Week of April 19, 1999

April 19, 1999

FUEL CELLS HIT THE ROAD
GM, FORD EARNINGS UP
ESCORT STAYS ON CALL
GM WANTS UNIVERSAL SIDE-BAG TESTS
TOYOTA SHUFFLES EXEC DECK
PEARCE NEXT GM HEAD?
GM SADDLES UP FOR MORE TRUCKS
A NEW PLANT FOR HONDA?
GM SETS DELPHI FREE
FORD SNAPS UP BRIT REPAIR CHAIN
GM FUNDS STRIKE WAR CHEST
SATURN STICKS IT OUT IN JAPAN

 

FUEL CELLS HIT THE ROAD. The world's first fuel cell demonstration fleet will soon go into operation in California. Details are sketchy, though a full announcement is due this week (and will be covered in depth by The Car Connection). The project will team up DaimlerChrysler AG, Ford Motor Co., Canadian fuel-cell company Ballard Power Systems, and oil companies Texaco, Shell and Arco. Earlier this year, DaimlerChrysler unveiled a fourth-generation fuel cell prototype, dubbed NECAR 4, which the company said it hopes to put into mass production by 2004. NECAR 4 is a modified version of a European Mercedes-Benz A-Class sedan. Ford has also expressed a goal of putting a fuel cell-powered vehicle into production by as early as 2004. DaimlerChrysler and Ford entered into a joint venture with Ballard last year. It's believed the three oil companies will provide a special fuel that can be used by the demonstration fleet vehicles to produce the hydrogen gas needed to run a fuel cell. This fuel-cell announcement was followed immediately by the news of terms between General Motors and Toyota, which said they will team to develop more fuel-efficient vehicles, and will cooperate on low-emissions vehicles such as fuel-cell cars and hybrid cars in the near future.

For more on the NECAR 4 vehicle, click here

 

 

GM, FORD EARNINGS UP. It was smiles around Detroit and Dearborn last week as both number-one automaker GM and number two Ford announced increased earnings for the first quarter. GM earned $2.1 billion, or $3.04 a share, setting a company record for any quarter and besting its year-ago figure of $1.6 billion, or $2.27 a share, by 31 percent. Ford saw a 20 percent increase in operating earnings at $1.81 billion, or $1.46 a share, against $1.51 billion, or $1.22 a share, a year earlier. Light trucks, including pickups and SUVs, continue to lead the charge for both companies – for the first quarter, 49 percent of all vehicle sales went to trucks, up from 48 percent last year. Although GM's U.S. vehicle sales were up 6 percent in the quarter, its market share declined to 28.8 percent from 30.2 percent in the first quarter of 1998 – largely due to a shortage of hot-selling trucks. GM’s Silverado and Sierra full-size trucks have been strapped for capacity since their introduction last fall.

Ride along in GMC’s new Sierra by clicking here

 

 

ESCORT STAYS ON CALL Riding a sales success that refuses to die off, Ford says that it will keep the Escort sedan in production this fall even after the new Focus subcompact goes on sale. As we reported last week, Ford plans to consolidate production of the Escort at its Hermosillo, Mexico, assembly plant, and sell the Escort alongside the European-bred, New Edge-styled Focus.

Escort sales rose by 7 percent in the first quarter of this year over last, and the Escort still ranks as the fifth-best-selling car in America. Insiders say Ford is selling both models to dispel any notion that the roomy, pert-handling Focus is a replacement for the older sedan — instead, it's ending up more as a replacement for the slow-selling Contour and Mercury Mystique compacts, which may be dropped at the end of this year. The Focus will be available as a sedan and wagon this fall and as a two-door coupe early next year. The company hasn't said when it will drop the Escort for good, but plans for a mini-ute on the Focus platform would seem to indicate the Escort has only two more years to live.

 

 

 

GM WANTS UNIVERSAL SIDE-BAG TESTS The Wall Street Journal is reporting that GM will ask other automakers to submit their side-impact airbags to a safety test they use in order to stave off government-imposed testing. More surprising yet, engineers at Ford and DaimlerChrysler are said to be in agreement with the tests, which the automakers will propose to the National Highway Traffic Safety Administration at a Washington meeting this week on the topic. The test was designed by the International Standards Organization, and the NHTSA is "very interested in what the industry has to offer,'' a spokesman told the Journal. Last week, the Feds voiced concern that side airbags may injure children and small adults and announced plans to study the effect of the bags on those occupants.

 

 

 

 

TOYOTA SHUFFLES EXEC DECK Japan's No. 1 automaker is promoting three executives to improve its strategic decision making, the company announced last week. Current Toyota Chairman Shoichiro Toyoda, a member of the family that started the company, will become honorary chairman, while Toyota President Hiroshi Okuda will replace him as chairman. The company's new president will be Fujio Cho, an executive who had run Toyota's U.S. manufacturing operations for six years and was a leading light in the start-up of Toyota's Georgetown, Kentucky, facility. Cho, who joined Toyota in 1960, will assume his new post in late June.

For more on Toyota's new American-made Tundra, click here.

 

 

 

 

PEARCE NEXT GM HEAD? GM Vice President Harry Pearce is the leading candidate to become the firm's next chairman, The New York Times reports. Pearce, the company's current vice chairman, has been assuming some of current Chairman John Smith Jr.'s duties in preparation for the role. First-runner-up Richard Wagoner Jr., 46, the General's president and chief operating officer, is also preparing for the transition by taking on a wider role in the company's strategy. The Times opines that Smith may retire in the next year, leaving Pearce, who returned to the company in December after a bone marrow transplant to treat leukemia, in the driver's seat.

 

 

 

GM SADDLES UP FOR MORE TRUCKS GM is messing with Texas again. Its Arlington truck-assembly plant, which was saved from the wrecking ball in the early 1990s, is getting a $400 million renovation that will enable it to build more of GM's popular trucks and sport-utes. GM says the expansion, which should be completed by 2001, will add 500 jobs at the plant and will allow the plant to be more flexible to build variations of the full-size truck platform. The plant is expected to build the next-generation Chevrolet Tahoe, GMC Yukon Denali, and Cadillac Escalade in higher volumes than is now possible; the plant may also add another high-buck truck model when it opens its new space in the fall of 2000. Arlington is one of six GM plants that are equipped to build the new full-size trucks and their variations.

Go for a ride in GMC's new Sierra by clicking here.

 

 

 

 

A NEW PLANT FOR HONDA? Honda may be the next car company to expand its U.S. facilities, Reuters reports. Last Friday, the Japanese carmaker said it might need more North American capacity by 2001, but no concrete decision had been made. The Japanese business daily Nihon Keizai Shimbun triggered the speculation when it reported that Honda will build a new automobile plant in the United States or Canada by 2001, its third plant in North America. Honda plans an initial investment of about 30 to 40 billion yen in the new plant, which will have a production capacity of 100,000 cars per year, the daily said. Honda's Canadian and U.S. plants now produce Civic, Accord and Odyssey models. The two plants produced a total of 874,500 cars in 1998; Honda sold a total of 1.01 million cars in North America in calendar 1998.

 

 

GM SETS DELPHI FREE General Motors has confirmed that it will spin off the rest of its interest in the world's largest parts maker, Delphi Automotive Systems, in a tax-free distribution valued at $12 for each GM share, Reuters reports. The company will turn over its remaining 80.1-percent stake in Delphi, valued at $7.8 billion, to GM shareholders May 28. Delphi execs, including Chairman John Battenberg, hope the spinoff will enable Delphi to win more non-GM business; currently the company builds 80 percent of the parts it makes for GM. Delphi makes fuel and emissions controls, steering and suspension parts, air bags, air conditioners, batteries, brakes, radios and wiring.

 

 

FORD SNAPS UP BRIT REPAIR CHAIN The cradle-to-grave car company came a step closer to reality last week as Ford announced plans to purchase Britain's Kwik-Fit car-repair center chain for $1.63 billion. The move fits into Ford's new strategy to reinvent its service centers and retain customers beyond their car purchases. The purchase also gives Ford another outlet for parts sales from its Visteon subsidiary, which may be spun off from the company later this year. Kwik-Fit, based in Edinburgh, Scotland, has 1,900 stores in Europe, with about half in the U.K.

 

GM FUNDS STRIKE WAR CHEST GM is slowing a stock-repurchase plan to build cash reserves in case of a UAW strike this summer, the AP reports. GM Chief Financial Officer J. Michael Losh told analysts last week of the move, although a GM spokesman confirmed that the company does not expect a strike this year. Last year, a nearly two-month-long walkout forced GM to shut down nearly all its 29 North American assembly plants, more than 100 parts operations, and cut costs by trimming advertising and discretionary expense items, such as overtime and cellular telephone use. The UAW's three-year collective bargaining agreement with the three traditional Detroit automakers expires Sept. 14. The pact covers 220,000 workers at GM, as well as 101,000 at Ford Motor Co. and 75,000 at DaimlerChrysler.

Read more about this summer's labor talks by clicking here.

 

 

SATURN STICKS IT OUT IN JAPAN Facing a persistent recession and indifferent Japanese consumers, GM's Saturn brand says it's committed to the Japanese market. New Saturn President Cynthia Trudell said last Wednesday that disappointing sales in Japan — Saturn sold only 1,400 cars in the country last year — wouldn't deter the company from establishing a beachhead in Asia. There are some signs of a turnaround: This year, sales are up 16 percent, to 365 cars so far. Saturn maintains an exclusive dealer network of 20 in Japan. The company is poised to introduce a new LS sedan and LW wagon that may eventually be sold in Japan; plans are also afoot for a compact sport-utility vehicle to be built beginning in 2001.

For more on Saturn's sales and labor struggles, click here.

To see the new Saturn LS sedan and wagon, click here.

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