Weekly News: March 19, 2001

March 18, 2001

CAMRYS RECALLED Toyota is recalling about 53,000 Toyota Camrys from model years 1998 to 2001 built in Kentucky, due to a potential problem that might cause the throttle to break and stick open. The accelerator cable might break, causing the throttle to remain in its last position before the breakage. Toyota has already started to notify owners of the affected vehicles.

GM INVENTORIES STILL TOO HIGH General Motors will idle about 4900 workers this week at its Oklahoma City and Oshawa, Ontario plants. The Oklahoma City plant makes Chevrolet Malibu models, while the Oshawa plant makes Buick Century and Regal, and Chevrolet Lumina models. According to an AP report, General Motors has an 87-day inventory of new vehicles, far above the industry standard of 60 to 65 days.

CHRYSLER TRIES INTERNET MARKETING FOR MINIVANS DaimlerChrysler's Chrysler Group is marketing no-haggle, discount versions of its minivans through the Internet, reports Automotive News. Special Internet EX Grand Caravan and Town and Country models are offered without the incentives that Chrysler dealerships have been relying on so heavily. While Chrysler's Internet price for the EX still has some bargaining space, there is less of it than with the other models, according to the report. Chrysler plans to phase out incentives over time, and if the Internet marketing scheme is successful, Chrysler will use more of it on other products.

RENAULT AND NISSAN FORM PARTS COMPANY Nissan and Renault have announced the formation of a Paris-based parts-buying company that will handle parts procurement for the two automakers. At first, the company will only do about one-third of the purchasing for the companies, but eventually it may handle 70 percent. The companies hope to save money by sharing many of the parts and coordinating development efforts. Nissan and Renault, combined, purchase about $50 billion in parts annually.

RACIAL PROFILING STUDIED A new U.S. Department of Justice report suggests that minorities are far more likely to be subject to being stopped or searched by police. The report, ordered by attorney general John Ashcroft for a racial-profiling study, also found that eleven percent of blacks' and hispanics' cars were searched during traffic stops, compared to only five percent for whites.

GM TO HOLD TALKS WITH DAEWOO General Motors will hold new talks with Daewoo, according to top Daewoo officials. Ford made a $6.9-billion bid for the company last September but then pulled out just before negotiations. At that time, GM had submitted a bid in the vicinity of $4 billion. The South Korean government has given GM until the end of April to submit a new bid for the automaker, which may choose to trim operations or sell its assets separately.

HYUNDAI AIRBAG INVESTIGATION CLOSED The National Highway Traffic Safety Administration has closed its investigation into potentially defective airbag systems on Hyundai Accent models. Ten children had been reportedly killed in accidents related to the airbags. The agency said that in at least eight of the cases, the children had been too close to the airbags, which is not the automaker's responsibility. Hyundai went to a new airbag design for the 2000 model year.

MORE PAYING CASH FOR NEW CARS Many more buyers are now paying for new cars with cash, up drastically from an all-time low in 1998, reports the New York Times. In 2000, 8.8 percent of U.S. vehicle buyers paid cash. The current proportion of people who pay with cash is now on level with that of the Seventies and Eighties. Affluent buyers who don't want to be bothered with monthly payments are the most likely to pay cash, although the move back to purchasing coincides with an industry movement away from the bargain leases of a few years ago.

42-VOLT DEMANDS BETTER HARDWARE Automotive News reports that, with the upcoming industry change to 42-volt automotive electrical systems and 36-volt batteries, entire electrical systems for automobiles will need to be redesigned due to the fact that the higher voltage, more prone to arcing, could lead to fires or reliability problems otherwise. Wiring harnesses and switches will need to have 'smart' fuses and other protective (and more expensive) measures.

DC WILL DROP STUBBORN SUPPLIERS DaimlerChrysler is planning to phase out suppliers that have not complied with the Chrysler Group's request to parts costs. According to an AP report, only about 40 percent of suppliers have agreed to cut their prices by the full five percent requested by the automaker, while about ten percent have completely refused to change their prices. Many suppliers have resisted the cuts and tried to negotiate compromises due to the industry downturn and the poorer financial shape of many of the companies.

GM DENIES CORVETTE SPINOFF AutoWeek reports that General Motors officials have denied considering a plan to spin off the Corvette model name to a different GM premium brand. Previous reports from other sources had said that GM wanted to make Corvette a separate, upmarket performance product line which would include Camaro and possibly other models.

HYUNDAI AND KIA SHARE PARTS CENTERS Automotive News reports that Kia and Hyundai will soon share parts distribution centers in the U.S., in order to cut shipping expenses and cut shipment times for parts. Kia will begin using a Hyundai facility outside Chicago, while Hyundai will gain access to a Kia facility in Atlanta. Hyundai bought Kia last year.

RECALL MADE 2000 A RECORD TIRE YEAR The Rubber Manufacturers Association reports a record number of 321 million passenger car and truck tires sold last year, helped out by the massive Firestone recall of 6.5 million tires. While the number of tires sold in 2000 was 1.4 percent higher in 1999, the industry production slowdown will cause a related slump in the tire industry.

WSJ: DOMESTIC AUTOMAKERS STILL NOT AS LEAN Toyota continues to rank near the top of quality and reliability surveys and Detroit automakers continue to rank lower, although they have closed the gap. According to a Wall Street Journal story, the domestic automakers still have not adopted Toyota's level of strict, lean production. While domestic manufacturers have adopted some of the elements of lean manufacturing, they haven't yet adopted the whole system.

CR RELEASES ANNUAL AUTO ISSUE Consumer Reports has just released its annual April auto issue and its second Annual Survey. The non-profit publication reports, among other interesting findings, that while 70 percent of new-car buyers rate getting the lowest price as most important, 36.5 percent did not comparison shop and 30 percent did not negotiate. The publication also revealed its top model picks for the year, safety assessments, and reliability results that showed domestic brands to generally lag behind import competition. For more information, see www.consumerreports.org.

NHTSA CALLS FOR BETTER HEAD RESTRAINTS The National Highway Traffic Safety Administration (NHTSA) has proposed new head restraint standards that would put U.S. regulations on par with what’s already required in Europe. The changes would increase the strength of headrests, as well as raise the required height and limit the normal distance from the back of a passenger’s head to the headrest.

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