Week of July 10, 2000

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THE DEBATE OVER RECYCLED AIRBAGS
EUROPEAN AUTOMAKERS SEEK COVISINT ALTERNATIVE
GAS PRICES TO FALL
EXIDE SELLS STARTER/ALTERNATOR BUSINESS
LOPEZ FACES EXTRADITION
SATELLITE UP FOR RADIO SERVICE
GAS PRICES HAD LITTLE EFFECT ON SUV SALES
DANA JOINS COVISINT
ROVER HIRES DESIGN DIRECTOR

THE DEBATE OVER RECYCLED AIRBAGS The Automotive Occupant Restraints Council (AORC) is disputing claims supported by the Automotive Recyclers Association (ARA) that undeployed airbags can safely be reinstalled in cars. The AORC says that recycled airbags subjected to stress, heat, or water may have impaired performance. The ARA, a group that represents salvage yard owners, contends that airbags can be safely reinstalled.

EUROPEAN AUTOMAKERS SEEK COVISINT ALTERNATIVE AutomotiveNews Europe reports that European automakers, including BMW, Fiat, PSA/Peugeot-Citroen, and Volkswagen are actively pursuing an alternative to the U.S.-based Covisint online parts procurement network. The companies, of which BMW is the most vocal, want an exchange that is not centered on North American companies. Covisint advocates insist that the exchange is meant to be a global effort.

GAS PRICES TO FALL The American Automobile Association reports that gasoline prices in the Midwest are rapidly falling, much to the relief of summer travelers. In the past two weeks, regional wholesale prices have fallen by about 45 cents, so the prices at the pump should continue to fall in coming weeks. Energy analysts predict that gasoline prices will continue to fall through September, due to a decrease in seasonal demand and a new OPEC-delegated boost in oil production. Saudi Arabia reportedly plans to increase oil production in the next few weeks, which should bring down the persistently high price of crude oil.

EXIDE SELLS STARTER/ALTERNATOR BUSINESS Exide Corporation is selling its starter and alternator business to a Chicago-based private investment group. The sale of the so-called Sure Start division to Laurian Capital Corporation brings Exide $8 million.

LOPEZ FACES EXTRADITION Spanish prosecutors have approved of the extradition of former General Motors and Volkswagen executive Ignacio Lopez to the United States. The U.S. is seeking the extradition for a federal case that accuses Lopez of stealing confidential documents from his job at General Motors and using them for his new position at Volkswagen in 1993. Volkswagen fired Lopez in 1996.

SATELLITE UP FOR RADIO SERVICE Sirius Satellite Radio has successfully launched a first satellite that will provide a nationwide signal. The Sirius service, which will be available in vehicles starting next year, will have 50 channels of programming.

GAS PRICES HAD LITTLE EFFECT ON SUV SALES High gasoline prices in the Midwest and Plains states in June had little effect, if any, on sport-utility sales, says a Bloomberg report. Although U.S. automakers posted lower-than-expected sales figures, sales of many large SUVs remained higher than those in June 1999. Lincoln Navigator and Chevrolet Tahoe sales rose 19 percent and 12 percent over last June, while most other large SUVs posted at least modest gains. Experts advised that prices hadn't remained above the $2 mark long enough to change buying habits. The American Automobile Association revealed that pump prices are already falling rapidly, and they should continue to fall in coming weeks.

DANA JOINS COVISINT Dana Corporation announced that it intends to join Covisint, the Internet-based supplier-manufacturer trade exchange. Dana hopes to cut purchasing-related costs by $1 billion through Covisint participation, a significant amount next to the companies total annual purchases of about $8 billion. The Covisint exchange, not yet in operation, will set up as an independent company.

ROVER HIRES DESIGN DIRECTOR The Rover Group, now under management by John Towers and the Phoenix consortium, has hired a new product design director. Peter Stevens, who has designed the McLaren Formula 1, Jaguar XJR15, and Lotus M100 Elan, will assume the role of Rover's head designer. Experts predict that new models will be the key to the company's survival, so Stevens' appointment is very important. Rover's new management, aiming to return the automaker to profitability and increase sales, have already cut retail prices by about ten percent for all models.