Week of June 19, 2000

1243_image

HYUNDAI SAYS DC PARTNERSHIP IS IN THE BAG
GOVERNMENT QUESTIONS REFINERS
SATURN RETAILERS HELP EBAY
MICROSOFT CONQUERS DRIVEOFF
DODGE DUMPS VAN FOR SUV
AUTOMAKERS POST SLIGHT CAFE IMPROVEMENT
GM EXPANDS FLEXIBLE FUEL OFFERINGS
CAR THIEVES LIKE MERCEDES-BENZ MODELS
GOVERNMENT CUTS RESEARCH PROGRAM
GM TO GIVE US FIVE

HYUNDAI SAYS DC PARTNERSHIP IS IN THE BAG According to a Ward's Automotive International report, Hyundai Motors is in the final stages of an agreement with DaimlerChrysler to take possession of Daewoo Motor Corporation. Under the proposal, DaimlerChrysler would take 40 percent of Daewoo, while Hyundai would take 20 percent and the remainder would be distributed to creditors. The arrangement would benefit DaimlerChrysler by giving the automaker access to the Asian market and cheap small-car production facilities. Hyundai, as the minority holder, would have a firm hold on the majority of the Korean market and yet avoid being termed a monopoly. DaimlerChrysler has continued to deny the agreement with Hyundai.

GOVERNMENT QUESTIONS REFINERS Federal officials met with oil refiners, demanding an explanation for sharply rising gas prices. According to CNN, the Environmental Protection Agency and the Energy Department's policy office had jointly sent a letter to major refiners requesting the meeting, saying that their analysis showed that supplies of gasoline were adequate in the Midwest, where prices have exceeded $2 per gallon. The agencies also requested an explanation of additional costs in producing the reformulated gasoline that is now required in some areas. In the meeting, the EPA said that the agency had estimated the cost of the cleaner fuel to be temporarily five to eight cents per gallon more expensive, but that doesn’t come close to accounting for the 50 cents more per gallon that consumers in some areas are paying. Refiners declined to comment to the agency remarks or to reporters.

SATURN RETAILERS HELP EBAY eBay has announced that it will enter a partnership with General Motors' Saturn division. Saturn will help eBay sell used cars by offering a comprehensive, nationwide car inspection service. Vehicle inspections for cars offered online by eBay and partner AutoTrader.com will be given by the service departments at existing Saturn retailers. eBay says it chose Saturn because of the brand's retail reputation.

MICROSOFT CONQUERS DRIVEOFF Microsoft's CarPoint LLC has announced that it is acquiring rival company DriveOff.com, a similar service that lets customers browse online, choose a model for purchase, and finalize details online before being referred to an affiliated dealership. CarPoint says that the acquisition of DriveOff will give CarPoint a more effective, direct buying service. The acquisition will expand CarPoint's affiliated retail network from 3700 dealers to 5000 dealers.

DODGE DUMPS VAN FOR SUV DaimlerChrysler plans to cancel production of the Dodge Ram Van effective April 2002 so that the automaker can use the production space to make a new sport-utility vehicle, says Automotive News. The new SUV will be built on the next-generation Ram pickup platform. Some industry experts question the late timing of DC's introduction of a full-size sport-utility vehicle, reasoning that by then the competition will be fierce and gas prices and regulations may strain demand.

THE NEW MINI LIVES ON BMW partner Ricardo says it will employ 75 former Rover employees to help with New Mini development, says Automotive News Europe. Despite the recent sale of Rover Cars from BMW to the U.K.'s Phoenix Consortium, Rover's New Mini remains under the control of BMW. The partnership between BMW and Ricardo, which is currently developing the New Mini, is set to last for another 18 months, but the project's ultimate fate is still unknown. If all goes as planned, the car will be built in BMW's Cowley, England, plant starting early next year.

AUTOMAKERS POST SLIGHT CAFE IMPROVEMENT Preliminary data from the National Highway Traffic Safety Administration (NHTSA) shows that automakers have slightly improved the average fuel economy of their vehicles for 2000. The NHTSA reported that the average fuel economy of cars is 28.4 miles per gallon for 2000, versus 28.3 in 1999. Light trucks posted an average of 21.1 mpg, versus 20.7 in 1999. The current federal requirements call for corporate averages of 27.5 mpg for cars and 20.7 mpg for trucks.

GM EXPANDS FLEXIBLE FUEL OFFERINGS General Motors announced a plan to build flexible-fuel full-size sport-utility vehicles. The flexible-fuel capability, called E85, which has already been offered on several other models from U.S. automakers for years, allows the vehicle to adapt to using a blend of gasoline and as much as 85 percent ethanol (renewable grain alcohol). GM plans to offer the E85 system as a no-cost option on Chevrolet Suburbans and Tahoes and GMC Yukons with the 5.3-liter V-8 engine. The offering of the flex-fuel system will benefit General Motors by helping them meet Corporate Average Fuel Economy (CAFE) standards. GM has been making Chevrolet S-10 and GMC Sonoma compact pickups with flex-fuel capability for the first time this model year.

CAR THIEVES LIKE MERCEDES-BENZ MODELS An annual insurance industry study, by the Highway Loss Data Institute, shows the Mercedes-Benz S-Class to have the highest theft frequency and loss claims for the 1997 to 1999 model years. The study also indicated that Mercedes-Benz vehicles are ten times more likely than average to be stolen. Acura's Integra coupe and sedan places second and third, respectively, and Mitsubishi's Montero placed fourth overall and first among sport utilities for instances of theft. The Mercedes-Benz SL convertible placed fifth in the study. Rated sixth through tenth, in order: Nissan Maxima, BMW 3-Series, BMW 7-Series, and Lincoln Navigator.

GOVERNMENT CUTS RESEARCH PROGRAM The House of Representatives Wednesday voted to cut funding for the Partnership for a New Generation of Vehicles (PNGV) program, a joint program between government and industry that works to develop fuel-efficient advanced technologies. The Republican-sponsored amendment will cut $127 million from the program. The partnership was started in 1993 by automakers and the Clinton administration, and it is suspected that the sponsors of the amendment are in a power struggle with the administration. The program is viewed by many industry backers as a progressive way of using technology, rather than regulations, to yield advancements.

GM TO GIVE US FIVE General Motors will introduce a new five-cylinder engine for compact trucks in 2002, says USA Today. The in-line five-cylinder engine built in Flint, Michigan, will share parts with an inline four and an in-line six-cylinder engine to be introduced sometime next year on GM's midsize SUVs. The move is said to be an effort to increase the company's corporate fuel economy.