TCC Daily Edition: 8/9/01

August 9, 2001

Welcome to TheCarConnection's Daily Edition, the best source of industry news-delivered FREE right to your e-mail inbox. Stay on top of what's happening, especially as the Management Briefing Seminars wrap up in Traverse City, Mich.. We welcome your comments and suggestions for making TCC's Daily Edition the best place on the Web for automotive news. Write to us at [email protected] -- The Editors

WILL BALLARD'S FUEL CELL TAKE A BACK SEAT TO GASOLINE OPTION?

While it may be the week of the fuel cell, it isn't necessarily a positive one for Ballard Power, the Vancouver-based pioneer in which Ford and DaimlerChrysler both have ownership interests. The reason? GM's announcement that its stationary fuel cell concept, meant to ramp up technology (and bring in cash) before the automaker transfers the idea to its vehicles, will run on gasoline as well. Indeed, as Larry Burns, GM's vice-president of research and development explained, "it allows us to use the existing infrastructure of filling stations around the country." The GM announcement came as Ballard reported widening losses in its second quarter, partly due to a 70 percent increase in research and development spending. Ballard reported losses of $41 million on revenues of $20.7 million.
ARVINMERITOR HEAD ADVOCATES RADICAL CHANGE IN INDUSTRY

Not only change, but radical change. That's what ArvinMeritor Inc. chairman and CEO Larry Yost said is needed to survive in the new automotive climate. Inconsistent financial performance, the traditional cycles and slow growth all make the auto industry (both OEMs and suppliers) unattractive from an investment perspective. In addition, overcapacity and a reluctance to outsource non-core business operations will continue to hamper efforts to be more attractive to investors. Yost's idea for turning around the fortunes of suppliers? Look for merger and joint venture opportunities (rather than acquisitions) as a way of generating black ink.

'MEA CULPA EXPLORUS, ESCAPUS': NASSER TAKES LAUNCH HIT

He is, after all, chief executive officer. Granted, Ford's Jac Nasser now shares some of the duties with the great grandson of the founder, but says he takes responsibility for the troubled launches of a redesigned Ford Explorer and new Ford Escape, both high-profile SUVs for the company. At the same time, Nasser defended his strategies while promising the company would do better in quality and customer satisfaction. A several-month delay of the Explorer was due to an original recall of some 6.5 million Firestone tires as well as a determination not to repeat the scenario that brought the Escape back to dealers on five separate occasions. Nasser's verdict on the Escape launch: "Just bad and not typical of what we'd expect."

DAIMLERCHRYSLER, AT&T WIRELESS FORM TELEMATICS TIE-UP

Slow off the starting blocks, DaimlerChrysler plans to make an aggressive move into telematics, the integration of autos and in-car navigation, communication and entertainment systems. In doing so, the automaker believes it can hold down costs by teaming up with one of the nation's leading providers of cellular services, AT&T Wireless. "Why shouldn't the company that invented the automobile work with the company that invented the telephone," said Wolfgang Bernhard, during a media briefing at the Management Briefing Seminar in Traverse City, Mich. Wednesday morning. While the background session was short on specifics, officials indicated the partnership will serve all three DCX vehicle units: Mercedes-Benz, Chrysler and heavy truck maker Freightliner. Expect the first telematics-equipped vehicles carrying the Chrysler brand by late this year or in early 2002, said DCX director of telematics Jack Withrow.

AUSTRALIAN STRIKE OVER AS TRISTAR WORKERS HEAD BACK

A two-week strike by 350 workers at Sydney's TriStar steering and suspension plant means an end to supply problems that have halted most production at local factories of Ford, General Motors and Mitsubishi. Workers are expected to resume work shortly, but parts aren't likely for at least three days. A Ford spokesperson at two plants employing 5,000 workers in total said production wouldn't likely start until Monday. Toyota, which built models for export while the strike was on, was not affected since it imported the needed parts from Japan.

HONDA DEVELOPS VIRTUAL GLOBAL FACTORY CONCEPT

Honda Motor Co. intends to link its assembly plants around the world into a seamless manufacturing system able to respond to shifts in demand anywhere its products are sold. As part of Honda's New Manufacturing System, the carmaker will be able to assemble virtually any product in its line-up at any one of its plants, whether in the U.S., Europe or Japan. The approach is allowing Honda to quickly shift production of the next-generation CR-V from Japan (which have reached their capacity) to Great Britain. While the manufacturing strategy will require a significant up-front investment in flexible, rather than fixed tooling, Honda officials insist the long-term savings will be far more significant. "Remember the old Honda slogan, 'We Keep It Simple?' Well, now they're applying it at the factory level," said J. Ferron, chief auto analyst with PriceWaterhouseCoopers.

GM TREADING CAUTIOUSLY IN HUGHES BIDDING WAR.

While General Motors will "take seriously...any serious bid" for its prized Hughes/DirecTV subsidiary, the automaker's vice chairman and chief financial officer said GM has received a detailed proposal from Rupert Murdoch's News Corp., but only a letter of intent outlining the unsolicited, $30 billion offer from EchoStar Communications Corp. Devine made the comments at the Management Briefing Seminar in Traverse City, Mich., but would not outline the process-nor set a timetable-for picking a winner of the DirecTV contest. He did say the GM Board would have to consider the likelihood of any deal being completed. That could be bad news for EchoStar due to potential antitrust regulations, the company being the second-largest satellite-to-home broadcaster in the U.S.

GM SAYS STRONG U.S. DOLLAR CRIPPLING DOMESTIC AUTOMAKERS

U.S. manufacturers are being devastated by a strong American dollar, says GM's chief financial officer. "It's frankly destroying the manufacturing capability, the manufacturing competitiveness of this country," said John Devine in a briefing to reporters at the Management Briefing Seminars in Traverse City, Mich. Devine said that while his employer is seeking support from the Bush Administration, he conceded there's little the government can do to shift exchange rates in favor of domestic manufacturers. "Nobody can mandate the dollar." Devine suggested Japanese automakers have pumped their exchange rate advantage into hefty sales incentives. In a wide-ranging discussion, he acknowledged GM will fall short of its goal to improve margins this year. But longer-term, he believes the company can reach its target and, in the process, significantly increase GM's share price.

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FACTOID:

HONEST: DEALERS ARE TRUSTED BY MOST CAR BUYERS

Most car buyers believe their selling dealer is honest and courteous, according to a study by J.D. Power and Associates. The 2001 Sales Satisfaction Study showed new vehicle buyers overall give their selling dealers an average rating of 8.5 out of a possible 10. The study also showed the power of a customer's feet: more than one million shoppers each year decide not to buy a particular make of vehicle because they didn't like the way they were treated by the dealer when they walked into the showroom.

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FROM THE SOURCE:

VISTEON WINS DVD REAR SEAT ENTERTAINMENT CONTRACT FOR MOPAR

Visteon Corporation said it has secured a contract to supply its Digital Versatile Disc (DVD) Rear Seat Entertainment System to MOPAR, DaimlerChrysler's original equipment replacement parts and accessories division. The vehicle enhancement package will be available to consumers through authorized dealerships for all 2002 model year Chrysler and Dodge minivans in North America and Europe. Visteon will supply the product hardware, provide its systems integration expertise and develop the necessary installation guidelines. Visteon's DVD Rear Seat Entertainment System, which will carry the MOPAR brand name Rear Seat Video System, will be shipped directly to the dealerships.

--PR Newswire

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HERTZ SIGNS WITH WIRELESS WEB PROVIDER

2Roam, the leading global wireless software and service provider, announced that Hertz Corporation has selected its wireless application software platform to deliver Hertz' Web-based customer service offering to wireless users. Hertz customers will be able to make, review, and update car rental reservations using cell phones, pagers and PDAs utilizing the 2Roam Wireless Solution. Hertz becomes the first car rental company to offer customers access to its online services via all wireless devices. "Hertz customers are typically business travelers or busy people who are constantly on the move," said Tom Jackson, CEO, 2Roam. "Since more than 50 percent of business travelers carry mobile phones on their trips, wireless applications will allow Hertz along with other travel and leisure companies to service their customers at all times, regardless of where they may be."

--PR Newswire

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THE TICKER

Autoliv (ALV), Closed 20.25, down 0.46

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ArvinMeritor (ARM), Closed 20.48, down 0.07

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American Axle (AXL), Closed 19.80, down 0.06

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Dana (DCN), Closed 24.46, down 0.54

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DaimlerChrysler (DCX), Closed 47.07, down 0.73

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Donnelly (DON), Closed 15.75, unchanged

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Delphi Automotive (DPH), Closed 16.00, down 0.12

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Eaton (ETN), Closed 74.06, down 1.12

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Ford (F), Closed 24.37, down 0.38

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General Motors (GM), Closed 62.19, down 1.10

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Gentex (GNTX), Closed 30.80, up 0.10

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Goodyear (GT), Closed 26.91, down 1.11

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Johnson Controls (JCI), Closed 77.91, down 1.37

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Lear (LEA), Closed 40.77, down 0.27

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Magna International (MGA), Closed 63.50, up 0.50

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SDRC (SDRC), Closed 24.79, up 0.01

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Toyota (TM), Closed 65.30, down 0.45

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TRW (TRW), Closed 42.11, down 1.18

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Visteon (VC), Closed 19.83, down 0.12

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Volkswagen (VLKAF), Closed 45.88, unchanged

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