Week of May 8, 2000

May 8, 2000





THE BIG TWO WANT DAEWOO General Motors executives early in the week announced GM's intentions to take over South Korea's Daewoo Motor. That makes GM, who sold its 50-percent stake in Daewoo in 1992, the latest to join a bandwagon of bidders that includes Ford, DaimlerChrysler, Fiat, and Hyundai. Later in the week, Ford Motor Company was reportedly pursuing a partnership with South Korea's Hyundai Motor for a takeover of Daewoo Motor. The partnership would likely bump up the price for the other leading bidder, General Motors. A Ford-Hyundai alliance would likely be better accepted by Daewoo workers. Daewoo is set to be auctioned off to the highest bidder by September, but the company's workers want Daewoo to be nationalized, fearing a sale to a foreign firm would move manufacturing elsewhere.

For more on Ford and Hyundai’s eyes on Daewoo, click here


PHOENIX BID RISES BMW has announced that it is now reconsidering a deal for Rover with John Towers' Phoenix group, after talks with venture-capital group Alchemy Partners collapsed. BMW had previously turned down an offer from Towers due to inadequate finances. Since then, the British government has made an aid package available that may apply in part to the Phoenix consortium's offer, and according to Britain's The Sunday Times, the group has been backed by mortgage bank Abbey National. BMW has said that if it cannot find a buyer for Rover, then a closure is unavoidable.


GOVERNMENT TO ADD AIRBAG TEST In the next week, the National Highway Traffic Safety Administration (NHTSA) will likely announce a new, low-speed airbag test. The test is in response to recent concerns over child fatalities in low-speed collisions. Some consumer groups want to reinstate a 30-mph airbag test, like the one that the NHTSA lifted from the requirements in 1997, that would better measure the ability of an airbag to protect unrestrained occupants. Since the 1980s, government statistics have shown that airbags have saved about 5000 lives, whereas there have been 158 reported airbag fatalities.

For more on the airbag regs, click here


INITIAL QUALITY FOR 2000 J.D. Power and Associates released its annual initial quality survey last week. The 2000 Initial Quality Study, which surveys consumers about problems encountered in their first 90 days of ownership and chooses the most trouble-free models in fourteen categories, places Toyota on top, with thirteen models chosen. Other top ranking marques were Honda and General Motors, both with six models chosen, and DaimlerChrysler, Ford, and Nissan, each with four models chosen. The survey found five percent fewer problems overall than last year.

For more on the Power figures, click here


INFLATABLE SEAT BELTS POP UP BF Goodrich has introduced a new inflatable seat belt that may start showing up in cars in about two years. The inflatable belt, which works in conjunction with the airbag system, deploys just before the airbag in order to hold the occupant firmly in position. Normally, the belt looks similar to a traditional fabric seat belt, but when inflated the belt expands to a width of about six inches, helping to reduce the risk of injuries by distributing the force over a greater area of the occupant's chest.


MAXX TO BE PRODUCED According to Ward's Automotive Reports, Canadian suppliers have revealed that DaimlerChrysler's MAXXcab concept, seen at this year's Detroit auto show, will be put into production at an existing assembly plant in Windsor, Ontario. The Pillette Road Truck Assembly Plant, which currently assembles Dodge Ram vans, has the capacity to produce 50,000 more vehicles annually than its current output of 75,000. The plant is set for an update with construction beginning on an adjacent paint shop. The MAXXcab concept incorporated a sport-utility/pickup hybrid with a van's front end.


BETTER GPS NOW President Clinton has signed an order — effective immediately — to release a more accurate data set for Global Positioning System (GPS) devices. Until now, the U.S. has only made the new system available to the military. The system, which has a resolution ten times better than the existing system, has been kept away from civilian control for fear of the system's use for missile targeting. The new array of data is fully compatible with existing equipment, so devices that use GPS data, such as in-car navigation systems, will show improved accuracy.


FORD BONUSES TO BE PAID BY CUSTOMER POLL Ford plans to use the results of a customer satisfaction poll to determine executives bonuses for this year, including CEO Jac Nasser. The poll, developed internally by Ford, will ask owners about sales, service, and satisfaction either at three months or three years of ownership. Results of the poll will affect bonuses by a factor of plus or minus 50 percent. Last year, Jac Nasser earned a bonus of $6.7 million on his salary of $1.5 million.


RENAULT JOINS FUEL-CELL EFFORT Renault has joined an existing BMW-Delphi fuel-cell venture. The joint venture will not introduce conflicts of interest, says Ward's Auto World, because Renault plans to use the fuel-cell arrangements in trucks, while BMW plans to use them in passenger cars, as auxiliary power units. Development of the solid-oxide fuel cells, which convert fuel energy directly to electricity, is well underway. BMW is reportedly currently testing a developmental fuel-cell arrangement. Delphi and BMW announced the project in April, 1999.


APRIL SALES STRONG Most automakers posted continued strong sales for April, reflecting good economic conditions and incentive programs. Both GM and Ford reported higher sales for the month, with GM up two percent and Ford up 12 percent. Toyota, Honda, Mitsubishi, Volkswagen, and Audi all set record sales gains for the month. Seasonally Adjusted Annualized Selling Rates (SAAR), which take into account the yearly cycle of the auto industry, released in April confirm broad industry sales gains and point to annual sales of 18.0 million, as compared to 15.0 million in April 1999 and 17.9 million in March, 2000. Of the 1,501,497 vehicles sold in April, 51.6 percent were cars and 48.4 percent were light trucks.

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