C&D editorial on high levels of stagnation in the current auto industry.

[12,000 RPM]

Recently I was chatting with George Peterson, president of the veteran market-research and consulting firm AutoPacific, about Nissan's strange year. It had a flirtation with sports-prototype racing, debuting the front-drive hybrid GT-R LM NISMO in a lavish Super Bowl ad but running just a single race before axing the whole program. Renault-Nissan chairman Carlos Ghosn has pushed hard to grow U.S. market share from 8.5 percent to 10 percent by the end of 2017, but, as the trade paper Automotive News reported, dealers have complained that the goal is unrealistic and the company's stair-step incentive ­program pushes stores into selling cars at a loss. And Ghosn had to work hard to preserve the Renault-Nissan partnership after the French government moved to take more control of Renault, in which it already had a 15-percent stake. No doubt, the proud Japanese are wary of taking orders from Paris as the partnership increasingly looks like a one-blade propeller, with Nissan and its profitable U.S. sales dwarfing the meager earnings from Renault's many low-margin markets.

Peterson agrees that Nissan, despite growing its U.S. sales by a healthy 7 percent in 2015, has had a few false starts. He figures that North America's heavy management churn, now somewhat settled, has been a factor. As we're winding down, Peterson mentions that there will be 357 named light-vehicle models for sale in the U.S. market by 2020. That's a lot of noise trying to find your ears. Peterson calls it the atomization of the car market. Coincidentally, 357 is only a little more than the number of musicians (342) in the University of Michigan marching band. Buying a new crossover is getting to be like picking out your favorite from Michigan's 68 trumpeters.


Once the 4DSC; now just a pretty good car.

Standing out amid the clamor is not a new problem, but it is one of the growing imperatives as quality and safety become commodities and more models arrive, both from traditional brands and some new startups. I'm picking on Nissan, ­perhaps unfairly, because I think the company symbolizes an industry-wide identity ­crisis at a time when identity is paramount to survival. What is Nissan? Is it the green-car company that launched the Leaf to great ballyhoo in 2011 but has yet to build on it? Is it the performance company that makes the aging 370Z and GT-R with no replacements in sight? Or is it the more sporty alternative to Toyota that gave us the wonderful 1989 Maxima 4DSC (four-door sports car) and 1991 Sentra SE-R, but is now just another purveyor of the PGC, the pretty-good car?

We find Nissans handsome and decent, but a Nissan hasn't won a C/D comparison test since 2009.

Well, at least Nissan has rolled the dice, both on product and styling. However, proffering PGCs can be dangerous; look at what happened to Fiat Chrysler, which said recently that by 2018 it'll be out of the U.S. small- and mid-size-car businesses and will concentrate on more-profitable trucks. The Dodge Dart and Chrysler 200, the latter redesigned a year ago, have faded into background noise and aren't worth the engineering costs for replacements, apparently. Scion is another victim of PGC syndrome. Launched as a play for young buyers, it eventually became indefinable as anything other than incremental and costly-to-support volume for Toyota. ­Scion's seven model lines (none of which was a crossover in an era of growing truck sales) sold barely more than the Honda Fit did by itself last year. With nothing to root it to the market beyond the appeal of this week's deal, Scion died.

BMW and Mercedes have carpet-bombed the market with models, but also arguably diluted their brands. It's hard to see the coming three-row BMW X7 as anything other than a stultifying me-too move by a company that used to set the agenda in the sports-sedan market. Meanwhile, Hyundai is working hard to shed PGC ­status, launching a luxury channel aimed at the Germans, and, with Kia, making huge engineering leaps with each generation. But it remains difficult to define Kia, maker of both the Soul and the K900, as anything other than incremental volume for the group.

One reason Apple and Google are eyeing the car business is because they see it as ripe for disruption. For decades, the industry has engaged in redundant efforts to produce PGCs that are increasingly harder to distinguish. Yes, that's partly due to regulations and partly the funneling effect of mainstream consumer tastes, but also because the high cost of gambling on something different has made everyone risk-averse. The danger in being conservative and duplicative may become grossly apparent if the Apple car ever breaks cover. The company has billions to spend and a track record of blowing up convention, from the mouse to the Mac.

Overnight, the iCar may make the industry's dearly held orthodoxies look as obsolete as the Commodore 64. Apple has a strong identity; to survive, a car brand must have one, too.

I'm not sure I buy into the whole "disruptive iCar" deal, but I definitely get an overwhelming sense that the auto industry has pretty much submitted to shareholders and regulators. There's just not a lot of truly innovative or exciting product out there, IMO. You look around... Audi is in full on design paralysis; everyone and their mom is jumping on the CUV bandwagon in largely boring cynical ways; naturally aspirated engines are dying etc. etc. On paper/in theory things have never been better, but there seems to be this feeling that innovation and risk are being stomped out. Today's auto industry could not birth a car like the 911, 3 series or even the Camry/Accord. They just do market research, bone up on regulations and iterate, iterate, iterate.

[SJ_GTI]

I kind of see what you are saying. I think Tesla is a company that is disrupting the market and taking risks. If the Model 3 doesn't work out for them they essentially go bankrupt (same was true for the Model S).

You can see the difference in approach. The mainstream companies (GM/Nissan/VW) approach to electric cars is so different than Tesla. With the mainstreamers you essentially get a relatively boring electric car (Bolt/Leaf/eGolf)that is focused on being a practical as possible while tesla went and made cars that are fun to drive and are pushing boundaries in various technological and design areas. You might not like the tesla cars personally, but they are trying different ideas that would be almost verboten from a mainstreamer.

I will give BMW some credit as they kind of went their own way with the i3 (and i8). It has a weird form factor but is supposedly fun to drive.

[CaminoRacer]

I rode by an i8 today.

[93JC]

Eh.

I understand the complaint that companies seem overly risk-averse but if you're running a car company your job is to sell cars and make money doing it, and the best way to do that is to make "pretty good cars". The auto industry was built on PGCs. Look at the top 10 best-selling cars in the US last year:

• Ford F-series
• Chevy Silverado
• Dodge Ram
• Toyota Camry
• Toyota Corolla
• Honda Accord
• Honda CR-V
• Honda Civic
• Nissan Altima
• Toyota RAV4

That's just from 2015, but the list for years prior is about the same going back 20 years. Every single one of those is merely a "pretty good car". None of them did anything truly innovative. Every time they step out of making PGCs they get burned for it.

The article picks on Nissan a bit, but if you're Nissan what do you do instead of what they did? Nissan was on the verge of going bankrupt 15 years ago, precisely because their products were too niche. Those 1990s Maximas were damned good cars but they were expensive compared to Accords and Camrys, and as a result Nissan was just a bit player in that market. They redesigned the Altima and Maxima and saved the company doing it, even if the cars became PGCs rather than something more unique. The Sentra SE-R was interesting from an enthusiast's point of view but it didn't sell anywhere near as well as a Corolla GT-S/XR-S/etc or Civic Si, and base Sentras were an order of magnitude less popular than Civics and Corollas.

People want Pretty Good Cars. People buy Pretty Good Cars. People don't buy 'unique' cars, so why go out of your way to chase lower margins (because you spent all the money R&Ding a 'unique' car) on fewer sales (because people prefer PGCs)?

I'm not confident Apple or Google will ever make a car of their own. They'll continue to work on things like iOS and Android integration with "infotainment" systems, but a whole car? Very skeptical. Google and Apple get a lot more credit for being innovative and 'disruptive' than they ought to. They've been innovative in creating (or gobbling up) new internet services, like Google's AdSense and Youtube and Apple's iTunes, but the actual products aren't all that innovative. In fact they're very derivative and have had many flops. We were all supposed to be wearing Google Glasses and Apple Watches.

Tesla is interesting. Tesla might actually disrupt some of how the auto industry does business w.r.t. the dealership sales model, but I'm also very skeptical of their long-term financial health. Right now they're enjoying a position in the market where they're seen as disruptive and innovative and customer-friendly, but these things will change drastically as the company gets bigger. (If it gets bigger...) They're building out their "Supercharger" network to alleviate the "range anxiety" concerns of buyers, and packaging "free" Supercharger use into the price of the Models S and X. What happens if they start building hundreds of thousands of Model 3s? I guarantee Supercharger use will be a four-figure option, or they'll introduce pay-per-use. And Model Ses in particular are also not very reliable; they're not only having big problems with the drive systems and the giant-iPad "UI", but basic things like squeaks, rattles, body panel alignment, doors, wipers, wheel alignment, brake rotors... They have a lot of goodwill going for them right now because they're selling $100,000 gadgets to rich people who want to buy 'Green' street cred and have second or third cars for when the Tesla has to go back to the Service Centre. These people just want to own something cool, which is considerably different than the $35,000-market they're purportedly after with the Model 3. If a Model 3 is your only car and it has to go back to the shop for perpetual problems you're going to be pissed.

Just today they e-mailed all X owners to tell them they'll be voluntarily replacing their third-row seat backs because the recline mechanism was shown to come loose and allow the seat back to fold forward in a European crash test. To many Tesla fanboys this is a sign that the company is adamant about protecting their customers' safety, to maintain their "safest car ever" cred. If GM or Ford or Honda or Toyota or Nissan released a car with a problem this big they'd be raked over the coals for building such an unsafe piece of shit. That's the difference between Tesla and other automakers right now: Tesla customers are early adopters who will put up with that shit. They feel like they're on the ground floor of a social movement toward electric cars. They drank the Kool-Aid, and they like it.

I was reading about Tesla the other day and found myself reading a Reddit thread. I'll paraphrase what one Tesla enthusiast said about the company and the cars: "I'm interested in the company and the cars because it's a cool piece of technology. The things that interest me most about the cars are AutoPilot, the huge touchscreen and OTA updates." That's a very, very different market from the people who just want a Corolla to get 'em to work and back, trouble-free.

[12,000 RPM]

Hey man, I totally get the business side. I understand that the auto industry is a business that has to make profits. I am not really looking for something like a Camry to be a dynamic powerhouse. But shit is kind of going too far. I mean look at Porsche with the turbo shit. They did it completely backwards. The 911/Cayman/Boxster are turbo but the Cayenne/Panamera are primarily N/A. That will prob change but you would think based on volume and emissions the big V8 cars would get boost first. Instead they pretty much killed the Cayman/Boxster (maybe that was the intention all along). Nissan got....exuberant in the 80s/90s, but now even the Maxima is completely boring. Even their halo performance car is kind of boring. They've just gone very corporate. Hell, Mazda is supposedly this soulful ass company and people keep singing their mainstreamers' praises, but the 3 I rented was about as playful as the Golf. Again I get that the crazy 80s and 90s were an aberration but I feel like the pendulum has swung too far into conservatism. Once the funny money runs out nobody is going to want to buy these boring ass cars.

[GoCougs]

Nissan hasn't won a C&D comparo since 2009? lol, 0.001% of the USDM cares about that. The editorial is tone deaf and short sighted. Not all automakers will be hitting it out of the park all of the time, but in total, cars are better and more distinguished now than ever - trucks, appliances, performance cars, all of them. It's not even close. Aging 370Z? I'll raise you a new Camaro SS and not only crush everything you know about performance coupes, I will invalidate the whole of this editorial.

[GoCougs]

I kind of see what you are saying. I think Tesla is a company that is disrupting the market and taking risks. If the Model 3 doesn't work out for them they essentially go bankrupt (same was true for the Model S).

You can see the difference in approach. The mainstream companies (GM/Nissan/VW) approach to electric cars is so different than Tesla. With the mainstreamers you essentially get a relatively boring electric car (Bolt/Leaf/eGolf)that is focused on being a practical as possible while tesla went and made cars that are fun to drive and are pushing boundaries in various technological and design areas. You might not like the tesla cars personally, but they are trying different ideas that would be almost verboten from a mainstreamer.

I will give BMW some credit as they kind of went their own way with the i3 (and i8). It has a weird form factor but is supposedly fun to drive.

Detroit full well knew/knows that pretty much no one is going to buy an $80k+ Model S from Dodge or Chevy...

[MrH]

There's a lot of Pretty Good Cars out there (I like that acronym). There's not a ton of distinction, but you have a ton of choice right now.

In my mind, I'm really only interested in a few brands anymore. Honda and Toyota own the PCG market. Both make incredibly reliable cars with high resale and lots of choice. For a daily driver, I think I'll always look at those two first.

Subaru and Mazda both make more interesting vehicles in the same markets that I'd also consider. Porsche and occasionally BMW make interesting expensive choices. GM is also knocking on that door with the Camaro and corvette.

Outside of those, few catch my attention. Why even consider a Nissan when Toyota and Honda eat their lunch in that segment? Chrysler is smart by getting out. FCA has nothing to add to the conversation when it comes to small and mid size cars.

I agree Tesla is pretty much the sole disrupted until Google or Apple do something.

[12,000 RPM]

I'm thinking Nissan is getting by on rentals and catering to folks with less than great credit. It's going to be really interesting to see what happens when that window closes. 17M cars a year in the US is fucking asinine considering the average age of cars on the road is increasing and the population is not growing that fast.

Even Honda and Toyota are in kind of a pickle. Their cars are too good. Outside of a big accident I can't see my car not crossing over 200K. I don't know if I can stomach the mid 90s NVH for that long but reliability wise it's solid. Again without insanely low loan rates you can kiss shit like $150 Accord leases and 0% financing goodbye. I cant see people reupping on PGCs every 3 years when new car loans are like 5% with really good credit. So rationally there's not much there. And emotionally cars are not exciting and new like back in the 50s-80s. Auto industry is going to be a lot different in like 10-15 years.

[MrH]

New car loans aren't 5% though..?People will still go get new cars when it's not needed. It's a luxury, and people like new cars, but I agree, I think 17M year after year is a pipe dream.

[Raza]

Cars suck now. In the future, they will be like phones. Every generation gets fatter, uglier, softer, and more expensive. There are like four cars on the market that excite me at all right now.

[MrH]

Phones get thinner every generation. That means cars will get thinner. Eventually they'll become roller blades. I can't wait for the future.

[Gotta-Qik-C7]

Cars suck now. There are like four cars on the market that excite me at all right now.

There's a lot of Pretty Good Cars out there (I like that acronym). There's not a ton of distinction, but you have a ton of choice right now.

In my mind, I'm really only interested in a few brands anymore. Honda and Toyota own the PCG market. Both make incredibly reliable cars with high resale and lots of choice. For a daily driver, I think I'll always look at those two first.

Subaru and Mazda both make more interesting vehicles in the same markets that I'd also consider. Porsche and occasionally BMW make interesting expensive choices. GM is also knocking on that door with the Camaro and corvette.

Outside of those, few catch my attention. Why even consider a Nissan when Toyota and Honda eat their lunch in that segment? Chrysler is smart by getting out. FCA has nothing to add to the conversation when it comes to small and mid size cars.

I agree Tesla is pretty much the sole disrupted until Google or Apple do something.

Yup....

[12,000 RPM]

New car loans aren't 5% though..?People will still go get new cars when it's not needed. It's a luxury, and people like new cars, but I agree, I think 17M year after year is a pipe dream.

They aren't now, but interest rates can't stay this low forever, and I think that is what is driving the record high sales. A brand new 3 series lease for like $350 a month? Shit just doesn't add up. And I'm feeling like people are less concerned with value than they would be if rates were higher. The Dodge Journey has had double digit sales increases since it came out in 2008

[AutobahnSHO]

People want Pretty Good Cars. People buy Pretty Good Cars. People don't buy 'unique' cars, so why go out of your way to chase lower margins (because you spent all the money R&Ding a 'unique' car) on fewer sales (because people prefer PGCs)?

True but every automaker's risk car is a car that generates buzz and "cred", even if they lose money on it.

-Taurus SHO
-WRX
etc...    Help lure people into the showrooms, where they buy PGC.  Also 'car guys' influence the people they know quite a bit. If the car guys' opinion is repeated 4th-hand it still influences sales..

[93JC]

True but every automaker's risk car is a car that generates buzz and "cred", even if they lose money on it.

-Taurus SHO
-WRX
etc...    Help lure people into the showrooms, where they buy PGC.  Also 'car guys' influence the people they know quite a bit. If the car guys' opinion is repeated 4th-hand it still influences sales..

Hmm... I don't think Taurus SHOs and Impreza WRXes aren't very 'risky' at all, they're "Pretty Good Cars" with some lipstick on them. They do generate some buzz and 'cred' and are generally worth the money.

When I think of risky cars I think of something like a Ford Flex or a Nissan Juke: they're 'weird' and 'different' and that alone pushes people away. I really like the Flex for what it is: a very practical wagon. It just so happens to take advantage of a boxy shape to help make that happen. That boxy shape is 'weird' and a lot of people don't like it for that reason.

By comparison I still don't get why anyone in their right mind would buy a Ford Edge, it's such a totally 'meh' vehicle compared to the Explorer and Flex, but for a few years the Edge was far and away Ford's most popular SUV. They still sell well over 100,000 of the things every year, while the Flex might hit 20,000 or 30,000 sales per annum. Why? I don't get it. I bet someone like ifcar can spout a list of many boring, inane reasons why the Edge sells well—no doubt it hits a particular price point and offers certain features that makes it a more appealing $/lb or $/feature car relative to other bore-mobile competitors like the Toyota Highlander and Honda Pilot. To me the Edge will only ever just be a Pretty Good Car. It's not a bad car, it's not a great car: it just is.

There isn't really anything special about the design and engineering of a Ford Flex either.

[ifcar]

Hmm... I don't think Taurus SHOs and Impreza WRXes aren't very 'risky' at all, they're "Pretty Good Cars" with some lipstick on them. They do generate some buzz and 'cred' and are generally worth the money.

When I think of risky cars I think of something like a Ford Flex or a Nissan Juke: they're 'weird' and 'different' and that alone pushes people away. I really like the Flex for what it is: a very practical wagon. It just so happens to take advantage of a boxy shape to help make that happen. That boxy shape is 'weird' and a lot of people don't like it for that reason.

By comparison I still don't get why anyone in their right mind would buy a Ford Edge, it's such a totally 'meh' vehicle compared to the Explorer and Flex, but for a few years the Edge was far and away Ford's most popular SUV. They still sell well over 100,000 of the things every year, while the Flex might hit 20,000 or 30,000 sales per annum. Why? I don't get it. I bet someone like ifcar can spout a list of many boring, inane reasons why the Edge sells well—no doubt it hits a particular price point and offers certain features that makes it a more appealing $/lb or $/feature car relative to other bore-mobile competitors like the Toyota Highlander and Honda Pilot. To me the Edge will only ever just be a Pretty Good Car. It's not a bad car, it's not a great car: it just is.

There isn't really anything special about the design and engineering of a Ford Flex either.

The Flex's practicality is mainly a myth perpetuated by boxy styling. The cabin isn't appreciably boxier than the competition; Ford mainly gave angles instead of curves to the styling details like the front end and the windowline. It's just an Explorer with one styling language instead of another, yielding a nearly identical result in terms of passenger and cargo space (the Flex has slightly more room but mainly because it's also slightly bigger).

The Edge is smaller and less expensive than either and much nicer to drive, but without the others' three-row seating. If you don't need seating for seven, why buy a barge like the Flex or Explorer over an Edge? It's boring and inane to not buy a car that's bigger than you need?

[MrH]

The Flex is a lot more spacious than the Explorer IMO

[12,000 RPM]

Edge is right up my alley.

Compared to Exploder/Flex it's lighter, cheaper, just as roomy in the front 2 rows, more fuel efficient, and much smaller (garage space is at a premium).

Compared to the Escape it's a lot roomier and has a nicer interior. Escape is smaller and more fuel efficient though

Compared to the MKC it's roomier and cheaper.

It's a good fit. Personally I hope to never own a 7 passenger vehicle. I'm not Catholic and I don't believe in buying car by the lb. Edge, Murano, RX and to a lesser degree the Venza all seem like good middle ground for CUVs. My garage is tite like prom nite though so smaller rides work better.

[ifcar]

The Flex is a lot more spacious than the Explorer IMO

It isn't.

[Madman]

Edge is right up my alley.

Compared to Exploder/Flex it's lighter, cheaper, just as roomy in the front 2 rows, more fuel efficient, and much smaller (garage space is at a premium).

Compared to the Escape it's a lot roomier and has a nicer interior. Escape is smaller and more fuel efficient though

Compared to the MKC it's roomier and cheaper.

It's a good fit. Personally I hope to never own a 7 passenger vehicle. I'm not Catholic and I don't believe in buying car by the lb. Edge, Murano, RX and to a lesser degree the Venza all seem like good middle ground for CUVs. My garage is tite like prom nite though so smaller rides work better.

I've always taken the opposite view of the Edge.  In other words, what's the point?

Sure, it is externally bigger than the Escape, but that doesn't seen to translate into a big difference in interior volume.  It also costs quite a bit more than the Escape, which wouldn't be so bad if the Edge offered the added practicality of a third-row seat.  But it doesn't.  If you need that third-row, you're forced to step up to an Explorer.

So what's the point of the Edge, again? 

[ifcar]

I've always taken the opposite view of the Edge.  In other words, what's the point?

Sure, it is externally bigger than the Escape, but that doesn't seen to translate into a big difference in interior volume.  It also costs quite a bit more than the Escape, which wouldn't be so bad if the Edge offered the added practicality of a third-row seat.  But it doesn't.  If you need that third-row, you're forced to step up to an Explorer.

So what's the point of the Edge, again? 

The Nissan Altima doesn't have much more room than a Sentra, but that doesn't mean there's no point to an Altima. Cars aren't specs. Drive it and you'll see the difference between the Escape and the Edge -- one is a basic car and the other, besides being roomier, is much more premium.

[93JC]

See? See? What'd I tell you?

[ifcar]

See? See? What'd I tell you?

Yep, inane boring reasons like one being better to drive.

[Madman]

Drive it and you'll see the difference between the Escape and the Edge -- one is a basic car and the other, besides being roomier, is much more premium.

You make the Escape sound like the Mitsubishi Mirage of crossovers; a stripped out penalty box fit only for minimum-wage-earning burger flippers!  And yet, the ones I've seen are nothing of the sort.  Sure, there's that base model with amber front turn signals and plastic wheel covers which nobody except Hertz buys.  Forget that one.  I'm talking about the well equipped Escapes which real customers spend real money on.

Hell, man, the Escape even has that cool little thing where you wiggle you foot under the rear bumper like a kindergarten kid doing the Hokey-Pokey to make the tailgate open.  If that isn't luxury, then what the hell is?!? 

But back to my original point; The Edge charges too much for too little to make it worth spending a premium over the Escape.  That said, I do like the looks of the new one.  It's big improvement over old Edge's stodgy design and insipid Gillette razor grille.  I still don't think it's worth the money, however.

[ifcar]

No, I make it sound like a compact car compared to a midsize car, in line with the specific example that I used. You can also get leather in Sentra.

[93JC]

No need to get all butthurt about it Koko, the point is that there are a litany of reasons to buy a Pretty Good Car, and that it isn't worth the manufacturers' time or money to design and build something 'different' instead of mere PGCs.

[12,000 RPM]

It sucks for anyone who wants anything besides a PGC.

[MrH]

It sucks for anyone who wants anything besides a PGC.

Who are these people exactly?

[Raza]

Who are these people exactly?

The four or five of us on this forum that drive sports and GT cars. And maybe like two other guys.