Week of February 7, 2000

GM NAMES WAGONER CEO General Motors promoted President Rick Wagoner to the post of chief executive officer. Jack Smith, the company’s current CEO, will remain chairman while Harry Pearce remains vice chairman. Wagoner, 46, has been running the company's global operations since October 1998 and will take his new position June 1. His predecessor Smith, 61, is said to be considering retirement in the coming year, at which time the company is expected to name Vice Chairman Harry Pearce to the chairman slot, despite his recent treatments for leukemia.

For more about Wagoner's promotion, click here.

GM, FORD UP FOR JANUARY, DC DOWN U.S. vehicle sales were up for both Ford and General Motors for the month of January, while DaimlerChrysler sales fell, marking its third drop in four months. Both Ford and GM said the rise was partly due to vehicle incentives; they logged 3.3- and 12-percent increases respectively. Although European and Asian automakers continued to gain market share over the Big Three, DaimlerChrysler was hit the hardest, with a drop of 5.9 percent. Overall the U.S. automakers’ share declined 1.7 percent from last year, to a 68.5-percent share.

JANUARY’S TOP TEN SELLERS Here are the twenty best-selling vehicles in the country for January, according to wire reports:

FORD OFFERS EMPLOYEES HOME COMPUTERS Some 350,000 Ford hourly employees will have the option to get Hewlett-Packard home computers and printers with unlimited Internet access for $5 a month. The deal is part of an agreement with the United Auto Workers union, who believe that employee’s access to e-mail will improve communications. Chairman Bill Ford said that the company is making the move because "the Internet will be the equivalent of the moving assembly line in the 21^st Century." Hewlett-Packard has said that it expects to ship about 300,000 computers to Ford workers. Analysts estimate the program will cost Ford $10-$17 per month per worker.

VW MAY JUMP IN DAEWOO GAME As if there hasn’t been enough speculation about the state of Daewoo Motor, the South Korean Finance Minister had to stir the pot a bit more. Lee Hun Jai told a local television station that Volkswagen was also interested in bidding when the automaker goes up for auction. VW, who declined comment, would join General Motors, Ford, Hyundai and Fiat SpA in the bidding process.

GM EXERCISES SAAB OPTION General Motors paid $125 million to exercise its option to buy the 50 percent stake of Saab Automobile that was held by Investor AB, a Swedish investment group. If it had not exercised the option by the end of January, Investor could have sold half its stake to GM later under a put option. GM purchased 50 percent of Saab in 1990.

FORD IGNORED WARNINGS TO UPGRADE BOILERS Documents gathered by state regulators showed that Ford and Rouge Industries ignored auditors recommendations to upgrade the boiler controls at the power plant where last year an explosion killed six workers. The Detroit News reported that the two companies received the advice from at least four outside auditors in 1987. The February 1999 accident, considered one of the costliest in U.S. industrial history, injured 30, killed six and caused about $1 billion in damage.

NO INTERNET SALES FOR TOYOTA Expressing concern that its customers may not receive good service for cars purchased online, Toyota president Fujio Cho told reporters that the company had no plans to sell its vehicles over the Internet. Toyota’s Japanese site Gazoo (http://gazoo.com/index.htm) allows visitors to purchase products such as stationery and food online. "We’ll offer information (about Toyota vehicles) on our home page and Gazoo, but sell our products at dealers," Cho said.

GM SHAREHOLDERS GET HUGHES STOCK The board of directors at General Motors agreed to offer shareholders $8 billion in tracking stock from the Hughes Electronics unit. Another $7 billion will be contributed to retirement-benefit plans, allowing the company to realize $15 billion in value from Hughes. Investors, who had expected an announcement of this sort, traded GM stock heavily, resulting in an overall rise of $4.6875 per share at the NYSE’s close on Tuesday.

FORD LOOKING AT CUTS IN EUROPE, STRIKE POSSIBLE After saying that its European performance was unacceptable, Ford’s European chiefs indicated yesterday that it will decide whether and how to cut European capacity in the first half of the year. In the meantime, 3000 design, engineering and administrative workers in the U.K. have voted for a strike in a ballot, according to union officials. Ford, who has said that it has made its "final offer" with the group, is likely to see a halt in U.K. production if the group strikes.

TOYOTAS GET ONSTAR SERVICE Toyota announced that vehicles sold in the U.S. will offer General Motor’s OnStar emergency communications service as an option. A final agreement has not been reached but OnStar spokesperson Todd Carstenson indicated the company was optimistic that a deal would be made soon. Separately, Toyota executive VP Kosuke Yamamoto said that because of the companies’ history together, GM had an edge over Ford in the efforts to get Toyota to join each automaker’s online supply networks.

AUTOMAKERS AIM FOR NEW AIRBAG TEST Industry groups and automakers met with the Office of Management and Budget, the group that handles government regulations, to urge that a slower-speed airbag test by adopted by the National Highway Traffic Safety Administration. Automakers say that the controversial 30-mph airbag test requires using more powerful airbags that can be harmful to children and small adults. The companies propose adopting a 25-mph test instead, which would allow an airbag that deploys with less force to be used. The new regulations are expected March 1.

ACCIDENTS DECLINE, BUT CLAIMS RISE Despite the fact that the number of auto accidents has declined over the last 20 years, a new study reports that people are more likely to claim injuries from an auto accident. The Insurance Research Council reported that bodily injury claims jumped 33 percent overall between 1980 and 1998, although these claims have declined slightly since 1996. The organization said that it had seen an improvement in the frequency of accidents recently, which it attributes to safer car designs and campaigns against drunk driving.