Weekly News: July 2, 2001

July 2, 2001

FORD TO SCRUTINIZE REPLACEMENT TIRE LIST Ford Motor Company might drop some tires from its list of valid replacements for recalled Firestone tires, after Congressional investigators alleged that pending National Highway Traffic Safety Administration (NHTSA) data shows the accident rate with some of those replacements to be higher than the recalled tires. The investigating committee would not release the actual data until the NHTSA reviews it. Although the NHTSA has thirty days to do so, it is soon expected to make a preliminary recommendation to the committee. Ford says that it will wait until it can scrutinize the Congressional data before it makes a move to stop using any of the tires. About sixty different models of tires are currently on Ford's replacement list.

NEW YORK CELLPHONE BILL MOVES THROUGH The State Assembly in New York has approved a new measure that would ban the use of hand-held cellphones in the state. The measure passed through New York's Senate last week, and Governor Pataki signed it into law late last week. The new law would go into effect in November, and after a phase-in period violations will bring a $100 fine. The use of hands-free cellphone devices is allowed under the new law, a boon for the burgeoning industry.

FIRESTONE TIRE TROUBLES KNOWN IN '96 The New York Times reported that personal-injury attorneys associated with the group Strategic Safety, along with one of the country's top safety consultants, knew about cases of Firestone tire failure on Ford Explorers in 1996—a year before the federal government had been alerted to a possible problem. The attorneys chose not to report the findings to the government for fear that a study would be inconclusive, causing their lucrative injury settlements to be dismissed. In a response, Strategic Safety asserted that Ford and Firestone were aware of these findings at that time, long before they went public.

CAFE GETTING NEW LEASE ON LIFE Lawmakers are once again considering an increase in the federal government's Corporate Average Fuel Economy (CAFE) standards, pending the results of a study due next month from the National Academy of Sciences. Until recently, experts thought that the whole idea of CAFE would probably be phased out under the Bush administration, but higher gas prices are stimulating lawmakers' renewed interest in the standards. Senator Dianne Feinstein has challenged automakers to make sport-utility vehicles with fuel economy that matches the fuel economy of passenger cars. For years now, the fuel economy standards for cars have been locked at an average of 27.5 mpg while light trucks have been allowed an average of 20.7 mpg. Proposed legislation would gradually bring light truck mpg in line with that of cars by 2007. Many argue that light trucks now fill the same consumer role as passenger cars, so the same higher rules should apply.

DAEWOO, ROUND TWO GOES SOUR Daewoo creditors in South Korea early last week started a new round of negotiations with General Motors, although later in the week negotiations have reportedly broken off. Daewoo's majority creditor, the Korea Development Bank, released the information about the new talks, but details have not been revealed. One of the main issues is the sale of Daewoo's main Bupyong plant, which creditors want to see sold, although GM is hesitant because of the plant's size and age. GM is expected to bid less than $2 billion for Daewoo, drastically less than Ford's $6.9 billion bid last year. Ford pulled out of the deal in negotiations last year, leaving Daewoo to find a new buyer.

CONSUMERS WARY OF FORD A new Automotive News survey suggests that Ford's consumer image has plunged since last year when Firestone first recalled 6.5 million tires, most installed on Ford Explorers. The survey found that nearly three fourths (74 percent) of respondents think that the Ford Explorer rollover accidents are due to a combination of factors dealing with both the vehicle and the tires. Forty-three percent of respondents gave Ford a poor ranking in honesty, though more than half (62 percent) thought that Ford was more credible than Firestone. In a similar survey last August, 53 percent gave Ford at least a good ranking in honesty. Oh, how times have changed.

GM LEASE PROGRAM STIMULATING SALES General Motors' new incentive program, that allows consumers to skip out early on leases if they buy or lease a new GM product, is working, according to preliminary June sales figures from analysts. Analysts expect that more than 40,000 people are expected to take advantage of the lease offer, although the cost to GM is unknown. Ford Motor Company is now trying a similar approach with leases on select vehicles, including the Windstar minivan, offering consumers an easy-out on their current lease if they buy or lease another Windstar.

HOT BIMMERS TO BE RECALLED BMW is expected to issue a recall of more than 22,000 2001-model vehicles, to replace a faulty switch that may cause a vehicle fire. Malfunction of the switch can cause the fan to be inoperable, leading to overheating. Models affected include some 3 Series, 7 Series, X5, and Z8 vehicles, depending on the built date. AutoWeek says that there have been several reports of X5 fires. BMW officials say that owners will not be notified about the problem until mid-July, when replacement parts become available.

FIRESTONE: ALMOST DONE WITH RECALL Bridgestone Firestone has announced that its recall of 6.5 million tires from last August is now nearing completion. The tiremaker says that 6.3 million tires have now been replaced, and the effort will be complete by August 29. Last month, Ford decided to recall another 13 million Firestone Wilderness AT tires on Ford products, although Firestone was not involved in the decision to issue the recall, nor does the company think that a recall was warranted.

HYBRID CIVIC COMING NEXT SPRING Honda has confirmed the arrival of a gasoline-electric hybrid version of its Honda Civic sedan in the U.S. next spring. The hybrid Civic will initially be offered only with an automatic transmission, with fuel economy in the 50-mpg range.

FORD UNLOADS ITS DEALERSHIPS Ford Motor Company is planning to exit the dealership end of its business, beginning with the automaker's announcement that it will sell seven Ford-owned dealerships in Tulsa, Oklahoma. UnitedAuto Group will buy those dealerships, while Ford will search for buyers for 23 more company-owned dealerships. Ford's decision to sell them is reportedly due to friction caused by privately owned dealerships that viewed the Ford-owned ones as a threat.

PRELUDE TO THE END Honda says that it will discontinue its Prelude sports car after the 2002 model year, a longstanding model in the automaker’s lineup. Slow sales are reportedly the main reason for the decision. Production of the Prelude has already halted in Japan.

RENTAL-CAR COMPANY GIVING SPEEDING TICKETS? A Connecticut rental-car company is reportedly under investigation by the state's Department of Consumer Protection for using a GPS tracking system to fine a renter for speeding. The renter believes the practice to be a violation of privacy. The rental company, called Acme Rent-A-Car, imposed three different $150 fines on the now-disgruntled speeding renter.

THE TOP TEN INTERSECTIONS TO AVOID Insurer State Farm has released a study that rates the top ten most dangerous intersections in the U.S. The company says that an intersection in Pembroke Pines, Florida, is number one for accidents, due to sheer traffic volume. Other top dangerous intersections were located in Philadelphia; Phoenix; Tulsa; Frisco, Texas; Metairie, Louisiana; and Sacramento, California. The company based its survey on the number of accident claims at each intersection. All of the most dangerous intersections had traffic lights. For a list of the most dangerous intersections in your state, see www.statefarm.com.

FIRESTONE CLOSES DECATUR Tiremaker Bridgestone Firestone has announced the permanent closure of its Decatur, Illinois, plant, the facility that produced the 6.5 million tires covered by Firestone's massive recall last August, and also a portion of the 13 million additional tires that Ford Motor Company recalled last month. Company officials insisted that the facility's closure was primarily a production capacity issue and not due to quality concerns or dated equipment. The company's announcement corresponded with an announcement to workers that the facility will close in six months. The Decatur plant currently employs 1500 workers, and Firestone says that due to a drop in production at all of its plants it will not be able to transfer many workers.

GAS PRICES FALL IN TIME FOR BUSY HOLIDAY Gasoline prices have already fallen by 17 cents, on average, from record highs last month, according to the latest American Automobile Association (AAA) survey of 60,000 gas stations across the country. Prices then peaked at about $1.55, averaged nationally. The AAA predicts that the decline in pump prices will result in especially congested road traffic for the busy Independence Day week. The group's survey indicates that about 36.6 million Americans will travel more than 50 miles on July 4. The National Highway Traffic Safety Administration (NHTSA) says that 87 percent of motorists support heightened law enforcement levels over the holiday weekend. The agency predicts, with July 4th falling midweek this year, that there could be a sharp increase in related fatalities due to the prolonged holiday period.

NEXT BMW ‘7’ REVEALED Some feature details of BMW's next big 7-Series sedan have been revealed, along with the first official pictures. The European-market 7-Series, set to go on sale in November, will first be shown at the Frankfurt show in September, while the U.S.-bound 2002 745i will make its auto show debut in Detroit and go on sale in January. The new-generation 7-Series will boast the first six-speed automatic in any car, among other technical innovations.

NHTSA EXPANDS INVESTIGATION INTO GM PICKUPS The National Highway Traffic Safety Administration has decided to upgrade an investigation of alleged brake problems in 1997-2000 GM full-size pickups to an engineering analysis. The agency now has 202 complaints of brake malfunction associated with failure of the vacuum brake booster, and a total of 25 crashes due to the problem. The part failure would cause a loss of power assist for the brakes, making the truck difficult to stop and potentially dangerous.

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