Week of July 31, 2000

PT CRUISER MIXED BAG IN CRASH TESTS
FORD TO CLEAN UP SUVS
FOCUSING ON THE WORLD
LEASE LENDERS LOSING
BECKER TO HEAD BMW SMALL CARS
GM AND FORD INTERESTED IN PROTON
AUTOMAKERS PROPOSE DISTRACTION GUIDELINES
HYUNDAI CONFIRMS PLANS FOR N. AMERICA AND EUROPE
MERCEDES-BENZ TO EXPORT CARS FROM S. AFRICA
INTEREST IN ROVER
BP TO PHASE OUT AMOCO
CHRYSLER PROFITS DOWN
FIRESTONE HOT SUIT
AUTONATION EARNINGS LOWER THAN EXPECTED

PT CRUISER MIXED BAG IN CRASH TESTS The DaimlerChrysler PT Cruiser received mixed ratings for crash protection in a recent National Highway Traffic Safety (NHTSA) test, said the agency. The PT Cruiser scored (on a five-star scale, with five being highest) two stars and four stars, respectively, for driver and passenger protection in frontal collisions. In the side-impact test, the PT Cruiser received four stars for front occupants and five stars for rear occupants. The frontal tests are conducted at 35 miles per hour into a fixed barrier, while the side tests involve a 3015-pound barrier moving at 37.5 miles per hour crashing into a stationary test vehicle.

FORD TO CLEAN UP SUVS Ford Motor Company announced a commitment to increase the fuel economy of its sport-utility vehicle models by 25 percent over the next four years. The 2005 calendar-year goal covers the Land Rover, Ford, Mercury, and Lincoln brands. Chairman Jac Nasser said that the program, termed "Cleaner, Safer, Sooner," is a positive strategy in a market that is reflecting more consumer-driven environmental responsibility. The automaker plans to achieve the fuel economy increases through powertrain revisions, lighter-weight materials, and improved aerodynamics.

FOCUSING ON THE WORLD By Ford's calculations, the Ford Focus has now become the world's best-selling car. However, industry analysts say that Americans will not be hearing Ford touting its achievement in ads because it conflicts with the selling points of the Focus, such as individuality and attitude. Ford sold about 228,000 Focuses during the period from December through April, a figure that beats the previously top-selling car in the world, the Volkswagen Golf, by about 24,000 units.

LEASE LENDERS LOSING Banks and leasing companies are reportedly reporting massive losses due to the slowing economy and overly optimistic estimates on residual values of leased sport-utility vehicles, although automakers themselves are not reporting such losses. The reason is attributed to the fact that while automakers make money on the vehicle, lending institutions must make money on the lease. Recently, the used-car market has become flooded with off-lease SUVs.

BECKER TO HEAD BMW SMALL CARS Germany's BMW AG has appointed its purchasing chief, Wilhelm Becker, to be the new strategic manager for the 3-Series line and the upcoming smaller car likely to be called the 2-Series. The new model, to go on sale in 2004, will likely be assembled at a new plant in Eastern Europe.

GM AND FORD INTERESTED IN PROTON According to Bloomberg News and the newspaper Utusan Malaysia, both Ford Motor Company and General Motors have expressed interest in Malaysia's Perusahaan Otomobil Nasional, known as Proton. Mitsubishi currently owns 16 percent of the Malaysian automaker.

AUTOMAKERS PROPOSE DISTRACTION GUIDELINES In response to recent government recommendations on driver distraction, automakers have voluntarily proposed uniform limitations on the type of interfaces for high-tech devices that are installed in cars. The Alliance of Automobile Manufacturers has stressed the importance of guidelines, although the group says that consumers want more of these high-tech devices, such as navigation systems and personal computers. Although the automakers solutions tend to suggest a move to voice-activated devices, the NHTSA claims that the cognitive distraction is just as bad as a manual one.

HYUNDAI CONFIRMS PLANS FOR N. AMERICA AND EUROPE Hyundai Motor Company has confirmed that it intends to build assembly plants in both North America and Europe. The automaker said that it is currently investigating possible plant locations and trade conflicts. The Korean automaker aims to double sales in both markets over the next five years, but in order to achieve that goal the company will need more production capacity, preferably in the markets.

MERCEDES-BENZ TO EXPORT CARS FROM S. AFRICA According to Ward's Automotive International, Mercedes-Benz will soon start assembling right-hand-drive C-Class sedans, for the Asian and U.K. markets, in East London, South Africa. The automaker already assembles a limited number of C-Class cars for the local market and for Australia, although the company has been hesitant about quality, which now appears on par with other plants. Starting in September, production will be boosted to 40,000 vehicles per year.

INTEREST IN ROVER According to Bloomberg News, a car company outside of Europe has proposed a partnership with Britain's Rover Cars. London's Financial Times reported that the partnership would result in replacements for its current model range. Rover is currently in search of a partner to help reduce costs and share platforms, and the automaker has set a March 2001 deadline to find a suitable alliance or partnership.

BP TO PHASE OUT AMOCO London-based British Petroleum Amoco Plc plans to drop the 90-year-old Amoco name completely. Most of the network of Amoco retailers will be given the BP name, although about 4000 will be eliminated due to duplicate locations. BP is also revising its marketing strategy at retail outlets to concentrate even more on the sale of non-petroleum items such as groceries.

CHRYSLER PROFITS DOWN DaimlerChrysler revealed that, although second-quarter net income is up, overall operating profit for this year will be down from last year. The company blamed the losses on product incentive programs and new-model introductions at the Chrysler division. Although overall company revenue was up 17 percent, operating profit in Chrysler fell 12 percent, to $1.1 billion, while Mercedes-Benz posted a 22-percent rise, to $719 million. In response to the disappointing figures, DC will introduce a cost-cutting plan that will cut administrative costs by about 25 percent by 2003. The plan would call for the elimination of about 5000 jobs over the period.

FIRESTONE HOT SUIT Two Florida families have sued both Ford Motor Company and Goodyear, alleging that tread separation on their Ford Explorer's original-equipment Firestone tires caused fatal accidents. The lawsuit accuses both companies of negligence. The National Highway Traffic Safety Administration (NHTSA) reports that it opened an investigation on the matter in May, after getting about 90 complaints from consumers in hot southern states about the tread separation.

AUTONATION EARNINGS LOWER THAN EXPECTED Despite improved efficiency, better earnings, and strong sales, AutoNation announced a fall in second-quarter earnings. Overall income fell from $97.1 million a year ago to $96.6 million this year, with revenues up slightly. The company predicts that it will sell 60,000 vehicles this year—50 percent more than 1999.