Week of April 24, 2000

April 24, 2000





VISTEON FREE AT LAST Ford Motor Company officially announced the long-anticipated independence plan for Visteon Corporation, as part of a broader plan for more consumer-focused business. Ford shareholders will receive 100 percent of Visteon shares under a distribution-ratio plan that will likely be based on Ford shares owned and Ford shares outstanding. Visteon, a leading producer of electronic automotive components, now has a yearly revenue of $19 billion. The Ford Board of Directors also approved a so-called Value Enhancement Plan, which will offer all shareholders new shares, and an option of $20 cash per share or additional shares of
equivalent value. Also of note, as part of a plan for greater consumer
focus, Ford announced that its joint aluminum-casting partnership will be expanded to include Canada's Windsor and Essex plants.


FORD'S SWEET SIXTEEN Ford Motor Company has again announced record earnings for the first quarter, of $2.1 billion or $1.70 per diluted share. This is Ford's sixteenth consecutive quarter with improved year-over-year operating results. Excluding now-independent Visteon, revenues were up 14 percent, to $43 billion, over those posted for the first quarter of 1999. Ford also posted record unit sales and a 21 percent
gain in automotive-operations earnings over those the same period a year
ago, to $1.6 billion.


DAIMLERCHRYSLER MIXED BAG DaimlerChrysler posted a 17 percent increase in revenues in the first-quarter, to $39.2 billion (based on the current Euro-Dollar exchange rate). Earnings per share were up in the first quarter, to $1.62, versus $1.57 in the first quarter last year. Operating profit was down 3 percent from the first quarter of 1999, to $2.4 billion. The Chrysler Group posted a 7 percent drop in operating profit (citing intense North American competition), while profits were up 11 percent at Mercedes-Benz. Later in the week, DaimlerChrysler shareholders voted yes to approve both a $2.3 billion dividend payout to shareholders and a plan for the company to acquire about ten percent of its outstanding capital stock. Some 12,500 shareholders attended the annual meeting in Berlin, where the vote was cast.


IN-CAR PRODUCTIVITY PARTNERS Delphi Automotive Systems Corporation and Palm Incorporated have announced an agreement that will lead to in-vehicle voice-recognition capability for Palm products. The first product of this partnership is the Communiport Mobile Productivity Center (MPC), a voice-recognition device that permits voice-based commands and data transfer. The MPC should mark the beginning of a full line of accessories based on multimedia technology. And although Delphi is first with such a system, the partnership agreement is nonexclusive, which means that more such products are on the way. Industry officials estimate that by 2005, half of all vehicles will have onboard communications and entertainment systems.


TOPLESS LEXUS Lexus has announced that it will begin building its first convertible next January for sale in March. The SC430, set to replace the slow-selling SC400 coupe, will have a retractable hardtop and the new 4.3-liter V-8 from the upcoming LS430. Toyota expects to sell about 10,000 SC430 convertibles per year.

NISSAN'S BIG TRUCK Nissan has confirmed that it is developing a full-size truck as a worldwide product. The truck as offered in the U.S. will have a V-8, but all other details are unannounced at this time. With the number of variations and derivatives of its product line that Nissan says are in the works, we can safely assume that pick-up and SUV variations are in the works.


HONDA INCREASES INSIGHT AVAILABILITY Honda has announced that it will increase the availability of its hybrid electric-gasoline Insight by more than 50 percent. The company cites higher-than-expected demand, which has created waiting lists, and favorable publicity as factors. Insight, which boasts the world's best gasoline fuel-economy ratings (EPA city/highway mpg: 61/70), will far exceed its initial calendar year 2000 sales target of 4000 units.


PREORDER PRIUS ONLINE Toyota has released U.S. pricing for its hybrid gasoline-electric vehicle, the Prius, and revealed a plan to sell most of these hybrids, at least at first, on the Internet. In Japan, where Prius has been sold since December 1997, more than 35,000 units have been sold. The five-passenger Prius will start at $19,995 when it goes on sale in the States this summer. Starting in June, a Prius pre-order program will be established on Toyota's Web site (www.toyota.com), and initial deliveries will be made in August. Internet pre-orders will include a complimentary three-year maintenance plan.


PORSCHE RECALLS 911C4 Porsche has issued a voluntary recall of 2911 North American vehicles to correct faulty fuel-gauge software. The recall, which involves 1999 and 2000 Porsche 911 Carerra 4 models, was issued to update instrument-cluster software that had the possibility of indicating a higher fuel level, and higher range remaining, than actual.


ANOTHER BID FOR ROVER Automotive News reported that a counterbid for Rover Cars has been made by former Rover Group CEO John Towers. BMW had previously announced plans to sell its Rover Cars division to Alchemy Partners, a London-based venture capital firm, but has said that it will respond to Towers' offer this week. Since BMW's announcement last month of its plan to sell Land Rover to Ford for $2.9 million, the future of Rover Cars has been uncertain. Alchemy Partners allegedly wants to turn Rover into a low-volume niche automaker. It is rumored that Towers' offer stands only if BMW will relinquish rights to products developed under its control, such as the New Mini.



BMW AND MERCEDES-BENZ COMPACTS Both BMW and Mercedes-Benz are planning to introduce compact models to the U.S. by 2005, says a Detroit News report. The planned BMW compact, rumored to be fully underway in development since Rover has been put up for sale, will likely be direct competition for the VW Golf. Mercedes-Benz is reportedly preparing a slightly larger version of the A-class for this same segment.

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