Week of October 18, 1999

October 18, 1999





NHTSA DEFLATES SIDE AIRBAGS The National Highway Traffic Safety Administration (NHTSA) is warning owners of vehicles equipped with side airbags that the devices can harm or kill children sitting too close to them. NHTSA says recent tests on child-sized, unbelted test dummies showed the potential for serious injury or death when the airbags explode after a collision. The agency is also concerned that rear side airbags are reducing the safe space for children in the rear seat, where it recommends seating them to avoid danger from front airbags. NHTSA has asked automakers manufacturing the rear airbags to deactivate them until they can prove the bags are without risk; currently, only GM, BMW, Audi, and Mercedes-Benz offer the rear bags.



FORD UNVEILS NEW STRUCTURE Jac Nasser has signed off on his own tweaks to Ford’s massive globalization effort. As of Jan. 1, Nasser’s Ford will set up 11 business units that will give its regions more flexibility in developing cars and serving markets.

The 11 markets will include Ford North America, Ford Europe, Ford Asia Pacific and Ford South America (the Ford North America business unit will include Ford Car, Ford Truck, Ford Division, Ford Canada and Ford Mexico). The Premier Automotive Group will consist of Jaguar, Aston Martin, Volvo, Lincoln and Mercury, a late inclusion that leaves some analysts puzzled as to its future goals. Other units will include Ford, Credit, Hertz, customer service, and Ford's new e-commerce unit. In addition, Mazda, of which Ford owns 33 percent, and the Visteon Automotive Systems parts unit will also be global business units.




GM MAKES $877 MILLION IN Q3 General Motors and Delphi Automotive Systems took advantage of strong sales and labor peace to post strong earnings for the third quarter. GM reported it earned a record $877 million or $1.33 during the third quarter, beating the expectations of analysts by more than 7 cents per share. The results were a $1.19 billion turnaround from the $309 million loss in the third quarter of 1998, which came in the wake of a 54-day strike by the United Auto Workers at two of the company's key installations in Flint, Michigan.


For more on the GM results, click here.



DODGE COMES BACK TO NASCAR Confirming all sorts of rumors and reports, DaimlerChrysler announced last week that its Dodge division will re-enter the NASCAR circuit in 2001. Dodge will run two teams on the Winston Cup circuit, starting with the 2001 Daytona 500. The company’s return follows years of stellar growth in NASCAR fan loyalty, TV ratings, and endorsement and ad revenue. NASCAR attendance has surged 65 percent in this decade, and of the top 10 largest sporting events in the country, each surpassing 100,000 spectators, nine are NASCAR events, Dodge said.



GM STICKS WITH DEALER BUYOUTS In the face of dealer outrage, GM says it’s proceeding apace with its plan to purchase up to 10 percent of its U.S. dealers, some 770 dealerships in 130 markets, over the next few years. GM CEO Jack Smith met with National Automobile Dealers Association (NADA) Chairman Jim Willingham for an hour last Wednesday, Reuters reports, and during the meeting, Smith told the dealers GM needs to protect its brands as well as increase its sales and slumping market share, now at 29 percent. GM has 7,753 dealerships in the U.S., and is in the early stages of winnowing its dealer body to improve customer service, as well as beginning a comprehensive Internet marketing strategy that may include direct delivery of vehicles ordered online.



QUEBEC BIDS TO KEEP GM PLANT The Quebec government confirmed on Wednesday that it has offered CD$360 million (about $144 million) to General Motors of Canada Ltd. to keep the automaker's ailing Ste. Therese plant alive. The Montreal newspaper La Presse says the funds would be earmarked to reinvent the plant into a modular-assembly site for a future vehicle. The plant, north of Montreal, produces the Chevrolet Camaro and Pontiac Firebird, neither of which have firm commitments from GM to stay in production beyond 2001. "If GM would close, 1,500 job losses would hurt us a lot," a Quebec spokeswoman said.



GM, SUZUKI TO BUILD IN JAPAN GM and Suzuki will develop and market a new vehicle together and build it in Japan, both companies announced last week. The vehicle, to be offered for sale in the Asian market starting in 2001, is called the YGM-1, and is based on Suzuki's new small-car platform, with styling input from GM. Neither company advised where the vehicle would be built, but a Suzuki plant in metropolitan Tokyo is being considered. The YGM will be GM's first passenger car to be manufactured in Asia for the Asian market.



GM, DAEWOO TALK ON ALLIANCE GM’s been keeping busy in Asia – while going over the details of its production deal with Suzuki, the company pushed ahead with its plans to form a strategic alliance with South Korea’s Daewoo. A 30-member GM delegation, led by Executive Vice President Lou Hughes, arrived in Seoul last week for a five-day visit to discuss details, according to Reuters. GM and Daewoo signed a memorandum of understanding in August to form a strategic alliance, the news service reports; Daewoo is said to be interested in selling GM its automobile business. Daewoo owes some $48 billion to its creditors, against some $65 billion in assets. South Korea's second-largest automaker, Daewoo produced 900,000 vehicles last year, including the American-market Lanos, Nubira, and Leganza.



FIAT ANGLING FOR SAMSUNG Add another company to the bottom-feeders seeking bargains in Korea. Fiat SpA, the world's sixth-largest automaker, has served notice that it is interested in buying the carmaking operations of South Korea’s Samsung Motors. Fiat is looking to Samsung to form a foundation for a production center in east Asia. General Motors and France’s Renault are also said to be interested in Samsung, which rolled out its first cars in April 1998 and went to bankruptcy court this past June.



VAUXHALL TO SELL ONLINE Meanwhile, in the U.K., GM’s Vauxhall brand says it will be the first automotive brand to sell its vehicle directly to consumers online. Beginning Nov

. 1, a buyer in the U.K. will be able to order his or her Vauxhall online and have it delivered to their doorstep within a week of placing an order. Using the Internet, customers will be able to fix a test drive at home and arrange financing. A series of special ".com" cars, including the Corsa, Astra, and Vectra, will be offered.




VW SUES VW(.NET) Volkswagen announced last week that it has filed a lawsuit against an Internet service provider in the latest struggle over the VW.net domain name. In the suit filed in federal court in Alexandria, Virginia, Volkswagen claims that Virtual Works, an Internet provider, is trying to extort the company and is committing cyberpiracy. Earlier this year, Virtual Works filed suit against Volkswagen to block the automaker's attempt to have the domain name reassigned. Volkswagen said it is asking the court to bar Virtual Works from selling the domain name to the highest bidder or otherwise using the www.vw.net site, Reuters reports. Volkswagen claims Virtual Works demanded a large payment from the automaker, or else it would sell the Web site to the highest bidder.

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