Week of October 16, 2000

October 16, 2000





BRIDGESTONE FIRESTONE SHAKEUP Bridgestone Firestone officials have announced that John Lampe, formerly executive vice president, has been named the company's new CEO and chairman. Masatoshi Ono, who has held the CEO position for seven years, and through the company's traumatic tire-recall situation, will retire to a post on Bridgestone's board of directors in Tokyo. Bridgestone Firestone management have been highly criticized about how they handled the recall situation, and many industry experts predicted that a management shakeup was near. Bridgestone Firestone also named Isao Togashi as the company's new head of manufacturing and board vice president. More management changes will be happening in the next few weeks, said Lampe.


EXPLORER CRASHES HIGH WITH GOODYEAR, TOO According to a report in the Washington Post, the Ford Explorer, even when fitted with Goodyear tires, has a higher rate of tire-related accidents than any other sport utility vehicles. The analysis, which looks at U.S. accidents from 1997 to 1999, suggests that there may be a stability problem with the Explorer. Curiously, the data collected for the analysis also showed that Ford Explorers with Goodyear tires were far more likely than any other SUV to crash due to tire failure. Ford Motor Company has strongly countered the Washington Post report with claims that Explorers with Goodyear tires have not experienced a greater frequency of accidents. Ford moved to attack the size of data analyzed by the Washington newspaper, said to include about 2000 fatal accidents. Ford says that, based on miles driven, the Explorer has a lower fatality rate than other SUVs.

For more information on Firestone’s restructuring, and the latest on the Explorer tire controversy, click here.


CHRYSLER WILL GET M-B TRANSMISSION, ENGINES DaimlerChrysler has announced that it will begin fitting Mercedes-Benz automatic transmissions to Chrysler vehicles. The company will spend $455 million to revamp its Kokomo, Indiana, factory for building the German-designed transmissions. The factory will build about 400,000 transmissions per year starting in 2004. This is the first significant instance of parts-sharing between Chrysler and Mercedes-Benz automobiles. DaimlerChrysler also has plans to begin putting Mercedes-Benz engines in Chrysler products, according to the Financial Times and Bloomberg News. Such an arrangement would give Chrysler more flexibility with platforms, product development, and manufacturing.

For more information on DC’s plans to share components, click here.


CA JUDGE ORDERS MASSIVE FORD RECALL A California judge has ordered an unprecedented massive recall of Ford cars and trucks. The order, which would cover as many as 1.7 million vehicles from the 1980s and early 1990s (and nearly 20 million vehicles throughout the U.S.), applies to vehicles in which Ford used its thick film ignition (TFI) module. Various class action lawsuits and consumer groups allege that the ignition modules have had a flawed design from the beginning, and that the modules are dangerous because failure due to heat buildup can lead to stalling while the vehicle is in motion. Ford has denied that the modules either have a design flaw or introduce a safety hazard. Ford plans to appeal the California judgement, on the grounds that the judge is not qualified to order a recall. Such a recall could cost $125 million in California alone.

For more information on the court order and Ford’s response, click here.


DC FORMS E-COMMERCE GROUP DaimlerChrysler AG has formed a new e-commerce subsidiary that should help cut costs by consolidating some operations. DCX Net will tie in with the Covisint online supplier exchange, and it will also incorporate other business-to-business e-commerce that the company conducts. 

For more on DaimlerChrysler’s new e-business subsidiary, click here.


DELPHI AND PALM HOOK UP Delphi Automotive Systems and Palm Inc. have announced their mutual investment in a venture aimed at providing in-car Internet service within a year. The venture, with San Jose, California-based Mobile Aria Inc., plans to design the service around Palm's handheld computer platform and Delphi's upcoming Communiport docking device. E-mail will be available at first, and eventually information services will be available.

For more on Delphi and Palm’s plan for in-car Internet, click here.


TOYOTA LOWERS U.K. PRICES Toyota has joined several other automakers' lead by announcing that it will cut U.K. prices by up to fifteen percent. The move comes after a request by the British government to lower new-car prices. Car prices in the U.K. are about ten percent higher than for the rest of Europe. Ford and Rover have recently announced similar cuts.


QUALITY DOWN ON SOME TOP MODELS According to the latest survey by J.D. Power and Associates, new-vehicle quality has stayed about the same, although some brands that normally score high posted lower-than-usual scores, reports USA Today. In the survey, which asks new-car buyers in the last 90 days how many problems they have experienced, several top-scoring vehicles by Toyota, Honda, and Acura experienced much higher frequencies of problems than earlier this year. Overall, since the same survey four months earlier, 105 out of 184 models included earned worse ratings. The firm guesses that the fall in quality in some models could be attributed to the record-high production volume in recent months.


TEXACO BUYS GM SHARE OF BATTERY VENTURE Oil giant Texaco will buy General Motors' share of an electric-battery joint venture. Currently, GM owns 60 percent of the venture and Texaco owns only 20 percent of the venture, called Energy Conversion Devices. The venture was formed in 1994, to make nickel metal hydride batteries for electric vehicles, although Texaco first invested in the venture this past May.


AUTO-SAFETY BILL PASSES HOUSE, SENATE The U.S. House of Representatives and the U.S. Senate have passed similar versions of an auto-safety bill that includes several important and controversial issues. The bill includes provisions requiring rollover testing, the phasing-in of tire-inflation warning systems, punishment of auto executives who don't properly reveal safety problems, and a general strengthening of the National Highway Traffic Safety Administration (NHTSA). The auto-safety bill is expected to be signed into law by President Clinton. The final version of the bill is significantly weaker than what was originally proposed, consumer advocates complain, because it includes a "safe harbor" provision that would grant whistle-blowers amnesty for reporting problems within a reasonable amount of time. The bill requires better reporting of safety defects by government regulators, new rollover testing, tire-inflation warning systems, and jail terms for company officials that withhold safety defect information.


FORD FACES UNION UNREST IN ENGLAND Ford Motor Company is considering adding several hundred more jobs at its Dagenham, England, engine plant in order to avert a possible strike, according to Bloomberg News. Local union members, angered by company plans to shut down the adjacent assembly plant, are considering a strike at the 7500-worker complex. Ford announced earlier this year that it plans to cut more than 2000 jobs at the facility, and completely close the assembly facility, which now assembles Ford Fiestas, by 2002. Late in the week, Ford Motor Company agreed to offer 300 additional jobs at its Dagenham, England, plant in order to avert a strike, but union leaders say it's not enough.


GM EARNINGS DOWN General Motors has reported third-quarter earnings down by 5.5 percent, mainly due to poor market performance in Europe. Overall company earnings for the third quarter were at $829 million, down from $877 million for the same period a year ago. Sales showed a modest drop, to $42.6 billion from $42.8 billion a year ago. The company lost $181 million in European operations but profited eight percent higher in North America, at $728 million. Another loss-factor was its growing Hughes Electronics group, which lost $88 million due to expansion.


FIRM RECRUITS LOSH AND STALLKAMP Industrial firm MascoTech Inc. has recruited two former auto executives to help run the company, reports the Detroit News. Former GM financial officer J. Michael Losh and former Chrysler president Thomas Stallkamp will join MascoTech, which makes fasteners, powdered metals, gaskets, and sealants, among other things. The firm is in the process of being bought by an investment group headed by former Reagan budget director David Stockman, and it is preparing to go public.


SATURN: THREE’S A CHARM While Saturn isn’t giving out the name of its SUV yet, the GM division is letting plenty of other details leak out, and it is showing the vehicle at the Miami auto show. The SUV will be offered in either front or all-wheel-drive configuration, and buyers will get a choice of a 2.2-liter inline four or 3.0-liter V-6. With the four-banger, you’ll be able to opt for either a five-speed stick or GM’s first continuously variable transmission (CVT). The crossover will be produced at the Spring Hill, Tennessee, plant currently producing Saturn’s compact SL sedans and SC coupes.


NEW MODELS AT MIAMI SHOW Also at the Miami show, the redesigned 2002 Ford Explorer, the 2001 Honda Civic, 2001 Kia Optima, and the upcoming Ford Thunderbird made their first public appearances. Daewoo showed a Nubira concept vehicle and a Lanos coupe, and Jaguar introduced a special edition of its XK, called the XKR Silverstone. The special Jag has a platinum silver color scheme, "Detroit-style" wheels and brakes, and new interior trim. Otherwise, the Miami show floor is swamped with SUVs and crossover vehicles on display. For more information on this increasingly important show, see www.sfiautoshow.com.

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