Week of April 10, 2000

FIAT STILL COVETS DAEWOO, WON’T COMMENT ON VOLVO After a news report that Fiat had dropped out of the running for Daewoo, official word from Fiat came that the Italian automaker was still very interested in the Korean company. Although the company wouldn’t comment on its interest in AB Volvo, analysts said a takeover looked promising. Separately, industry experts say the Swedish truckmaker is once again in talks with Renault since the European Union had vetoed the proposed merger between Volvo and Scania.

ROVER SOON TO BE IN TUG-OF-WAR U.K. newspaper the Guardian reported that another bidder has received financial backing from the British government and will soon be making a bid to purchase BMW’s Rover unit. The group is said to be led by John Towers, a former exec at Rover, as well as several wealthy Rover dealers and a trade union group. It has reportedly been talking with current Rover head Werner Saemann for the last several days and could present a formal proposal as early as today. BMW agreed to sell the Rover car unit to venture capital firm Alchemy Partners last month.

VW BUYS SCANIA STAKE Volkswagen’s supervisory board approved an 18.7 percent stake in Scania for $1.6 billion in a meeting on Sunday. The stake, equal to 34 percent of the votes, will be purchased from Investor AB. First announced last week, the deal will allow the largest car manufacturer in Europe to gain a presence in the heavy truck market.

IT’S ALL ABOUT MONEY—RENAULT, SAMSUNG Money, or more specifically the lack of it, appears to be at the heart of the talks between Renault and Samsung. Unnamed sources told Reuters that Samsung had issues with "hidden debt" and that Renault had made a new offer that is closer to Samsung’s requirements, but doesn’t include any of the company’s $4 billion debt. The two parties, who had earlier set a three-month deadline that ended March 31, have agreed to extend their exclusive negotiations until April 21.

FORD HOPES JOINT VENTURES WILL BOOST EUROPEAN BUSINESS As earnings in Ford’s European business unit continue to slide, the automaker is considering shifting some of its European business to joint projects without manufacturers. Ford Europe Chairman Nick Scheele told the Wall Street Journal that transmissions were one area where producing the items for Ford as well as others would be relatively easy and generate increased earnings. Ford is also contemplating building Mazdas, which it owns a controlling stake in, at its European factories according to David Thursfield, Ford Europe’s President.

TOYOTA TO BUILD RX300 IN CANADA Toyota announced that it will expand its Cambridge, Ontario factory in order to build the Lexus RX300 there. By the year 2003, Toyota expects production at this plant to consist of 60,000 RX300s and 160,000 Corollas. The Solara, which is currently produced in Cambridge, will be moved to Georgetown, Kentucky. The decision to expand is part of Toyota’s efforts to expand their share of the SUV market in North America.

SEBRING’S CHIPS FLY The National Highway Traffic Safety Administration (NHTSA) is investigating why the decorative plastic panels on the lower part of the Chrysler Sebring’s doors are coming loose or falling off. Automotive News reported that NHTSA sees a potential safety issue if drivers following behind these vehicles swerve to avoid a falling panel and have a collision. Only the Chrysler Sebring coupes, not convertibles, are affected.

ENERGY DEPARTMENT LOWERS ITS SUMMER FUEL FORECAST Now that the Organization for Petroleum Exporting Countries (OPEC) increased its oil production, the U.S. Department of Energy dropped its forecast on summer prices at the pump. The agency said prices should be at an average of $1.46 per gallon this summer, with a steady decline beginning in May. It projected that the average U.S. price after Labor Day would be $1.39 per gallon. The projected summer price is still 25 percent higher than last year.

GM TO BUILD NEW FACTORY General Motors has begun the process to replace its aging factory in Lansing, Michigan, according to the Wall Street Journal. The proposed facility, which has not yet been approved by GM’s board, will be where the next generation of mid-size GM cars are built, which are currently code-named Epsilon, said WSJ citing unnamed sources. A GM spokesperson said it was possible construction on the new plant could begin as early as this summer.

GM EXEC MOVES TO LOCKHEED Louis Hughes, executive VP for new business strategies at General Motors, will move to Lockheed Martin as its new president and COO. Hughes, 51, began his career at GM in 1966, holding a multitude of positions including as exec VP of GM and head of its international operations before the company reorganized in 1998. Hughes will begin his new position on April 27.