Volkswagen has eschewed that to become one of the world’s greatest car manufacturers, but it’s not too far from the truth. If you read period American books on managementâor even one of my favourites, Lee Iacocca’s autobiographyâthere is this idea of what ‘efficiency’ is, usually with a lot of outsourcing, finding cheaper and cheaper bases of manufacture, with another eye on how to raise the share price for the quarter. Not the best way to run a firm, especially when visions need to be set for years, decades or quarter-centuries. I’ve written about that aspect before.
But the way John McElroy puts it in his article, ‘efficiency’ means an absence of overlap and vertical integration, yet with them, Volkswagen AG is the world’s largest car company ‘if you measure it by revenue and profits. Its revenue of $200 billion is greater than every other OEM. Last year’s operating profit of $14 billion is the kind of performance you expect from Big Oil companies, not automakers.’ Yet:
Any efficiency expert would tell you that VW is too vertically integrated, has too much overlap and duplication, and has way too many brands. VW, meanwhile, keeps growing bigger, stronger and more profitable ⊠Efficiency experts will tell you that on an employee-per-vehicle basis, Volkswagen looks hopelessly inefficient. Financial analysts will tell you that the company woefully trails its competitors on a revenue-per-employee basis. But VW will tell you that it makes more money than any other automakerâby far.
In fact, McElroy goes on to say that Volkswagen looks a lot like the General Motors of Alfred P. Sloanâbefore the MBAs got hold of it.
The idea of ‘efficiency’ is often a misnomer. Most of British industry was dismantled with the mantra of efficiency, essentially giving it up to globalist, technocratic forces, helped along by the Slater Walkers and the governments of the time. Those decades, too, were driven by “experts”âand what resulted was neither efficient nor productive. The decline of British Leyland is perhaps one of the most telling examples of period thinking applied disastrously to the British motor industry, its skilled workers now happily picked up by the Japanese, Germans and Indians.
By all means, if real savings can be had and long-term goals achieved, then efficiency is a wonderful thing. There are areas where technology should aid productivity. But watch out for that word efficiency. It doesn’t always mean what the experts say it meansâand if revenue and profit decline as a result of it, and corporate culture is harmed, then you may be better off heeding the lessons that Volkswagen’s management has. Use that MBA as a framework, not as a playbook.
If you’re a car nut, then you won’t be mourning, too much, the passing of former Czech president Vaclev HĂĄvel. Or, for that matter, Kim Jong Il. It’s Saab that has finally died as it files for bankruptcy after GM, which still licenses key technologies to the Swedish firm, vetoed its sale to Zhejiang Youngman Lotus Automobile.
GM has a JV with SAIC, the Shanghai automaker, and believes that if those technologies were to find their way into the hands of a small upstart Chinese rival, it wouldn’t be to its advantage. Saab, which had been teetering on collapse since March, when it first stopped production, decided to call in the receivers today.
GM had issued a statement at the weekend, saying, ‘Saabâs various new alternative proposals are not meaningfully different from what was originally proposed to General Motors and rejected ⊠Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and it shareholders. As such, GM cannot support any of these proposed alternatives.’
Swedish Automobile, the parent company of Saab, responded, ‘After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded.
âThe Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors.’
GM, in the two decades in which it owned Saab, failed to turn a profit with the brand. However, its parting gift, the new 9-5 saloon, was heralded by some fans as a return to form for the company. Hopes were high for it, and the 9-4X crossover, helping Saab back into a position of strength.
It’s easy to do a post mortem now, but the failure could be levelled at GM’s misunderstanding of the Saab brand. It may have been sensible to shift Saab models on to Opel platforms for economies of scale, but, in doing so, the cars lost some of their character. The lowest point was when GM created a rebodied Subaru Impreza and called it the Saab 9-2X, which fooled few buyersâone has to remember that Saab buyers tended to be well educated. Saab never fitted well in a business which targeted the mainstream: its own cars were always bought by people who enjoyed their quirkiness and the fact they did not follow convention.
GM only understood this when it was far too late, as the last two models demonstrated.
When GM itself had to file for bankruptcy protection in the US in the late 2000s, Saab, Pontiac, and Saturn were the victims.
When Saab was sold to Spyker, its boss Victor Muller invested heavily into the business to try to turn it aroundâbut he, and other investors, would have lost tremendously today. Saab fans will likely remember Muller favourablyâafter all, he put his own money into the business and shared his supporters’ passionâbut in a world where break-even points are at hundreds of thousands of units, Saab’s 30,000 in 2010 were never going to be enough. MG Rover Ltd. collapsed with 2004 sales of 115,000 in 2005.
As hindsight is 20-20, Saab and Youngman might be accused of wishful thinking, believing it to be unencumbered by GM’s IP rights. However, the American business held the right of revocation over key licences that make up Saab’s 9-3, 9-4X and 9-5 models.
It’s not the first time intellectual property has got in the way of car businesses. One of the most famous examples was BMW arranging with Rolls-Royce trade mark owner Vickers plc to license the brand for motor cars, as Volkswagen negotiated to buy the Rolls-Royce Motors business. And all Volkswagen really had to do to find this out was visit the Rolls-Royce website home page at the time: right at the bottom, stated clearly, was the message that the Rolls-Royce brand was licensed from Vickers plc.
Renault Torino.
Chrysler Esplanada.
Volkswagen 1500/Volkswagen 1500M.
Ford Versailles (B2).
Aero Willys 2600 (213).
