Week of August 2, 1999

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JULY SALES SCORCHING
POWER DROPS SATURN A NOTCH
COBRA 'STANG HAS LEAKY BRAKES
FEDS STUDY DC, GM GAS TANKS
DC SAYS NO TO ACQUISITIONS THIS YEAR
GM ASKS VERDICT BE OVERTURNED
TRUCK COUPONS BOOMERANG ON GM
CADDY TO DUMP LOGO
HONDA TO BUILD NEW ENGINE PLANT
FORD WANTS TO SELL MORE TIRES
AUTOBYTEL BUYS CHILTON
FORD CHOOSES CARCLUB.COM
BUMPER STICKERS RATE TEEN DRIVING

JULY SALES SCORCHING Auto sales aren't taking a break from their torrid pace. Next week, automakers are expected to report another record month for vehicle sales. Analysts told Reuters they expect the rate of sales to be off slightly from recent months, but the pace should still keep annual sales on a record-breaking run. Of the biggest automakers, GM is expected to report sales as much as 63 percent higher than last year's strike-burdened July, but its market share could dip to 29 percent. Ford is expected to show an overall increase of 1 percent, while DaimlerChrysler could credit hot vehicles such as the Jeep Grand Cherokee with an 8-percent rise. Import brands will likely report a 6.3-percent increase: All European brands should report sales increases, but Japanese makers are on a slight retreat.

POWER DROPS SATURN A NOTCH Saturn isn’t the top brand for dealer satisfaction for the first time in five years, according to J.D. Power. Power's annual survey of sales satisfaction puts Saturn at No. 6, behind Cadillac, Jaguar and Volvo (all ranked No. 1), Mercedes-Benz, and Land Rover. Apparently Saturn's slipping sales are turning up the tension in the retail environment: Some 18 percent of Saturn customers said they felt pressure during the sales experience, up 5 percent from last year. As for the top brands, Power credits Land Rover's new vehicle Centres with developing a cozy sales atmosphere for the brand.

COBRA 'STANG HAS LEAKY BRAKES The National Highway Traffic Safety Administration (NHTSA) says that the last generation of Ford's Mustang SVT Cobra may develop leaks in its braking system. The 1994-1998 Cobras are suspected of developing leaks in front brake hoses under race conditions. At least 21 brake hoses have failed in 15 vehicles, with two resulting in racetrack crashes, the NHTSA said. Ford has notified SVT Mustang Cobra owners through an article in its "SVT Enthusiast'' magazine, which is mailed to more than

34,000 owners, the agency said. They were told that a new front brake hose using a steel section to dissipate heat is available from Ford dealers. Nearly 40,000 of the 1994-98 model-year SVT Mustang Cobras were sold, Ford said.

FEDS STUDY DC, GM GAS TANKS The NHTSA is stepping up its investigation into possible fuel-tank leaks in some 2 million DaimlerChrysler 1996-1999 minivans and nearly 1.3 million 1994-1999 GM pickups. The agency says both companies are responding to the inquiries, which could be upgraded to a recall if enough evidence of leaks in side-impact crashes is presented. Engineers from the NHTSA will begin examining the tanks to determine if a recall will be pursued.

DC SAYS NO TO ACQUISITIONS THIS YEAR DaimlerChrysler Chairman Robert Eaton told reporters last week that his company does not foresee any more acquisitions this year, putting a damper on speculation that DC would bid for Fiat or Mitsubishi. Eaton told Reuters that consolidation in the auto industry would continue but said the world's No. 5 automaker did not expect to make an acquisition. "Right now, we are not in discussions with anybody in the automobile area, and therefore I would not expect that there would be an acquisition this calendar year," Eaton said. "On the other hand, consolidation is going to continue. If the right opportunity presented itself, as we've said, we'd look at it."

GM ASKS VERDICT BE OVERTURNED As expected, GM has asked a California judge to overturn the recent $4.9 billion jury verdict levied against it. The jury awarded the sum to Patricia Anderson and her family in compensation for burns they suffered when their 1979 Chevrolet Malibu exploded in a 1993 accident after being rear-ended by a drunk driver. GM says the verdict was "shocking," and noted that the vehicle met all current safety standards when it was produced. The Anderson's attorney argued during the trial that the fuel tank in the Malibu was too close to the rear bumper and insufficiently protected from explosions. The $4.9 billion judgment included $107 million in compensatory damages and $4.8 billion in punitive damages.
For more on the GM verdict, click here

TRUCK COUPONS BOOMERANG ON GM GM's other gas-tank lawsuit verdict is coming back to haunt it. Earlier this decade, GM agreed to send some 6 million buyers of its full-sized trucks a $1,000 coupon, as resolution to lawsuits charging that the trucks' gas tanks were placed haphazardly. At the time, Reuters reports, some critics thought the company got off too easily. Now the coupons have become hot commodities: Some are being sold to brokers who re-sell them for a profit to interested customers. A Houston company, the Certificate Redemption Group, has offered to buy the coupons from possessors for $100.

CADDY TO DUMP LOGO As it renovates its product lineup, Cadillac is reinventing its logo, and may dump the wreath and crest design entirely. Cadillac manager John Smith told reporters at the introduction of the new Cadillac DeVille that the current logo may not be as "forward looking" as the vehicles Cadillac will launch in the coming years. "Without question, there are significant segments of the population, particularly within this country, for whom that symbol has great meaning," Smith said. Focus groups responded well to new logo designs, he added. The current logo combines a wreath with the family crest of Le Sieur Antoine de la Mothe Cadillac, who founded the city of Detroit in 1701. The new logo may arrive before Cadillac's centennial in 2002.
For more on the 2000 DeVille, click here

HONDA TO BUILD NEW ENGINE PLANT Honda, Japan's third-largest automaker, plans to spend about $87 million to build a new plant for low-emission engines, Reuters reports. The plant will be in Saitama prefecture, outside Tokyo, and will have an annual capacity of 500,000 engines.

FORD WANTS TO SELL MORE TIRES A new ad campaign from Ford bowing this week will attempt to boost the automaker's tire sales. The plan is to raise tire sales at the Big Blue Oval more than sixfold, to 6 million units annually by 2001.

The campaign will advise consumers that Ford and Lincoln Mercury dealers — "America's newest tire store," stocks name-brand treads. After the tire ads break, Ford will add ads to boost its parts sales, in accordance with its goal to double its share of the $100 billion U.S. replacement parts market to 12 percent, or $12 billion, from 6 percent, or $6 billion annually.

AUTOBYTEL BUYS CHILTON Autobytel.com, one of the Net's biggest car-buying referral services, has purchased the publishing company that issues the Chilton car-repair manuals. For $17.5 million in cash and stock, Autobytel can now provide customers with reference books for do-it-yourself car repairs and itemized lists of repair costs. The Chilton manuals, started in 1925, will be available on the Autobytel.com site for free. The company also announced that it might partner with auto repair retailers, such as Sears, Roebuck & Co. or Kmart, to provide coupons for oil changes, clutch repairs, and other vehicle services.

FORD PICKS CARCLUB.COM In further efforts to keep customers happy from cradle to grave, Ford has taken a minority financial stake in carclub.com (www.carclub.com). The online site is a major source of auto information, products and services, sales referrals, and offers assistance in purchasing, financing, insuring, maintaining or selling vehicles. The site will remain an independent company apart from Ford.

BUMPER STICKERS RATE TEEN DRIVING You've seen the stickers asking, "How's my driving?" Now some bumper stickers are asking you to rate the teen-age driver behind the wheel. "How's my teen driving? 1-877-TAKE-KEYS" is one such sticker, which allows others to report reckless driving among younger drivers. The stickers have been spotted in California, Missouri, Texas and Florida, Reuters reports. Most of the regionally inspired programs work the same way: Each sticker has a specific code to be used when a complaint is lodged. The hotline calls the parents to report the poor driving habits. "It makes the kids so darned paranoid that they become better drivers," said Tom Deats, a Texas police officer whose service, -800-4MY-TEEN, has enrolled 2,000 teen-age drivers in the United States and Canada. But not everyone loves the idea, Reuters adds. "That sucks," said Katie Smithe, 16. "I'm not a good driver. My parents would be getting calls 24-7."