CISCO'S GONE

The Detroit News and about every other automobile industry website on the planet is reporting that Cisco Codina, Ford Motor Company’s (F) head honcho of North American Sales and Marketing is gone, effective November 1, 2007.

Codina claims it is just a scheduled retirement after a long thirty years of service. (He promised his wife, after all)

The Detroit News, on the other hand, implies that Cisco’s being shown the door because his weak marketing operation has failed to stem FoMoCo’s catastrophic ten year plunge in market share:

"The Detroit News first reported that Codina was on the hot seat in April after the company missed its first quarter sales targets. Since then, Ford's decade-long decline in domestic market share has slowed, but still shrank to its lowest ever in August -- just 14.4 percent, compared with 22 percent five years ago."

Of course Cisco’s problems did not start back in April. As Speedzzter blogged back in 2006:

"Automotive News reported on June 29, 2006, that Cisco Codina, Ford group vice president of North America marketing, sales and service, is complaining Chrysler's suggestion of an employee discount plan in July has weakened sales during the last couple of weeks in June."

"Codina said 'It's unbelievable that someone would begin talking about next month's incentives in the middle of the month. Go figure.'"

'Cisco, of course, protests a little too much."

"Obviously, the U.S. consumer is conditioned to summer-time "fire sales" from the Detroit 3. Moreover, given the dramatic declines in truck and SUV sales as well as increasing general economic impact of sustained higher fuel prices and FoMoCo's relatively weak position in high m.p.g. vehicles (No tiny "B car" in the U.S. market, the aging Focus and Ranger forced to carry Ford against newer competition, no light diesels, no economy engine option for Mustang, limited hybrid capacity, Ford's failure to use currently-available technology to increase V8 fuel efficiency, etc.), consumers fully and reasonably expect escalation in the incentive wars this year."

[Virtually none of these product-side problems have been fixed. Cisco’s results would have been even worse had it not been for the modest success of FoMoCo’s new crossovers]

Codina also sometimes said some dumb things that could raise the ire of consumers. For example, in 2006 Cisco ineloquently dumped on the "employee pricing" gimmick:

"Cisco saves special hostility for treating ordinary customers as well as the ever-shrinking group of Ford employees: ‘I don't think employee discounts are good . . . Last time we were dragged into it. Right now, at this point in time, we have no intention of doing employee pricing. It’s very disruptive.’"

With comments like that, consumers properly stayed the sidelines waiting for a "real" deal.

Not that Cisco and his cohorts didn’t try.

Codina implemented Mark Fields’ "Bold Moves" campaign to mixed reviews. Dealers claimed it was too subtle. Moreover, most of the truly "bold" moves seemed to be coming from elsewhere (i.e. GM's Five-Year/100,000 mile warranty and Chrysler’s "lifetime" powertrain warranty).

Later, Codina’s troops corrected course with the more aggressive "Ford Challenge" campaign and the "Swap your Ride" subcomponent. Neither, as of yet, have stemmed the market share decline flow (and are arguably at least FIVE YEARS TOO LATE).

The Detroit News said Codina was "popular" with dealers. Of course except when he was trying to axe some of them. But with FoMoCo’s anti-competitive dealer shrinkage plan now ahead of schedule, perhaps it’s time for the "hatchet man" to step down.

It’s inevitable that someone will compare Codina’s tenure with the meteoric rise of another FoMoCo marketing alum: Jim Press.

Of course, Press bailed out of Ford before Pintos started exploding . . . before the absolutely moronic withdrawal from motorsports of the 1970s . . . before the "energy crisis" . . . before the transmissions slipped out of gear . . . before the Bronco rollover lawsuits . . . before the ignition switches burned . . . before the "always on" cruise control fiasco . . . and before the Explorer/Firestone mess. So Codina's defenders could argue that Press was dealt a better hand.

But while Press had to build Toyota's "Borg Cube" virtually from the ground up (studying and learning from FoMoCo intently as he went), Cisco was spotted Ford's legendary history and cash-in-the-bank nameplates, such as the F-Series, the Thunderbird and the Mustang.

All have declined under Codina's watch. Meanwhile, Toyota basically took over the world.

Press is now rumored to be the $50 million dollar man for the new (for about the third time) Chrysler, after marshaling Toyota’s ballistic rise in the American market and becoming the first non-Japanese board member in Toyota's history. In contrast, Cisco’s getting his "gold watch."

Now that Cisco is riding off into the sunset, he’ll have plenty of time to reflect on how the product side let him down . . . and maybe how his organization let down the product.

FUEL ECONOMY: IT’S ALL ABOUT "CHOICE"

The Alliance of Automobile Manufacturers and the National Automobile Dealers Association have launched a brilliant new interactive website in the raging battle for a sensible national fuel economy policy. Autochoice.org poses the salient question:

"Why do people drive what they drive?"

Undoubtedly banking on the thirty-plus year winning streak that the concept of "choice" has achieved in liberal circles, the AAM and NADA have properly refocused the fuel economy debate on the market choices of consumers. The Autochoice website points out "When considering what kind of vehicle to buy, consumers evaluate all the different uses they will demand of their new car or light truck. Most consumers select vehicles that best serve their peak uses — even if these attributes may be used infrequently.

In other words, consumers buy what they NEED!

"Peak" functional attributes, such as load carrying capacity, trailer towing ability, and higher passenger ratings have largely driven a huge shift since 1970 from automobiles to light trucks. According to the Autochoice website, light trucks accounted for 53 percent of U.S. light vehicle registrations in 2006! This is obviously one of the unintended consequences of the EXISTING Corporate Fuel Economy Average scheme.

The predominant interactive feature of the Autochoice website is a stunning map of the United States of America, which breaks down the truck vs. car registration data on a state-by-state basis.

Autoblog Green howls "Wow, is that site tailored-made for Senators on the fence on this issue or what?" Interestingly, the few states where cars outnumber trucks are all "blue states." Much like the famous "Bush vs. Gore" map of 2000, the RED STATES are solidly "light truck country."

The brilliant aspect of Autochoice.org is that it "tees up" positioning those who demand unrealistic Corporate Average Fuel Economy mandates as "anti-choice!"

Autochoice.org is clearly a better effort than the AAM’s earlier internet salvo, drivecongress.com, because it tilts the debate to a common-sense, "kitchen table" issue for politicians and voters.

Certainly, a mass of technologically unsophisticated voters "want it all" (i.e. a massive SUV with hybrid-style fuel economy, no compromises in functionality, and no price increase). And the hard core "greeniacs" apparently could care less about how small businesses, sportsmen, "country folk" and large families actually use vehicles in "flyover country." Instead they pine on for a future based on tiny, urbanized hybrids and government-controlled mass transit. Both of these groups are detached from the technical and economic realities at stake.

Of course, the reality is that even H.R. 2927, the industry-backed "Hill-Terry" alternative Corporate Average Fuel Economy bill, will dramatically increase new vehicle prices and gut consumer choices. But the wholly unrealistic Markey bill is a prescription for economic disaster.

Hill-Terry "sets rigorous standards for automobile fuel economy that are very challenging but achievable - a combined fleet average that will be between 32 mpg and 35 mpg in Model Year 2022." As Speedzzter has pointed out before, even the less draconian Hill-Terry targets may extract significant damage from the "sports and high performance" niches.

Thus, Autochoice could go further than it does:

• It could emphasize that many people choose larger vehicles for increased safety.
• It could acknowledge the significant niches for limited use sports cars and high performance vehicles, both of which could be decimated by unnecessarily strict fuel economy standards.
• It could point out that increased costs for new vehicles will be disproportionately borne by lower income Americans (who will be increasingly deprived of newer, safer and more functional vehicles by the increased buy-in of turbo-diesel engines and other expensive, complex fuel saving technologies).

Still, the Autochoice campaign is a baby step in the right direction. Hopefully it will educate some of those who see light vehicles as "magic black boxes" that could become dramatically more efficient merely upon the whims of a few Washington liberals. Hopefully it will help politicians and voters to view the issue of "vehicular choice" a bit more soberly.

AUTOMAKERS WIN ONE IN CALIFORNIA

Unlike the disaster in the U.S. District Court for Vermont last week, the automakers have snatched a victory in the Northern District of California. Federal District Judge Martin Jenkins (who, by the way, like Vermont's William K. Sessions, III, is another Clinton appointee) has dismissed the California Attorney General's pirate raid against the six major automakers for monetary damages for "climate changing greenhouse gasses."

In California v. General Motors, Judge Jenkins properly held that State had failed to state a justiciable claim against General Motors Corp (GM). Toyota Motor North America, Inc., Ford Motor Co. (F), American; Honda Motor Co., Inc, DaimlerChrysler Corp. and Nissan North America, Inc.

The California Attorney General had claimed that carbon dioxide, nitrous oxide and other greenhouse gasses were a:

"(1) public nuisance under federal common law; and, alternatively, a

(2) public nuisance under California Law, California Civil Code § 3479, et seq. and California Civil Code § 731."

Such claims, of course, are wildly unprecedented. Seeking another windfall similar to the infamous "tobacco settlement," the California Attorney General demanded millions in monetary damages, attorneys’ fees, and a declaratory judgment for future monetary expenses and damages incurred by the State of California in connection with the "nuisance" of global warming.

The automakers moved to dismiss this junk lawsuit on four grounds:

(1) the entire case raises nonjusticiable issues properly reserved for resolution by the political branches of government;

(2) the complaint fails to state a valid nuisance claim under federal common law;

(3) the complaint fails to state a valid nuisance claim under California law; and

(4) the nuisance claim under California law is preempted by federal law.

Judge Jenkins correctly found that "Resolution of Plaintiff’s federal common law nuisance claim would require this Court to make an initial policy decision." Judge Jenkins relied on Connecticut v.American Electric Company, Inc. (AEP), 406 F. Supp. 2d 265, 272 (S.D.N.Y. 2005) -- a case where crusading attorneys general were attempting to beat down electric utilities on an analogous nuisance theory (albeit apparently without the piracy angle). Judge Jenkins observed from the AEP decision: "As the EPA has stated:
'It is hard to imagine any issue in the environmental area having greater 'economic and political significance' than regulation of activities that might lead to global climate change. . . . Unilateral [regulation of carbon dioxide emissions in the United States] could also weaken U.S. efforts to persuade key developing countries to reduce the [greenhouse gas] intensity of their economies. 68 Fed. Reg. at 52931.'"

"Unavoidably, climate change raises important foreign policy issues, and it is the President’s prerogative to address them. 68 Fed. Reg. at 52931. Virtually every sector of the U.S. economy is either directly or indirectly a source of [greenhouse gas] emissions, and the countries of the world are involved in scientific, technical, and political-level discussions about climate change. 68 Fed. Reg. at 52928. Id."

Judge Jenkins then concluded "the Court finds that the same justiciability concerns predominate and significantly constrain this Court’s ability to properly adjudicate the current claim. Regardless of the type of relief sought, the Court must still make an initial policy decision in deciding whether there has been an 'unreasonable interference with a right common to the general public.'"

Next, after recognizing the central, predominant role of Federal standards for both exhaust emissions and fuel economy, Judge Jenkins did what Judge Sessions should have:

"[T]he Court finds that injecting itself into the global warming thicket at this juncture would require an initial policy determination of the type reserved for the political branches of government."

AMEN!

The Court further reasoned:

"A judicial determination of monetary damages for Plaintiff’s global warming nuisance tort would improperly place this Court into precisely the geopolitical debate more properly assigned to the coordinate branches and would potentially undermine the political branches’ strategic choices by 'weaken[ing] U.S. efforts to persuade key developing countries to reduce the [greenhouse gas] intensity of their economies.'"

In other words, Judge Jenkins reasoned that a court-imposed policy which would have indirectly resulted in a unilateral limitation on greenhouse gasses would undermine the international bargaining position of the Federal government.

Why would emerging greenhouse gas "powers" such as the People's Republic of China and India give up anything if the U.S.A. had nothing left to "trade?" Judge Jenkins correctly recognized that such calculus (to the extent it is otherwise constitutional) is properly within the purview of the political branches of government.

Judge Jenkins also relied upon Massachusetts v. Environmental Protection Agency,127 S. Ct. 1438 (2007), but, unlike Judge Sessions, to achieve a result more favorable to the automakers. Judge Jenkins reasoned:

"Underpinning the Supreme Court’s standing analysis is the concept that the authority to regulate carbon dioxide lies with the federal government, and more specifically with the EPA as set forth in the CAA. Also inherent in the Supreme Court’s reasoning is the principle that any State that is dissatisfied with the federal government’s global warming policy determinations may exercise its 'procedural right' to advance its interests through administrative channels and, if necessary, to 'challenge the rejection of its rulemaking petition as arbitrary and capricious.'"

Accordingly, Judge Jenkins properly concluded "Because the States have 'surrendered' to the federal government their right to engage in certain forms of regulations and therefore may have standing in certain circumstances to challenge those regulations, and because new automobile carbon dioxide emissions are such a regulation expressly left to the federal government, a resolution of this case would thrust this Court beyond the bounds of justiciability."

Judge Jenkins further reasoned that "Plaintiff’s claim implicates a textually demonstrable constitutional commitment to the political branches." This reasoning expressly rejected the California Attorney General's ridiculous claim that the "environmental nuisance claim is committed to the federal judiciary and has no import on interstate commerce or foreign policy."

"In this case, by seeking to impose damages for the Defendant automakers’ lawful worldwide sale of automobiles, Plaintiff’s nuisance claims sufficiently implicate the political branches’ powers over interstate commerce and foreign policy, thereby raising compelling concerns that warn against the exercise of subject matter jurisdiction on this record."

Judge Jenkins additionally found that "There is a lack of judicially discoverable or manageable standards by which to resolve Plaintiff’s claim." Judge Jenkins astutely concluded the "Court is left without guidance in determining what is an unreasonable contribution to the sum of carbon dioxide in the Earth’s atmosphere, or in determining who should bear the costs associated with the global climate change that admittedly result from multiple sources around the globe."

However, the victory for the automakers was not absolute. Judge Jenkins recognized that the California Attorney General could take another shot under California state law in state court. Moreover, an appeal to the somewhat unreliable 9th Circuit Court of Appeals is possible.

Still, given the potential damage that such bogus "nuisance" actions could cause, the dismissal of the California Attorney General's "pirate raid" lawsuit is good news indeed.