Week of May 22, 2000

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RESTRUCTURING FORD OF EUROPE
SATURNS GET SIDE AIRBAGS
AOL SELLS CARS
RENAULT AND NISSAN COMBINE EURO SALES
GM SEEKING AUTOVAZ DEAL
SUDDEN ACCELERATION HITS THE WALL
MILBERG SUPPORTED
SEMA OPPOSES CAFE THAW
EPA PROPOSES TOUGH RULES FOR BIG-RIG EMISSIONS
MERCEDES-BENZ MAY MAKE VANS STATESIDE
EXCURSION PRODUCTION TRIMMED

RESTRUCTURING FORD OF EUROPE On Friday, Ford announced several drastic restructuring moves that will hopefully bring its European operations back to profitability. Ford's operations in England will suffer from plans to completely close the Dagenham assembly plant by early 2002. The company does, however, plan to invest $500 million to convert the existing Dagenham engine plant to a diesel engine center that will employ only a fraction of the previous workforce. Other parts of the rejuvenation plan include a possible joint venture with transmission supplier Getrag to design and manufacture manual transmissions onsite at several Ford assembly plants, a $15 million investment in central London's Ford Design Centre, and a potential new casting operation in Cologne, Germany.

SATURNS GET SIDE AIRBAGS General Motors will feature side airbags in all Saturn models by late this year. The side bags will be of the curtain type, which unrolls from the roof and inflates in milliseconds. Most side airbags currently on the market are of the type built into the side of the seat, but GM engineers say that the curtain airbags give better protection from head injuries. General Motors also said that it will use dual-stage airbags on some 2001 models. The dual-power bags have a weaker stage to reduce low-speed airbag injuries.

AOL SELLS CARS AutoNation has announced that it is entering a partnership with America Online that will give AOL subscribers special services with AutoNation. Under the new AOL Autos Direct branded site, AOL customers would receive a $200 discount on ordered vehicles and a year of free scheduled maintenance. AutoNation is the country's largest automotive retailer and expects about $1.5 billion in Internet sales this year.

RENAULT AND NISSAN COMBINE EURO SALES Renault and Nissan will combine their sales and marketing efforts in Europe by 2005. The plan will involve rebranding and redesigning some models and establishing sales hubs that each manage several dealerships. Nissan will likely benefit most from the deal, because it will greatly expand its dealership network and have the better-recognized Renault name on some of its products. Overall, the plan will eliminate 504 jobs and save about $915 million.

GM SEEKING AUTOVAZ DEAL General Motors announced that it is waiting to tie a deal with Russian automaker AutoVAZ. The deal would potentially establish a market for some GM models, such as the Opel Astra, and it may also give both companies the opportunity to jointly develop a new off-road vehicle.

SUDDEN ACCELERATION HITS THE WALL The National Highway Traffic Safety Administration (NHTSA) has chosen to reject a request for the opening of a new investigation into sudden acceleration, due to lack of evidence. The latest accusation regarding sudden acceleration, a phenomenon in which a car accelerates without warning, involves some Ford vehicles and any vehicles in general with cruise control systems that are always active when the ignition is on. The last time the NHTSA conducted an investigation into sudden acceleration was in 1989, concerning Audi vehicles. This time, as before, NHTSA cited likely driver confusion between the accelerator and brake.

MILBERG SUPPORTED Although BMW CEO Joachim Milberg faced a stern audience at the company's annual shareholders' meeting, Milberg revealed that the company will post record sales and profits for this year due to Rover's departure. BMW's largest shareholder, the Quandt family, stood out to support Milberg. The Quandt family owns a 48-percent stake in the company.

SEMA OPPOSES CAFE THAW The Specialty Equipment Market Association (SEMA) has announced that it is in opposition to efforts to remove the freeze on Corporate Average Fuel Economy (CAFE) standards, citing the potentially disastrous results to the automotive industry if stricter fuel-economy standards curb the desirability of SUVs. CAFE standards have been frozen since 1995, at 27.5 miles per gallon for cars and 20.7 miles per gallon for light trucks. Recently, higher gasoline prices and a renewed interest in CAFE by members of Congress have brought the CAFE freeze back into debate. Many environmentally conscious groups want to see the fuel-economy upped, but most of the industry, largely dependent now on gas-guzzling SUVs, strongly opposes the CAFE.

EPA PROPOSES TOUGH RULES FOR BIG-RIG EMISSIONS The Environmental Protection Agency has revealed proposed regulations that would require large trucks and buses to have the type of pollution-control equipment that has been required on cars for decades. The plans, if implemented, may cut pollution from trucks by nearly 95 percent. New tailpipe emissions standards that concentrate on reducing particulate matter from diesels would go into effect in 2006. The Alliance of Automobile Manufacturers has voiced their support for the EPA proposal, which would also reduce sulphur levels in diesel fuel. The proposal calls for a new fifteen parts per million cap on sulphur content. Sulphur, besides having a strong odor, contaminates emission-control devices. The American Petroleum Institute criticizes the proposal as unrealistic, and proposes a less drastic pollution reduction.

MERCEDES-BENZ MAY MAKE VANS STATESIDE The Wall Street Journal has reported that DaimlerChrysler may soon assemble commercial vans in the U.S. DC will start exporting Mercedes-Benz Sprinter delivery vans starting next year. Plans for a factory would move ahead quickly if demand exceeds the expected 20,000 U.S. sales per year.

EXCURSION PRODUCTION TRIMMED Due to slow sales, Ford will scale back production of its Excursion SUV by about 25 percent. The automaker had planned on selling about 69,000 of the SUVs per year, but now has revised the estimate to about 52,000. At the same time, Ford announced that it will increase production of its in-demand SuperDuty F-series pickup, produced in the same Louisville, Kentucky, plant by 35,000 units per year.