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L.A. auto show: Detroit auto makers working the patriotic angle

Cadillac Urban Luxury Concept. The ULC has gull wing doors, a footprint of only 151 inches long and 68.1 inches wide and seats four.


I prowled the sprawling General Motors section of the Los Angeles auto show Wednesday, searching in vain for someone - anyone - willing to talk about GM's initial public offering (IPO).

No luck. GM had some pretty high-ranking executives on hand, including Chevrolet's global marketing vice-president, Chris Perry. Perry was recently poached from Hyundai America where he worked closely with GM's new overall marketing boss, Joel Ewanick.

Yes, you read that correctly: the two top marketers at GM were the two top marketers at the South Korean auto maker barely five months ago. That alone is a shocker, isn't it? Perry is the fourth marketing executive to run Chevrolet in the past 13 months. Perhaps the executive churn is now at an end for a while.

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Perry had a great story to tell about how he ended up at GM. Truth be told, he had no interest in moving from sunny Southern California to Detroit, even though Ewanick pushed him hard to join him, texting, e-mailing, calling... The key message from Ewanick: patriotism. Ewanick argued that it was Perry's patriotic duty to help bring GM back to health after emerging from bankruptcy 18 months ago.

The lure worked. It certainly wasn't the money, said Perry. He was well taken care of at Hyundai. However, when Perry's wife saw what sort of house they could afford in depressed Metro Detroit, compared to what they had in California, the final piece of the puzzle fell into place.

It's a good story and speaks to something clearly at play now in the auto business: patriotism. All three of the Detroit-based auto makers are working the patriotic angle to some degree in their communications. More is to come, too. The import brands should brace for it and have an answer.

Now while I was at GM, I did take in what may turn out to be the star of the L.A. Show, Cadillac's Urban Luxury Concept. Cadillac has only offered big and brash SUVs until now, but this concept points to something entirely new - a tiny but luxurious Cadillac with the smallest power train ever offered by the luxury brand (a turbocharged, 1.0-litre three-cylinder engine).

The ULC, created and designed in the Los Angeles area, is slightly wider and shorter than a Mini Cooper and seats four passengers. The concept's scissor-type doors extend outward and rotate forward when opened.

"Does it have to be large to be premium? Does it have to be large to be luxurious? Beautiful things like the Faberge egg or a diamond (come) in a small size," said Clay Dean, head of GM's advanced design studio and design for Cadillac. "It is a vision for us that tells where can we go in the future."

This little Caddy is something GM should seriously consider building. It looks brilliant.

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What Dean would not comment on is GM's IPO. But it does look as though Canadian taxpayers are poised to get back a big chunk if not all of their investment in the General.

Moreover, it looks like the Ontario and Canadian governments prudently declined to increase the number of shares they would sell in the IPO. Bloomberg reports that our Canadian governments stuck with the amount announced Nov. 3, U.S. filings and now stand to benefit significantly if GM shares rise from the initial $33 (U.S.) a share.

That means Canada will recover more of its investment in the bailout than if it sold extra shares in the IPO, as our government had been pushed to do by the U.S. Government. Canada and the province of Ontario control 11.7 per cent, the U.S. has a 61 per cent stake and a health fund controls 17.5 per cent.

People like me often engage in a lot of politician-bashing, but in this case let's give the pols their due. They appear to have managed a nice balance "between being part of the IPO, which we have always said we would be, and at the same time doing so in a way where we are going to chunk it out over time to try and maximize taxpayer protection," said Canadian Industry Minister Tony Clement said today.

You and I may yet get back all of the $7.1-billion (U.S.) the Canadian Government provided in the U.S.-led GM bailout in June 2009; Ontario provided $3.5-billion (U.S.). In exchange, our governments received 175 million shares, and before the IPO $1.1-billion has been repaid.

For the record, the governments need an average price across all of their shares of about $54.25 to break even, while the common shares carry a book value for the government of Canada of about $15 a share right now. Canada also has preferred shares in GM.

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The combined Canadian stake in GM will fall to 9.3 per cent through the IPO if underwriters exercise an option to buy additional shares. Canada will need to sell its remaining stake for an average of $60.08 a share, Bloomberg data show.

Notes from the L.A. Auto Show

Chrysler/Fiat showed the production version of the North American Fiat 500 to be sold in Canada and the U.S. later this year. In Canada, the 500 will start at $15,995, while in the U.S. the starter price is $15,500.

"This vehicle will appeal to a wide variety of customers," said Sergio Marchionne, CEO of Fiat and Chrysler, speaking to reporters after the 500 was introduced at a press conference here.

This modern version of the 500 was introduced to Europe in 2007, and the 500 we'll get will be tailored to North American tastes. The suspension will be tuned for our roads, and it will get a more robust heating and air conditioning system to cope with our "harsher" climate.

Finally, a few quick words about Volvo. Stefan Jacoby, the new Volvo CEO who was recruited from Volkswagen, wasted a golden opportunity to lay out Volvo's vision for the future under its new Chinese ownership. He delivered the keynote speech to open the show early in the morning, standing in front of a captive audience of about 1,000 journalists.

But instead of delivering something newsworthy, his speech was mostly a history of Volvo, how Volvo engineers developed the three-point safety belt, the three-way catalytic converter and how Volvo's founders started with the fundamental idea that "cars are driven by people."

Why on earth would Volvo squander this chance to get out a serious message of change and growth and innovation - whatever those things might mean at the new Volvo - delivered by its chief executive? Bad call, Volvo.

Given that Volvo's sales in North America are a disaster, it surely would have been smarter to use the keynote opportunity to garner some positive, or at least interested, media coverage. Volvo has a long way to go with whatever comeback it might fashion.

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About the Author
Senior writer, Globe Drive

In 25 years of covering the auto industry, Jeremy Cato has won more than two-dozen awards, including three times being named automotive journalist of the year. Jeremy was born in Montreal and grew up in the San Francisco Bay Area. More

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