Week of May 1, 2000

May 1, 2000




ROVER BID COLLAPSES The sale by BMW of Rover to venture-capital company Alchemy Partners has collapsed at the eleventh hour. BMW had been working with a preferred deadline of Friday April 28 to complete the sale. Earlier in the week the company had dismissed a counter-proposal for Rover from an organization called the Phoenix Group, lead by former Rover CEO John Towers, because it could not be finalized ahead of this cut-off point. The whole plan was wrecked, however, when Alchemy Partners announced, on the morning of the final day, that it was withdrawing from the deal, quoting disagreement on "contractual matters."


RENAULT SELLS ITS TRUCKS TO VOLVO, BUYS SAMSUNG AB Volvo, the second-biggest truck and bus maker in the world, will immediately acquire Renault's truck division, Renault Vehicles Industriels (RVI). RVI also manufactures trucks and buses, and includes U.S.-based Mack Trucks. Combined, the Renault-Volvo truckmaker could boast sales (based on 1999 figures) of $846 million. According to the New York Times, Renault opted to pay an extra $470 million to up its stake in Volvo to 20 percent to get approval from the French government, which owns 44 percent of Volvo. With its 20 percent stake in AB Volvo, Renault will be able to take two seats on Volvo's board. Renault also this week completed its pending purchase of Samsung Motors. Samsung's creditors have agreed to accept a $560 million deal that would give Renault a 70.1 percent stake in Samsung. These moves mark another step in Renault's refocusing, along with Renault's purchase of Romanian carmaker Dacia and investment in Japan's Nissan.


SATURN BOOSTER GM introduced a $1.5-billion expansion plan for Saturn that will include a manufacturing complex expansion and a new engine facility. According to Automotive News, $500 million will go to an engine facility in Spring Hill, Tennessee, to produce a new four-cylinder engine, code-named L850, that will power an upcoming SUV as well as the S-Series. Along with the engine-facility announcement, Saturn made an announcement that it will use a Honda V-6 engine in an upcoming model. The remaining approximately $1 billion will go to an expansion of the existing Spring Hill manufacturing complex.


FRANCIS: NOT A CAR GAL ANYMORE Oldsmobile's general manager, Karen Francis, announced her resignation, effective April 30. Francis has taken a position as chief marketing officer and managing director of business-to-business e-commerce company Internet Capital Group. Francis joined GM in 1996 after working at Proctor & Gamble and Empire pens.


GM BUILDING EXCITEMENT IN PONTIAC GM has announced a new $193 million brand-rejuvenation investment in Pontiac's home turf. The plan, which concentrates in a new Pontiac North engine-design complex, is part of a broader $2 billion plan to relocate scattered workers to distinct "business campuses."


GM RECALLS SUVS General Motors has issued a safety-related recall of 1999 full-size sport-utility vehicles. In a February 1999 test conducted by the National Highway Traffic Safety Administration (NHTSA), a Chevrolet Tahoe registered a higher possibility of neck injury than that allowed by the government. In the test, the crash dummy's chin hit the dashboard because the bag deflated too quickly. Although GM has insisted that the test was an anomaly, and even filed a petition last summer to disregard the results, GM has since used a redesigned airbag that will deflate more slowly. GM's fix for the recalled vehicles involves the installation of a foam strip on the dashboard. Approximately 279,000 Chevrolet Tahoes, GMC Yukons, and Cadillac Escalades built between September 1998 and May 1999 are affected by the recall.


MITSUBISHI TRIMS DOWN Mitsubishi has announced a new cost-cutting plan that will consolidate production facilities and purchasing. The automaker plans to make purchases with stakeholder DaimlerChrysler and jointly develop a new small car with DC. The cuts will affect a thousand Japan-based administrative jobs. It is expected that Mitsubishi's assembly facilities in Adelaide, Australia, may also be on the list of cuts.


BLIMEY! MORE BRITISH JOBS LOST? The Detroit News confirmed analysts' belief in recent rumors that it is likely that Ford Motor Company will completely end vehicle production at its Dagenham, England plant, which is inefficient when compared to Ford's other European assemblies. The Dagenham plant, which currently makes Fiestas, vans, and engines, employs 6500 workers. Although it is likely that vehicle production will cease, some 1800 jobs in engine production should be unaffected. The automaker may expand diesel engine output at the factory to soften the blow, but even then it adds up to 3000 jobs cut.


FORD FINED BY EPA The Environmental Protection Agency has revealed that Ford will pay a $1.1 million fine for alleged Clean Air Act violations. The fines apply to Ford's Wayne Assembly, Michigan Truck Assembly, and Dearborn Assembly plants, for failure to comply with emissions regulations. Ford has recently corrected the situation with additional pollution control equipment, including a $12-million environmental compliance project at the Dearborn plant.


36-VOLT STANDARD? An industry consortium suggested this week that the industry make a move from 12-volt auto electrical systems to higher-capacity 36-volt (or 42-volt) ones. The SAE's Storage Battery Standards Committee suggests that using a 36-volt battery would enable automakers to design accessories such as power steering, power brakes, and air conditioning to run directly from battery power, rather than using belts and pulleys. This should in turn greatly reduce emissions and fuel consumption, experts say. With in-car multimedia and communications systems and other power-hungry accessories coming to the market in the next few years, the upgrade is warranted.

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