Week of August 14, 2000

FIRESTONE RECALLS 6.5 MILLION TIRES
LAWSUIT EXPOSES GM STRIKE SCANDAL
SATURN REVEALS SUV
BMW STAYS WITH REAR-WHEEL DRIVE
FORD SUES MODEL E
ESCAPE AND TRIBUTE RECALLED
VOLVO GETS SECOND CHANCE
RIO TARDY
GM’S GRAND PLANS FOR HUMMER
AUTOMAKERS COMMIT TO SIDE-AIRBAG TESTS
HONDA TO PROFIT FROM HYBRIDS
GM WILL PRODUCE SSR
FORD TO OFFER SKID-CONTROL SYSTEMS ON ALL SUVS
GM AND EXXON ANNOUNCE GASOLINE FUEL CELLS
FORD TO BUILD NEW ASTON MARTIN PLANT

FIRESTONE RECALLS 6.5 MILLION TIRES Bridgestone Firestone Wednesday announced a recall of about 6.5 million Firestone ATX, ATX II, and Wilderness tires. Firestone plans to phase in the recall beginning with the southern states. The tires are being recalled for a potential defect that may cause tread separation in hot-weather conditions at high speed, more often when the tires are underinflated. So far, 46 deaths have been attributed to failure of the tires. Although about 48 million of the tires have been made, after an investigation with the National Highway Traffic Safety Administration (NHTSA) and Ford, Firestone opted to narrow the recall to include only a particular size, P235/75R15, and a particular production facility for Wilderness tires, Decatur, Illinois. Most affected by the recall is Ford, whose best-selling Explorer SUV has offered variations of the tires for many years. Firestone plans to notify all owners of the affected tires, and will provide new Wilderness tires or, if necessary, competing-brand tires at no charge.

LAWSUIT EXPOSES GM STRIKE SCANDAL The Detroit Free Press has revealed a scandal pertaining to a lawsuit filed Monday against the UAW and General Motors. The lawsuit, waged by a group of about 20 disgruntled UAW members, alleges that the UAW didn't fairly represent its members in a 1997 Pontiac strike, and that the union prolonged the strike longer than necessary so that jobs for sons of UAW officials could be worked into the settlements. The lawsuit also alleges that $200,000 in false overtime payments was paid to top UAW officials as part of the settlement. The 1997 strike, at the plant that assembles GM's full-size pickups, cost GM millions of dollars. The lawsuit, filed on the behalf of UAW members, seeks $50 million in compensatory damages and $500 million in punitive damages.

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SATURN REVEALS SUV Saturn released the first official rendering of its Saturn SUV. The compact sport-utility vehicle will offer both four-cylinder and V-6 engines, front-wheel drive or four-wheel drive, and plastic body panels. Production for the 2002 model should start in early fall of next year. Saturn plans to unveil the vehicle to the public October 6 at the South Florida International Auto Show in Miami.

BMW STAYS WITH REAR-WHEEL DRIVE BMW has said that its upcoming small car will be rear-wheel drive. Until recently, analysts have speculated that the company may be considering front-wheel drive. The new car, which may be called the 2-Series, will be the only car in its class with rear-wheel drive. It will compete in Europe with the Ford Focus, Volkswagen Golf, and Audi A3.

FORD SUES MODEL E Ford Motor Company filed a federal lawsuit against the automotive-leasing Web site Model E. Ford accuses the site of selecting a name too close to that of its famed Model T. Model E is an upscale online leasing company with which consumers will be able to custom-order their lease vehicles. The California-based Web site, which will be launched later this year, insists that there is no intended connection with Ford.

ESCAPE AND TRIBUTE RECALLED Ford is recalling its newly introduced Escape sport-utility vehicle for a potential steering problem. A nut that fastens the steering wheel to the steering column can crack, says Ford, although there have not yet been any reports of part failure. About 1300 early-production Escapes and 625 Mazda Tributes are affected.

VOLVO GETS SECOND CHANCE The National Highway Traffic Safety Administration (NHTSA) has given Volvo a revised, "best pick" rating for its S80 model's frontal offset crash test. Originally, the agency downgraded the model because of a premature, 5-mph-impact detonation, and because of the high temperature of the airbag's gas on the test dummy's hands. Volvo quickly changed the airbag's design to remedy both of the problems.

RIO TARDY Korean automaker Kia Motors has delayed the advertising-campaign introduction for its new model, the Rio, due to a supply shortage. The campaign for the Rio, which at $9045 will be the lowest-priced car in the U.S. market, has now been delayed until October 1.

GM'S GRAND PLANS FOR HUMMER According to the New York Times, the Hummer will have two additional, more affordable models in the next three years. General Motors, Hummer's new owner, plans to boost yearly sales volume to 40,000 by offering a cheaper H2 model in 2002 and a very basic H3 model in 2003. The H3 would reportedly sell at about $25,000. GM purchased the brand from AM General Corporation last year.

AUTOMAKERS COMMIT TO SIDE-AIRBAG TESTS The Alliance of Auto Manufacturers said that automakers have agreed to commit to side-airbag tests established by a group of experts affiliated with the alliance. To this time, there have been no regulations or requirements for side-airbag systems. Side airbags first were available in 1997. The group's side-airbag testing procedures have been submitted to the NHTSA for approval. The NHTSA had previously asked that the manufacturers come up with a testing standard for the side bags.

HONDA TO PROFIT FROM HYBRIDS According to Reuters, Honda Motor Company revealed at a conference in Michigan that it plans to make a profit from the Honda Insight's gasoline-electric hybrid technology sooner than originally anticipated. The automaker has now raised its forecasted U.S. sales from 4000 units to 6500 units annually. Honda will continue to lose money on the specialty, aluminum-bodied Insight model, but hopes to make money on the venture soon after the technology is introduced on a hybrid Civic hatchback model sometime next year.

GM WILL PRODUCE SSR General Motors has decided to produce the Chevrolet SSR roadster-pickup concept, originally unveiled at the Detroit auto show this January. The Super Sport Roadster, as it's called, will likely share mechanicals with GM's full-size pickups, with rear-wheel drive and a V-8 engine. GM plans to put the SSR into production in late 2002.

FORD TO OFFER SKID-CONTROL SYSTEMS ON ALL SUVS Ford will install a new, electronic anti-skid system in all sport-utility vehicles and pickups within the next few years. Ford will first offer the systems on the upcoming 2002 Ford Explorer and Mercury Mountaineer. The systems use steering-wheel angle sensors and yaw sensors to anticipate loss of vehicle control and compensate with application of the brakes. Ford hopes the systems will help to reduce the number of rollover injuries and fatalities. According to the National Highway Traffic Safety Administration, more than 60 percent of SUV fatalities occur in rollover accidents, and about 9500 people per year are killed in rollover crashes in the U.S.

GM AND EXXON ANNOUNCE GASOLINE FUEL CELLS General Motors and Exxon Mobil have jointly developed a fuel-cell technology that uses gasoline. In the arrangement, a processor derives the hydrogen necessary for power generation from gasoline. The advantage of the system, say the companies, is that consumers would still be able to fuel their vehicles in the same way as now. Exxon Mobil says that the new technology would emit half the carbon dioxide of current internal-combustion automobiles. GM says it will have a demonstration car that uses the system within 18 months.

FORD TO BUILD NEW ASTON MARTIN PLANT Ford Motor Company has announced that it plans to build a new Aston Martin factory. The announcement comes at a time when Ford has intentions to make Aston Martin a higher-volume brand than it is now. The new factory, located in Gaydon, England, will make a lower-priced AM model starting in three or four years. The factory will eventually employ about 400 new workers.