Week of February 14, 2000

STUDY SAYS BUYERS GETTING OVER 11 PERCENT OFF STICKER A new study by CNW Marketing/Research revealed that car buyers were getting more than double the discount they got 15 years ago on the sticker price of a new vehicle. The study said that the average discount in 1999 was 11.3 percent below the sticker price – up from 5.1 percent in 1985. The change was attributed to the fact that car buyers can get the dealer’s invoice price from a variety of sources on the Internet, including directly from some dealers.

HONDA UNSURE ABOUT GM’S ONLINE PARTS PARTNERSHIP After indications that Honda was likely to join General Motors’ new online parts supplier network called TradeXchange, company president Hiroyuki Yoshino said it was skeptical of the need for such a program. After stating that Honda did not have any issues with high inventories, an area the program is expected to address, Yoshino said, "While there may be a place in the U.S. market for a simple commodity car made from universally available parts, it would be a pretty boring car and that’s not something we have a lot of interest in."

TAURUS, SABLE GET FIVE-STAR RATINGS Ford’s 2000 model year Taurus and Sable vehicles were awarded the five-star safety rating for both driver and front passenger in frontal crashes. The tests, conducted by the National Highway Traffic Safety Administration, involve crashing the vehicles into a fixed barrier at 35 mph.

HIGH GAS PRICES PREDICTED FOR SUMMER Government and private forecasters are predicting that gas prices will continue to rise, reaching a potential all-time high by Memorial Day. The high price of crude oil and short supply at refineries are attributed to the rising prices. In addition, the government is expecting an increased consumer demand over last year’s record high.

GHOSN SPOUTS GLOOM AND DOOM Carlos Ghosn, COO of Nissan, told a group of Japanese business leaders that Nissan needed to expedite its restructuring process quickly before it dies. "Speed is a necessity, not a wish…We need to revamp it (the company) quickly because if we don’t do it quickly, the company might not exist anymore," said Ghosn. Nissan recently announced that it was expecting not to reach its target group operating profit for the fiscal year, which ends March 31.

DIRECT SALES GET THUMBS UP IN STUDY A recent study conducted by J.D. Power indicates that Internet shoppers would prefer to purchase their vehicles directly from manufacturers if they could. Of the 400 new vehicle buyers surveyed, about half said they would buy direct even if they didn’t save any money. When asked if they would buy direct if they could save $3000, nearly 70 percent said yes. J.D. Power concluded that the results clearly indicated problems with the dealer franchise system and that manufacturers should consider restructuring the system. Due to state franchise laws and the cost of developing a distribution system, it is unlikely that manufacturers will ever sell directly to the public.

CONSUMER REPORTS FACES SUIT ON ISUZU REVIEW A lawsuit, filed by Isuzu, against Consumer Reports magazine began in Los Angeles last week. The lawsuit claims that sales of the Isuzu Trooper dropped 50 percent after the magazine issued a poor review of the vehicle in October 1996. The article, which states that the Trooper was prone to rollover during hard turns, urges buyers to stay away from the vehicle. The trial is expected to last two months and may focus on free speech rights.

TOYOTA UPS PRICES ON ECHO, CELICA Toyota will raise its prices on the 2000-model Echo and Celica sold in the U.S. Four-door Echoes will now start at $10,395 for the manual transmission and $11,195 for the automatic transmissions, representing an overall increase of $100 for both versions. The Celica price will go up $180, now starting at $16,875 with a manual transmission and $17,675 with an automatic transmission. The new prices go into effect on February 28.

GM’S SMITH TAKES OVER SERVICE PARTS OPS John Smith, the general manager of Cadillac, has been named as William Lovejoy’s successor to head General Motor’s service parts operations. The 49-year old Smith, who has been with GM since 1968, took the top spot at Cadillac in 1997. Lovejoy recently took over as head of vehicle sales, service and marketing for North America. A successor at Cadillac has not been named.

AIRBAG ISSUE HEATS UP Parents for Safer Airbags (PSAB), a safety group comprised of victims of driver and passenger airbags, urged the National Highway Traffic Safety Administration (NHSTA) to keep its 30-mph crash test for unbelted dummies. Automakers have argued the test, saying that the higher speed requires a more aggressive airbag that can harm children and small adults. The PSAB is lobbying for advanced airbags that have safety features which protect unbelted occupants, without harming belted occupants. Several automakers have complied with the 30-mph test, which is currently optional, for the last ten years and have had no issues of harm to individuals as a result of the airbag deploying. Separately, regulators are slated to meet with NHSTA today to discuss developing a rating system for child car seats.

INTELLICHOICE NAMES VEHICLES WITH BEST VALUES For the 14^th consecutive year, IntelliChoice has announced its "Best Overall Value of the Year" (BOVY) awards for cars and trucks that cost less to own than is typically expected of vehicles in the same price range. Vehicles were assessed based on depreciation, insurance, finance costs, registration fees, fuel and maintenance costs. The 2000 model year winners overall are:

• Honda Civic CX Hatchback — Best Car Value Under $20,000
• Mercedes-Benz E320 AWD Sedan — Best Car Value Over $20,000
• Ford Ranger XL SuperCab 4WD Extended Cab — Best Truck Value Under $18,000
• Chevrolet Silverado K1500 2 Door Extended Cab 4WD — Best Truck Value Over $18,000
• Honda CR-V LX 2WD — Best SUV Value Under $25,000
• Infinti QX4 4WD — Best SUV Value Over $25,000
  

LEVINE LEAVES CHRYSLER/PLYMOUTH, JEEP Martin Levine, head of the Chrysler/Plymouth and Jeep division at DaimlerChrysler, is leaving to head a division of the Omnicom Group, the world’s largest advertising company. Levine will join PentaMark, which handles advertising for many U.S. automakers, as president and CEO. DaimlerChrysler is expected to announce Levine’s replacement soon.

GM ENCOUNTERS INTERNAL THEFT Several executives at General Motors are thought to be the victims of internal theft, according to local Detroit newspapers. The Violent Crimes Task Force at the Detroit Police Department suspects a female contract employee, who may have had access to sensitive areas of corporate management. It is suspected that the woman sold or gave the social security numbers and credit card numbers of several General Motors executives to criminals who then charged $100,000 to $200,000 on the cards. Police, who have no one in custody, suspect as many as 10 people may be involved.

EUROPE CREATES NEW AUTO RECYCLING LAW The European Parliament endorsed legislation that will require automakers to take on the cost of recycling old cars. The End of Life Vehicles Directive, part of a plan to reduce waste left in landfills or incinerated, may even require manufacturers to recycle cars made before the legislation takes effect. Recyclers, such as companies who shred old cars for their sheetmetal, don’t agree with the legislation, saying that there are other markets for so-called waste materials. The recyclers indicate that companies who produce plastics, rubber and polymer products for cars should also share the responsibility with the manufacturers. Final details of the new law will be decided on later this year.

FIAT STIRS THE RUMOR MILL, DC’S LIPS SEALED Fiat board member Grande Stevens gave the first indication that an alliance with another manufacturer may be in the works. "Fiat is actively courted. I think that by the end of this year it must decide whether to go for an alliance and with whom," he said. DaimlerChrysler, who has been widely rumored to be courting the Italian automaker, declined comment.