TCC's Daily Edition: 10/05/01

October 5, 2001


The news coming out of Ford seems to get worse every day. On Wednesday, the Detroit News reported that North American chief Nick Scheele told employees that costs have ballooned by $1,000 a vehicle and product quality has fallen well below those of Ford’s rivals. Scheele, known in the industry as a fix-it guy for his work in several Ford posts, told employees at a meeting last week that most of the company’s problems stemmed from its North American operations, and a major turnaround plan would be released soon. “For the first time in the U.S., Toyota has a double-digit lead” in quality, Scheele said. “Ford is, for the first time, significantly worse than GM or Chrysler.” Meanwhile, Scheele hinted that e-business initiatives would be de-emphasized. Scheele said that even though Ford has been successful in cutting costs, there are huge new expenses for sales incentives and marketing. Scheele’s admission comes on top of Ford’s announcement earlier this week that it would lose more than 10 cents a share in the quarter.


Reversing an earlier promise to fight any government-mandated tire recall, Firestone agreed to recall 3.5 million Wilderness tires that have been tied to rollover accidents involving the Ford Explorer. Firestone will recall two sizes of Wilderness tires made before May 1998 as original equipment for Ford SUVs. This recall is in addition to a recall of 6.5 million Firestone tires in August 2000. More than 200 deaths and 700 injuries have been related to Firestone tire failures. Over the past couple of years, Ford and Firestone have taken turns blaming each other for the deaths, but in announcing the recall, NHTSA said that Ford's Explorer sport utility vehicle was no more likely to roll over after a tire separation than other SUVs. ``At this point, NHTSA does not agree with Firestone claim that Explorers are more prone to rollover after tread separation,'' a U.S. Department of Transportation official said. ``NHTSA found no basis for the Firestone allegations.'' Firestone still faces hundreds of lawsuits over accidents involving the tires. It has already settled about 1,000 cases. Firestone is a unit of Japan's Bridgestone Inc.


The U.S. Environmental Agency poured more fuel on the discussion of CAFÉ standards Wednesday when it said that the average fuel mileage of all 2001 model year vehicles has slipped to its lowest level since 1980. The falling numbers were due largely to Americans driving large, gas-guzzling sport-utility vehicles. The report comes as the U.S. Congress considers broad legislation aimed at revamping the nation’s energy policy, including lessening dependence on foreign oil. Model year 2001 sport utility vehicles averaged 17.2 miles per gallon, pickup trucks 16.5 mpg, and vans and minivans 19.3 mpg. Cars average 24.2 mpg, the EPA said. The average of all 2001 model vehicles was 20.4 mpg, it said. The average fuel efficiency for all 2000 model vehicles was 24.0 mpg.


Apparently even luxury automobiles are feeling the slowdown in the U.S. economy. Jaguar, Ford Motor’s British luxury division, says it will close two of its three assembly plants in the United Kingdom for an extra week this month, canceling production of 1,500 cars. The two plants build the XJ8 sedan, the XK8 coupe, and the S-Type, will close Oct. 15-19, further extending the annual one-week autumn shutdown. The move cancels production of 1,500 cars. The plant that builds the new X-Type sedan won’t be affected. Other automakers, including Volkswagen, Renault and Fiat in Europe and Ford, General Motors and the Chrysler Group in the United States have also announced similar shutdowns.


South Korea's major automakers rose solidly in September, buoyed by strong exports to the United States. Analysts are saying that U.S. consumers are turning to less expensive imports in the wake of the Sept. 11 terrorist attacks in New York and Washington. Hyundai Motor said its vehicle shipments to the United States during September jumped 50.2 percent year on year to 30,166 units, while Kia’s shipments were up 30.4 percent year on year to 20,585 units.


General Motors will launch four new Cadillac models in the next three years, all aimed specifically at the European and Asian markets in an attempt to build the luxury division into a global brand. Mark LaNeve, general manager of CadillacDivision, told Just-Auto that the new Cadillac CTS unveiled at Frankfurt demonstrated that GM is serious. Cadillac’s plans will include changes to its distribution network, including a plan announced at the Frankfurt Show to fold Cadillac into Saab’s European dealer network.


Despite sagging auto sales in the United States in the wake of the Sept. 11 terrorist attacks on New York and Washington, Nissan no plans to initiate aggressive sales incentives similar to those currently being offered by U.S. automakers. "We need a little more time to assess, but what is clear is that in the medium to long term we see no reason to change the main direction of the Nissan revival plan," Nissan's chief financial officer, Thierry Moulonguet, told Reuters. Many analysts believe it’s only a matter of time before other brands will need to use sales incentives to keep customers coming in the doors. Nissan reported a 19.2-percent drop in U.S. light vehicle sales for September. Meanwhile, in a bid to cut development costs, Nissan is moving to integrate Mitsubishi’s transmission division into a subsidiary called Jatco. Nissan owns 99.7 percent of Jatco.


The vast majority of vehicles now in operation are between 5 and 15 years old. This could mean good news for automakers as the aging vehicle population requires replacing. According to Experian Automotive's National Vehicle Database, the largest percentage of vehicles currently on the road – about 18 percent – are between 5 and 7 years old. Vehicles more than 15 years old makeup the next largest group at 16.9 percent. Following is a quick look at other top automotive age groups:

*16.3 percent of vehicles in operation are 11 to 14 years old.

*15.4 percent are 8 to 10 years old.


Nissan North America announced pricing on the 2002 Sentra SE-R sports sedan. The SE-R returns to the Nissan Lineup with two models, the SE-R and the performance SE-R Spec V. The all-new SE-R with manual transmission has a base Manufacturer's Suggested Retail Price (MSRP) of $15,999. … Johnson Controls has been recognized by General Motors with the automaker's 2001 Diversity Champion Award for outstanding development of minority-owned supply companies. This is the first year that the award has been presented by General Motors to a tier-one supplier.


Autoliv (ALV), Closed 15.73, up 0.45

ArvinMeritor (ARM), Closed 14.71, down 0.84

American Axel (AXL), Closed 14.50, up 1.85

Ballard Power Systems (BLDP), Closed 24.89, up 0.11

Borg-Warner (BWA), Closed 42.85, up 0.23

Collins & Aikman (CKC), 6.00, up 0.30

Cummins (CUM), Closed 33.93, up, 0.28

Dana (DCN) Closed 14.40, down 0.22

DaimlerChrysler (DCX) Closed 33.93, up 0.61

Donnelly (DON) Closed 13.10, down 0.05

Delphi Automotive (DPH), Closed 12.00, up 0.38

Eaton (ETN), Closed 64.10, up 1.01

Ford Motor Co. (F), Closed 17.24, down 0.71

General Motors (GM), Closed 41.21, down 1.51

Gentex (GNTX), Closed 25.10, up 2.06

Goodyear (GT), Closed 18.39, up 0.12

Johnson Controls (JCI), Closed 68.07, up 0.51

Lear (LEA), Closed 28.20, up 0.14

Magna International (MGA), Closed 51.82, down 0.03

Motorola (MOT), Closed 15.82, up 0.54

Nissan (NSANY), Closed 8.92, up 0.37

Tower Automotive (TWR), Closed 6.75, down 0.23

Toyota (TM), Closed 56.10, up 0.59

TRW (TRW), Closed 33.26, up 1.14

Visteon (VC), Closed 13.14, down 0.09

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