Weekly News: May 14, 2001

May 14, 2001

GM APPEALING CERTIFICATE REDEMPTION RULING General Motors is appealing a Louisiana court's decision to allow rebate coupons to be resold. The coupons are part of a class-action lawsuit settlement to owners of 1973-1991 full-size GM pickup trucks, for a problem with fuel tanks prone to explosions. The coupons allow previous owners $1000 off a new GM vehicle, although middlemen are purchasing the coupons for $100 and the second certificate-holder is allowed $500 off a new vehicle. GM says that a secondary market for the certificates is illegal, but the group reselling the certificates, endorsed by several consumer advocacy groups, says that it allows owners who cannot afford a new vehicle to be reimbursed.

TOYOTA'S IN THE BIG THREE? Toyota has surpassed Dodge as the third most popular car in the U.S. According to the Detroit News, Toyota is still not a threat to the Ford and Chevrolet nameplates. Toyota sold 469,237 vehicles so far this year, which amounts to 25,680 more than DaimlerChrysler's Dodge division, according to the paper.

BAD FUEL SHUTS DOWN STATIONS A bad batch of ethanol has fouled gasoline in about 50 Milwaukee-area gas stations, causing some to close temporarily. Agricultural giant and ethanol formulator Archer Daniels Midland reports that the amount of rust inhibitor in the batch is roughly 100 times the normal amount. The ethanol formulation is required in much of the region in order to meet new federal emissions standards. The company says that the mishap should not have a long-term affect on supplies or fuel prices, although the Midwest region already faces high prices again this summer.

MEXICAN TRUCKS WILL LAG IN INSPECTION According to a Los Angeles Times report, Mexican tractor-trailers are going to be allowed a compliance period of up to eighteen months for new regulations that require the trucks to undergo U.S. safety checks. Opponents, insisting that Mexican trucks should be required to comply with U.S. safety rules immediately, say that the long compliance period will let unsafe trucks into the country, potentially causing unnecessary accidents. New free-trade rules permit Mexican-based trucks to operate on U.S. highways.

HYUNDAI GAINS While most of the auto industry flounders, Korean automaker Hyundai continues to emerge as a significant force in the U.S. auto industry. Hyundai’s automotive operations posted a net profit gain of 28 percent (to about $211 million) in the first quarter, as compared to a year earlier. The company made continued significant sales gains (up 24 percent in April, versus a year ago) due to the launch of its Santa Fe sport-utility vehicle and XG300 luxury sedan.

PUMP PRICES HIGHEST EVER The U.S. Energy Department has declared the current national average gasoline pump price of $1.703 to be the highest on record. The national figure is 7.7 cents higher than just a week ago and 25 cents higher than a year ago. The Midwest region posted some of the highest prices, with an average of $1.90 in smog-reformulation areas and $1.80 in other areas.

THE PRICE OF CONGESTION According to a Texas A&M University study, traffic congestion costs us $78 billion per year in wasted time and fuel. The study, based on an analysis of existing Federal Highway Administration data, found that Los Angeles-area drivers are spending an average of 56 hours per year (and about $1000 per person per year) in gridlock traffic, while Atlanta comes close at 53 hours. Several other major metropolitan areas clocked in at well over 30 hours per year in gridlock, on average.

M-CLASS AND GRAND CHEROKEE WILL SHARE The popular Mercedes-Benz M-Class and Jeep Grand Cherokee models will begin sharing components but not platforms, according to an Automotive News report. Chrysler Group CEO Dieter Zetsche said that the next-generation Grand Cherokee would be an evolution of the current generation while incorporating some Mercedes-Benz parts, which could include various components relating to the transmission and four-wheel-drive system.

CELLPHONE DISTRACTION NOT SO PREVALENT A new study released by the University of North Carolina Highway Safety Research Center and the AAA Foundation for Traffic Safety has found that drivers are most often distracted by things outside the vehicle. Cellphone use contributed to only 1.5 percent of driver distraction, a surprisingly small figure. For comparison, other distractions were the sound system (11.4 percent), talking with passengers (10.9 percent), and eating or drinking (1.7 percent). The findings were based on National Highway Traffic Safety Administration data.

NATIONAL PARKS TRYING PHOTO RADAR The U.S. National Park Service plans to begin using photo-radar cameras in a section of the George Washington Parkway in suburban Washington, D.C., a stretch of road that has a high number of speeders. The agency hopes to eventually implement the cameras at several other national parks. Privacy advocates have protested the expanded use of the cameras for monitoring purposes as well.

FORD EMPLOYS TOYOTA SUPPLIER Aisin AW, a Japanese supplier to Toyota, has announced plans to jointly develop hybrid gasoline-electric power systems with Ford Motor Company. The Japanese company will help Ford in the development of a hybrid system, similar to that of Toyota's Prius, for its Escape compact sport-utility vehicle. The hybrid version will be introduced for 2003. Toyota claims 40-percent ownership in Aisin AW.

CELLPHONE HEARING: NOT ENOUGH INFO YET Congress's House Transportation subcommittee has held a hearing on the dangers of cellphone distraction, and based on the available information, members say that while cellphone distraction is a critical issue, it may be too early to justify legislation that bans the use of cellphones while driving. Federal crash data points to driver distraction as the cause of up to 30 percent of all accidents, but a recent analysis of the data shows that the level of cellphone distraction is lower than such actions as eating and tuning the radio while driving.

BEST AFFORDABILITY IN 22 YEARS The latest Auto Affordability Index, an industry indicator issued periodically by Detroit’s Comerica Bank, ranks affordability the best since 1979. In the first quarter of 2001, the purchase of an average-priced new vehicle required 22.7 weeks of median family income. New vehicles in the first quarter sold for an average of $21,882, actually down slightly from the fourth quarter of 2000.

GM LAUNCHES PHILANTHROPY SITE General Motors, seeking more publicity for its pro-environmental actions, has introduced a new Web site that stresses environmental activities, safety, and diversity, among other 'do-good' things. The site, www.GMability.com, will also offer tips for safe driving.

DC SEEKS DISMISSAL OF SHAREHOLDER SUITS DaimlerChrysler has filed motions in a Delaware U.S. District Court to dismiss shareholder lawsuits claiming that the company deceived investors, violating securities laws. The company claims that no public statements from officials have misrepresented the deal as a "merger of equals." Among those taking legal action is billionaire investor Kirk Kerkorian, a prominent shareholder in the company until recently.

TOYOTA GOES SOUTH OF THE BORDER Toyota Motor Corporation has created a Mexican unit, Toyota Motor Sales de Mexico, and the company intends to enter the Mexican market under North American free-trade rules that take effect in January 2004. Until then, the new Mexican unit will evaluate the market and plan a model lineup.

HONDA'S CVT MISER American Honda has announced EPA fuel-economy figures for its new Insight hybrid gasoline-electric model equipped with a continuously variable automatic transmission (CVT). The new model achieves ratings of 57 mpg city and 56 mpg highway, which makes for a driving range of more than 500 miles. Honda's Insight model with the five-speed manual transmission is the fuel-economy leader for the North American market, with ratings of 61 city and 68 highway. The new CVT model, now the highest-mileage vehicle available with an automatic transmission, also complies with California's Super Ultra Low Emission Vehicle (SULEV) standards.

SUV MAKERS, READ THIS! The Oregon Supreme Court has upheld a $7.6-million ruling against Toyota Motor Corporation. The case against Toyota alleged that an accident involving a 1994 Toyota 4Runner that rolled over when the driver swerved around a road hazard could be attributed to faulty design. Toyota's reason for appeal, it alleged, was that the court had improperly extended the state's product-liability law. The court’s precedent-making decision might lead to costly consequences for other SUV makers and in lawsuits in other states.

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