Week of September 20, 1999

September 20, 1999





DC DOMINATES FRANKFURT It was a busy Frankfurt show for most automakers, but especially for DaimlerChrysler AG. A host of concept and production cars were unveiled, including a new A2 city runabout from Audi, a BMW coupe to match its exotic Z8 roadster, and even a new Formula One race car from Ford subsidiary Jaguar. For its part, DaimlerChrysler unveiled its Java concept car, a Neon-based compact that may be sold around the world, and a roadster version of its embattled Smart microcar. But it wasn’t only the cars that DC brought to the show: It also brought denials of a report that Co-Chairman Robert Eaton would lose some of his power as a result of a coming management board shake-up. DC officials also denied another report from inside the company that its headquarters would be officially consolidated in Stuttgart.

For TCC’s complete coverage of the Frankfurt show, click here



DC, UAW SHAKE HANDS Phase One of this year’s UAW contract negotiations are complete, now that DaimlerChrysler and the United Auto Workers have reached agreement on a new labor contract. DC’s unionized workers won annual 3-percent raises for each of the next four years, as well as a $1,350 signing bonus. The DC deal is widely seen as a template for deals the UAW is trying to construct with GM and Ford. The latter two companies have yet to ratify a deal with the union.


For the complete story on the UAW talks, click here


SENATE VOTES DOWN CAFE MODS The U.S. Senate has effectively quashed an effort to raise the Corporate Average Fuel Economy (CAFE) bogey of 27.5 mpg for cars and 20.7 mpg for trucks. In a 55-40 vote, the Senate kept in place a three-year moratorium on reopening the CAFE standards, which measure average fuel economy for all of a manufacturer’s cars or trucks, from the smallest subcompact to the largest full-size SUV.



VW IN NEW PRICE-FIXING PROBE European legislators are looking into whether Volkswagen has been fixing the price of its Passat sedan, the AP reports. In the investigation, VW is said to have pressured German car dealers into dropping deep discounts on Passats, making German prices for the model the most expensive in Europe. Last year, VW was fined a record $106 million by the European Economic Commission for disallowing northern European customers to buy Volkswagens in Italy, where currency exchange rates and local pricing made them cheaper.



J.D. PICKS THOSE WITH ‘APEAL’ Who’s got the most appeal? Not your high-school cheerleaders. In the auto world, J.D. Power says it’s Volkswagen, General Motors, and Toyota (including Lexus). According to the 1999 J.D. Power and Associates 1999 Automotive Performance, Execution And Layout (APEAL) Study, those companies sell the most appealing vehicles. The 88,000-person study measures "what excites and delights owners" in their new vehicles. Among the winners: Volkswagen's Jetta, GTI, Passat and Beetle; the BMW 3-Series and 7-Series; the Chevrolet Corvette; Toyota, Lexus and Honda SUVs; General Motors' new trucks; and the midsize Dodge Dakota pickup.



NASSER REVAMPS ‘FORD 2000’ Ford may not be quite ready for the year 2000, according to Business Week magazine. This week’s issue says Jac Nasser, Ford’s new CEO, will fine-tune the "Ford 2000" global strategy put in place by his predecessor, Alex Trotman. The magazine reports that Nasser plans to split Ford’s North American auto brands into "strategic business units,'' such as Ford Car, Ford Truck and Mercury, to give brand managers more authority. The company may also reintroduce "market focus in regions … that will give Ford stronger brands and more appealing products," the magazine said.



FORD SETS ONLINE PLANS First GM, now Ford. Dearborn’s biggest employer said it will combine its burgeoning Internet enterprises into a single business unit that will help it link more effectively to customers. According to Reuters, the new unit will be headed by Brian Kelley, a Ford vice president who joined the company from General Electric Co. The new business unit will combine retail dealer and electronic commerce activity and will also integrate Ford's global electronic commerce activity from consumer purchase through Ford's entire supply chain. Behind the scenes, Microsoft and business solutions software maker Trilogy Software will design the information company and maintain it. Hinted at in the announcement is an in-car electronic service similar to GM’s OnStar.



FORD’S ROBERTS TO RETIRE Ross Roberts, Ford vice president and head of the company’s retail network, said he will retire at the end of the year. Roberts, 61, is a 37-year veteran of the company and former head of the Ford division. Roberts’ departure is seen as another blow to the company’s plans to consolidate some of its dealerships into a national retail network known as the Ford Auto Collections. Earlier last week, Automotive News reported that Ford will scale back the pace of forming retail collections and will consolidate in smaller groups and regions as its does.



FORD TO BUILD IN JAPAN In another response to GM’s PR machine, Ford Motor Co. said it will build vehicles in Japan starting in the year 2000. Ford will assemble a sport-utility vehicle for the Japanese market at affiliate Mazda’s plant in Yamaguchi, the Japanese Nihon Keizai newspaper reported. The paper also reports that Ford plans to build 3,000 to 5,000 units a year of the sport-utility vehicle with an engine displacement of more than 2.0 liters for sale through Ford dealers in Japan and possibly throughout Asia for possible export elsewhere in Asia. From these reports, we’re betting the Ford in question is the new compact SUV, the Escape, due out next year.

Want to see the Escape again? Click here.



DC RECALLS DODGES, CHRYSLERS Some 645,000 1993-95 Chrysler and Dodge automobiles will be recalled to repair engine cradle control arms, DaimlerChrysler announced last week. The recall includes the Chrysler Concorde, LHS, New Yorker, and Dodge Intrepid cars. There have been 39 reports of cracking or separating control arm brackets, the company said, but no serious accidents or injuries. Also, DC said it has recalled about 72,000 1994-95 Dodge Ram pickup trucks equipped with diesel or V-10 engines to reinforce the shock absorber tower assembly. About 75 customers have reported broken or cracked shock towers, mostly after off-road use, but no accidents or injuries resulted, DaimlerChrysler said.



SAAB RECALLS 9-3 Saab will recall 5,132 Saab 9-3 cars of the 1999 vintage because of problems with manual front-seat locks. On some 9-3 coupes and convertibles, Saab said, the "Easy Entry'' cable in the front driver and passenger seats can fail, causing the seat fore/aft adjustable mechanism to become unlocked. No accidents or injuries have been reported. Owners will be notified by mail, and repairs will be completed free of charge at authorized Saab dealerships.



PEUGEOT TO MEXICO? PSA Peugeot Citroen, Europe's No. 3 carmaker and all the rage of France, is said to be considering building an assembly plant in Mexico. Bloomberg reports that Paris daily Le Figaro made the assertion; the French paper also said that the possible project is being studied for financial feasibility and is also being shopped to five Mexican states. The company, France's biggest carmaker, is currently building its first plant in Brazil, which is poised to open in 2001.

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