(Source:  Forbes)

GM. Those two letters call up a lot of emotion these days. People ask, “What went wrong?” “How could a company that large, that successful, go bankrupt?” The less polite say: “General Motors’ leadership is corrupt.” “They ignored customers.” “The union killed them.” “Government interference.” “Idiots.”

We used to expect size to benefit a company. Being large and established meant you were supposed to have market clout, and you could protect your profits. According to Michael Porter, Harvard Business School professor and author, being biggest meant you had created entry barriers that kept your turf safe. With economies of scale in manufacturing, procurement, distribution, marketing, sales, financing and research and development, you could get so giant no competitor could effectively attack your products or prices. And for many, many years, nobody was bigger than General Motors ( GMGMQ.PK– news – people ).

The myth of the invulnerability of the large company is dead. We all know that by now. But other than depressing us, what does it mean? What have we learned from these failures that can help us be more successful in the future?

Many theories of business–from the work of Fredrick Winslow Taylor, who introduced modern management practices a century ago, to that of writers like Jim Collins today–have posited that success comes largely from figuring out what business you want to be in and then focusing on it intently. Pay attention to the resources on which you rely, invest to gain advantages of scale, operate with a tight focus on your goals and you should succeed.

This approach is based on an industrial-age understanding of oligopoly, where over time a pool of competitors shrinks to just the most efficient handful that can all be profitable in the long term. In other words, as Jim Collins has argued, if you set yourself a big, audacious goal and focus on tight management, you should expect to grow large and profitable in the end.

It’s good that GM’s situation raises people’s blood pressure. The company’s trip through bankruptcy is a highly visible sign of how markets have changed. To pull out of this recession, we need to make sure other companies don’t follow GM’s route. Leaders need to stop focusing on traditional market leadership, size and scale. They must abandon that approach to success. Now, more than ever, they have to identify market shifts and reposition their organizations to play in growing markets.

Profit comes from leading customers into new markets, not from optimizing your position in historical ones. To pick a winner, look for companies that shift with markets rather than trying to wield clout. To create a winner, build such a company.

Click here to read the entire article.

(Source: Natural Resources Defense Council)

America’s addiction to oil continues to threaten not only our national security and global environmental health, but also our economic viability. Natural Resources Defense Council (NRDC) analyzed how heavily drivers in each state are affected by increases in oil prices and ranked states on their adoption of solutions to reduce their oil dependence — measures they are taking to lessen their vulnerability and to bolster America’s security. NRDC found that rising gas prices, combined with the economic downturn, are making people more vulnerable to changes in oil prices. But many states are taking significant steps to reduce oil dependence through smart clean-transportation policies.

Our analysis shows that:

• Oil dependence affects all states, but some drivers are hit harder economically than others.
• The trends in states’ vulnerability to oil price increases over the past couple of years are not encouraging — drivers in every state were more vulnerable in 2008 than they were in 2006.
• While some states are pioneering solutions and many are taking some action, a fair number of states are still taking few (if any) of the steps needed to reduce their oil dependence.

Image Courtesy: NRDC - Percent of Income Spent on Gasoline by the Average Driver, 2008

The NRDC report says that although some states are adopting strong measures to reduce their oil dependence, too many others are still taking little or no action. The solutions rankings in this report are based on the range of key actions that states can take to reduce oil dependence, with particular focus on policies that can have substantial impact and can be replicated by other states.

NRDC research shows that the 10 states doing the most to wean themselves from oil are:

1) California
2) Massachusetts
3) Washington
4) New Mexico
5) Connecticut
6) New York
7) New Jersey
8) Pennsylvania
9) Oregon
10) Florida

In contrast, the 10 states doing the least to reduce their oil dependence are:

1) West Virginia
2) Idaho
3) Wyoming
4) Mississippi
5) South Dakota
6) Oklahoma
7) Alabama
8) Arkansas
9) North Dakota
10) Alaska

Click here to download the full issue paper. A Fact Sheet developed by the study team can be downloaded here.

(Hat Tip: Elena Schor @ Streetsblog, Capitol Hill)

(Source: Washington Post, Jalopnik, Autoblog)

Car can extend its range to more than 300 miles with its flex fuel-powered engine-generator.

Image Courtesy: Autoblog

In case you missed it this morning, General Motors CEO Fritz Henderson made some big news just one month after the “new” GM emerged from bankruptcy protection.

General Motors announced today that its forthcoming electric vehicle, the Chevrolet Volt, will achieve city fuel economy of 230 miles per gallon, under testing that used draft federal fuel economy methodology standards for plug-in cars.

The Volt will become the first mass-produced vehicle to obtain a triple-digit MPG rating, the company said.

“The Volt is becoming very real, very fast,” chief executive Fritz Henderson said. “The price of oil is going to go up.”

According to Frank Weber, vehicle chief engineer for the Volt, the number is based on combined electric only driving and charge sustaining mode with the engine running. He declined to get specific about the proportions, but did say that the urban cycle would be predominantly EV only. The EPA has been studying real world vehicle usage and is developing the formulas to try and provide a representative number of what most customers could expect to achieve. In addition to the composite number, the new EPA stickers will likely also get numbers for mileage in charge sustaining mode and electric efficiency in EV mode.

Initial prices for the car may be as much as $40,000, analysts said.

But company officials said the car’s price is expected to come down over time. They note, moreover, that gas prices will rise again, making fuel-efficient cars more valuable.

The Volt, which is scheduled to start production late next year, is expected to travel up to 40 miles on electricity from a single battery charge. The company says the car can extend its range to more han 300 miles with its flex fuel-powered engine-generator.

Assuming the average cost of electricity is approximately 11 cents per kilowatt-hour in the United States, a typical Volt driver would pay about $2.75 for electricity to travel 100 miles, or less than 3 cents per mile.

This story’s still developing, but if our sources are correct, it would blow the Toyota Prius out of the water. Heck, it’d blow every other vehicle currently on the market out of the water with the exception of the Tesla roadster — and that’s no four-door mid-size sedan. So for GM this represents a huge marketing coup — the ability to claim the most fuel efficient vehicle in the world and a big blow to detractors who claim the big, sweaty ‘merican manufacturer can’t build quality products.

Click here to read the entire article.

(Source: Bloomberg; WSJ & Autoblog)

Image Courtesy: Autoblog

General Motors Co. will let customers buy cars and trucks online from some California dealers through EBay Inc., the operator of the most-visited U.S. e-commerce Web site.

A new Web site, gm.ebay.com, will offer Chevrolet, Buick, GMC and Pontiac brands starting tomorrow, GM and San Jose, California-based EBay said today in a statement. More than 225 dealers will participate, the companies said.

Offering GM autos on the Internet gives Chief Executive Officer Fritz Henderson a new venue to boost sales as he shrinks the ranks of U.S. dealers by about 42 percent to 3,600 by the end of 2010. Those reductions are part of a plan to return GM to profit after $88 billion in losses since 2004.

When GM emerged from bankruptcy protection in July, among a slate of changes, it said it would realign sales and marketing functions. Chief Executive Fritz Henderson had said GM was testing a new online auction system with eBay that would enable customers to bid on actual vehicles just like they do in an eBay auction, including the option of choosing a predetermined “buy it now” price.

“Exploring new online distribution alternatives is a good idea as GM downsizes its brick-and-mortar distribution system,” said Laura Martin, a Los Angeles-based analyst at Soleil Securities Group Inc. She rates EBay shares as “hold” and doesn’t own any.

In addition to acquiring vehicle through eBay’s “Buy It Now” and “Best Offer” formats, the site also will allow consumers to compare pricing across models or participating dealerships and get tips and advice while determining trade-in values and whether their current vehicle may also qualify for the government’s “cash-for-clunkers” incentive program.

The companies cited a recent J.D. Power & Associates study that said more than 75% of new-vehicle buyers in 2008 used the Internet during their shopping and research process, compared with 70% in 2007. The study also found that 2008 marked the largest year-over-year increase in online automotive shopping since 2001.

Autoblog’s comments on the news notes that this pact between GM and eBay will add functionality to the process, though, while giving dealers a greater online presence. Suspiciously absent from the program is GM’s Cadillac brand. It is not known exactly why GM chose not to include its luxury arm in the eBay auctions, but it is believed that the decision has something to do with giving customers a more premium, coddled car-buying experience. The trial program is reportedly set to expire on September 8.

Click here to read the entire article.

(Source: The Guardian, UK)

Ana Portet has had an unusual commute to work. At 7.30am she popped down to Sants railway station in Barcelona. Three hours later she was in a meeting with colleagues from her brewery firm, 315 miles away in Madrid.

“I’ll be back in Barcelona by half past five,” she said as her early afternoon bullet train flew back along the new high-speed tracks at up to 210mph. “It’s so quick, sometimes you are there before you have even noticed.”

Portet is one of hundreds of thousands of travellers who have migrated from the world’s busiest air shuttle, linking Madrid and Barcelona, to what is now Spain’s most popular train, the high-speed AVE.

The AVE, an intercom announcement has just told us, will leave us in the centre of Barcelona in two hours and 32 minutes. With Madrid’s AVE station a short walk from the Prado museum, the journey is from one city centre to another. What is more, the high-speed train does this in punctual, hassle-free and elegant style.

High-speed trains pulled by aerodynamic engines with noses shaped like a duck-billed platypus are grounding aircraft across Spain. The year-old Barcelona-Madrid line has already taken 46% of the traffic – stealing most of it from fuel-guzzling, carbon-emitting aircraft. As the high-speed rail network spreads a web of tracks across Spain over the next decade, it threatens to relegate domestic air travel to a distant second place.

A high-speed network is not designed overnight. Spain’s AVE story started in the 1980s, when the socialist prime minister Felipe González commissioned a line between Madrid and his home city of Seville. The project was overshadowed by corruption scandals and greeted with a certain amount of scorn. Why was sleepy Seville getting the line and not busy Barcelona? Some saw it as an expensive white elephant and a monument to González’s ego.

The line, however, was a spectacular success. Remote Seville was suddenly two and a half hours from Madrid. Spaniards, used to shabby, lumbering trains that crawled across the countryside following unpredictable timetables, discovered their trains could be stylish and run on time.

Previously the choice on the Madrid-Seville run was between a hot, tiring six-hour coach journey or an aircraft. Seventeen years later, only one traveller out of 10 takes the plane to Seville. The rest go by a train that is 99% punctual. The Seville line proved that high-speed trains could be part of the answer, albeit an expensive part, to some of Spain’s most enduring problems.

By 2020 Spain will have Europe’s largest high-speed network, its 6,000 miles of track outgunning even France’s TGV system. By then 90% of the population will be within 30 miles of a station. New lines have already been opened to Segovia, Valladolid and Malaga in the last 18 months. New links will eventually connect France and Portugal.

The high-speed train network also helps Spain control carbon emissions, with passengers on the Madrid-Barcelona line cutting their own emissions by 83% on the trip.

Click here to read the entire article.

Transportgooru Musings:

Something unusual is happening with the mainstream media these days.  There seems to be a renewed interest in pushing the idea of having a high-speed rail network in to the minds of the American public .  We have seen two articles on CNN/Fortune have brought too fore how China is pushing ahead with its investment in building a sophisticated, world class HSR network.  This spurred a good bit of debate on many popular infrastructure & transportation forums such as the Infrastrucrist.  Another one appeared in LA Times, by business writer David Lazarus whose sentiments about the American transportation system was summarized as follows after experiencing the highly systematic & super-sleek Japanese network: “It’s hard to appreciate how truly pitiful our public transportation system is until you spend some time with a system that works.” Many of us know that feeling.  Then he gushes about the consistently reliable, affordable and convenient transit systems in Japan. “I rode just about every form of public transit imaginable — bullet trains, express trains, commuter trains, subways, street cars, monorails and buses.”  Again, our good friends at Infrastructurist followed-up with a nice debate.

Now we have this Guardian article, that gushes about the glorious Spanish high-speed rail network.  I am sure this would stir another round of renewed interest in the minds of us transportation nerds, especially among those who keenly the TransportGooru and Infrastructurist columns on this topic. But do these discussions go beyond the comments section of these portals.  I wonder if the Government is even taking note of these anxiety-laden cries that advocate the need for a comparable HSR.  As the President and his administration staff reiterate his commitment to keep American workforce competitive in every field, pushing huge loads of money for all sorts of industries (Automobile manufacturing, battery research etc.) , everyone in the Government seems to forget that competitiveness should also extend beyond roads and vehicles.  The vast American bureaucracy is slowly pushing ahead with limited funding ($8Billion) and a massive goal (a HSR-network in pockets of nation with targeted connectivity), while other nations like China and Spain are blazing ahead with massive investments in a rail network.  Unless we as a nation get serious about investing in alternative transportation options such as rail, we will continue to remain dependent on our expensive oil addiction.

With the Government pushing new thinking such as transit-oriented development, it is probably not too far in the future before urban living becomes “cool” again and the minor discomforts of not having the plush sub-urban life with white picket fences and acre-wide manicured lawns might fade away.   The Government facilitated the emergence of the sprawl and the suburban lifestyle with its policy and funding push for interstates.  Back in the past were days when railroading was the best alternative for longer distances.  Ford and other American automakers created a new way of life with the commercialization of automobile technology, which has now blossomed into a thriving industry.  Can the Government enable a similar push for building high speed rail networks around the country?

Before we even get there, let’s first ask: Is there a need for it?   Yes, clearly there is a need for it, at least for distances shorter than 400 miles and there is also a desire for it among folks.  But the only thing that is lack is the Governmental backing. The paltry $8B will not be enough but it is definitely a good start.  It is not always a bad thing to emulate successful strategies, irrespective of where it emulates from.  American ingenuity stems from this ability to take ideas irrespective of their origin and tweak to make them suitable for the American landscape.  We did this for years by simply importing foreign talent (from nuclear scientists to PhD students) propelled new ideas and thinking to create a huge economy that was atop the world for decades. Why not do the same for building a rail network?

We have the need, we have the people who can get it done. All we need is the willingness to invest and the determination to get it done. As demonstrated in the past, Americans can accomplish great things (from building the interstate system to the invention of the atomic bomb), when the Government stood firm and pushed ahead to finish these mega-projects.  Some of these projects not only became a rallying point for nation building (during and after WWII) but they also spawned new economies and industries, spurring job growth and economic development in communities.

For argument sakes, for the time being we can remain content that our nation has a sophisticated air transportation network, with even the tiniest of the towns boasting an airport.  In reality, many of our airports are overwhelmed and strained by heavy operational delays and operate with sub-par efficiency, at times also posing a risk to passenger safety.  But at the end of the day, we are still going to be an oil-dependent economy, ply our cars and planes with imported for the near future.  Of course, there is a lot more to it than just saying and writing it on these websites and newspapers.  But that’s where the Government comes in to figure it all out and to make it happen.  That’s what the American tax-payers pay for every year before April 15th – to fund and keep a massive bureaucracy working for the to safeguard the interests of its citizens and not budge for the disgruntled political masses.

For what it matters, we are blessed with a dedicated team of professionals who are a part of this massive bureacracy and the USDOT employs thousands of people under its railroad-ing arm, the Federal Railroad Administration (FRA).  The agency should be given special powers (agreed that we are not Communist China and it may all have to be worked out within a Democratic framework) to expedite the approval process for the pending HSR proposals.  It should also be taken into account that allied industres such as steel manufacturing be reviatlized with incentives for making steel locally.  This would be a really good way to resuscitate the long-shuttered steel mills of our nation.  Hire a new workforce to build these raillines (as a data nugget, consider what China had been able to do in keeping its workforce busy.  The CRCC now employ 110,000 workers on a single line connecting Beijing and Shanghai.  If you are running short of professional capacity to build and manage all this new work, employ the new grads coming out of our universities (FYI,  the CNN article on Chinese HSR plans offer this data:  Last year China Railway Construction Co., the nation’s largest railroad builder, hired 14,000 new university graduates — civil and electrical engineers mostly — from the class of 2008. This year, says Liang Yi, the vice CEO of the CRCC subsidiary working on the Beijing-to-Shanghai high-speed line, the company may hire up to 20,000 new university grads to cope with the company’s intensifying workload. But with the private sector cutting way back on hiring — and university students desperate for work — taking on that many new engineers and managers hasn’t been too difficult) and put them to work on this project of national importance.   If we managed to somehow put aside all our  political in-fighting and come together to accomplish this in the next 20 years, our future generations may have a better shot at being competitive.  We may even see a renewed interest in our nations private-sector players to invest and operate these new railroads (many foreign and local infrastructure firms are now buying rights to build and operate our nation’s ports and toll-roads).  Who knows! Someday in the future we may have a sophisticated system if we “get it right”).

It takes a special leader , who can stand tall amidst all the challenges and marshall his troops to get the mission accomplished and our President sure has shown glimpses of such qualities.  But as we all know, mere glimpses are not enough.  Unless our leadership shows some serious commitment and interest, the possibilities of an average American riding an Ave-like or Shinkansen-like or a TGV-like system will remain elusive.  Will the real leader stand up and deliver?

(Source: Green Car Congress, CNN & Streetsblog)

On Friday, President Obama signed into law H.R. 3435, which provides $2 billion FY 2009 emergency supplemental appropriations for the Consumer Assistance to Recycle and Save Program (Cash-for-Clunkers, C4C).

The additional $2 billion for the supplementary funding to keep the C4C program going is being transferred from the amount made available for Department of Energy–Energy Programs—Title 17—Innovative Technology Loan Guarantee Program in title IV of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).

One of the arguments in favor of passing the bill prior to the Senate showdown, that offering $2 billion in extra “clunkers” cash would not amount to deficit spending, stems from Democratic leaders’ decision to shift the funds over from a Department of Energy (DoE) loan guarantee program.

(Source: Green Car Congress, AP, Wall Street Journal & The Japan Times Online)

Toyota’s Prius was the top-seller in Japan in July, with 27,712 units sold—almost quadruple the 7,058 units sold in July 2008, up nearly 25 percent from June, according to data from the Japan Automotive Dealers Association (JADA).

Image Courtesy: Green Car Congress - Monthly Prius Sales in Japan Since Jan 2007

For a second straight month, Prius has bagged the top-seller title, underscoring robust demand for fuel-efficient vehicles.  Demand for gasoline-electric vehicles has surged in Japan, helped by tax breaks and subsidies under a government initiative to promote cleaner automobiles. Toyota has said customers placing orders now for the Prius will have to wait until at least April for delivery due to surging demand.

Toyota Motor Kyushu Inc. said Thursday that orders for the hybrid version of its luxury Lexus sedan have been robust, leading the Toyota unit to expand production of the model.

Orders for the HS250h Lexus hybrid launched July 14 have reached 8,600 units, far more than the monthly target of 500, Seiichi Sudo, president of the Toyota unit, said in Fukuoka.

“Orders are very brisk as customers endorse its environmental performance,” he said.

The company is making employees work 30 to 90 minutes of overtime a day to meet demand, Sudo said, warning, however, that delivery of many ordered cars could be delayed beyond the March 31 expiry for the government’s subsidy program.

Overall auto sales in Japan declined 4.2% to July to 289,927. Toyota sales decreased 3% to 135,535 according to JADA.  This decline in Japan’s auto sales for July was the smallest since the world’s third biggest auto market started shrinking last August.

This was the 12th straight month of decline, but it was much smaller than the 13.5% drop in June.

The results for the April-June quarter showed that Toyota Motor Corp. is getting some traction from aggressive cost-cutting and Japanese government incentives that have boosted sales of green cars like the Prius. Analysts surveyed by Thomson Reuters had forecast a fiscal first quarter loss of 210 billion yen.

Booming sales of the Prius hybrid helped the world’s No. 1 automaker Toyota deliver a smaller-than-expected 77.82 billion yen ($819 million) quarterly loss and narrow its forecast of red ink for the full year.

Click here to read the entire article.

(Source: Retuters India & Autoblog)

The family owners of Italian car designer and niche manufacturer Pininfarina SpA have hired Italy’s Banca Leonardo to sell their majority stake in the company, a company source said on Friday.

The decision was taken at the company’s board meeting on Wednesday, the source said. The sale of the 50.7 percent stake held by Pincar, the Pininfarina family company, was foreseen as part of a debt agreement with banks at end of 2008.

“It is a commitment Pincar made with the banks. The family has no intention of leaving completely,” the source said, adding Pincar will no longer be a majority shareholder.

Images via Apture: Multiple flavors of Pininfarina Designed Ferraris

Sure, but who will buy controlling interest of such a storied company? Have you met our Indian friend Tata? Rumors are swirling that Indian giant Tata, new owner of both Jaguar and Land Rover, is reportedly in the hunt to purchase the Pininfarina family’s shares.

Various other companies have been touted as possible partners for Pininfarina, which has designed stylish cars for Ferrari. Pininfarina is working with French financier Vincent Bollore on developing an electric car.

Earlier this week, Pininfarina said Pincar had subscribed its 50.7 percent share of a 70 million euros capital increase. The increase attracted overall 55.6 percent take-up.   The Pincar subscription to the rights issue was also part of the end-2008 agreement with banks, the source said.

However, the reports are painting the pending deal as a partnership rather than a takeover and Tata already has dealings with Fiat, so they’re familiar with the Italian way of doing things.  If a rival took more than a third of Pininfarina’s shares, it could put at risk its contract to April 2011 with Ford Motor Co. Pininfarinia builds the Ford Focus Coupe-Cabriolet at its plant in Bairo, near Turin, Italy. It also has a joint venture with Ford subsidiary Volvo Car Corp. to make the Volvo C70 at a plant in Uddevalla, Sweden.

Let’s see how it all shakes out!

(Source: AP via NPR)

President Barack Obama signed into law a $2 billion extension for the popular “cash for clunkers” program Friday morning.

The Senate voted to refill the popular car incentive program Thursday, tripling the $1 billion fund that has led to big crowds at once deserted auto showrooms. President Obama signed the bill Friday, extending the program into Labor Day and preventing the 2-week-old incentives from running out.

Car shoppers caught up in the frenzy of the program will have more time now and a $2 billion reason to trade in their old gas guzzlers.

The program gives new-car buyers up to $4,500 toward their purchase if they trade in a less fuel-efficient car or truck. So far, 8 in 10 of the vehicles traded in have been trucks. The three Detroit automakers’ nameplates have accounted for 45 percent of the new-car sales.

Auto industry analyst Aaron Bragman of IHS Global Insight said it was unlikely that demand will remain as high as it is now. Many people who qualified have already bought cars and while the rebates are expected to boost total vehicle sales in 2009, Bragman predicted lower sales next year because many customers have already taken advantage of the incentives.

“You are not going to see a continuation of the frenzied sales pace,” Bragman said. “I don’t think they will use up that money any time soon.”

Click here to read the entire article.

(Source: NPR)

Pedal to the metal, Congress sent President Barack Obama legislation Thursday night with an additional $2 billion for “cash for clunkers,” the economy-boosting rebate program that caught the fancy of car buyers and instantly increased sales for an auto industry long mired in recession.

Images via Apture

The Senate approved the money on a 60-37 vote after administration officials said an initial $1 billion had run out in only 10 days. The House voted last week to keep alive the program, which gives consumers up to $4,500 in federal subsidies if they trade in their cars for new, more energy-efficient models.

Without action, lawmakers risked a wave of voter discontent as they left the Capitol for a monthlong vacation.

Supporters of the program hailed its effect on the auto industry — which had its best month in nearly a year in July — as well as its claimed environmental benefits.

“The reality is this is a program that has been working. Consumers believe it’s working. Small-business people believe it’s working. People who make steel and aluminum and advertisers … and everyone who’s involved in the larger economic impact of the auto industry believe it is working,” said Sen. Debbie Stabenow (D-MI).

The legislation had its share of critics, though, most of them Republicans.

“What we’re doing is creating debt. … The bill to pay for those cars is going to come due on our children and grandchildren,” said Sen. Judd Gregg (R-NH).

Officials said the program’s initial $1 billion probably already has been spent, but a paperwork backlog prevented an accurate accounting. The additional $2 billion is enough to help consumers purchase a half-million more new cars, they added.

There was no suspense about the outcome in the Senate, where supporters of the legislation focused their energies on defeating all attempts at amending the measure. Passage of any changes would effectively scuttle “cash for clunkers,” they said, since the House has already begun a summer vacation and is not in session to vote on revisions.

An attempt by Sen. Tom Harkin (D-IA) to limit the program to lower and middle-income consumers was jettisoned on a vote of 65-32. Gregg’s call for Congress to offset the $2 billion with spending cuts elsewhere also failed, 51-46.

The Senate’s debate capped an unusually swift response by lawmakers, who were informed scarcely a week ago that the program was quickly running short of money.

Click here to read the entire article.