Week of December 20, 1999

December 20, 1999





JAG, VOLVO CALIFORNIA-BOUND Barring a last-minute change, Jaguar and Volvo plan to close down their East Coast operations and set up shop in Irvine, California. The move would be part of a broader strategic realignment by Ford Motor Co., which owns the two European brands. Jaguar and Volvo would share offices with two other Ford nameplates, Lincoln and Mercury, which transplanted their own operations to California three years ago.

For more on the move west, click here



GM WOOS DAEWOO After nearly two years of wining, dining, and angling for South Korea’s Daewoo Motors, GM is expected to win exclusive bidding rights for the company. Daewoo’s many creditors are expected to give GM the nod over rumored interest from Fiat, DaimlerChrysler, and Ford. Earlier this year, GM and Daewoo signed a letter of intent on future cooperation, but until last week, GM held back on a formal offer because of Daewoo’s precarious finances. Last week, GM officials said they would pay $5-6 billion for most of Daewoo’s automotive assets within Korea and abroad. Already this month, GM has committed to pay $1.4 billion for a 20-percent stake in Japan’s Fuji Heavy Industries, parent company of Subaru.



DC-HONDA-FIAT-PEUGEOT POSSIBLE? France’s La Tribune gives us our weekly dose of DaimlerChrysler rumors, with the extraordinary speculation that DaimlerChrysler, Peugeot, Fiat and Honda are talking about a four-way alliance that would lead to each maker taking a financial stake in the other partners. The paper, citing an unnamed DC executive, also reports that Fiat’s majority-holding Agnelli family vetoed a DaimlerChrysler takeover of Fiat last summer, but that it may have warmed to the idea of some kind of cooperation. In September, DaimlerChrysler said it would acquire another automaker to flesh out its presence in the small to midsize market.




FORD WINS LOYALTY RACE Ford keeps them coming back, according to the latest J.D. Power opinion surveys. Ford has the industry’s most loyal owners, with more than 61 percent coming back for another Ford. (The industry average for return shoppers is 46 percent, Power figures, the highest loyalty rating since the mid-1980s.) Following Ford were Lexus at 57 percent, Toyota at 55 percent, Mercedes-Benz at 54 percent, and Chevrolet at 52 percent. Ford’s dominance might be traced to its full-size trucks, which Power says pull in the most loyal buyers. Mini-utes fared poorly, with only 20 percent of buyers coming back to the same brand.




TRUCKS OUTSELLING CARS IN 2000? The torrid affair between American drivers and SUVs is peaking, and 2000 could be the first year in which light trucks outsell passenger cars, says a DaimlerChrysler analyst. In December, trucks outsold cars for the first time within a calendar month. The shifting market share toward trucks and a near record year could produce the fli-flop, says W. Van Bussman, DC economist. He estimates this year’s sales volume will top 17 million, and predicts next year at 16.1 million units, only slightly behind 1999’s anticipated record volume.



GM VOWS TO OUTSELL FORD TRUCKS Ford may be partying like it’s 1999, but GM says wait until next year. The world’s largest automaker says in 2000, it will sell more trucks than current leader Ford. Right now, the neck-and-neck race for 1999 puts Ford’s F-150 ahead of GM’s Silverado and Sierra by more than 30,000 units. However, GM will add heavy-duty versions of its trucks next year, which could plump up sales numbers beyond 1 million trucks a year.



"BP" FINDS A HOME AT VW Bad blood eventually dissolves — at least at Volkswagen. The company announced last week it would hire Bernd Pischetsrieder, the former chairman of BMW AG — the man who plucked Rolls-Royce from beneath VW’s nose in a last-minute financial coup. The 51-year-old "BP," as he’s thankfully abbreviated, will take control of VW’s SEAT brand and also will run herd over VW’s quality control. Thinking ahead, VW has procured a release from BP’s non-compete clause with BMW, something they overlooked when they hired bubbly former GM purchasing czar Inaki Lopez in the early 1990s. GM later filed suit against VW and won a billion-dollar judgement over proprietary cost-cutting plans Lopez purportedly took with him to Volkswagen. BP, by the way, was released from BMW this year over mounting losses at the company’s Rover unit, and was replaced by Joachim Milberg.


FIELDS TO RUN MAZDA The youth movement at Ford has overrun affiliate Mazda, with the appointment of 38-year-old Mark Fields as the company’s new president. Fields, new to Mazda just last year, replaces the outgoing James Miller, who says he’s been advised to retire by his doctors. Fields was made executive VP at Mazda last month.



STALLKAMP TO RUN MSX Booted from Juergen Schrempp’s management board at DaimlerChrysler, former exec Thomas Stallkamp was named CEO and vice chairman of supplier MSX International last week. The company suppliers engineers, designers and other services to automakers. Stallkamp, 53, officially retires from DC at year’s end; at MSX, he replaces E.H. "Bill" Billing, 72, who will stay on as chairman.



FORD TO MESS WITH TEXAS It’s high noon in Texas and the lawyers are about to be drawn in Ford’s fight to sell its used cars over the Internet. Last week, a federal court in Austin declined to overturn a state regulatory rule that prevents manufacturers from selling their own vehicles online. Ford, meanwhile, argues that its Ford Pre-Owned site (www.fordpreowned.com), which uses dealers to complete transactions, complies with the state rules. Ford says it will pursue "legal remedies at the state and federal levels'' after its request for an injunction against the overseeing Texas agency was denied last week. Ford Pre-Owned currently operates sites in Boston, Atlanta, and San Francisco; buyers examine inventory online, then arranged a test drive with a secure credit deposit. The vehicles are ushered by dealer personnel from a Ford-owned warehouse to the showroom, where the transactions take place. The state’s interpretation is that Ford sets the prices and effectively sells the vehicles despite the presence of the dealer.



DC NIXES SUPPLIER ‘NET-WORK DaimlerChrysler, recently criticized by outgoing VP Tom Stallkamp for lagging in Internet development ("The Scramble for E-Economics", Dec. 6, 1999), says it won’t set up an Internet portal where suppliers can bid on work with the automaker. Recent GM and Ford moves to set up similar sites won’t be countered, DC says, because the company wants "to manage the supply chain, [not] to own it.'' GM’s TradeXChange site and Ford’s AutoXChange (which Ford says will be taken public within 18 months), are charged with reducing costs for the automakers by scanning continuously for low bids on parts. Ford is encouraging use of its site by suppliers, while GM says all of its parts procurement will be done online by 2001.




MICHELIN RETURNS TO F1 Tire manufacturer Michelin said Thursday it will return to Formula One in 2001 after a 17-year absence, teaming with the Williams-BMW team and Team Toyota two years later, Reuters reports. The tiremaker helped win three drivers' and two constructors' world championships between 1978 and 1984. Its sole competition in F1 will be Bridgestone, which has been the series’ only supplier of tires since Goodyear stopped participating in 1999.



BUICK PUTS A TIGER IN ITS TANK Buick’s newest spokesman is post-adolescent PGA bigwig Tiger Woods, who’s now attached to the brand for five years, after which he’ll still be too young to hit its target demographic with anything short of a nine-iron. Woods, 23, was signed to bring a "diverse and international" audience to the brand’s advertising. Buick already sponsors four PGA Tour events, while Woods already hawks Nike, American Express, and Rolex watches.



LAST CHECKER UP FOR BIDS Would you buy a 21-year-old car with nearly a million miles on the clock? Well, it’s too late anyway to win the bidding for Earl Johnson’s 1978 Checker Cab, the last one produced to ply New York City’s streets. The cab, auctioned by Sotheby’s on Saturday, carried Muhammad Ali and Walter Cronkite during Johnson’s driving career, which ended on July 26 with his retirement. Johnson, who retired to Jamaica (not the one in Queens), clocked most of the Checker’s 994,050 miles. He bought the cab for $9000, a few years before Checker Cab of Kalamazoo, Mich., closed its line for good in 1982. The cab had a pre-sale estimate of $20,000 to $30,000.



JINGLE BELLS, SPRUNG FROM JAIL In Tennessee, a simple Christmas carol got several defendants off on traffic tickets last week. Judge Mark Fishburn threw out traffic charges last Monday and Tuesday if defendants sang "Jingle Bells" in court. "It was a spur-of-the-moment thing,'' he told reporters. "Everybody seemed to be in a festive mood. I turned to the audience and asked them if they were really in the Christmas spirit.'' Fishburn did convict a few people, including two teen-age boys who were going 80 mph in a 45-mph zone.

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