Branding

Infiniti and Saab lead by example
There's no doubt the recession has hit world-wide auto sales hard.

With sales not meeting profit expectations, budgets are slashed in an attempt to cut costs. Marketing, of course, takes a hit as well. But sales are slowly returning, with new vehicle sales expected to rise in November from a year earlier.

I like to devote some of my time here on Ridestory talking about branding and how the manufacturers appeal to buyers and enthusiasts. I've always thought clever brand placement did more to appeal to consumers than the barrage of ads on network TV. I think it's safe to say that placing brands in recognized entertainment has probably been one of the few bright spots in automotive marketing.

Saab: Fiona's ride
One example, believe it or not, is General Motors. The auto maker showed some brand smarts when they successfully placed Saab in USA Networks 'Burn Notice'.

Advertising Age has an excellent article (subscription required) explaining Saab's success and how GM received some of it's best brand metrics ever. Brand integration into a popular TV show certainly proved to be a successful strategy.

Saab has a problem looming on the horizon, though. And that's a lack of cars.

As GM's sale of Saab to Koenigsegg continues, vehicle production has slowed due to cost cutting in preparation for the new 9-5.

"We have about 10 Saabs left, and they won’t last long,” said Ivan Goodwin, sales manager at Jim Ellis Saab in Atlanta. “It’s going to be a big problem, but there is nothing we can do about it."

In addition, Saab announced the closure of more than a third of their U.S. dealers. A limited inventory is going to hurt those dealers remaining open.

Infiniti and Elvis Costello's 'Spectacle'
Infiniti is taking advantage of their exposure on the Sundance Channel's 'Spectacle', hosted by Elvis Costello.

The Sundance Channel doesn't accept traditional advertising, so Infiniti's brand gets some more unique exposure through front-of-venue placement and title sponsorship on the show's marquee at the Apollo Theater.

'Spectacle' features Costello interviewing and performing duets with many talented guests. In addition, each show will feature Infiniti-sponsored "Inspiration Sessions," which pairs famous musicians with their producers. The show begins its second season December 9th.

Kathy Roznowski, Infiniti's senior media manager, said 'Spectacle' has become a large part of Infiniti's marketing strategy because the branded-entertainment matches the auto maker's promise of "inspired performance."

"We need to deliver inspiration in everything we do, from the performance of the vehicle to hospitality in consumers feeling they're getting peace of mind or quality," she said. "What these clips will be able to do is inspire fans to take them into the social space, to help us promote these artists pairings by sharing them with their friends."

"We ultimately want people to experience all our vehicles, so we're trying to talk more from the level of the brand itself. It's not about a sales event," Ms. Roznowski said.

I think the success both Saab and Infiniti are experiencing with their branded entertainment will spread to others. I'd much rather see cars used in an entertaining way, such as a series character driving it or as part of a musical diversion. It doesn't smack so much of advertising and can actually help support the content.

Survey says...Pontiac!
Unfortunately, General Motors may be making a big mistake. According to Advertising Age, a survey recently completed by CarGurus asked potential car buyers which GM brand they would like to see survive the cuts. They chose Pontiac.

The survey had almost 1,700 respondents, with 44% naming Pontiac, 27% choosing Hummer, 20% selecting Saab and only 9% picking Saturn. Now the respondents picking Pontiac really isn't a stretch. Pontiac is known as GM's performance brand, dating back to the birth of the muscle car era in the '60s.

Now the rest of the survey results are a bit confusing. Second after Pontiac is Hummer. Maybe Sichuan Tengzhong, the Chinese company negotiating to purchase Hummer, knows something we don't. The goal, of course, is for GM to get rid of a brand that just isn't profitable anymore. The Chinese company sounds willing to put up the cash to keep Hummer afloat. This should be interesting.

Some amazing photography from this Concorso
A stunning 1938 Alfa Romeo 8C 2900B Berlinetta Touring won 'Best of Show' at the 2009 Concorso d'Eleganza Villa d'Este on the grounds of Villa Erba in Cernobbio, which is about 25 miles north of Milan, Italy.

I received the release about the Concorso from the BMW Press Group but only decided to post about it when I saw the beautiful photography taken during the event.

Unfortunately, the weather turned gray on Sunday, with rain throughout the day. It didn't seem to turn visitors away though.

“The great response from the public despite the poor weather shows how this event has become a firm fixture on the calendar of car aficionados from both this region and countries around the world,” said Karl Baumer, President of the Concorso d’Eleganza Villa d’Este and Director of BMW Group Classic. “The weather on Sunday could have been better for the 80th anniversary of the Concorso, but a sunny Saturday with this selection of cars provided a more than worthy setting for our anniversary Concorso,” added Jean-Marc Droulers, President of Villa d’Este S.p.A.

When will hydrogen fuel cell cars be ready?
This is the most frequently asked question about hydrogen fuel cell vehicles. While the technology still needs to be developed further, hydrogen fuel cell cars will arrive at dealerships by 2015.

Number of hydrogen fuel cell vehicles on the road today
GM has been the most aggressive promoter of hydrogen fuel cell vehicles. Project Driveway is a demonstration program that started over a year ago where more than 100 Chevy Equinox hydrogen fuel cell vehicles are being driven by members of the general public in Washington, D.C., New York, and Los Angeles. Each person gets to drive the vehicle for three months. GM also brings some of the hydrogen vehicles to “ride and drive” events at conferences and makes them available for journalists to test drive.

Honda started a similar program last summer where a small number of customers in Southern California can lease the FCX Clarity hydrogen fuel cell car for $600 per month. Between 2008 and 2011, Honda will build 200 FCX Clarity hydrogen cars. The company has built the world’s first dedicated hydrogen fuel cell vehicle production facility in Japan. The first Honda FCX Clarity rolled off the production line last June which was almost exactly 100 years after the first production Ford Model T.

Furthermore, Daimler has been testing around 100 hydrogen fuel cell vehicles for several years. And Toyota, Hyundai, Nissan, Ford, and Volkswagen all have a small number of hydrogen fuel cell vehicles on the road.

At the moment, the hydrogen fueling infrastructure for these vehicles is very limited. There are around 60 hydrogen fueling stations that are operational in the U.S. Half of these are in California. On the other hand, there are around 170,000 gasoline stations in the U.S.

Hydrogen fuel cell vehicle driving experience
A frequent comment from people who test drive hydrogen fuel cell vehicles is that besides the lack of engine noise the experience is very similar to driving a gasoline-powered vehicle.

The driving range of hydrogen fuel cell cars has improved greatly. The Toyota FCHV (Highlander) hydrogen fuel cell vehicle is a mid-size SUV that gets 516 miles of driving range with only slightly less rear trunk and passenger space as the Toyota Highlander Hybrid. The vehicle stores hydrogen at 10,000 pounds per square inch (psi).

Other hydrogen fuel cell vehicles have driving ranges as low as 180 miles. There are a variety of reasons for this including storing hydrogen at 5000 psi, using smaller tanks, and having less efficient fuel cells. However, with the exception of the Honda FCX Clarity, most hydrogen fuel cell vehicles are converted gasoline-powered vehicles. With vehicles that are built specifically to run on hydrogen, extra space for the hydrogen tanks can be created. Furthermore, the hydrogen prototype vehicles are typically utilizing fuel cell technology that is one to three years old. The next generation fuel cells being developed by the car companies will be more efficient, smaller, and weigh less.

The bottom line is that hydrogen fuel cell vehicles will be able to meet customer needs for trunk space, passenger space, a 300-mile driving range, etc.

Remaining obstacles with hydrogen fuel cell vehicles
The only two remaining obstacles with hydrogen fuel cell vehicles are cost and durability. The fuel cell technology will likely be ready in the 2012 time frame. This will give the car companies four to six years to improve on the fuel cells that are in the existing prototype hydrogen vehicles.

However, there are two other cost issues. The car companies will also need to optimize the manufacturing process and mass produce the hydrogen fuel cell vehicles in order to make them economical for consumers.

Dieter Zetsche, CEO of Daimler, said in early 2009 that his company will be able to produce hydrogen fuel cell vehicles at the same cost of a hybrid vehicle in 2013 or 2014 assuming at least 100,000 units are built per year. Daimler is planning to begin limited production of hydrogen fuel cell vehicles this summer.

Toyota has said that hydrogen fuel cell vehicles will arrive at dealerships by 2015 or perhaps sooner. GM has said hydrogen fuel cell vehicles will be sold beginning in 2014 or 2015.

Building the hydrogen fueling infrastructure is the real issue
Since hydrogen fuel cell vehicles are very close to being ready, the real issue is that the hydrogen fueling stations need to be built. The car companies are clearly taking care of their part. Hydrogen fuel cell vehicles will be ready to be mass produced in three or four years.

However, despite the tremendous amount of progress with hydrogen fuel cell vehicles, the hydrogen industry as a whole is thinking very small when it comes to ramping up the hydrogen infrastructure. There is almost no talk right now of building thousands of hydrogen fueling stations by 2015. Moreover, a “real world” hydrogen fueling station (i.e. one that could dispense 1000 or 1500 kilograms of hydrogen per day) has yet to be built. The existing hydrogen fueling stations typically dispense tens of kilograms per day for a small number of vehicles.

With peak oil looming, oil prices are likely headed back to $100 or $150 per barrel in the next two or three years. Furthermore, they could potentially go even higher five years from now. Therefore, the lack of a sense of urgency to get the hydrogen fueling infrastructure built on a scale that is necessary is baffling.

Another unsettled issue is how the hydrogen fueling stations will be financed. The focus up until now has been on the oil companies and the federal government. However, both have shown little interest in building the hydrogen fueling infrastructure.

Last fall, I proposed a way to build the hydrogen fueling infrastructure that does not involve the oil companies, federal government, or subsidies. The idea is to have hydrogen fueling station cooperatives. Here is how they would work.

One thousand people who live near each other would agree to purchase a hydrogen fuel cell vehicle and each pay $2000 extra in order to finance a $2 million hydrogen fueling station. Each person would then own 1/1000th of the fueling station. This would solve the hydrogen infrastructure “chicken and egg” problem, because both the vehicles and the fueling station would come at the same time.

Furthermore, the idea is scalable. For example, the concept could be used to build 50 hydrogen fueling stations that are spread throughout the Phoenix metro area. The stations would provide fuel to 50,000 residents of Phoenix who purchase hydrogen fuel cell vehicles.

It should be noted that these hydrogen fueling stations will most likely be selling hydrogen that is produced on-site from natural gas. This will likely be the most economical way to produce hydrogen for at least several years. While this will result in around half of the carbon dioxide emissions as cars powered by gasoline, the downside is that the increased demand for natural gas will eventually cause the price to go much higher.

However, hydrogen can also be produced from wind, solar, or nuclear power. The short-term cost will be higher than producing hydrogen from natural gas. On the other hand, these production methods will result in very stable prices for consumers.

With electricity generated from wind, solar, or nuclear power and transmitted over the electric grid, the hydrogen could be produced on-site with electrolyzers at fueling stations. Another option is to produce the hydrogen at wind, solar, or nuclear facilities that have a large number of electrolyzers and then distribute the hydrogen to fueling stations via pipelines and trucks.

The hydrogen could also be produced at solar or nuclear facilities through methods that utilize the heat from solar or nuclear power. These methods are much more efficient than first generating electricity from solar or nuclear power and then producing hydrogen via electrolysis. In this scenario, pipelines and trucks would also be used to distribute the hydrogen to fueling stations.

Summary
Hydrogen fuel cell vehicles that meet mainstream customer requirements will arrive at dealerships by 2015. However, people need to be thinking much bigger when it comes to building the hydrogen fueling infrastructure. Perhaps this will happen when oil returns to $100 or $150 per barrel in the next two or three years.

This is a guest post by Greg Blencoe, CEO of Hydrogen Discoveries, Inc., which is a start-up company with a large-scale hydrogen storage technology and a hydrogen pipeline technology that is based in Oak Ridge, Tennessee. He also publishes the Hydrogen Car Revolution blog.