Week of January 31, 2000

January 31, 2000





DC CHAIRMAN EATON TO RETIRE DaimlerChrysler Co-Chairman Bob Eaton announced his retirement at a meeting of the company’s top management in Auburn Hills, Mich., on Wednesday. When the two companies merged in 1998, Eaton said that he would retire within three years. The announcement comes just four months after Eaton’s protégé Thomas Stallkamp was shown the door by Co-Chairman Juergen Schrempp. Eaton, 59, departs on March 31 after seven years with the company. Prior to joining DaimlerChrysler, Eaton spent 29 years at General Motors, most recently as president of GM Europe.

For more on Eaton’s retirement, click here


DC DOESN’T EXPECT TOP RATING FOR MINIVAN DaimlerChrysler doesn’t expect its new minivan, unveiled at the Detroit Auto Show, to receive the National Highway Traffic Safety Administration’s (NHTSA) five-star crash-test rating. John MacDonald, senior VP of sales and service, told dealers at the NADA Convention that not receiving NHTSA’s top rating represents a "huge miscalculation" by the company, according to Tuesday’s Wall Street Journal. Steve Rossi, a DC spokesman, said that the company had yet to perform crash tests on the new minivan, but that it will "represent an advancement in safety" over the current model. The current minivan received four stars in front crash-tests, while side tests yielded five stars for front occupants and just three stars for rear seat passengers. NHTSA said it would not test the new minivan, due out in September, until this fall at the earliest.

For more on the minivan’s safety issues, click here


JEEP CHEROKEE PRODUCTION EXTENDED Record 1999 sales have resulted in an extended production run for the Jeep Cherokee at DaimlerChrysler’s Toledo, Ohio factory. "We have a unique opportunity to continue product of the current Cherokee while we ready a new plant for production of a future Jeep model," said Martin Levine, head of the Jeep division. The new Cherokee, slated for production in spring 2001, will be built at the brand new Toledo-North facility. Some are speculating that the extension gives Jeep some time to consider the carlike look and feel of the Cherokee’s replacement, and whether it should be sold under a different nameplate.

For the story behind the nine-lives Cherokee, click here


DC, FIAT RUMORS SPROUT ANEW Merger mania isn’t over yet — or, at least, the speculation isn’t. An Italian newspaper reported Wednesday that DaimlerChrysler and Fiat were nearing a stock-swap agreement that would leave DC in control of Fiat’s auto group. Neither company would comment on the report, although DaimlerChrysler has said previously that it has talked with Fiat, PSA Peugeot Citroen and Honda about the possibility of a joint venture to offer its new small car.


AIRBAG TESTING CHANGES LIKELY The National Transportation Safety Board has recommended that a lower-speed crash test be used to certify airbags. A 30-mph crash test with unbelted dummies was previously used. The test has not been required for the last two model years, after concerns that it was forcing manufacturers to install airbags so powerful that they were causing deaths in unbelted children and short adults. The board’s recent comments basically agree with those of automakers, which say that airbags should be designed first to ensure no harm to children and second to protect occupants who are wearing seat belts.


AMERICAN LUXURY LOSING POPULARITY When it comes to luxury vehicles, the European brands are gaining popularity with American buyers, according to a CNW Marketing/Research's annual "Aspiration Index." For 1999, 23 percent of Americans had a European luxury vehicle on their shopping list, up from just 11 percent in 1990. Some 38 percent of Americans had Lincoln and Cadillac models on the list, down from 66 percent in 1990. The biggest change was among the under-30 shoppers; barely 14 percent wanted a domestic brand, down from 26 percent in 1990.


GM, DEALERS KISS AND MAKE UP After months of animosity between dealers and General Motors, the automaker assured them that its plan to buy up 10 percent of its dealers was completely dead. Chairman and CEO Jack Smith addressed dealers at the NADA Convention, promising to include them in initiatives such as regional advertising, Internet sales and manufacturer-owned stores — the things that have put them at odds in the past. "If you want to know if we learned our lesson, you can bet your sweet bibby we learned our lesson," said Roy Roberts, retiring VP of vehicle sales and marketing.


ABT: NO MORE MIDDLEMAN Autobytel.com announced at the NADA Convention this week that it would now act as a car broker, selling cars directly over the Internet through its AutobytelDIRECT.com (www.autobyteldirect.com) Web site. The new service allows buyers to choose, finance and take delivery, all without going to a dealer. The company still must obtain its vehicles through dealers, who will pay the company $100-$300 per vehicle they sell to AutobytelDIRECT.com. Because of competition from online buying sites, some manufacturers may change their pricing to reflect the dealer’s price, versus the retail price. Ford is currently testing a program with this pricing structure in Tucson, Ariz.


DEALERS FIGHTING ONLINE SALES Dealers are fighting Internet companies who are selling vehicles directly to consumers by pushing state governments to pass laws against such practices. Dealers have already succeeded in getting tighter franchise laws in nine states, causing lawsuits in some states including Texas, according to an article in The New York Times. General Motors, which has most recently has been at odds with its dealers, sided with them saying that such Internet companies could be "cut out" if the manufacturer and its dealers work together. Roy Roberts, retiring VP of sales and marketing for GM, told dealers that the company would work closely with them so buyers would not feel they needed to use an independent online company to purchase a vehicle.


GM MERGES CARS, TRUCKS In an effort to improve vehicle development times and to reduce costs, General Motors said it would combine the car and truck groups in North America. The integration, which GM says will eliminate duplicate processes, will begin in the first quarter and be complete within the next 18 months. GM North American President Ron Zarrella called the integration, "a logical next step in leveraging the common business processes and systems, vehicle platforms and components that laid the foundation for GM’s global automotive organization announced over one year ago."


KOREANS READY FOR BATTLE The Korea Federation of Small and Medium Business (KFSB) is stepping up its plan to block the sale of Daewoo Motor to a foreign buyer. Believing that 1.7 million Korean jobs are at stake, the company said it was prepared to raise as much as 1.7 trillion won ($1.5 billion) to gain control of the company. Analysts, who don’t believe the group is capable of running an automaker, suggested that the move might be a play to raise the price of the company, rather than take it over. Several global automakers, including General Motors, Ford, and Hyundai, have expressed interest in taking over Daewoo’s automotive unit.


FORD REPORTS 1999 EARNINGS Ford reported record earnings of $7.24 billion in 1999, more than any other automaker in history, with overall revenues increasing by 13 percent. Fourth-quarter profits jumped 73 percent to $1.81 billion, but investors and analysts are still concerned about the company. Many feel Ford is not cutting costs in Europe quickly enough and are disappointed there are no plans to buy back stock. Ford CFO Henry Wallace said that European plant closures were a possibility.

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