One of the problems that diesel vehicles have in the U.S. market is that they were historically not very pleasant to be around. While the driver might have been delighted with the low-end torque that put her away from the other cars when the traffic signal turned green, the drivers of the other cars were probably glad she was gone because (1) the diesel injector knocking sounded like a bionic woodpecker; (2) there was a fairly noxious odor being emitted from the vehicle; (3) the car zoomed away leaving a cloud of blue smoke in its wake.

This last item, the blue smoke, makes us wonder why Mercedes-Benz is launching an advertising campaign today around the word “BlueEFFICIENCY.” “BlueTEC” is the term it uses for its diesel-powered vehicles, which is predicated on the color of the urea that is used to reduce emissions.

Wouldn’t this talk of “blue” lead non-diesel partisans, those who need to be convinced of the improved performance and fuel efficiency that can be realized through having a diesel under the hood, to think, “Damn, blue smoke!”? And that would encourage them to buy a diesel engine because. . .?

Although the slogan that GM had used when it was hyping ethanol like it was going to be The Fuel of the Future may have been somewhat silly—“Live Green. Go Yellow.”—but at least it sounded somewhat more environmental that the color of exhaust.

Another aspect of the Mercedes messaging requires extensive quotation from the press release describing it:

“The centerpiece of the campaign is an emotive TV spot that uses historical analogy to represent the innovative power of the brand with the three-pointed star. Using New York as a case in point, it shows how over 100 years ago the inventions of Gottlieb Daimler and Carl Benz revolutionized individual mobility and in so doing solved one of the most pressing emissions problems of the day: horse dung. Towns and cities were in danger of becoming buried under the mountains of droppings produced by the hundreds of thousands of our four-legged friends.”

Emotive, indeed.

(By the way: today’s clean diesels don’t travel with that smoke screen.)

While there will be some not-inconsiderable consternation among the general media regarding August auto sales, there are a few things to keep in mind, like the loss of a selling day compared to 2009 (25 vs. 26) and the fact that last year it was “Cash for Clunkers” in full swing, so people were beating it to the dealerships to snap up whatever they could for their beaters.

That said, Ford has still another share gain in August, which marks the 22^nd time in 23 months that it has retail market gains in the market. And GM is happy that Buick is now the fastest-growing major auto brand in the U.S., up 61% this year.

Yet while Ford Motor’s overall sales were down 11% compared to last year and GM was off 11% as well (mysterious, eh?), Chrysler reported a 7% gain vs. last year.

Yes, Chrysler did better in August 2010 than August 2009.

A few numbers are interesting.

In the classic Camaro vs. Mustang battle, Camaro continues to win. Even though Camaro sales were off 27.2% this August compared to last, Chevy moved 6,321 Camaros. Mustang sales were down 11.4%, yet it moved just 5,570 units. So far for the year, it is Camaro 60,185 and Mustang 53,094.

Something must be going on in the limo business because the Cadillac DTS had a sales jump of 127.9% compared to August 2009. There were 1,896 of the land yachts sold this past August.

Additionally, the Lincoln Town Car saw a jump of 194.6%--yes, 194.6%--with its sales of 825 units.

Although one might imagine that big SUVs have had their day, Ford Expedition sales were up 57.5% (2,640 units) and Lincoln Navigator sales were up 29.5%, to 610. While Escalade sales were up 4.4%, to 1,076 units, Escalade ESV sales were up 36.6% (724) and Escalade EXT were up 13.9%, to 188.

And here’s evidence of a flushed inventory: In August, GM sold 7 Pontiacs. Last August? 29,921.

A $750-million investment that BMW Group announced in 2008 for the BMW Manufacturing Co. facility in Spartanburg, SC, paid off in earnest today as the BMW X3 went into production. Whereas the first-gen X3 had been made in Austria, BMW has consolidated its X models in Spartanburg, as the X5 and X6 are also produced there.

The $750-million was spent on building a new assembly hall for the X3 and an expansion of the facility’s paint shop to accommodate the additional production. This increase of a total of 1.5-million square feet of production capacity brings the plant’s total footprint to 4-million square-feet. And since 1992, BMW has invested some $4.6-billion in South Carolina.

One of the things that electric car skeptics roll out with when talking about the potential proliferation of electric vehicles (EVs) is that consumers will be concerned with the limited range offered. That range, of course, is in comparison to gasoline- or diesel-powered vehicles.

What they’re not necessarily taking into account is the facilitation that governments may provide to encourage the use of EVs.

Case in point: yesterday Nissan North America and the state of Hawaii announced a partnership “to advance zero-emission mobility by promoting the development of electric vehicles, and an electric-vehicle charging network, throughout the state.”

Nissan’s interest is obvious, because they want to move as many 2011 LEAF EVs as they can, and the state of Hawaii is an ideal place to do it. Consider: you could drive from Honolulu to Haleiwa and back—this is right across Oahu—and at about 62 miles round trip, that would leave some 35 miles or so left in the lithium-ion batteries. Ideally, you could go to the North Shore and charge while you surf or charge while you shop at Ala Moana.

Presently the state offers a $4,500 tax credit toward the purchase of an EV (any make, not just Nissan) and a $500 state tax credit for the purchase and installation of a home charging station. Take that, and roll in an available $7,500 federal tax credit, and it is possible for a Hawaiian to get a LEAF for $20,780.

In talking about the program, Hawaii governor Linda Lingle (R) stated, “By bringing the Nissan LEAF to Hawaii and working collaboratively with the State and our partners toward the electrification of transportation, Nissan is playing an important role in helping us achieve the goal of reducing our dependence on imported oil.” And as Senator Daniel K. Inouye (D) noted, “More than 90% of the fuel and energy we consume in Hawaii is the product of imported oil.”

Ever fill up a rental in Hawaii after your days of fun in the sun? It’s not so much fun.

To the extent that states work with companies like Nissan, there will undoubtedly be traction gained for EVs. While there could be some question regarding the role that governments ought to play in transportation issues, consider this: what if President Eisenhower hadn’t signed the act in 1956 that led to the development of the interstate highway system? How would that have worked out for car industry and consumers?

While it might seem gratuitous to show photos of the new Lotus Evora S that has a 276-hp 3.5-liter DOHC V6 and a six-speed manual transmission that powers the car from 0 to 60 mph in a mere 4.6 seconds and a maximum speed of 172 mph, we are doing so to make another point. That is, the car, which has a lightweight bonded aluminum structure and an overall weight of 3,161 lb., also provides a combined fuel consumption rating of 23.6 mpg.

Which means you can go really fast and still have respectable fuel efficiency.

This variant of the standard Evora comes with a sport pack that features a button that allows the driver to control throttle response and to activate the exhaust by-pass valve. Thanks to the new active exhaust system, when you push the button “the car sounds just as dramatic as it feels.” In other words, “vroom-vroom.”

Although the merger and acquisition (M&A) deal market in the global auto industry was a bit more hush-hush during the first half (H1) of 2010 than it was in H1 2009, according to the automotive transaction services practice of PricewaterhouseCoopers, there was actually some traction in 2010—described as “a cautious uptick in deal volumes”—although there was the “lowest disclosed deal value in five years.” Of course, two big disclosures in 2009 had the U.S. government involved, so. . . .

According to the firm, there were three primary areas that vehicle manufacturers and component suppliers were seeking to address via their M&A activities:

• Divesting of non-core businesses
• Bolstering core competencies
• Engaging in new markets or with new customers

Clearly, there is a focused approach going on, and as Paul McCarthy, U.S. automotive transaction services strategy leader at the firm put it, “In the near-term, the bulk of the automotive M&A market will likely be smaller, targeted deal activity.”

PRNewswire/PwC

There was considerable M&A activity in Europe, which accounted for 50% of the global volume and six of the top 10 global transactions. In North America, it was primarily about rightsizing and turnarounds. In Asia there was notable activity including that in H1 2009 there was a net deal outflow while in H1 2010 a net deal inflow.

The future? PricewaterhouseCoopers U.S. automotive transaction services leader Paul Elie observed, “With the worst of the economic and credit crisis behind them, financial buyers are likely to show renewed interest in the automotive deal market. Looking ahead, we anticipate larger deals coming to fruition in 2011 as the market improves and participants jockey for global leadership.”

It is just as well that the summer is waning and the time for picnicking is drawing to a close because otherwise we might be upset that we missed out on the opportunity to have gotten in our bid for the Phantom Drophead Coupé that Rolls-Royce Motor Cars developed to mark the 60^th anniversary of the recent Pebble Beach Concours d’Elegance in Carmel, California.

The car featured a special exterior color, “Stillwater Blue,” a reference to the Stillwater Cove on the Monterey Peninsula. There is a navy blue soft top—lined with cashmere, of course. The upholstery is a Crème Light leather. The interior wood fittings are a cross-banded Santos Pallisander veneer with silver pinstripe inlay contrasts.

Speaking of wood, the roof tonneau cover is hand-crafted oiled teak, the same material that is used for the luggage compartment flooring. Teak is also used for the picnic deck.

The luggage compartment has a refrigerated cabinet housed below the floor. There is a fully fitted champagne service set with crystal flutes, as well.

Said Torsten Müller-Ötvös, Rolls-Royce CEO, “This 60^th Anniversary Special Edition is the embodiment of our Bespoke capabilities in Goodwood. It demonstrates the abilities of our designers and artisans to create something absolutely appropriate for an occasion and ultimately, something exceptional to cherish forever.”

Apparently, the vehicle was sold within minutes. But as we said, as picnic season is drawing to a close. . . .

Although the Deepwater Horizon oil spill is no longer on the front pages of newspapers and while the network anchors are no longer reporting from the scene in nicely pressed work shirts, it is worth keeping in mind that oil spills don’t necessarily just happen in oceans, they can occur in places from factories to garages.

This occurred to us while looking at some information about a professional grade hazardous material kit from Oil Eater. Kits are available in 65- and 95-gallon sizes; each is said to handle the corresponding volume of liquid.

In case you’re wondering, given the Gulf Oil Spill was on the order of 180 million gallons, it would have required 1,894,736 95-gallon kits to sop up the mess.

Once upon a time, brute force was the way to go when it came to getting things done in cars and trucks. Throw whatever you needed to at it to get the job done while making grunting sounds like Tim Allen on Home Improvement (no surprise that Allen hails from Detroit).

Now it is about smarts, not force. Even in things that would probably be overlooked.

Case in point is the variable displacement oil pump being used in the Chevy Cruze 1.4-liter turbocharged engine.

By variably metering oil flow predicated on rpm rather than having fixed displacement, what's needed is used. As Mike Katerberg, assistant chief engineer for this Ecotec engine puts it, “By lowering the volume of oil we reduce the amount of energy, or torque, required to pump the oil, without taking necessary lubrication away from the engine. Reducing the torque demand reduces fuel consumption. It’s a simple, durable, maintenance-free design that we have used in our transmissions for years and more recently in our hybrid vehicles.”

Smarter design. Smarter performance.

The pump body pivots, as shown by the blue lines, to adjust the vanes, shown in red.

One interesting aspect of the transition to a multiplicity of powertrain solutions for cars and light trucks is the fact that it is bringing together what are arguably somewhat unlikely partners.

Case in point: Remy Electric Motors is working with MotoCzysz, a design and engineering firm that is focused on advancing the state of motorcycle technology, largely through the development of electric drive systems, on bringing to market a system for automobiles.

Says Michael Czysz, founder and CEO of MotoCzysz, “I believe electric drives are the purest and best solution to propel the majority of automobiles around the world. The D1g1tal Dr1ve was designed specifically with that vision in mind. Our partnership with Remy Electric Motors will allow us to deliver a modern, simpler, evolved replacement for the 100-year-old gas engine.”

The drive system was originally developed as a package to fit a motorcycle frame. Whereas often electric drive systems consist of a variety of components from various sources that are wired together, the D1g1tal Dr1ve was developed as a single unit, packaged as what they refer to as a “super axle” that's located between the two drive wheels.

It uses a liquid-cooled Remy internal permanent magnet (IPM) motor that provides 250 lb-ft of torque and 135 hp of power at 93% efficiency.

The companies are planning to have the system ready by Q2 2011.

While the sport of motor racing at the highest levels is more political and aggressive than a coffee klatch between staff members of Fox News and MSNBC, the sport itself does advance the technology of vehicles that mere mortals can buy and drive.

Audi, which took Le Mans again this year—its ninth victory in the 24-hour-race—has announced its participation in the International Le Mans Cup (ILMC)--seven endurance races to be held in the U.S., Asia, and Europe—organized by the Automobile Club de l'Ouest (ACO). ILMC is said to be heir to the 1953-1984 World Championship for Makes which, according to Audi, “was at times more popular than Formula 1.” (Smack!)

The tech that Audi has successfully brought to bear on sports prototype racing that has ended up in suburban garages includes diesels. Its diesel-powered car won Le Mans in 2006, much to the consternation of gasoline-powered enthusiasts everywhere. The company continues to campaign the powertrain in its R15 TDIs (and offers them in cars even like the A3). Today's racing diesels includes turbochargers with variable turbine technology.

“In view of the new ACO regulations that will come into effect in 2011, light-weight design combined with high strength and durability, energy recovery and fuel-efficient engines will become even more important than they've been in the past,” says Dr. Wolfgang Ullrich, head of Audi Motorsport. “All of these are topics which our colleagues on the production side at Audi are deeply involved in as well.”

Wouldn't it be nice to have something that looks like this in your driveway?

Back before the tech bubble burst like a variant of the Hindenburg in a steampunk story, the guys in Detroit, who were really more like Robert Fulton than Shawn Fanning, had an idea about how they would generate all kinds of cash in a way that had little to do—directly, anyway—with making cars.

They, too, would climb on board the Silicon Shinkansen, heavy on the gravy.

Destination: Incredible Valuation.

Obviously, it didn't work out quite as planned, probably worse than the sock puppet pitchman on the Superbowl ad for the former Pets.com.

As some of you may recall, the guys in Detroit were more than infatuated with Internet auctions. Their zeal trumped eBay-hunting Beanie Baby addicts from back in the day.

They set about to create their own uber-auction site. Any supplier that wanted to do business with any of these companies would have to sign on (and watch their margins get hammered through the reverse auction process).

It was called “Covisint.”*

The plan was that once the site was firing on all cylinders (to use an admittedly mechanical metaphor), they'd have an IPO. Ca-ching!

Well, it didn't quite work out that way.

And now the IPO that's out there is the one being put together to help repay the American and Canadian taxpayers who invested tech-bubble like quantities in General Motors.

At least they didn't run any sock-puppet ads. . .although Tiger Woods and a Buick Rendezvous certainly was an example of irrational exuberance.  As they said back then “It’s all good.”

Right.

*Covisint still exists. It is owned by Compuware.

During a presentation for the 2011 Jeep Grand Cherokee, Mike Manley, president and CEO for the brand, talked about how the vehicle has the legendary off-road capability that Jeep is world renowned for yet a design that would make it appropriate for being parked in the swankiest of valet situations.

Which I took with a large grain of salt. Until earlier this week. During a visit to Monaco—as in the country, not the somewhat forgettable Dodge with that name, although I am confident that there will be more than one rolling down Woodward this weekend for the Dream Cruise—this week, I was surprised to see current-generation Jeep Grand Cherokees parked in valet situations right along with Ferraris and Lamborghinis. Evidently, what those of us in the U.S. see as a daily driver for commuters and stay-at-home parents and the like has a cache of rather impressive proportions. And given the design of the 2011, it is likely to be parked even more out in front than the previous one. (There will be a lot more about the design and engineering of the ’11 in the next issue of Automotive Design & Production.)

Speaking of Jeeps, new of the Wrangler and Wrangler Unlimited on their way for the 2011 model year, as well. According to Manley, “While retaining unmatched, legendary capability, the 2011 Jeep Wrangler boasts an all-new interior that delivers a host of comfort, convenience and versatility features. In addition, Sahara models now feature a stunning, all-new body-color hard top, for customer looking for a Jeep Wrangler with a more premium appearance.”

While I haven’t seen one in person yet, I’m now willing to believe that there may be something to that “more premium appearance” comment.

The week of Detroit’s annual Dream Cruise is one of increasing energy. The number of out-of-state plates increases. More cars are cruising Woodward Avenue each night. An increasing number of people line the streets in lawn chairs and in parking lots to watch the cars go by. Everything from a BMW Isetta with a Chevy V8 hanging out the back to pristine Ford Mavericks and Pinto to hand-built hot rods to Depression-era and earlier cars to high-end sports cars roam the road. And so it was Thursday night.

I was in the middle of the scrum with my girlfriend. No, we didn’t have the 1969 Lotus Elan or the 1969 Ford Cortina. (Both are off the road.) We had a smart car. An incongruous vehicle, I’ll admit, in a sea of muscle cars. Coming back down Woodward on our first loop, we were surprised to hear the air-raid sirens going off. To a person in the Midwest, that can only mean one thing: Tornado. The local radio stations were talking about a line of severe thunderstorms heading our way, and the skies behind us had turned a dark blue-black. Time to leave.

Crawling along with traffic, we grabbed the first major side street we could find, and headed for home. And the smart’s three-cylinder engine and automated manual transmission chugged us along in a quick but choppy fashion. That’s when the thought that had been rattling around in my head since hitting Woodward popped into view.

At the start of the month, the CEO of Hyundai’s American operations, John Krafcik, had announced that his company was going to make a “moon shot” and build vehicles that would have a fleet average of 50 mpg by 2025. This publicity stunt got a lot of attention, and probably seemed like a good idea, since no one expected the federal government to raise CAFE standards above 45 mpg. At 50 mpg, Hyundai looked like exemplary corporate citizens, ignoring the fact that the Korean car maker is far from a full-line automaker, and it could bask in the green glow of sycophantic media adulation. Only 45 mpg isn’t that far above 35 mpg to a bureaucrat.

Then came word that Washington is looking to raise fleet fuel economy to 60 mpg by 2025. A figure even the diminutive smart I was driving can’t come close to reaching. That would mean forcing automakers to adopt mass electrification of the fleet, forcing hundreds of thousands of pure electrics onto the market each year. Prices would rise. Costs would skyrocket. Trucks would all but disappear. More than a few automakers would be in grave danger of collapsing under the strain. And for what?

As the dark clouds moved closer, I thought of the futility of this Soviet-style top-down regulation. It takes at least 15 years to turn over the fleet. That means it would be 2040 at the earliest before anyone would even begin to see the fruits of the new standards, if their implementation didn’t slow down new cars sales. In less time than it takes to write the new mileage standards, and all of the loopholes that will be necessary to make it possible to reach the magic 60 mpg average, the energy question could be solved by getting the government out of the way. Diesel could drastically cut energy use and reduce greenhouse gas emissions (if you believe that global warming isn’t a gigantic Ponzi scheme and farce), but at the cost of increased particulate emissions that might kill 162,000 people over 70 years. I’ve written about this before, but doubt that sanity will enter a political equation that revolves around exercising and keeping power.

Still, as the weather reports became more numerous, I couldn’t help but think that, in some Blade Runner future, I might have to depend on a fuel cell or battery or highly stressed combustion engine to get me and my loved ones to safety. I don’t doubt the ability of engineers to figure out ways to make things work. I do, however, doubt the ability of some power-obsessed, do-gooder bureaucrat who lives in one of the most insular cities on the planet to decide what form my future transportation will take. It’s my life, my future, my determination.

The storm passed our area without harm (others were not so lucky), and we parked the smart in my driveway and went in to watch the storm coverage on TV. Ticking and popping as it cooled down after a brisk drive, the smart sat tired but content. It’s the right choice for someone, but not necessarily for me. If forced to, I could live with it, but that’s a decision I’d prefer to make on my own so that my future Dream Cruises don’t become a nightmare born of publicity stunts and bureaucratic overreach.

When the cost of vehicle design and development began to skyrocket with the rise in safety and emissions regulations in the 1970s, only those automakers who had either the size and volume or the skill to adapt to changing circumstances survived. Those who chose to save their way to prosperity (e.g. every British high-volume automaker) rather than plan for the future could not keep up. And combining smaller companies to create a “big” company didn’t work, as the British discovered. Success meant modern product built using modern methods, and sold at a competitive price.

Now it is Fiat’s turn with Chrysler, and the Italian company has decided to eliminate as many of the underperforming vehicles and platforms as possible from the Chrysler and Dodge stables. In their place will come new models based on Fiat platforms and powertrains, and produced in a very Toyota-like variety of shapes and sizes. Much of the hard engineering work is done. All that is necessary is to adapt these platforms and drivetrains to U.S. regulations, and clothe them in “American” bodywork. This way, Fiat can build vehicles in America in volumes approaching the magic capacity utilization number, and add brands like Alfa Romeo (or Lancia) without breaking the bank.

In the short term, this should work, and Fiat will get closer to the magic number of vehicles it says successful automakers will need to produce in order to survive. But, as shown earlier, the British proved that alone isn’t enough. The fun will come when Fiat and Chrysler have to develop new platforms. Which side will “win”? Will Fiat blindly pursue volume, or will it give each platform enough adjustability to meet the needs and desires of buyers on both sides of the Atlantic? Will it do what Daimler would not—share equally its plans, platforms, engineering and resources—to create a single high-volume car maker out of two very different companies?

Personally, I think Marchionne is on the right track in some areas. The companies are working together. Italy is, according to some reports, not dominating, but cooperating. The next generation of vehicles are being planned together. However, the establishment of a separate Fiat franchise to sell the 500 suggests more Fiat-badged cars will follow, and that may dilute the overall effort by introducing a “new” brand and set of vehicles that must be promoted with limited marketing funds. Also, slapping a Chrysler badge on a five-door Lancia may be expedient, but it ignores the prejudices of the American car buyer. He likes trunks. Reskinning a Chrysler 300 without putting it through a thorough weight reduction program and revamping its interior, suspension and engines to the point that no one could tell they were related, devalues the Italian brand. Separating Ram from Dodge without adequately explaining the rationale behind it satisfactorily suggests an exit strategy whereby Fiat rides off with Ram and Jeep, not a plan for the future.

Much of the problem can be laid at Marchionne’s feet. He has enforced silence on both Chrysler and Fiat, and refused to explain his reasoning. I can understand his feelings. A vocal subset of the automotive press is looking for a reason that the Fiat-Chrysler combo will fail, and he doesn’t want to waste his breath explaining things that should be obvious. He’d rather stun us all with a full-fledged plan as a fait accompli, rendering any objections moot. It’s bold… and arrogant… and dangerous. I wish him well.