Weekly News: June 4, 2001

June 4, 2001

FEDS PLAN HEARING ON FORD DECISION The federal committee investigating Firestone tires covered by last year's recall has planned a hearing on Ford's recent decision to effectively double the size of the recall. According to a USA Today report, the hearing will look into issues regarding tire pressure and load ratings for the Ford Explorer. Federal investigators are also continuing their investigation into tire pressure and load ratings for vehicles already covered by last August's recall.

FEDS: EXPLORER INVESTIGATION UNLIKELY A federal investigation into a possible design defect on the Explorer is unlikely, despite accusations from Firestone and several consumer groups, according to an MSNBC report. A National Highway Traffic Safety Administration (NHTSA) official said that an investigation would only be conducted if there were suspicion of a defective part, not over the inherent likelihood of the Explorer to roll over. The NHTSA closed a 1990 investigation into rollovers involving Ford's Bronco II because there was no particular defect, so officials think that Ford could use that as a defense with the Explorer.

FORD MIGHT ASK FIRESTONE TO HELP WITH $3 MILLION RECALL According to Newsweek, Ford Motor Company might ask Firestone to compensate the automaker for part of the estimated $3 billion that Ford's expanded recall will cost. The magazine cites Washington sources, who told the publication that Ford CEO Jac Nasser had considered requesting compensation from Firestone. Ford last week expanded the Firestone tire recall to include about 13 million tires, effectively doubling the number involved, after Bridgestone Firestone announced that it would no longer supply tires to Ford. Firestone says that Ford expanded the recall only to convince consumers that the problems leading to the recall were solely due to tires, rather than suspected design issues with the Explorer.

FORD GOES TO GOODYEAR Who’s Ford turning to in the wake of the expanding Firestone recall? It looks like Goodyear will be the prime beneficiary. Last week, Ford and Goodyear outlined how Goodyear will step up production and shipments to accommodate Ford’s extra tire needs. The biggest piece of the deal provides for Ford-approved replacements for the tires in question at one of Goodyear’s 5000 retail outlets, at no charge to the owner of the Ford vehicle. Authorized replacement Goodyear models can be found at both http://www.goodyear.com and http://www.ford.com. Ford announced last week that it would replace all 13 million Firestone Wilderness AT tires, one day after Firestone said that it would no longer solicit Ford’s business in the Americas. 

TCC’s award-winning coverage of the Firestone fracas

GM, DAEWOO ARE DEALING General Motors’ long, ardent pursuit of South Korea’ s Daewoo Motor may have reached its final phase. GM, the Korean Development Bank (which will represent Daewoo's creditors), and Daewoo have announced they have reached an agreement to begin the formal negotiations for GM to take over the company’s passenger-car operations. According to reports, GM has offered $775 million for Daewoo’s assets, not including a massive older assembly plant in Korea. According to the Hankook Ilbo newspaper, GM would also assume $1.55 billion of Daewoo debt, which it could in turn reduce by selling stakes to the other automakers’ partner Fiat, for example.

GM Bids $775 Mil for Daewoo (5/30/2001)

DC RECALLS NEONS DaimlerChrysler is recalling about 515,000 Dodge, Plymouth, and Chrysler Neons in North America for a problem with the power brake system. The brake booster vacuum hose could possibly loosen from the intake manifold, causing a sudden loss of power assist, according to DaimlerChrysler. The recall covers Neons from the 2000 and 2001 model years only.

NEW SEATBELT LAWS WORK According to new National Highway Traffic Safety Administration (NHTSA) statistics, seatbelt use jumped by more than ten percent in states that began allowing police to pull motorists over for seatbelt violations alone. Last year, Alabama, Michigan, and New Jersey passed such laws. Michigan's seatbelt use jumped to 83.5 percent in 2000, up from 70.1 percent in 1999. The national average for seatbelt use stands at 71 percent.

BOSTON DRIVERS MOST AGGRESSIVE Boston has the country's most aggressive drivers, according to an AAA-sponsored survey. The survey considered driving behavior such as speeding, horn use, gesturing, and talking on a cellphone while driving. The survey results were based on 1000 drivers polled, with 100 each in eight major metropolitan areas. Cleveland and Detroit received good grades in the survey, while Miami and Washington, D.C., received poor ratings, indicating a high number of aggressive drivers.

ISUZU PLANS MASSIVE JOB CUTS Japan's Isuzu Motors plans to cut 9700 jobs over the next few years, to cut about one quarter of its worldwide work force. Isuzu plans to reduce operating costs by merging more operations with General Motors. The number of models and platforms will be reduced, and the company's Kawasaki truck plant and headquarters building will be closed. The company has been posting losses for the last several years, and some industry experts have predicted a long-term decline for the company.

NISSAN ALREADY GOOD FOR RENAULT Two years after Renault SA purchased a majority stake in unprofitable Nissan, the Japanese automaker is already turning profits, says the Detroit News. Now, Nissan's $2.7-billion profit is helping bolster Renault's financial position in a troubled European market. Experts originally almost unanimously predicted that the alliance would not work.

GAS PRICES STILL RISING The Bush Administration is promising long-term relief, but it’s hard to see the light at the pump. Retail gas prices were up another 1.7 cents last week to an average of $1.704 a gallon for regular unleaded. The Department of Energy showed that while prices are still beneath the record set the previous week, the per-gallon tariff is still about 17 cents higher than last year. In the southeast, drivers are paying an average of $1.55 a gallon, while in California, prices are topping off at an average of $1.80 a gallon.

Bush Energy Plan: CAFE Stays Put (5/20/2001)

CADDY CTS TARGETED TO SELL 30,000 Cadillac is setting its sights somewhere in the middle for the CTS, the ‘03 replacement for the Catera four-door. Mark LaNeve, the new chief of Cadillac marketing, says U.S. sales for the new CTS are being estimated at about 30,000 in its first year, which would be an improvement over the slow-selling Catera. "We'd be shooting for 30,000 units. It's ambitious compared to our historical penetration with that segment," LaNeve said at a press conference. LaNeve, a one-month Cadillac vet fresh from a stint at Ford’s Volvo unit, thinks the styling of the CTS will play a big part in its acceptance: "We need the college kids to look at our car and say, I want one of those when I grow up," LaNeve said. The CTS is due to go on sale early next year as an early 2003 model. Pricing is estimated in the $30,000 to $35,000 range.

Spy Shots: ‘03 Cadillac CTS (4/9/2001)

SALES CONTINUE TO SLIDE IN MAY U.S. auto sales continued to slide during May, although the overall drop was not as severe as had been predicted by some analysts. Industry-wide, car sales fell two percent and light truck sales fell one percent versus a year ago. Domestic brands were once again hit hardest, with Ford Motor Co. sales down 12 percent during the month. Sales of Ford’s redesigned Explorer, hurt by various recall image problems, remained down 16.5 percent below year-ago levels for the previous-generation model. DaimlerChrysler’s overall sales for the month fell eight percent, while General Motors reported a one-percent jump in sales, aided by a nine-percent jump in light-truck sales. Several import brands reported significant gains (including Hyundai, with a jump of 35 percent).

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