Weekly News: May 7, 2001

May 7, 2001

COURT APPROVES CERTIFICATE RESELLING A Louisiana court has ruled that the reselling of General Motors $1000 rebate certificates, mailed to about six million owners of GM pickups as part of a class-action settlement, is permissible. The settlement awards a certificate for $1000 off any new GM vehicle, although many of the owners of the affected 1973 to 1991 model-year vehicles would not be able to afford a new vehicle or be in the market for one. The Houston-based Certificate Redemption Group is planning to buy the certificates for $100 each and sell them to fleet buyers. General Motors is protesting the settlement and plans to appeal it. CNG says that GM planned for only about ten percent of the certificates to be redeemed.

DC-HYUNDAI VENTURE GOES AHEAD Korea's Hyundai says that the commercial vehicle joint venture with DaimlerChrysler is moving ahead, and details will be announced by the end of June. Recent rumors have spread that the joint venture might be off now that DaimlerChrysler has increased its stake in Mitsubishi, although both companies have expressed a continued interest. According to Reuters, DaimlerChrysler might opt to reduce its stake in the venture due to financial losses this year.

DC BRINGS GERMAN STRATEGY TO CHRYSLER DaimlerChrysler is reportedly trying to bring its Mercedes-Benz car-development approach to the Chrysler Group. According to Automotive News, the "quality gate" approach assures that problems will be caught early, rather than several years through development. In the Mercedes-Benz approach, all work is stopped until all issues are resolved at each stage of the project. Company officials think that Chrysler could save a lot by using the strategy, as several product development cycles have been interrupted by changes ordered by quality control or marketing.

SLUMP NOT AFFECTING DELPHI TELEMATICS Despite a slump in the automotive market, Delphi Automotive Systems expects demand for in-car Internet and other wireless products to rise, according to a Bloomberg News report. Delphi, originally spun off from General Motors, plans to post sales of $400 million this year, up from $322 million last year.

NHTSA REQUIRES TRUCK REFLECTORS The National Highway Traffic Safety Administration (NHTSA) says that just by putting reflective tape on truck trailers, 7800 crashes and up to 350 fatalities per year could be prevented. The agency has already required all new trucks built since 1993 to be equipped with the reflective tape on the back, but now the agency is requiring that all trucks be equipped with the tape by June 1.

VOLVO CHIEF JOINS GM General Motors has lured away former Volvo president Mark LaNeve to head Cadillac. LaNeve replaces Michael O'Malley, who left Cadillac to take the top position at Ford's ad agency. LaNeve has formerly held several positions within Cadillac and GM since 1981.

TEEN DRINKING AND DRIVING DOWN A new survey of high school seniors in 30 different states shows that drinking and driving among teenagers has dropped by nearly twenty percent. The University of Minnesota study, published in the American Journal of Public Health, attributes the improvement to better awareness and tighter 0.02 blood alcohol level requirements in all fifty states.

HERTZ TO OFFER LUXURY MAKES Rental-car company Hertz will soon begin renting luxury models from Ford's Premier Automotive Group. The new selection could include models from Jaguar, Land Rover, Lincoln, and Volvo. At first, the program will only be offered to twenty markets throughout the U.S. and Canada, but the luxury offerings will be expanded to 19 more markets by the end of 2003.

APRIL SALES DOWN FOR DOMESTICS Auto sales figures for April show significant drops for most automakers, as compared to April 2000. Big Three automakers reported a combined 16 percent drop in sales for the month, DaimlerChrysler fared the worst, with a 33-percent drop in car sales and an 18 percent drop overall. This year to date, industry sales figures are down seven percent for cars and six percent for trucks, at an adjusted annual rate of 16.65 million vehicles. Several import brands, including Hyundai and Kia, reported significant gains.

CHILD SEATS RECALLED The U.S. Consumer Product Safety Commission (CPSC) has recalled about 3.4 million infant car seats. Rear-facing Evenflo Joyride combination seat/carrier models are affected by the recall. The handle used to make the seat an infant carrier could potentially cause the seat to be released, resulting in injuries. Ohio-based Evenflo is offering a repair kit for the seat: Call 800-557-3178 or go to www.joyridecarseat.com.

SENATE PROPOSAL WOULD RAISE TRUCK MPG A group of Senators has proposed new legislation that would require the fuel consumption of sport-utility vehicles to match that of cars. The law, supported by a bipartisan group in the Senate, would close the loophole that allows automakers' SUV models to use more fuel without penalty. Sport-utility vehicles would have to comply with a 27.5-mpg average, up from a currently required 20.7-mpg average. The fuel-economy rules would also apply to vehicles up to 10,000 pounds, eliminating the loophole that vehicles like Ford's Excursion have found. According to an independent study, boosting the overall fuel economy of new cars and trucks by just five percent would save about 1.5 million barrels of oil per day.

DELPHI OPENS FORD FACILITY Supplier Delphi Automotive Systems, originally a spinoff of General Motors, has officially opened a center for business with Ford Motor Company. The Delphi Dearborn Customer Service Center will have about 240 Delphi employees, including engineers, sales, and support people. The company expects significant increased business from Ford in the next three years.

DRIVERS CONFIRM: CELLPHONE CHATTING DANGEROUS According to a new survey by Progressive Insurance, a surprisingly high percentage of motorists who talk on a cellphone while driving report dangerous behavior such as swerving or speeding up. Eleven percent of those polled reported knowing someone who was in an accident while talking on the phone and 18 percent admitted having a close call and nearly hitting another vehicle. Ten percent said that they had run a red light while chatting. Also, 46 percent reported swerving and 41 percent admitted speeding up while driving alone and talking. An astonishing 90 percent of respondents with cellphones reported talking on the phone at some time while driving alone. Seventy-one percent of those who reported talking while driving were between the ages of 18 and 34, indicating that younger drivers are more likely to chat behind the wheel. Furthermore, the company cites New England Journal of Medicine results that show the use of cellphones while driving to quadruple the risk of a collision.

GM OFFERS BUYOUT PACKAGE General Motors has offered a buyout package to younger salaried employees, in an attempt to trim the number of white-collar workers. The company is now offering six to fifteen months of pay in a lump sum for employees who have been with the company for at least one year. GM is also offering an early retirement package for employees age 55 to 61.

FORD TO INVESTIGATE GLOBAL WARMING Ford Motor Company has announced the formation of an executive team that will investigate ways to fight global warming. The new initiative, part of the company's second annual corporate citizenship report, will appoint a group of executives to consider measures for the reduction of "greenhouse gas contributions" from company activities. The report also acknowledges that the policies that fight global warming may have economic and social obstacles.

DELPHI DEVICE FOR STOP-AND-GO Delphi Automotive Systems has revealed a new device that could boost gas mileage in urban stop-and-go driving by up to five percent. The company's Energen 5 technology incorporates a combined starter and alternator that can stop and then restart the engine almost instantaneously at stoplights. The system eliminates conventional starter gear, allowing the engine to be started via the accessory belt. Delphi says that the device will be installed in at least one European-brand model line for 2003.

DON'T THROW THAT APPLE CORE AWAY A Swiss company has developed a sports car that runs solely on compost, according to an MSNBC report. The converted Rinspeed Advantage R runs on compressed methane gas generated from fermenting vegetables. The car uses technology developed by Kompogas AG, of Glattbrugg, Switzerland.

VW GRANDE Volkswagen AG has announced a plan to invest $1 billion into its Mexican operations over the next five years, to exploit recently broadened free-trade rules. The company's complex in Puebla, Mexico, will be expanded so that vehicles can be exported to more countries from the facility.

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