Weekly News: April 30, 2001

April 30, 2001

GM AND CHRYSLER RECALL MINIVANS General Motors has recalled more than 550,000 minivans for a potential problem with the power sliding doors. A switch in the door could jam, potentially causing the door to open when not intended. The Chevrolet Venture, Oldsmobile Silhouette, and Pontiac Trans Sport and Montana models equipped with the optional power doors are affected by the recall. Over at DaimlerChrysler, the Chrysler Group has recalled about 11,000 new 2001 model year Chrysler minivans, including Town and Country, Voyager, and Dodge Caravan models built in a one-month window between March 22 and April 21. In the affected vehicles, a lower control-arm bolt in the front suspension could break, possibly causing loss of control. Chrysler recommends that the recalled vehicles should not be driven until repaired by dealers.

SETTLEMENT PLAN STIRS FIERY CONTROVERSY General Motors is in a fierce battle with a Houston-based operation that wants to resell certificates mailed to 5.8 million owners of full-size pickups with defective fuel tanks. GM is mailing out certificates for $1000 off a new vehicle as part of a class-action court settlement against GM for a potential fuel-tank fire hazard on some 1973 to 1987 pickups, and the Certificate Redemption Group (CGI) is offering to buy the certificates for $100 cash, for those who are not in the market for a new vehicle or cannot afford it. The group then intends to resell the certificates to fleet owners and others interested in buying a new vehicle. GM says that the scheme is not legal and the automaker will not honor the traded certificates. CGI says that GM only intended ten percent of those offered the certificates to actually redeem them, and that’s just not fair either.

MORE LOOKING AT USED CARS A new study by Opinion Research for Autobytel suggests that the economy is changing car shoppers' plans, with more looking at used vehicles. Of those polled, 39 percent felt that current economic conditions would influence them to buy used instead of new, with those earning under $50,000 per year more influenced by the slump.

ESCAPE RATES WORST IN CRASH TESTS The latest insurance-industry sponsored crash tests rate Ford's Escape worst out of three small SUVs tested. In the Insurance Institute for Highway Safety's (IIHS) 40-mph frontal intrusion test, the Hyundai Santa Fe performed 'good,' and the Toyota RAV4 performed 'marginal,' while the Escape's damage warranted a 'marginal' rating. The group says that the results indicate a high likelihood of leg injuries, and that the dummy's head also hit the steering wheel in the impact. The Escape did perform well in the federal government's crash tests, with five- and four-star ratings for the driver and passenger, respectively. Ohio-based insurance company Progressive is again exclusively offering video results of the tests, which may be viewed at www.progressive.com.

DC TO EXPAND PT CRUISER PLANT DaimlerChrysler says that it will increase production of the phenomenally successful PT Cruiser by 80,000 vehicles next year. The automaker will invest about $300 million to expand the PT's Toluca, Mexico, assembly plant. The plant expansion will bring total annual PT Cruiser production up to about 310,000 units—a huge jump from Chrysler's original target of 70,000 per year.

GM LURES NESBITT Bryan Nesbitt, the DaimlerChrysler designer who penned the highly successful and image-building PT Cruiser, has been wooed away by General Motors. Nesbitt will take the top position at GM's Chevrolet design studio, setting a design theme for the brand's future products.

JEEP'S LIBERTY WILL MEAN LAYOFFS DaimlerChrysler has notified union leaders that up to 2035 Jeep workers in Toledo could be permanently laid off when Cherokee production is stopped and phased over to Liberty production later this year. According to an AP report, company officials said the new plant that will build the Liberty model will use more automation and thus need fewer workers.

GM LOSING BIG ON SATURN General Motors is rumored to be losing nearly $3000 per vehicle on Saturn models and continues to lose about $850 million per year, according to a recent Bloomberg News report. Saturn's no-layoff policy is hurting it due to lagging sales, and the division's original Spring Hill plant is operating at about half capacity, although this fall the Vue SUV, to be built at the facility, will likely get Spring Hill moving again.

SOME GREEN GROUPS AGREE WITH TAX-CREDIT PROPOSAL Ford, Toyota, and Honda, along with some environmental groups such as the Union of Concerned Scientists and the Natural Resources Defense Council, are supporting proposed legislation that would offer tax credits to people who purchase hybrid gasoline-electric or alternate-fuel vehicles. The proposal would also provide credits for the purchase of alternative fuels and installation of fueling stations. The Sierra Club, along with some other environmental groups, isn't supporting the bill because it would not place any requirement on overall gas mileage, allowing more large gas-guzzling SUVs.

MIDSIZE CAR OWNERS MOVING TO SUVS Owners of mid-size cars are the group of drivers with the most migration to sport-utility vehicles, according to a new J.D. Power and Associates survey noted in Automotive News. The survey, based on electronic dealership data, found that owners of midsize sedans such as the Ford Taurus, Honda Accord, and Toyota Camry were most likely to buy an SUV as their next vehicle—and five times as likely than two years ago to make the transition.

CADILLAC TOPS IN SATISFACTION Automotive consulting firm AutoPacific has released its Vehicle Satisfaction Scores for 2001, and the big news is that Cadillac tops the list, ousting Lexus from the top spot. The Lexus LS model (LS430 for 2001) is the single model with the highest overall satisfaction for the second consecutive year. In the truck segment, the Lincoln Navigator took the top spot, up from fifth place last year. The Cadillac DeVille ranked second among passenger cars, while the Ford Excursion ranked second among light trucks. Hyundai took its first-ever top-in-class spot, with its new Santa Fe compact sport-utility. The scores, compiled from owner-rated scores in 40 different attributes of new-car ownership, provide an industry-respected method for comparing customer satisfaction levels. Here are some of the placings:

Top Five Cars (first through fifth place): Lexus LS430, Cadillac DeVille, BMW 7-Series, Toyota Avalon, Mercedes-Benz S-Class

Top Five Trucks (first through fifth place): Lincoln Navigator, Ford Excursion, Lexus RX300, GMC Yukon, Acura MDX

DC Q1 LOSS: LESS THAN ANTICIPATED DaimlerChrysler has released its first-quarter financial information. The company reports a first-quarter operating loss of about $545 million, compared to a profit of about $2.2 billion in the same period last year. The reported loss is far below the loss of nearly $800 million that analysts anticipated. The huge loss was anticipated due to DaimlerChrysler's costly recovery plan for Chrysler, and also Mitsubishi. DaimlerChrysler's truck operations posted a larger-than-anticipated loss of nearly $125 million, mostly attributed to a slump at Freightliner. Also, the Chrysler unit reported that car inventories have now fallen to a 53-day supply, below the automaker's normal level.

CONSUMER GROUPS CALL FOR EXPANDED RECALL Two consumer advocacy groups, Public Citizen and Safetyforum.com, have released a joint report that blames both Firestone and Ford for the accidents and injuries involved with recalled Firestone tires mounted on Ford Explorer sport-utility vehicles. The report states, "the real problem begins and ends with Ford Motor Company," alleging that Ford made some wrong decisions in specifying the tires and in recommending a low tire pressure. Attributing poor design as the source of the problem, the report recommends that all 15-inch and 16-inch Wilderness AT tires should be recalled, regardless of where manufactured. The groups are also calling for Ford to notify owners of all of the potential dangers associated with the tires, tire pressures, and the rollover risk. Ford maintains that all the blame for the tire-failure accidents lies with Bridgestone Firestone.

UAW LOSING MEMBERS Due to the onslaught of auto-industry layoffs, the United Auto Workers lost more than 90,000 members (nearly 12 percent) last year, with total membership down to about 672,000, according to an AP report. Membership also fell sizably, by nearly ten percent, in 1999.

WATCH OUT, MEAGER CITIZENS! The United States Supreme Court has ruled that it is constitutionally permissible for police to arrest and handcuff people for minor traffic offenses. In reviewing a case in which a Texas woman sued a police officer for bringing her to jail for not wearing her seat belt (she was then freed), the court decided that such an arrest is an unnecessary inconvenience, but one not in violation of the Fourth Amendment.

GM SAFETY DEVICE DETECTS TRAPPED KIDS General Motors is unveiling a new safety device that would protect children from being trapped in locked vehicles. The device would monitor the heartbeat of occupants with a sensor. An irregular heartbeat, a sign of heat distress, would activate a chirping sound from the car alarm. The new technology will probably debut for 2004 or 2005 on minivan models. Each summer there are numerous reports of children who die due to heat stress while locked in vehicles. GM cites that children are about three times less able than adults to handle heat stress.

RED-LIGHT CAMERAS WORK A new study by the Insurance Institute for Highway Safety, a group representing the insurance industry, shows that there is evidence that red-light cameras are effective in reducing accidents. The group studied the before and after effects of installing red-light cameras at 11 of 125 intersections in Oxnard, California in 1997. With the installation of red-light cameras, the study found that front-into-side collisions involving injury were reduced by 68 percent, and injury crashes were reduced by 29 percent. Intersection accidents overall in the city decreased by seven percent, even in intersections where the cameras were not installed, signaling a change in driver behavior.

TIGHT GAS MARKETS MIGHT BE IN TROUBLE AGAIN Gasoline prices in Chicago and some areas of California are reportedly already over the two-dollar mark, with a shortage of so-called 'clean gasoline' formulated to cut smog in those markets. A limited number of refineries are producing the new blends, and some lawmakers and consumer groups are accusing oil companies of price gouging. Several major oil companies, including Exxon Mobil and Chevron, have recently reported large earnings increases. A similar shortage happened last year in the same regions.

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