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Headlight News Weekly for November 20, 2000

November 20, 2000



DC REPLACES HOLDEN DaimlerChrysler AG has revealed that Chrysler operations president James Holden is to be immediately replaced by Dieter Zetsche, a top executive in DaimlerChrysler's commercial vehicles unit. Speculation began early in the week, when the company had called a supervisory board meeting for Friday. Since Holden's appointment less than a year ago, the Chrysler unit has posted its first operating loss in years and contributed to the German company's lackluster stock price. Wolfgang Bernhard, currently of Mercedes-Benz's AMG performance group, will probably be appointed as Chrysler's new chief operating officer.

For more information on the top management changes in Auburn Hills, click here.

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SHIPPERS HOLDING DAEWOO CARS Daewoo Motor's shipping companies in Europe are holding nearly 1700 Daewoo cars on freight ships in Germany and Belgium until the automaker can pay them. The Korean automaker has been shipping about 50,000 cars to European ports per month. Daewoo was forced to declare bankruptcy last week after creditors refused to loan the automaker more money. Although many of Daewoo's suppliers have agreed to ship parts to the struggling Korean automaker, Daewoo will likely remain idle due to overdue power bills and the lack of other essential parts. Daewoo's Bupyong plant was shut down last week.
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COURTS FREEZE DAEWOO ASSETS Korean courts have frozen the assets of debt-ridden Daewoo Motor Co., although they have not yet placed the automaker in receivership. General Motors and Fiat are still considering a joint bid for Daewoo, but no progress has been made in recent days. If the company is placed in receivership, a new administration will be appointed to restructure the company's finances, but if the court refuses receivership, then the company will be auctioned off in pieces, which may be what GM and Fiat are waiting for.
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DC MAY IDLE MORE PLANTS With DaimlerChrysler's Chrysler dealer inventories accumulating once again, several of the U.S. division's plants may face more temporary shutdowns, reports the Detroit News. Several plants may be idled for the last two weeks of the year, until dealer inventories can clear the way for new orders. A decision regarding the shutdowns may be made soon after the expected change of power in Auburn Hills.
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RECALL CUT SALES BY 40 PERCENT Bridgestone Firestone has reported that sales of Firestone tires fell by about 40 percent through September and October versus the same period in 1999, while sales of the company's passenger-car tires weren't as affected by August's massive recall of 6.5 million Firestone light-truck tires. Firestone now expects the cost of the recall to be about $450 million. So far, 77 percent of the recalled tires have been replaced.
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KIA RECALLS SEPHIAS Kia Motors America has announced a recall of all 1998 and 1999 model year Kia Sephia models. The recall, which affects more than 100,000 cars, has been called for a potentially defective fuel vapor recovery valve. Improper operation of the valve may cause gasoline to overflow and spill during fill ups.
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MITSUBISHI REPORTS LOSS Japan's Mitsubishi Motors Corporation has reported a $701-million loss for the six-month period ending September 30. The loss is nearly twice that reported for the same period a year earlier. The company has recently scarred its image with reports that the company hid consumer complaint data going back more than two decades. The exchange rate between the yen and the dollar is also partially to blame.
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FIAT WILL MOVE ARGENTINA ASSEMBLY TO BRAZIL Fiat is planning to move the assembly of several models from Argentina to Brazil, according to sources. Fiat currently assembles Palio and Uno Mille models in Argentina. The automaker, which believes that it will be able to be more competitive if it assembles the cars in the Brazilian market, will cut the Argentina plant to produce only one model, the Siena.
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BRAZILIAN AUTO WORKERS STRIKE About 60,000 automotive assembly workers in Brazil have walked off their jobs, demanding higher wages. The walkout affects Ford, General Motors, Honda, Mercedes-Benz, Toyota, and Saab plants in Brazil. The workers are requesting a ten-percent pay raise, although the National Vehicle Manufacturer Association won't agree to more than eight percent.
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TROOPERS RECALLED Isuzu has announced a recall of 18,460 Trooper sport-utility vehicles due to a problem with fuel-tank leakage in crashes. The problem affects 2000 and 2001 model years. In a recent Insurance Institute for Highway Safety crash test, a fuel line separated, causing the leakage. Owners and dealers have already been notified of the problem.
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NEW REAR CRASH TESTS PROPOSED U.S. Secretary of Transportation Rodney Slater has proposed several upgrades to the way that the federal government conducts rear-impact crash tests on vehicles. The proposed changes would include a change from the current rigid, 30-mph test to a deformable, 50-mph test that would more accurately simulate a rear impact from another vehicle. The fuel system integrity test would also be raised, from a rigid, 20-mph test to a deformable, 33.5-mph test. Both of the tests are aimed at toughening the standards for the resistance of vehicle fires. Vehicle fires result in less than one percent of crashes, while four percent of people killed inside a vehicle were in a crash that resulted in fire. Manufacturers would have three years to comply with the new requirements.
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PT CRUISER SUPPLY DISAPPOINTING DaimlerChrysler has warned its dealers that it will continue to be far behind in filling orders for new PT Cruisers. The company will advise dealers, by December 1, of how many 2001 model year PT Cruisers they will get through next summer. Customers with orders not filled will have to wait for model year 2002 and pay a higher price. DaimlerChrysler has also ordered its executives who drive PT Cruisers under a company car plan to turn them in to be resold. About 120,000 PT Cruisers will be made this year at the Toluca, Mexico, plant. Additional production will soon start at DC's Graz, Austria, plant, although production volumes will only be a fraction of that produced at the Mexico plant. DaimlerChrysler had originally intended the PT Cruiser to be an image-building car, but rapidly building discontent with the way the company is dealing with buyers’ unfilled orders and failing to communicate with dealers may prove worse.
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GM/REYNOLDS DEAL DISSOLVES Automotive News has reported that a deal for General Motors to take a ten-percent stake in dealer e-business company Reynolds and Reynolds has apparently fallen through. Both companies have ended negotiations for the deal, which would have been worth more than $200 million.
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VISTEON PLANS MONROE IMPROVEMENTS Visteon Corporation plans to invest $100 million into a modernization of its Chassis Systems plant in Monroe, Michigan. The improvements will enable the facility to use new technologies and allow new products such as an expanded catalytic converter business. The improvements to the plant will be completed by 2002.
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RENAULT COMES BACK TO MEXICO France's Renault has announced that it will re-enter the Mexican car market after a 14-year absence. The automaker will first introduce a Mexican-built version of its Scenic multi-purpose vehicle, which has been a sales success throughout Europe in the past few years. The Scenic will be assembled at an existing Nissan facility at Cuernavaca. Renault plans to sell about 6000 Scenics and 10,000 other models per year.
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PARTICIPATION LOW IN SAME-SEX PROGRAMS Participation in progressive new programs that extend worker benefits to domestic partners of gay employees has been far below that originally expected, reports the Detroit News. General Motors says that only 114 employees have participated in its program, while DaimlerChrysler reports that only 89 workers have signed up. Ford isn't releasing figures for its program. Other major U.S. corporations that have offered same-sex benefits have posted participation rates far higher than these in the auto industry, so the figures suggest that the auto industry itself may not be as progressive as the companies.
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