Weekly News: April 16, 2001

April 16, 2001

DC JOINS SUV ECONOMY RACE DaimlerChrysler has changed its mind on fuel economy. Chairman Jeurgen Schrempp now says that the company will match the fuel economy of sport-utility products from General Motors, Ford, and other rivals. In recent years, automakers have barely met the 20.7-mpg standard required for light trucks. Ford earlier last year pledged to improve the fuel economy of its sport-utility vehicles by at least 25 percent in the next five years, while General Motors said it will top Ford.

BLUE OVAL PROGRAM CAUSING CONTROVERSY Ford's Blue Oval program is still the subject of immense controversy among dealerships, according to USA Today. Ford lets dealers who comply with the Blue Oval program purchase vehicles for a 1.25-percent lower price than for those dealerships that do not comply. The Blue Oval requirements involve requirements such as location, appearance of the facility, and training of employees. Dealer groups and some dealerships say that the program, which establishes a two-tiered pricing structure, is unfair to dealerships and violates dealer franchise laws. So far, about 80 percent of Ford's 4100 U.S. dealers have complied with the Blue Oval requirements.

FULL-SIZE VANS TIPSY  WHEN LOADED The National Highway Traffic Safety Administration has issued a warning about full-size, fifteen-passenger vans. According to a federal study, the vans are three times as likely to roll over when fully loaded, due to a shift in the vehicles' center of gravity. The advisory includes all full-size, truck- based vans from Ford Motor Company, General Motors, and DaimlerChrysler.

TESTS SHOW WIMPY BUMPERS The Insurance Institute for Highway Safety (IIHS), a group representing the insurance industry, says that the five-mph bumper performance of the four large pickups and three small SUVs it recently tested was particularly poor, with each of the vehicles sustaining at least $4000 in damage. The agency's testing procedures involve low-speed impacts into flat barriers and poles. The most expensive to fix after the tests was the Dodge Ram pickup, with $8023 in damages. For more on the tests, which are for estimating cost, not necessarily safety, see www.iihs.org.  

INCENTIVES HURTING RESALE VALUES The high incentives and discounts that automakers are offering are also hurting resale values, according to a Chicago Tribune report. According to the report, incentives especially hurt resale values in the first several years of depreciation, with a direct impact on the resale value nearly equal to the incentive. Market saturation and heavy competition in the SUV market means that SUV models have suffered lower-than-anticipated residual values.

RAM VAN GETS ANOTHER YEAR OF LIFE DaimlerChrysler has decided to produce the Dodge Ram van for an extra year, says Automotive News. Originally slated for discontinuation in April 2002, the full-size van will now be produced until July 2003. Originally, DaimlerChrysler planned a new, Ram-based SUV to be built at the van's Pillette Road plant in Windsor, Ontario, but the company's turnaround plan cancelled the upcoming vehicle entirely, allowing the company to add another year to the van's life. DaimlerChrysler has no plans for a new-generation of full-size vans, due to lagging sales of the vehicles and conversion vans.

BUSH BUDGET CUTS PNGV According to Automotive News, President Bush's budget proposal will mean at least $40 million in cuts for the Partnership for a New Generation of Vehicles, the technology-sharing program between government, industry, and research institutions. The Bush administration wants to refocus the program toward light-truck developments. The budget proposal did also include a $16-million boost for the National Highway Traffic Safety Administration (NHTSA), for better record-keeping and new standards.

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