Weekly News: April 2, 2001

April 2, 2001

EXIDE PAYS FOR PAST MISTAKES Exide Technologies has finally reached a plea agreement in an Illinois federal court, closing the door on the dishonest dealings of former Exide management. With the settlement, Exide will pay about $27.5 million in fines, payable over five years, and the federal government will agree not to bring any more criminal charges against the company for the dealings of its former management. Exide was implicated in a scandal with Sears Roebuck and Company, involving Sears Die Hard batteries that were mislabeled as premium products. Exide, now led by former Chrysler executive Bob Lutz, says that it has since taken legal action against the former top executives.

JURY WILL DECIDE FORD CASE September 17 has been set as the date that a jury trial will decide whether Ford owes damages to owners of its models equipped with allegedly faulty thick film ignition modules. Last October, a California judge ordered all two million of the affected 1983-1995 vehicles recalled in the class-action suit, although Ford has not yet complied with the order. The case alleges that Ford's placement of the ignition module makes it susceptible to heat buildup and stalling problems. If the jury decides against Ford, damages could be well in the billions.

DC DENIES INTEREST IN DITCHING CHRYSLER DaimlerChrysler officials in Germany have once again denied reports that they are considering selling the unprofitable Chrysler operations. The German magazine Spiegel had reported that Deutsch Bank, a major shareholder in the company, had wanted to address options for Chrysler. DaimlerChrysler cited the company's $4 billion turnaround plan and goal of restoring the division's profitability by 2003.

DOMESTIC CONTENT FIGURE NOT USED, SURVEY SAYS A study done for the National Highway Traffic Safety Administration has concluded that consumers pay very little attention to the domestic content labels required on vehicles sold in the U.S. since 1995, according to an Automotive News report. The survey found that the content listing influenced the buying decision of only five percent of nearly 650 surveyed new-car buyers. A surprising 77 percent were not aware that the content labels existed. The labels show the percentage of U.S. and Canadian parts content, along with the country of origin of the engine and transmission.

EXXON MOBIL JOINS FUEL CELL PARTNERSHIP Oil giant Exxon Mobil has joined the California Fuel Cell Partnership, a Sacramento-based group of energy companies, automakers, and government agencies studying the possible use of fuel cells in vehicles. Although fuel cells run on hydrogen and oxygen, Exxon Mobil has considerable interest in the development of a gasoline processor that would synthesize hydrogen for use in the fuel cells, from ordinary gasoline. This method would cut emissions compared to today's cleanest vehicles, although it would not be emissions-free.

GM AND FORD ANNOUNCE HIGHER-LEARNING GIFTS Ford Motor Company is providing a $10 million gift toward the construction of a new engineering building at Smith College, in Northhampton, Massachusetts. The automaker wants to encourage more women to become engineers with a new program at the college. Also yesterday, General Motors announced a $3 million investment in a materials research laboratory at Brown University in Providence, Rhode Island. The lab will harbor research between GM engineers, engineering professors, and students. Research will examine ways to make lighter, more recyclable cars.

SUBARU RECALLS 2001 LEGACY, OUTBACK Subaru of America is issuing a voluntary recall of some 2001 model year Subaru Legacy and Outback models with potentially defective seat rails. Only 3627 vehicles with manually adjustable seats are affected by the recall, and within the recalled cars there are only 66 cars with the actual defect. The defect does not pose an immediate threat to safety, but it could prevent adjustment of the seat.

GM WILL STOP USING SUV ROLLOVER STICKERS General Motors says that it will stop voluntarily putting federal rollover labels on its sport-utility vehicles. Although GM will continue to put the warnings in owner's manuals, the automaker maintains that there is little benefit from the stickers, according to an AP report. The National Highway Traffic Safety Administration requires particular SUVs with wheelbases of 110 inches or less to carry the warning, but it doesn't require the label for other SUVs. Ford and DaimlerChrysler plan to continue using the labels on all SUVs.

ROVER CONSIDERS GM/FIAT POWERTRAINS MG Rover is considering the purchase of engines and transmissions from General Motors and Fiat, according to Automotive News and the Financial Times. The Rover group's talks with GM and Fiat are reportedly the first with another automaker since its purchase from BMW a year ago.

MITSUBISHI ADMITS HIGHER LOSS Japan's Mitsubishi Motors has admitted that it expects a far greater loss for the past fiscal year than originally anticipated, due to company restructuring moves and the costs of the company's recall scandal. While the company previously expected to report a loss of about $1 billion, the company now expects the figure to be nearly $2 billion, for the fiscal year ending March 31. DaimlerChrysler now owns 34 percent of Mitsubishi, and the Japanese automaker is participating in a turnaround plan that also includes U.S. unit Chrysler.

NEW MEXICO USING ONLINE VISION TEST The state of New Mexico has announced that it will be the first state to use a new Web-based vision test. The clinical-grade test, provided by VisionRx, can be given at DMV field offices, allowing instantaneous results. The new tests, required at each renewal, replace older tests that were given up to twelve years apart, enhancing safety for motorists.

CARFAX ADDS THEFT RECORDS Virginia-based vehicle history service Carfax has added vehicle theft histories to its database. Carfax is an online service that provides vehicle history records to prospective buyers and sellers of used cars. The background check service already includes such items as former owners, salvage history, and accident damage claims.

DELPHI ANNOUNCES MAJOR CUTS Delphi Automotive Systems has announced company streamlining measures that will include plant closure, consolidations, and about 11,500 jobs cut. The company also will stop all of its business areas (worth about $900 million) said to be "under portfolio review." Delphi executive vice president and chief financial officer Alan Dawes said that the restructuring program will allow Delphi to exit unprofitable and non-core business. U.S. plants affected by the restructuring include those in Fort Defiance, Ohio; Robertsdale, Alabama; and Saginaw, Michigan. The job cuts amount to five percent of Delphi's global workforce.

NHTSA INVESTIGATES ALTIMA AIRBAGS The National Highway Traffic Safety Administration (NHTSA) has opened an investigation into passenger airbags in 1994 and 1995 model-year Nissan Altimas. At least 29 complaints have been made, alleging that the airbags have injured the passengers' eyes and even blinding some. However, 24 of the 29 complaints were logged to the NHTSA by the same Portland, Oregon, attorney.

TRUCK-RELATED FATALITIES DROP For the third year in a row, the number of truck-related fatalities on U.S. highways has declined, according to the American Trucking Associations (ATA) and data from the National Highway Traffic Safety Administration (NHTSA). The ATA emphasizes that 70 percent of fatal crashes between cars and heavy trucks are instigated, at least partly, by an error by the car driver.

FORD SIDES WITH GREENS ON HYBRID ISSUE Ford Motor Company is siding with environmentalists in advocating a new tax-credit incentive for buyers of hybrid gasoline-electric vehicles that make advances in fuel efficiency. Ford's new take on the incentives joins the positions taken by Toyota and Honda. Detroit rivals GM and Chrysler have wanted incentives to essentially cover any car that uses a hybrid system, rather than only those cars that are innovative, seeking an alternative to the corporate average fuel economy (CAFE).

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