Week of November 29, 1999

November 29, 1999




NOVEMBER SALES JUMP; GM SHARE TO DROP? The official numbers aren’t in until this week, but November sales are already looking sharp. Analysts estimate U.S. car and truck sales surged between 5 percent and 9 percent this month, despite higher gas prices and interest rates. The Big 2.5 and some import brands report sales this week. When they do, those same analysts worry that although GM's sales rose with the market, its share of the U.S. market could erode further, to less than 28 percent from 28.9 percent a year ago. Come back next week for a full rundown of sales numbers and top 20 sellers.



UAW ON EDGE IN LORDSTOWN Last week’s rejection of a new contract offer from GM means that workers at the Lordstown, Ohio, assembly plant still don’t have a deal to carry them through 2004. The plant, which assembles the Cavalier and Sunfire compacts, had been the subject of a skirmish over GM's plans for "Project Yellowstone," a modular-assembly proposal that would have slashed employment at the plant. When Yellowstone was scuttled, GM extended the life of the current Cavalier/Sunfire way out to 2004 — but gave no guarantees to the plant’s work force beyond that year. The UAW members at Lordstown rejected the proposed four-year agreement because they say GM is slowing down production at the plant despite rising sales of the models.


HONDA TO DC: WE’RE NOT ON THE BLOCK Despite reports in Germany’s Wirtschaftswoche, Honda is not interested in being acquired or being invested in by DaimlerChrysler, the Japanese company announced last week. A report in the German paper said that DC Co-Chairman Juergen Schrempp was interested in purchasing a part of Japan’s third-largest carmaker; the paper reasoned that Honda’s motorcycle engines would make great powerplants for DC’s problem-child Smart car. With a four-seat Smart planned in the near future, DC is in search of a partner to bear the brunt of development costs. A Honda spokesperson gave no credence to the report.




MORE DC-PEUGEOT MUTTERINGS Meanwhile, in scenic Paris, daily Le Figaro is citing internal PSA Peugeot sources that say DC in fact will invest in the French carmaker, which will in turn develop the platform for the new Smart. The paper, citing an unnamed Peugeot executive, reports that DC is talking with Peugeot and Fiat about mutual cooperation on small cars and diesels.




VW TO SPEND BIG ON NEW MODELS Volkswagen, of course, is content to soldier on by itself with a just-announced initiative to spend more than $30 billion on new products, including a new range of Bentley motor cars, some upscale VWs earmarked to compete with Benz and BMW, and a long-floated Beetle cabriolet. Last week, the biggest German automaker said it would plug DM 60 billion into the new models and into refurbishing factories in the homeland.



MITSU LOSSES MOUNT Mitsubishi, meanwhile, is still sliding into debt. The fourth-largest Japanese maker reported a $370 million loss for the six-month period that concluded in September — even after selling some valuable Japanese real estate. Wire reports estimate Mitsu’s total debt at Y1.75 trillion, or about $17 billion. Mitsubishi was the only one of Japan’s carmakers to post a loss for the period, which it attributes to the appreciating yen and slackening sales.



DC VAN SALES WILT WITH COMPETITION DaimlerChrysler has its own wilting sales to worry over. Its category-defining minivans are facing sales pressure from new entries from Ford, GM, and, especially, Honda and Toyota. To boost sales, DC has taken the once-unheard-of step of introducing and then boosting rebates on the vans. Sales fell about 3 percent this year, while the category itself grew at 11 percent. Through October, the company controlled 37.8 percent of the minivan market, down from more than 50 percent in the early to mid-1990s. The rebates now reach $1,250. A new DC minivan is scheduled to make its debut at the Detroit auto show in January.



ASTRO/SAVANA CUTBACKS PLANNED A reduction in production at GM’s Baltimore assembly plant has workers worried that the rear-drive Astro and Safari vans are headed for an ignominious fate. On Monday, GM announced that it would cut production of the vans down to one shift, eliminating workers that staff the second shift. A GM spokesman told Reuters the vans would stay in production through 2003 on one shift, but declined further comment. GM cites declining demand for the vans as the impetus behind its decision.



INDIANA IN LINE FOR SECOND TOYOTA PLANT Is the Sienna minivan moving from Georgetown, Kentucky, to Indiana? According to Japan’s Nihon Kezai daily, it is. The paper, citing unnamed sources, says Toyota will jumble around a handful of models and will spend about $290 million to build a new Indiana plant for the Sienna. At October’s Tokyo Motor Show, Toyota announced it would decide by year’s end on expanding in the United States; the Japanese paper states Toyota has decided already on building in Indiana, adding Sienna production capacity next door to the Toyota Tundra pickup/Sequoia SUV plant. The report also says Toyota will move its Camry Solara coupe from its Canada facility to Kentucky, alongside the Camry, then bring production of the popular Lexus RX 300 to Canada from Japan.



FORD PLANS LUXURY-DEALER CONVERGENCE If at first you don’t succeed, repackage. That’s the general concept behind Ford’s new initiative, announced last week, to combine the back-office functions of its luxury brands within major markets but to retain individual dealerships. You’ll recall that last year Ford began a plan to purchase and combine retailers within metro areas into superstores known as the Ford Auto Collection. In the face of dealer conniption fits, Ford has scaled back those plans and now is offering to assist in purchasing real estate and brokering deals to combine service shops, finance and insurance and other dealership functions. Ford’s European locations for its Volvo and Jaguar dealers would be included in the plan. Ford is hoping to shave costs at the retail level with the plan and to boost luxury-car sales from about 650,000 this year to more than 1 million.



GOODYEAR TO SHUTTER FACTORIES Goodyear announced last week that it will close plants in Italy and Argentina and will cut nearly 1,400 jobs to trim its network of production facilities. Goodyear estimates that it will save about $40 million with the closings, which should ease the price it paid to set up a European joint venture with Japan’s Sumitomo tire company.




DC WINS REVERSAL OF $750,000 VERDICT DaimlerChrysler has been relieved of a $750,000 judgment in a New York federal court, by a judge who ruled that the automaker was not liable for the airbag-related death of a 5-year-old boy. U.S. District Judge Jed Rakoff said on Friday the attorneys for the family of Michael Liz Crespo had failed to prove their case, Reuters reports. A jury had ruled last December that the world’s fifth-largest carmaker was 50-percent liable for boy’s death and had awarded the family $750,000. Crespo was killed in 1995 when an airbag deployed during a head-on collision involving a minivan driven by his father; the plaintiffs had argued that their son could still be alive if DC has used a different type of airbag. The child was not belted into the seat at the time of the accident.

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