Week of July 5, 1999

July 5, 1999



JUNE SALES STAY HOT GM and Ford lead the roster of automakers reporting ever-higher sales in June. While DaimlerChrysler last week reported its car sales slowed in June by 13.9 percent, GM says its car sales jumped 1.6 percent. Ford cars surged ahead of last year's pace by 10.6 percent. The good news wasn't limited to the wholly American firms: every European automaker showed higher U.S. car sales increase in June as well. Japanese brands fared better when trucks were figured in: Toyota, Honda, and Nissan reported total vehicle sales gains of 4.9, 1.6 and 4.8 percent, respectively.


BUICK CITY TURNS OUT THE LIGHTS A 95-year history of carmaking came to an end last week as GM closed its Buick assembly plant in Flint, Michigan. In 1997, GM announced it would close the plant and either retire or transfer the plant's 1,400 workers remaining. Some 200 temporary workers were fired as a result of the closure. The Buick City plant assembled Buick LeSabre and Pontiac Bonneville sedans; those vehicles are being switched to GM facilities in Orion Township and Hamtramck, Michigan, in the wake of the closure. GM is currently negotiating with the city of Lansing, Michigan, to build a new luxury-vehicle assembly plant for future Cadillacs.


GM BUYS INTO HUMMER While its sedan business is tightening its belt, GM's truck wizards have tapped into the marketing mystique of the AM General Hummer by purchasing marketing rights to the civilian version of the military vehicle. Last week, GM and AM General announced that the world's biggest automaker would buy the right to use the Hummer brand name worldwide, while AM General would continue to build the vehicles at the Mishawaka, Indiana, assembly plant. GM will take over marketing and distributing the commercial version of the Hummer through its dealers next year. As recently as two weeks ago, AM General had purchased the rights and machinery for the Hummer's 6.5-liter diesel engine from GM.


EPA WANTS CLEAN-AIR RULES BACK The U.S. Environmental Protection Agency will appeal a recent federal court ruling that rolled back the next stage of cleaner-air legislation, which was due to be phased in starting in 2003. In May, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 that the EPA had been awarded overly broad powers in defining the new air-pollution rules, which would further restrict the soot and ozone-related emissions from cars and trucks. The courts are expected to respond to the appeal by the end of July.


DC SAYS MINIVANS ARE SAFE DaimlerChrysler is again defending its minivans as safe in the wake of a European study that gave the vans an "appalling zero rating" in a front impact crash test. In a test of eight "people carriers" under the European New Car Assessment Program (NCAP), the Chrysler Voyager received a two-star rating overall and a zero for frontal-impact protection. DaimlerChrysler responded that it will study the results, but also answered that the high-speed frontal crash — which less than 1 percent of drivers would experience on the road — did not reflect the vehicle's overall safety. The Renault Espace received the best safety rating of four stars in the test, along with the Toyota Picnic.


FEDS LOOK INTO GM TRUCKS The National Highway Traffic Safety Administration (NHTSA) is looking into the latest GM full-size pickups in response to owner complaints of unexpected steering wheel movement at moderate speeds. The affected models include 1997-1999 C/K pickups, and Suburban, Yukon and Tahoe sport-utility vehicles. GM estimates there are more than 1.5 million of the vehicles on the road. The NHTSA says 76 drivers have complained that the trucks' power steering system is causing sudden exaggerated steering movements during lane changes and turns. GM says the electronically modulated power steering system is intended to improve driving feel.


FORD RECALLS CONTOUR/MYSTIQUE Ford is bringing back some 703,000 1996-1998 Ford Contour and Mercury Mystique models for faulty wiring in the headlight switch. The wiring could cause panel lights and parking and taillamps to malfunction, the company says. While no fires or accidents have resulted, the company says instrument panel and other lights may malfunction. The switch and, if necessary, the wiring harness affected will be replaced free of charge.


DC REVAMPS STYLING DEPARTMENT The face of the former Chrysler Corp. continues to change with the retirement of Neil K. Walling, DaimlerChrysler's U.S. design chief, and the wooing away of VW's Freeman Thomas. Walling, 55, is vice president of exterior design and has worked on 40 Chrysler concept cars and every generation of its minivans. DC VP Trevor Creed will take on Walling's duties, while new DC stylist Freeman Thomas — late of Audi's TT and the New Beetle — joins the company as vice president of advance product design strategy. Thomas, 41, had been VW's U.S. design studio chief, and before that had worked at Porsche.


IT'S CURTAINS FOR 3000GT, CUTLASS Mitsubishi has rung the death knell for the showy 3000GT sports car. Slow sales mean that this will be the last year for the V-6-powered, two-seat coupe and its Spyder hardtop convertible variant. Mitsubishi sold just 4,100 of the cars in the United States last year, down from a high of 15,230 in 1994. This year, the 3000GT found only 1,476 buyers through the month of May. The 3000 GT will continue to be sold in Europe and Japan, but in the U.S., Mitsu hopes its image will be transferred to the new Eclipse sport coupe now making its debut. Separately, Oldsmobile built its final Cutlass last week as well. The venerable nameplate is being retired as the Oldsmobile Alero assumes the last Cutlass' role in the company's lineup. The final Cutlass will be shipped to Lansing to be installed in the company's museum.

For more on the new 2000 Eclipse, click here


GHOSN TAKES RENAULT TO NISSAN Carlos Ghosn, the former Renault star who became the No. 2 executive at Nissan on June 22, will begin a massive cross-cultural program to prepare the companies for the changes needed to benefit from the "Alliance Nissan-Renault." Ghosn will deliver the broad outlines of his plan to speed up Nissan's recovery in early July. Nissan and Renault have already said that the first early synergies will come from purchasing efficiencies: To cut costs, Ghosn is likely to use the same sort of cross-functional teams he used as a key to cutting costs at Renault. Ghosn said recently that within Alliance Renault-Nissan, "we expect to enhance our international development. We will join our forces for that, on markets where we are not present yet, like Russia, or use the existing position of one of us, like Mercosur," where Renault is establishing a factory and distribution network. Details of Ghosn's plan will be announced at the Tokyo Auto Show in October.


KELLER GOES TO PRICELINE Noted automotive analyst and former Motor Trend contributor Maryann Keller is headed to the Internet. Keller will join Priceline.com, the Web site that features a patented business model by which customers name their own price. She becomes the company's first president of its Automotive Services unit. Keller is charged with building a management team for Priceline.com's Automotive Services unit and with smoothing the nationwide rollout of Priceline's new-car purchasing service later this year. Keller comes from Furman Selz (now part of ING Barings), where she served as the firm's lead auto analyst since 1986. She is the author of two books: "Rude Awakening: The Decline, Fall and Struggle to Recover at General Motors"; and "Collision: GM, Toyota and Volkswagen and the Race to Own the 21st Century."


AUTO DOCS CHARGED WITH FRAUD Thirteen doctors have been charged with mail fraud for allegedly supplying false disability reports to GM and DaimlerChrysler employees, Reuters reports. A series of undercover visits by investigators found the physicians were issuing sick notices to the employees although they exhibited no health problems. Some doctors cited in the sting charged as little as $25 for a note covering a one-day absence and up to $120 for a two-week leave, according to Reuters.


ROVERS HEAD FOR KOSOVO A group of seven Land Rovers is now on the ground in Kosovo as part of a donation to the international peacekeeping effort in the Serbian province. The Land Rover Discoverys and Defender 110s will be used to help with the task of resettling refugees. Bill Baker, Land Rover director of public relations programs, coordinated the provision of seven field-prepared Discoverys and a Defender 110 to the UK’s Department of International Development. Three of the vehicles will be loaned to the World Health Organization while the others will be used to assist in restoring safe, sanitary living conditions to the region.


ROADKILL GETS LICENSE PLATE When deer season hits, cars begin hitting deer. And some Michigan lawmakers want to issue special license plates that will help to pay for the furry aftermath of animal-car collisions. A $25 extra charge for the plates — to be embossed with a whitetail deer — would raise an estimated $1 million a year for cleanup costs. Last year, the state counted 65,397 car-deer collisions, an increase of 142 percent in 14 years. The state is already considering or offering specialty plates for other interests, such as education.

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