Like many of the best dealers, Bob Thibodeau has invested heavily in his showrooms, in recent years, particularly in the service department, which was once among his biggest revenue generators. But things haven’t worked out quite as planned, says the Detroit-area Ford retailer.

“Quality is, today, the price of admission,” Dr. David Cole, director of the Center for Automotive Research, in Ann Arbor, Michigan, tells TheCarConnection.com. The problem is that, “As quality has gone up, my service business has gone down,” laments dealer Thibodeau, and it’s not something peculiar to his showroom, or the Ford brand.

It wasn’t all that many years ago, when a customer could be expected to come up with a “punch list” of problems with a new car, defects small and large a dealer would have to fix. And other issues would crop up, often during the first few months of ownership. These days, according to data from J.D. Power & Associates and other organizations tracking quality, the typical new car is virtually trouble-free, at least during the first 90 days of ownership.

During that period, Power’s Initial Quality Survey, or IQS, shows top brands experiencing less than one “problem” for every vehicle. Even the lowest-ranked brands, such as Land Rover, now suffer fewer problems than a top nameplate, like Toyota, experienced a decade ago.

So, with fewer problems, new vehicles are spending less time in the shop, especially during the period a vehicle is covered by warranty. Normally, that is an especially lucrative source of business for dealers who make surprisingly little actually selling new cars.

Thibodeau Ford is one of many looking for ways to recoup the investment in service bays made over the last decade. It’s not always easy. Industry surveys show that consumers tend to steer clear of dealer showrooms once their vehicle is out of warranty.

“The BMW dealer I went to came up with a list of jobs that would’ve cost me a couple thousand dollars,” says Ginny Kingston, a Detroit-area advertising executive. Instead, she found half the work wasn’t needed, and ultimately paid a quarter of what the dealer wanted to get her car fixed up.

Not all dealers treat customers like that. But the bad apples have hurt the good ones, making it difficult for a shop like Thibodeau’s to bring in customers for services like oil changes. And with their big stores and heavy overhead, it can be difficult to compete on price with the fast-service shops one finds all over every town in America.

Keeping dealers profitable is critical for manufacturers, however. If a retailer’s Ford showroom and shop aren’t making money, he may shift to another franchise that appears more lucrative. So carmakers are taking steps to help dealers recover business lost to better quality.

“We are working on giving them the tools to improve their retail parts and service business,” Mark Fields, Ford’s President of the Americas, tells the Detroit News. At its annual dealer meeting, in Las Vegas, this week, Ford unveiled a new line of accessories, called Customs – everything from bedliners to custom wheels – which will be available only at its dealerships.

Other makers, ranging from Toyota’s Scion to BMW’s Mini, have crafted business models that shift towards dealer-installed and aftermarket accessories.

In many cases, large dealers have, where possible, consolidated service departments, so they can handle multiple brands, even if they are sold through separate showrooms.

Few dealers want to see quality slip again. Today’s well-informed consumer would simply go somewhere else. But there’s little question that the surge in quality has had some serious, unintended implications for the nation’s automotive retailers.

Independent truckers around the U.S. were planning to park their rigs today to protest the rising cost of diesel fuel, which has soared way past the price of gasoline. Such protests are notoriously ineffective, however, since the independents only make money if they are in motion.

Nevertheless, just the whisper of this kind of "strike" is enough to attract the attention of bloggers, TV reporters and other media types to illuminate the issue of soaring diesel costs. In addition, upset truckers also staged a protest around Harrisburg, Pennsylvania on Monday and other demonstrations are being planned in other parts of the country for later in the month. Judging from Internet postings, there is also considerable unrest in California where diesel prices have shot past $4 per gallon.

Meanwhile, the U.S. Energy Information Administration, in a report last week that got relatively little attention, said diesel went up 1.5 percent again in late March, while the price of gasoline dropped 2.5 percent. The EIA also predicted that diesel fuel will remain substantially more expensive than gasoline at least through the summer and blamed the high cost of diesel fuel on strong demand in Europe – where diesel-powered automobiles now outsell those using gasoline.

The EIA explained: (Diesel and distillate) inventories in the U.S. and Europe remain tight while U.S. gasoline stocks are well above the average range for this time of year. Distillate stock draws in the U.S. have been partially driven by East Coast heating oil demand. However, overall tightness in U.S. distillate markets is due more to slumping imports than to domestic demand strength.

While U.S. trucking has felt the effects of our economic slowdown, strong European demand has had ripple effects across the Atlantic with European supply constrained by refinery maintenance, unplanned outages, tighter emissions standards that restrict import sources, and economic disincentives stemming from low gasoline margins. European refiners appear to have trimmed crude runs because of low gasoline margins and diminished export markets.

The transition of the European light-duty vehicle fleet to high diesel dependency has reduced the value of gasoline produced by European refineries in their home market. And now, weakness in U.S. gasoline markets has deprived European refiners of an economic outlet to dispose of surplus gasoline output. This contributes to tightness in distillate markets on both sides of the Atlantic," the EIA concluded.

"At winter's end, we normally expect gasoline and diesel fuel prices to be converging, with gasoline prices then rising above diesel for the remainder of the summer. However, diesel fuel prices have continued to rise at a quicker pace than gasoline through the late winter/early spring period, and the diesel fuel premium over gasoline is now in the 70 cent per gallon range," the EIA report added.

So far European carmakers such as Volkswagen have opted to ignore the price gap as they pursue plans for bringing more diesel-powered cars to the U.S. However, if the gap persists, like the EIA predicts, this certainly has the potential to give American consumers another excuse not to purchase next-generation diesel vehicles. By Joseph Szczesny

Quality is no longer a differentiator, “it’s the price of admission,” suggests Dr. David Cole, director of the Center for Automotive Research. And, if you don’t deliver, you could face serious problems. Just ask Chrysler, which took a solid body blow from the folks at Consumer Reports magazine, earlier this year, the highly-influential publication burying the troubled automaker in the bottom ranks in its annual automotive survey.

A poor showing in CR, as well as in other recent quality studies certainly isn’t helping the automaker reverse the steady decline in its sales and market share. But Chrysler is hoping it can improve its tarnished image by dealing directly with skeptical consumers.

The automaker is setting up a new Online Customer Advisory Board that it describes as an industry first in a effort to bring consumers into the product development process. Deborah Meyer, the company's vice president and chief marketing officer, says the objective of the board is to create a dialogue with customers and gain their insights on product features and technologies. The forum is closed and Chrysler is now recruiting members for the board, she said.

"Chrysler designers and engineers have always had a pulse on the market to deliver segment-leading products, but the launch of the Customer Advisory Board gives us a new way to connect with our customers to be even more responsive and innovative," Meyer said, adding that, "We have a new platform to engage our customers in two-way dialogue so we can harness their insights and vehicle dreams as we move quickly to develop and refine technologies and products.”

Dubbed Passenger, the high-tech “platform will help Chrysler spark innovation and satisfy a shared desire for meaningful change through ongoing collaboration with its customers," predicted Justin Cooper, co-founder and chief of innovation and marketing at Passenger, the Los Angeles firm that helping Chrylser launch and manage the site. "Involving customers in the process promotes active participation and those customers who feel more informed have the ability to share more favorable opinions about Chrysler with their peers, the truest form of advocacy," he said.

Joe DiMeglio, vice president of Organic, Chrysler's online ad agency, said, "Brands that listen thoughtfully to their customers and put them in the middle of their organizations will win in this era where the customer's voice is both strong and visible. We are incredibly excited about this ground-breaking initiative and helping Chrysler gain an even deeper understanding of their customers-the foundation of all exceptional brand experiences."

To participate in the Customer Advisory Board, consumers are invited to submit an application at www.ChryslerListens.com. Participants must be 18 years or older, a United States resident and hold a valid driver's license.

Beginning in late-March, Chrysler will begin the initial phase of the Customer Advisory Board, which is a three to four week period when Chrysler will introduce the members to the process and the company.

Once introduced, Chrysler will begin the ongoing dialogue with the Customer Advisory Board members by engaging the community with live, facilitated sessions where they may view media, respond to polls and engage with other members. There will also be discussion sections that allow members to discuss a variety of topics such as quality, safety or technology on their own time during a four-week period. Examples of topics may include environmental, safety, quality or technology. —Joe Szczesny and Paul A. Eisenstein

In his keynote comments at the New York Auto Show, Chrysler CEO Bob Nardelli took pains to present a positive picture. The automaker, he insisted, is on track to reverse its massive losses, with new product setting the stage for a market turnaround, even in the current, slumping U.S. auto market.

But despite the former Home Depot exec’s rosy picture, things are looking anything but good for Chrysler. Here’s the first of three reports that examine the problems Chrysler faces, and the steps it’s taking to get things under control.

Nearly two decades ago, Chrysler pulled out of another serious slump by lining up a “management dream team,” considered by many observers among the best the auto industry has ever seen. The line-up included President Bob Lutz, top engineer Francois Castaing and design wizard Tom Gale. Under Nardelli, Chrysler has attempted to assemble another powerhouse in the executive suite, starting with Vice Chairman Jim Press (shown above), formerly Toyota’s top American executive; and Deborah Meyer, a highly-regarded marketing manager imported from Lexus.

But things haven’t been going smoothly – at least not if you listen to folks inside Chrysler headquarters. It’s been hard to hide the open hostility between Nardelli and Press, numerous well-placed sources contend. And that’s not the only problem at the executive level.

Chrysler and its parent, Cerberus Management LLC, were rocked again this week, first by the departure of an another key executive and then by a broadside from the head of the Canadian Auto Workers union.

Chrysler's management, which has been fighting to contain the perception of turmoil inside the company, confirmed the departure of Mike Donoughe, a key engineering vice president. Only two months ago, Donoughe was handed the assignment of reviving Chrysler's mid-sized car lines and turning them into true global platforms, which the company could then sell around the world. At least one report suggested that Donoughe left after a clash with one of CEO Nardelli's chief lieutenants.

After the report appeared in the on-line edition of The Wall Street Journal, however, Chrysler fired off a press release, saying it wasn't so. "Chrysler denies that the departure had anything to do with a clash with management," the statement said. Nevertheless, the departure of Donoughe, who, over the years, had worked on several critical projects such as the minivan and Dodge Ram, and was one of the young engineers picked to work at a senior level in Germany during the abortive merger with Daimler, was a clear loss for the company.

Following Donoughe's departure, Chrysler announced the promotion of three other executives:

• Mark M. Chernoby was appointed Vice President and Chief Engineer for Chrysler's Future Midsize Product Team. "In this capacity, Mark will lead the development of future product in the critical midsize vehicle segment, targeting product with appeal in the global marketplace," the company said.

• James B. Issner succeeds Chernoby as Vice President - Core Components, Chrysler said. Issner also will oversee another of Nardelli's pet projects, expanding the company's engineering organization in China, India, Eastern Europe and Mexico.

• Louis Rhodes was appointed Vice President - Advance Vehicle Engineering and President of ENVI, the in-house subsidiary created to sharpen its focus on the environment and to integrate emerging technologies into Chrysler's future vehicles, Chrysler said in a statement.

If all the in-fighting wasn’t bad enough, Buzz Hargrove, the president of the Canadian Auto Workers, also took a dig at the management of Cerberus and Chrysler, saying he now believes Cerberus founder Stephen Feinberg misled him last summer. Hargrove, who supported the Cerberus takeover, early in 2007, said, in an interview with Bloomberg, that Cerberus was now trying to cut its way to profitability.

"That's great for Cerberus but it's not great for workers, because a lot of people are going to lose their jobs and a lot of people have lost their jobs," said Hargrove, who has to negotiate a new labor contract with Cerberus this summer. Chrysler vice chairman Jim Press, however, had said last week Chrysler is moving to right-size in the face of a very competitive market. —Joe Szczesny and Paul A. Eisenstein

Porsche’s popular roadster, the Boxster, is breaking the 300-horsepower barrier, for the first time, with a limited-edition two-seater celebrating the German marque’s legendary RS60 race car making its debut at this year's New York Auto Show.

A total of only 1960 of the new 2009 Porsche Boxster RS60 roadsters will be built, about 800 earmarked for the U.S., company officials told TheCarConnection.com. While the name commemorates Porsche’s racer, the production number matches the year the original RS60 left its mark, for the first time, on the motor sports world.

The 2009 Porsche Boxster RS60 will weigh in with 303-hp, to be more precise, eight more than the current Boxster S model. Torque remains the same, as 251 pound-feet.

Starting out with the “base” Boxster S, Porsche has added or revised a number of features to enhance the appearance and performance on the 2009 Boxster RS60. For one thing, the roadster rides on 19-inch wheels and tires, rather than the S-edition’s 18s. And the wheels have been spaced out an extra 5 millimeters each.

The sport design fascia is distinguished by its pronounced lower spoiler lip. The windshield gets a black surround, reminiscent of the original RS60 racer.

Inside, there are three individual gauge pods. Three interior colors are available, though Carrera Red is standard. There’s only one exterior shade, GT Silver Metallic.

A sport exhaust completes the package.

On the technical side, Porsche’s Active Sport Management suspension system is standard, as well, where it is optional on the Boxster S.

Look for a price tag of $64,900, compared with $55,700 for the Boxster S. Porsche officials estimate the 2009 Boxster RS60 comes with an added $10,000 in equipment, however.