Weekly News: April 23, 2001

April 23, 2001

NHTSA RELEASES CRASH-TEST RESULTS The National Highway Traffic Safety Administration has released a new batch of crash-test results, including conventional front and side tests, and new rollover ratings for another 17 vehicles. In the rollover test, the Chrysler Sebring and Dodge Stratus sedans ranked the highest, with a five-star rating, while the Ford Windstar topped the list for front and side impacts. The Ford Windstar also did well among minivans in the rollover test, with a rating of four stars. For the complete results, go to www.nhtsa.dot.gov.

JUDGE ORDERS FORD RECALL A California judge has ruled that Ford Motor Company must replace faulty ignition modules on up to two million vehicles in California. The recall order is the result of a statewide class-action lawsuit. Last year, a judge ruled for the recall after finding out that Ford had concealed information about the parts, indicating that the automaker had known about the problem years ago. Ford allegedly placed the ignition module in many of its vehicles in a place where engine heat could cause failure and stalling. Many models from 1983 to 1995 are affected by the recall order.

GM AFFIRMS DAEWOO INTEREST General Motors has reaffirmed its intent to take over South Korea's Daewoo Motor Co. as soon as possible, according to an AP report. The automaker denied reports that it may be the end of the year before a settlement is made. Daewoo has been under court receivership after going bankrupt last November. Since then, the company has laid off thousands in an attempt to make the company more attractive to GM. General Motors is also reportedly trying to get tax breaks from South Korea as part of an acquisition of automaker Daewoo.

OPEC CUTS WILL STRAIN SUMMER GAS SUPPLY Cuts in petroleum production ordered by OPEC will again place gasoline in tight supply during the summer months, according to a report by the International Energy Agency. The agency said that there will be enough overall supply, but it might not be in the right place at the right time, leaving the market open to volatility and price spikes.

COLLEGE BUYERS LIKE HONDA According to a new survey from FuturePages, college students rank price and reliability as the most important factors in a new-vehicle purchase. The survey asked about 475 college students various questions about how they shop for a vehicle, and what vehicles they are considering. Honda was thought of by the students as having the best combination of value and reliability. Of those polled, 42 percent had researched certain models online, while 30 percent had looked on manufacturer Web sites. Only three percent had purchased a vehicle online.

IT'S NOT ONLY FIRESTONE A jury has awarded $55.4 million in a highly publicized tread-separation case against Continental General Tire. In a 1996 accident, the Las Vegas woman suffered spinal injuries, leaving her a paraplegic. The accident involved the AmeriTech ST tires installed on a Ford Taurus.

OLDS SELLING WELL, INCENTIVES TRIMMED Oldsmobile, faced with a tight supply of new vehicles due to much higher sales than expected, is cutting its cash incentives in half. Oldsmobile's car sales actually rose 6.9 percent in the first quarter—not too bad for a brand that's on death row! The sales boost was stimulated by various dealer and customer incentives, and an extended five-year or 60,000-mile warranty.

LAWYERS RAISE AIRBAG TETHER QUESTIONS Some lawyers representing passengers injured by airbags say that many passenger-side airbags do not have tethers that stop the intrusion of the airbag into the passenger, which adds to the potential chance of additional injury, according to a Detroit Free Press report. The lack of tethers is sometimes attributed to a higher number of eye injuries on particular models. Lawyers say that adding the tethers would only cost about three dollars per car, although at least one automaker defended that the constraints of the passenger area decided the need for a tether.

MORE AMERICANS USING MASS TRANSIT The proportion of Americans using public transportation increased last year, according to federal statistics. While the number of trips on mass-transit systems increased by 3.5 percent to 9.4 billion (American Public Transportation Association data), the number of miles driven by motorists remained unchanged at 2.7 trillion miles, according to the Federal Highway Administration. The number of passengers using public transit was at the highest level since 1959.

CHRYSLER SEDANS WILL SHARE M-B PARTS DaimlerChrysler plans to use many Mercedes-Benz components in the next-generation versions of Chrysler's full-size sedans. According to Bloomberg News, the Chrysler 300M, LHS, and Concorde, and the Dodge Intrepid will borrow various parts from the Mercedes-Benz E-Class, including steering components, axles, and transmissions. The cars will begin sharing transmissions in 2004, when the Chrysler sedans change over to rear-wheel drive, although other minor parts sharing could begin before then.

GM WILL START FIXING MIDSIZE SUVS General Motors will soon be shipping new parts to dealerships to fix new 2002 SUVs sidelined by an April 5 recall. The automaker says that lower control arms on the Chevrolet Trailblazer, GMC Envoy, and Oldsmobile Bravada, were not manufactured to specification. GM recalled all 30,000 built so far on April 5, saying that failure of the suspension part could cause loss of control. Parts will begin reaching dealerships later this week to fix the 6000 vehicles already sold.

GM AND FORD EARNINGS DOWN, BUT BETTER THAN EXPECTED General Motors reported first-quarter earnings down nearly 88 percent, beating analysts' predictions. Overall earnings dropped 50 cents per share, to $225 million, down from $1.78 billion in the same period last year. The company's financial performance suffered from a $100 million loss due to overseas operations. Ford Motor Company reported first-quarter earnings down 49 percent. The relatively meager earnings of $1.06 billion, 56 cents per share, is actually higher than what analysts were predicting for the quarter. The company's revenues were $42.4 billion, down from $42.9 billion in first-quarter 2000. Analysts responded positively to the report, taking into account the current state of the auto industry.

ONLINE PRICES OFTEN WRONG Online car-selling Web sites have very high rates of error for new-vehicle pricing, according to a survey by CNW Marketing Research. The firm found Chrome Data to have the least errors in pricing, while CarsDirect.com had an average error rate of more than $1500 per vehicle.

ELTON JOHN SELLS COLLECTION Elton John is reportedly planning to sell about 20 of his cars for an expected $1.4 million through auctioneers Christie's, according to Reuters. The collection, set to be auctioned June 5 in London, includes models by Rolls-Royce, Ferrari, Jaguar, and Aston Martin.

SETTLEMENT FOR GM PICKUP OWNERS As part of a huge class-action settlement, General Motors will offer nearly six million owners of full-size GM pickup trucks certificates toward the purchase of a new vehicle. If those who receive the certificates are not in the market for a new vehicle, the so-called Certificate Redemption Group will pay $100 for the certificates, a provision that consumer groups fought for in order to help distribute the huge cash settlement to owners. The settlement is the result of a case in which side-mounted fuel tanks on the full-size pickups were allegedly prone to explosions on impact.

IS SATELLITE RADIO THE NEXT BIG THING? According to a new research brief from Webnoize, pay satellite radio is projected to reach more than 19 million U.S. consumers by the end of 2005. The figure represents 9.3 percent of U.S. adults. Several satellite-radio companies have already formed and are near launch, including services from XM Satellite Radio and Sirius. But we think the figure might be a little optimistic: With upcoming telematics systems, many listeners might just choose to download and play MP3s straight from the Web to their car.


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