Weekly News: June 11, 2001

June 11, 2001

FIRESTONE WILL NOT PAY FOR FORD RECALL Bridgestone Firestone's president has stated that the company will not pay Ford Motor Company for its recent expanded recall of Firestone Wilderness tires. He said that the company considers the tires good, and he again pointed to a potential stability problem with the Ford Explorer. Reports last week indicated that Ford CEO Jac Nasser might try to make Bridgestone Firestone pay part of the estimated $3 billion in costs for the expanded recall. Meanwhile, a new report independently performed for Bridgestone Firestone presents evidence that the Ford Explorer performs the same under the failure of Goodyear tires as it does under failed Firestone tires. The study, done by a mechanical engineering professor at Ohio State University, also shows less dramatic tire-failure consequences in a Jeep Cherokee and Chevy Blazer, compared to the Explorer. The report alleges severe oversteer conditions upon failure of the Explorer's left rear tire, linked to a potential design flaw with the popular SUV.

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DC TO FIX MINIVAN LATCHES In response to a recent government crash test, DaimlerChrysler has agreed to voluntarily replace the lock system for left-side sliding doors on DaimlerChrysler minivans. A National Highway Traffic Safety Administration crash test showed that the door latches did not hold and the door could potentially detach in a higher-speed crash. DaimlerChrysler will also redesign the latch for new models. The voluntary fix only covers about 136,500 2001-model-year vans with manual sliding doors. Those models with power sliding doors have a different latch system.

CU WARNS ABOUT BOOSTER SEATS Consumer Reports, the consumer advocacy publication of Consumers Union, says that some booster seats could cause seat belts to jam in a loosened position, allowing the child to move too much in a crash. The booster seats are recommended for use by children who have outgrown regular child seats, and a current nationwide program called Boost America, sponsored by Ford Motor Company, is distributing the booster seats and also heightening awareness. For more information on how to properly install and use booster seats, along with a model-by-model guide, see www.consumerreports.com.

INCENTIVES GALORE Domestic automakers are continuing to raise incentives on new cars, with free financing also offered on some Ford Motor Company, General Motors, and DaimlerChrysler vehicles. New-vehicle incentives are currently averaging $2619 per vehicle, up 38 percent from a year ago, according to an AP report, citing CNW Marketing Research data. Most dramatic is a new GM program that offers a chance for customers to cut their leases short without penalty if they buy or lease a new GM product, not including Saab, Saturn, or Hummer. The GM program runs through July 15.

FORD MIGHT REORGANIZE MANAGEMENT According to various reports, Ford Motor Company management might soon face an upper-level management reorganization. Ford's management board reportedly wants some company executives to report to other top executives, including chairman William Clay Ford, Jr., rather than only CEO Jac Nasser. The move would ensure that Ford is more involved in company operations. Nasser vehemently denied the reports, calling them false and ill-intentioned. Nasser has spent much of his efforts in the past year defending the Ford Explorer and the company's Firestone tire recall efforts.

TUNDRA FARES WELL IN CRASH TESTS In the latest round of crash tests conducted by the Insurance Institute for Highway Safety, a lobby group representing the insurance industry, the Toyota Tundra gave the best occupant protection in a 40-mph frontal offset crash test. The IIHS tests ranked four extended-cab full-size pickups, rating the Tundra "good." In contrast, the best-selling Ford F-150 was given a "poor" rating, with a high probability of injuries. The Dodge Ram 1500 was also rated "poor," due to a late airbag deployment, while the Chevrolet Silverado 1500 was rated "marginal." Making the matter confusing to consumers, the poor-performing Ford F-150 was given a top five out of five stars in the federal government's frontal crash tests.

GREENSPAN: GAS PRICES NOT AN ISSUE Economy god Alan Greenspan downplayed the role of high gasoline prices as detrimental to the U.S. economy. Greenspan also predicted that gasoline prices will soon fall again, and overall energy prices will stabilize. Experts still anticipate that gas prices will soar regionally in the Midwest and in California, but the price hikes in those locales will be due to refiners' supply problems and not due to actual energy prices.

CONTINENTAL JUMPS IN Continental Tire says that it will cover most of the tires to replace Firestone Wilderness tires recently recalled by Ford. Continental, which makes tires chiefly under both the Continental and General brands, will increase production at all of its North American plants to fill the gap left after Bridgestone Firestone recently said that it will no longer supply tires to Ford Motor Company.

FORD EXPANDS TIRE RECALL TO EUROPE Ford Motor Company expanded the recall of Firestone Wilderness AT tires to include Europe. The expansion covers an additional 23,000 vehicles with U.S.-made Firestone tires. Previously, Ford had said that no European vehicles would be affected by the recall, although company officials did not disclose what prompted the new decision.

GM SHAREHOLDERS VOTE NO ON ACCIDENT TRACKING General Motors shareholders voted no on a proposal that would have required the automaker to keep track of accidents involving vehicles that had the company's OnStar telematics system. The shareholder who originally proposed the action was concerned with the role of OnStar in driver distraction--particularly with new services such as Internet browsing and information services. General Motors opposed the proposal because just keeping track of whether a vehicle had OnStar does not indicate that the system is to blame, and Internet features are only available when the car is stopped.

ELTON JOHN'S CARS SELL FOR MILLIONS The sale of some of singer Elton John's cars has brought about $2.75 million--nearly twice that of preliminary estimates. Auction house Christie's sold twenty cars from John's collection at a London auction. The roster included several classic English cars, a Ferrari Testarossa, and a rare Jaguar XJ220 supercar, among others. The auction house said that the entertainer was selling the vehicles for practical reasons, despite rumors that he might need the money due to the loss of a multimillion-dollar lawsuit last year. After the sale of the twenty cars, eight cars remain in his collection. The singer reportedly was not present for the auction and watched from the U.S., where he is currently on tour.

DAEWOO UNION PROTESTS AT GM SHAREHOLDER MEETING South Korean Daewoo union representatives were present at General Motors' annual shareholders meeting. The union members, from the Korean Metal Workers' Federation, reportedly passed out letters of protest persuading against a GM takeover of the company. The workers said that with a GM takeover they expect many more layoffs. GM has submitted a proposal for the acquisition of Daewoo, although the terms of the acquisition are not yet decided.

FLORIDA AG BLAMES BOTH FOR TIRE FIASCO Florida's attorney general has spoken out against both Ford and Firestone, blaming both companies for the Ford Explorer and Firestone tire fiasco of the past year. The state's attorney general, Bob Butterworth, says that Ford is at fault for specifying a tire with poor heat resistance, while Firestone is also at fault for producing some defective tires. He told Reuters that the state's Department of Highway Safety found that the Ford Explorer stood out as having a single-car rollover rate much higher than other SUVs.

HONDA RECALLS SOME CIVICS Honda is recalling about 8205 Civic models in the U.S. and more than 52,000 worldwide for a potential problem with loose fuel-pipe tubing. Failure of the tubing could lead to fuel leaks, the company said. All of the affected cars were produced last year at Japanese facilities.

LAW HELPING CA INSURANCE RATES According to a new study by the Consumer Federation of America, Californians are paying less for auto insurance than other states. The study found that California insurance had fallen four percent from 1989 to 1998 while it had risen nearly 39 percent in the rest of the country. The consumer advantage is attributed to California Proposition 103, a 1988 law that established more regulation for the insurance industry.

CHRYSLER TO OFFER SUV SIDE AIRBAGS DaimlerChrysler's Chrysler division plans to offer side airbags on its 2002 sport-utility vehicles, according to an announcement from the automaker. Chrysler says that for 2002, 75 percent of its SUV offerings will be available with side airbags, and it will be the first manufacturer to offer side airbags in a full-size pickup, the Dodge Ram. "...We feel that these new side curtain airbags can further help reduce head trauma," said Bernard Robertson, a vice president in engineering technologies and regulatory affairs. The automaker has no plans to offer a side bag system in the Wrangler, though. The airbags offered will be of the side curtain type that drops down from the headliner. Chrysler also revealed that it will begin offering tire pressure monitors in some of its 2002 models.

NHTSA STARTS HEADLIGHT INVESTIGATION Are brighter headlights safer or just annoying? The National Highway Traffic Safety Administration is about to begin an investigation into glare due to headlights, and federal investigators plan to focus on whether newer high-intensity discharge (HID) headlights produce more glare than ordinary headlights, according to USA Today. The agency also plans to look into the glare due to high-mounted truck headlights and also fog lamps. Researchers at the University of Michigan have found that the headlights emit harsher, blue light that more readily bothers the eyes, although the federal government has no accidents on record attributed to HIDs.

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