Automakers new rules

Automakers scramble to catch up with changes in consumer behavior. Fortune's Alex Taylor reports how they're dealing with seismic shifts in the business.

In the auto business, where new cars take 36 months or more to move from a designer's inspiration to the dealer showroom, changes can take years to reveal themselves.

At least they used to. These days, seismic events seem to rock the industry on a daily basis. Take the impact of private equity. Now that Cerberus has taken over Chrysler, and financiers are sharpening their pencils for Jaguar and Land Rover, a few far-seeing analysts expect greater innovation and faster decision-making to ripple through the rest of the industry.

Equally big changes are shaping consumer behavior. Recent conversations with import automakers on the West Coast, as well as some surprising announcements by General Motors, suggest that some current business practices are rapidly becoming obsolete. Here are just a few of the new rules.

Toyota is tops. Now everybody pile on.
Long ago, Toyota brand passenger cars passed the Ford and Chevy nameplates to become the number one seller. Now Toyota is poised to become number one in car and truck sales combined. How does "baseball, hot dogs, apple pie and Toyota" roll off your tongue?

What's the price of leadership? People taking potshots at your backside. As soon as Toyota rolled out customer cash and zero percent financing on its new Tundra pickup, a competitor leaked the news to journalists.

Others tried a subtler approach. GM went public what it called "full-size pickup facts" that seemed carefully selected to portray its Chevy and GMC in the best light. So instead of talking about their sales this year, which have improved only modestly despite the rollout of new models, GM chose to herald big improvements from 2003 to 2007 in "Brand image" (up 17 percent) and from 2004 to 2007 in Average Transaction Price (up $2,600 per unit). That's like a baseball player ignoring his lousy batting average and bragging about his sacrifice bunts.

Automakers are radically reshaping the way they approach advertising.
Marketer Jim Farley, who recently took over as head of Lexus, made his name at the Scion division by eschewing print and television advertising in favor of the Internet and other less traditional methods that he hoped would build stronger relationships with potential consumers.

Now General Motors confesses that it is shifting more of its ad dollars into online advertising too. The reason, according to marketing boss Mark LaNeve, is that the Web is more effective in combating the lagging perceptions that continue to dog GM: poor fuel economy, bad quality and high prices.

LaNeve likes the way that digital ads can direct consumers to thousands of pages of information about products, prices and the competition. He sees an even bigger payoff from the potential of immediacy. Since consumers turn to the Web when they are getting serious about buying a new car, advertising there allows GM to get more involved in the shopping process.

The hybrid revolution gathers speed - and Toyota's Prius is way out front.
While Honda announced that it is discontinuing the gasoline-electric version of the Accord because of slow sales, the Toyota Prius continues to defy gravity. Once considered a novelty, the Prius is selling more strongly now than at any time in its seven-year history. Its volume is running at twice the rate of a year ago and Toyota now expects that Prius will outsell every single domestic passenger car nameplate except for the Chevy Impala.

Why the diverging fortunes? Honda was selling added performance in the Accord hybrid, which didn't resonate with consumers the way that better fuel economy does. Besides, the hybrid Accord looked like every other Accord, meaning consumers couldn't get credit for being "green" when they parked it in front of their homes. The Prius, by comparison, can't be confused with anything else.

Celebrities interfere with car sales
Those with long memories can remember Dinah Shore pitching Chevrolets in the 50s and Ricardo Montalban rhapsodizing about Corinthian leather in the Chrysler Cordoba of the 1970s.

Now GM has decided that Tiger Woods, one of the world's best known athletes - and best paid endorsers - is getting in the way of Buick sales. GM is nudging Woods away from pitching Buicks and getting him to appear in ads for OnStar, its telematic service, instead.

LaNeve says the presence of Woods "detracts from the product message." He adds: "We don't want a celebrity at the core of any brand." He didn't mention whether he blames Woods for the fact that that sales of Buick cars are down 21 percent this year.

I guess that means Paris Hilton won't be inking a deal to endorse Hummers anytime soon.
(C)By Alex Taylor III, Fortune senior editor

TOP-10 Great Vehicles for Road Trips

There's a car or truck suited for road trips of every type. Here we highlight 10 great road-trippers along with tips for optimum driving safety and enjoyment.

Skyrocketing fuel costs, be damned — vacationers are expected to open their maps and take to the road in record numbers in the weeks ahead, though many may scale back their spending in other ways to offset the budget-busting cost of a fill-up.

“High gas prices won’t deter Americans from traveling,” predicts Sandra Hughes, travel vice president for the American Automobile Association (AAA). “Families will travel closer to home, they will travel for fewer days and will save money by staying in less-expensive hotels and eating in cheaper restaurants. But they will continue to take vacations and plan getaways,” she says.


The AAA forecasts that 84 percent of all travelers will reach their destinations by car this summer, which is an increase of about 1.8 percent over 2006. Based on the association’s projections, more than 115 million Americans will hit the highways during the summer's three main holidays, Memorial Day, 4th of July and Labor Day.

Family Vacations: Toyota Sienna

A minivan is without question the ideal family-vacation vehicle. Among the current crop of seven-passenger people movers, we picked the Sienna by virtue of its wide range of available road-trip trappings, including several features its closest competitor, the Honda Odyssey, lacks. We think the 2008 Chrysler Town & Country holds promise, but have yet to test it and so we cannot recommend it here.


The Sienna can be fitted with a full-time all-wheel-drive system and run-flat tires for added safety, along with adaptive cruise control to conveniently maintain a set speed and distance from the traffic ahead. The Sienna also offers iPod audio-system connectivity so you — or the kids — can bring an entire library of tunes along for the ride.






Trip for Two: BMW 650i

Being an empty nester is all about personal indulgence. The kids have grown up and moved on, and it's time to ditch the SUV or minivan for something more expressive and entertaining to drive. The sensuous 650i coupe is ideal for a quick getaway to escape life's tensions and rekindle passions. Its generous size makes it comfortable for long trips.




Exploring the limits of the 650i's 360-hp 4.8-liter engine adds excitement to any trip. An Active Roll Stabilization system ensures optimum comfort over bumps and potholes while cruising in a straight-line, but tightens up the suspension through turns for exhilarating handling. A coddling interior includes supremely comfortable seats and a standard navigation system with real-time traffic information.





College Road Trip: Scion xB

The college years are all about exploration, and what better way to reach a divey roadhouse in search of that undiscovered band than in the 2008 xB? While it retains the prior generation's boxy profile, the eminently affordable and practical xB takes on a more-muscular and menacing appearance. It also has a longer wheelbase and larger wheels and tires for enhanced handling.



The newly redesigned xB includes a more-powerful engine (158 hp) than the outgoing model's that should still prove fuel-efficient. It can be mated to a new four-speed sequential-shift automatic. The xB has many safety features, a roomy interior and a generous assortment of standard equipment, including a premium audio system with full iPod integration.







Camping: Land Rover LR3

If you've never outgrown your desire to play in the dirt, the midsize LR3 can blaze the roughest trails, allow you to commune with nature and still transport you back to civilization with panache. Land Rover's innovative Terrain Response system automatically picks the most appropriate settings for various vehicle systems and traction aids according to five driver-selectable modes.


Not long ago, Land Rovers would've been our last choice for a road trip, as they were terribly uncomfortable on paved roads over long distances. But the LR3 is pleasing even off the trail, and its cavernous interior will swallow lots of gear and still let passengers stretch out. The base LR3 includes a 216-hp V6 engine, while the top versions pack a potent 300-hp V8.






Fuel Economy: Toyota Prius

With the Prius, it could be your bladder and not the gas tank that dictates the frequency of pit stops on your journey. The hybrid gas/electric-powered Prius is frugal enough with fuel to make the 540-mile trip from Chicago to Memphis on a single tank of gas, with enough left over to tour the town.





The Toyota Prius marries a small gasoline engine to an electric motor/generator and a self-charging battery pack to garner an EPA-rated 48 mpg city/45 mpg highway. Its futuristic profile affords a roomy interior for four adults to ride in comfort over a long haul.







Towing: GMC Yukon Denali

While steep fuel prices may have dampened demand for full-size SUVs, they remain purposeful purchases for those who need to tow a boat to the lake or a trailer to a campsite. The Yukon Denali effortlessly serves those needs with a 380-hp 6.2-liter V8 that boasts 417 pound-feet of torque for a top towing capacity of 7,900 pounds.




The Denali version of the Yukon is as plush as its Cadillac Escalade twin, but not as pricey. It's laden with luxury items like leather seating, dual-zone A/C and standard XM satellite radio. Practical luxury features to help the driver include a power liftgate, rain-sensing wipers, remote start and rear parking assist.

Moving the Kids: Lincoln Mark LT

A large and luxurious four-door pickup truck isn't for everyone. But if you're transporting the kids to college and want to do so in high style, the Mark LT is among the best. The new-for-2007 long-wheelbase version includes a class-leading 6.5-foot cargo bed that's large enough to hold a dorm room's worth of Ikea accoutrements.

The Mark LT's cabin is posh, swathed in wood and leather trim. It comfortably seats two parents and up to three future valedictorians. A 300-hp 5.4-liter V8 engine assures strong acceleration, even with a full load of passengers and cargo, while a smooth-riding suspension soaks up pavement imperfections with ease. An ample assortment of upscale amenities belies its working-class roots (it's based on the Ford F-150 pickup).

Tailgating: Honda Element

Perfect for hitting the road to catch three baseball games over the course of a long weekend — in separate cities — the Element was literally designed with tailgating in mind. Offered in front- and all-wheel-drive versions, its boxy shape affords a spacious interior with rear-hinged back doors for easy access.

Limousine-like rear legroom makes a long ride comfortable, though there's only room for four occupants altogether. That's because the backseat is split in the middle and folds to the sides for added cargo space. Accessories include a cabana tent and poles that attach to the rear of the vehicle, a tailgate seat back, and legs for the spare-tire cover to be used as a table. Best of all, if you spill anything, the Element's rubber floors can simply be hosed off.

Convertible: Jaguar XK

This is a competitive category — albeit a small one. We settled on the Jaguar XK Convertible for its unique blend of luxury, style and athleticism. It rides almost as comfortably as a luxury sedan, yet has superb handling for spirited driving thanks to be being light and rigid as well as having a deftly engineered suspension. The XK Convertible's sonorous 300-hp 4.2-liter V8 engine is strong and the six-speed automatic precise.

The XK Convertible's interior is lavish and comfortable for two. It remains calm and quiet even with the top down on the highway, which is essential for long drives. The multilayer fabric top requires only the push of a button to quickly deploy. Once in place, it completely insulates for sound and the elements. The backseat and trunk will accommodate all the luggage a couple will need.

Overall: Mercedes-Benz E320 Bluetec

The midsize E320 Bluetec is ideal for a party of four on a long journey; a fifth can fit if necessary. Typical of a diesel engine, its 3.0-liter turbocharged V6 is about 30 percent more fuel-efficient than a comparable gasoline engine. Yet it bears none of the vices of past diesels: namely poor acceleration and stinky exhaust smoke. Its 208-hp and 400 pound-feet of torque allow strong acceleration, which can be crucial for highway driving.

The E320 Bluetec offers all of the luxury and comfort Mercedes-Benz is known for with class-leading fuel economy: 23 mpg city/32 mpg highway. That may seem low because the EPA just implemented more-stringent fuel-economy tests that dropped ratings for all vehicles. Compare the E320 to other midsize luxury sedans at www.fueleconomy.gov to see just how efficient it is.
by Jim Gorzelany

2007 Kia Rondo review

Starting MSRP $16,395 – $20,195

Have you noticed? Automakers have been trying to disguise cars that five years ago would have been called minivans. They must have figured out that car buyers don't like that term, because they are bending over backward to design multipurpose cars that don't look like minivans of the past — replacing sliding doors with standard, swing-out ones and jacking the vehicles up to SUV height. Of course, they're not calling them minivans anymore, either.

With the Rondo, Kia bucks that trend. Kia doesn't call it a minivan, but the Rondo is the epitome of one in terms of style and size. It's a full 10 inches shorter than Kia's Sedona minivan, and has an optional third row that creates a cramped seven-seat configuration. There's plenty of cabin room for two rows, and it delivers a pleasant ride, yet although Kia hits a few home runs with the Rondo, they aren't enough to capture a pennant — or sway current minivan owners.

Exterior
Kia really wanted the Rondo to be "different." There's this whole "ugly beauty" aesthetic in the design world — think Scion xB — that companies are currently pursuing. The theory is, although the design might alienate most shoppers, the people who like it will really, really like it. I don't see the jelly bean styling of the Rondo getting many of those extremely positive reactions, though. The greenhouse is just way too tall, the profile is too stubby and neither the front nor the rear end offers any interesting angles.

The huge windows, while creating a frumpy exterior look, are actually a pleasant change of pace once you're inside the Rondo. They're preferable to the high beltlines of most of today's cars and SUVs and are terrific for sightlines; there are even small windows near the front pillars that give a better view to the right or left of the driver.

Trying to sell anyone on the Rondo's ugly beauty might be tough indeed. During a week of driving it, I felt too much like a suburbanite with at least two children, and I have no kids and live in the city. To pull off the cool-transport attitude, you want the opposite effect. There's just no way to feel cool in the Rondo, and if everyone sees me driving what they think is a minivan, I might as well buy a real minivan.

Interior
The Rondo's interior is filled with severely molded plastic. The bulky, gray stuff makes up most of the substantial areas of the interior — including the dash, glove box and center stack — and probably contributed to the opinion of many who sat in the Rondo that the cabin felt cheap. However, the radio and air conditioning controls and the steering wheel felt very nice to the touch and were almost welcoming.

It's the interior where you have to remember that the Rondo's base price is under $17,000. That might be high for a compact car,
but this is supposed to compete not only with minivans but also with compact SUVs like the Honda CR-V. There is no compact SUV or full-size minivan on the market with a lower starting price than the Rondo.

With that in mind, I really didn't find the interior to be inferior. The front captain's chairs are much more like a minivan than an SUV and took some getting used to, but everything was laid out ergonomically, and the optional leather seats were quite comfortable over long hauls.

The second-row seats offered a lot of both leg- and headroom; I don't think it would be possible for anyone shorter than Kobe Bryant to hit their head on the roof of the cabin. The second row slides back and forth and reclines. The optional third row is tight, as one would expect in a vehicle this size. Small children might enjoy it, but anyone old enough for a driver's license shouldn't ride back there for more than a few minutes.

Cargo
Cargo hauling is an obvious plus for the Rondo, with its 74.4 inches of cargo room with the second- and third-row seats folded flat. That's more room than the Toyota RAV4, which sports one of the largest cargo areas in the compact SUV class. And yes, you can get a lot of stuff back there. However, the second-row seats are cumbersome to fold. It's a three-step process that includes pulling the seat bottoms forward with a strap, then removing the head restraints and storing them in holes on the turned-upward seat bottom. When that's done, the seatback folds flat where the seat cushion used to be. This is how many SUVs and other vehicles handled fold-flat cargo areas in the past, but for a new model to do it this way is a major flaw.

It's especially disappointing because the busy families looking at the Rondo are most likely to need a one-handed — or even one-button — method of expanding the cargo area, given one hand is likely to be busy with shopping bags, the laundry, a baby seat or even a baby. These owners will be frustrated if they need to change the layout on the fly.

Luckily, I found the cargo area with just the easy-folding third row down plenty large enough for most shopping duties, even a back-to-back grocery and Costco run. It's rated at 35.0 cubic feet, which is slightly less than the Honda CR-V and RAV4.

Performance
My biggest gripe with the Rondo concerns its performance, or, more precisely, its poor gas mileage. The optional V-6 engine in my test car had plenty of pep despite its somewhat sluggish automatic transmission. That triumphant feeling of ample passing power on the highway, however, will quickly fade at the pump. The EPA rates mileage at 20/27 mpg (city/highway) with the V-6 and 21/29 for the base four-cylinder. We observed less than that — mid- to high teens — in mainly city driving. The EPA numbers are similar to those for front-wheel-drive compact SUVs like the CR-V and V-6-powered RAV4, but both of those SUVs are more refined on the road than the Rondo.

The Rondo's ride, though, is exceptional. It glided smoothly over the bumpiest of Chicago's potholed roads. You could run errands in the Rondo all day with no backache.

Steering is intuitive, and despite a long wheelbase and its overall length, the Rondo was easy to navigate in tight spots. The upright seating position creates terrific forward visibility, and the huge windows help things out back.

The Rondo could be a very nice highway cruiser, but it suffers from some expected wind noise because of its awkward, tall shape. It's actually taller than both the RAV4 and CR-V, even though the step up is shorter.

Safety
Like many Kias, the Rondo comes equipped with a number of safety features that are standard on even the least expensive, base trim level. Front-seat-mounted side airbags, side curtain airbags for all three rows, four-wheel-disc antilock brakes, electronic stability control, a tire pressure monitoring system and front active head restraints are all standard.

The Insurance Institute for Highway Safety had not crash tested the Rondo as of this writing.

Rondo in the Market
The Rondo is an odd duck to be sure, and not just because of its looks. No vehicle on the market offers this much interior and cargo room for so low a price. Even when decked out with leather, an upgraded Infinity sound system, a moonroof and a V-6 engine, my test vehicle was just more than $23,000. That kind of value statement is very alluring.

The question, though, is who is going to see that value? Thrifty compact-SUV shoppers who can no longer find a sub-$20,000 vehicle? Minivan owners who are looking to downsize and save money? I'm not sure, because Kia's full-size Sedona minivan starts at a price similar to a V-6 Rondo, but with a much more powerful engine.

The Rondo's transmission issue and sub-par gas mileage are significant cons, but all the other factors, like value, safety and comfort, will add up nicely for that elusive buyer who wants everything the Rondo offers, but doesn't want a full-size minivan. For everyone else in the market, nothing about the Rondo seems to add up.
By David Thomas