DAILY EDITION: Nov. 1, 2002

October 31, 2002

TCC'S DAILY EDITION: Nov. 1, 2002


FIAT TO BOOST AUTO GROUP WITH $2.47 BILLION
Fiat SpA will pump $2.47 billion into the struggling Fiat Auto group as required by Italian law. According to that law, any company that owes more than one-third of its net assets must be recapitalized. Fiat SpA will effect the transfer by canceling some of Fiat Auto’s debt to the parent company, according to Reuters. GM, which owns 20 percent of Fiat Auto, is not party to the arrangement. Fiat lost $335 million in the third quarter, and has said it will cut 8100 jobs to stanch losses — a move extremely unpopular in Italy and with the country’s government.
GM Loses $804 Mil In Q3 by Joseph Szczesny (10/21/2002)

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DAILY IN DEPTH: FORD CUTTING $11.2 BILLION IN COSTS

Ford Motor Co. executives said Thursday they were targeting $11.2 billion in savings from their global product purchasing over the next two years. That figure represents about 15 percent of Ford's total global annual purchasing of $75 billion for the parts and materials needed to build the automaker's cars and trucks.

Ford Group Vice President David Thursfield and Ford North America chief Jim Padilla briefed reporters about the cost-cutting goals as part of a full-court press the automaker is putting on to convince the press and Wall Street that it is making progress. Stock and credit agency analysts have been beating up Ford in recent weeks for not moving fast enough to cut costs.

Thursfield said he would be "disappointed" if the company did not get those savings through several new cost-cutting techniques. These include working closely with suppliers to eliminate waste, intensified parts sharing and adjusting the content in some vehicles, he said. Among changes: 25 different brake calipers and rotors in 2002 will be cut to 11 by 2007; 26 front seat architectures this year will shrink to four in 2010; 31 radio variations will come down to 14 by 2007. The executives also said they are striving for 64 percent component commonality among its vehicles, and 56 percent carryover content from one generation to the next.

Padilla said Ford North America would be profitable for 2002, and that he expected the unit to "maintain a very positive position next year." Ford North America lost $50 million in the third quarter, earned $45 million in the second quarter and lost $430 million in the first quarter for a total loss so far of $435 million. If Ford North America makes enough to make up for that loss in the fourth quarter, it would be quite a turnaround.

Ford is in the midst of a multi-year turnaround effort after last year's loss of $5.45 billion. Savings on product development costs are a key part of the bid to return the world's number-two automaker to profitability. —Jim Burt
Ford Loses in Q3, Too by Joseph Szczesny (10/21/2002)

NEXT WEEK AT TCC: Ride along in VW’s ’03 New Beetle Convertible and get into the first Maybach drive!

MAZDA BOOSTING FORECASTS
Ford affiliate Mazda, meanwhile, says it is raising estimates for profits it will report on Nov. 12 as well as those for the second half of the Japanese fiscal year, which ends Mar. 31, 2003. Mazda says it now expects to book about $45 million in profit for the period that ended Sept. 30, Reuters reports, more than double what it expected. For the second half of the fiscal year it’s expecting about $150 million in profit, up by about $30 million. Officials also told the news service they expect a slight boost in sales volumes.

ZAP BIDS ON TH!NK
Ford may have an interested buyer for its dormant TH!NK tank. Zap, a California-based electric car company, says it’s offering $10 million for TH!NK, for which Ford paid $23 million when it was still Norway’s Pivco Industries in 1999. Ford renamed Pivco TH!NK, invested $100 million in the company’s electric-car efforts, then decided to halt investment in the company this past summer as a part of its cost-cutting efforts. TH!NK is based outside Oslo and employs 150 people.

WORLD REPORT: BRAZIL

Bob Lutz, GM’s new product boss, visited the São Paulo International Auto Show, which has just ended. He unveiled the Journey, a wood-and-FRP mockup of what seems to be the next Blazer, built on the Zafira monospace platform (which is itself a stretched Opel Astra chassis). Lutz said that developing vehicles in design centers such as São Caetano’s, in the surroundings of São Paulo City, with collaboration of other countries, helps in keeping costs down and revealing new talents... A recent Financial Times story on Bill Ford quotes him as giving the “last chance” for Ford’s South American operations, bleeding red ink for the past seven years. The quote was received serenely by the company executives here; the company has just poured $1.2 billion in a new plant in Camaçari, state of Bahia, and saw its market share in Brazil jump from 6.6 percent last year to 10.6 percent in the first nine months of 2002, thanks to the new Fiesta. Exports were up 15 percent this year and shall skyrocket in 2003 due to the new, subcompact Fusion SUV shipments to the U.S…Volkswagen confirmed 40,000 Brazilian Golfs will be sold in the U.S. this year. The model has been just granted the Total Quality Award, Small Cars category, by the Strategic Vision Company. This year J. D. Power nominated the Brazilian-made Golf as the top-quality model marketed by the VW Group in the U.S. – Fernando Calmon

FROM THE SOURCE

PRNewswire

McLaren Performance Technologies, Inc. (Nasdaq: MCLNC) announced today that it has opened its doors to the individual automotive enthusiast for high-performance tuning, complete classic and muscle car restorations, race and street-rod prep, along with additional engine and powertrain services. Such services for the private owner will supplement the company's recognized engineering activities for the industry.

Toyota Motor Sales, USA, Inc. (TMS) recently announced the completion of appointments to the newly formed Diversity Development Department, a pivotal step towards fulfilling Toyota's ambitious 10-year $7.8 million diversity strategy. The department is charged with ensuring that Toyota has sound diversity-development processes, people management systems and measurable strategies aligned with its corporate vision. Leading the department is Vice President of Diversity Guillermo Hysaw, who reports directly to Jim Press, TMS executive vice president and COO.

Johnson Controls (NYSE: JCI) today announced that it has completed the acquisition of Varta AG's Automotive Battery Division, a major European automotive battery manufacturer. Johnson Controls is paying approximately Euro 312.5 million, subject to closing adjustments. The transaction is effective October 31, 2002.

THE TICKER

Name Symbol Last Chg
AUTOLIV ALV 19.40 +0.20
AUTONATION INC AN 10.61 +0.44
ARVINMERITOR ARM 15.15 +0.34
AMER AXLE & MANU AXL 23.70 +0.25
BALLARD PWR SYS BLDP 11.079 +0.189
BORG WARNER BWA 44.98 +0.76
COLLINS AIKMAN CKC 2.65 -0.10
CUMMINS INC CUM 23.96 -0.04
DANA CORP DCN 10.00 -0.20
DAIMLERCHRYSLER DCX 34.10 -0.01
DELPHI CORP DPH 6.96 +0.08
EATON CORP ETN 68.39 -0.16
FORD MOTOR CO F 8.46 +0.04
GENERAL MOTORS GM 33.25 +0.70
GENTEX CORP GNTX 29.48 -0.63
GOODYEAR TIRE GT 7.10 -1.01
HONDA MOTOR CO HMC 18.09 -0.43
JOHNSON CONTROLS JCI 78.00 -1.00
LEAR CORP LEA 36.55 +0.40
MAGNA INTL MGA 53.98 -0.23
MOTOROLA INC MOT 9.17 -0.01
NISSAN MOTORS NSANY 15.30 -0.38
SONIC AUTOMOTIVE SAH 15.75 -0.06
TOWER AUTO TWR 5.30 +0.15
TOYOTA MOTOR TM 48.60 -1.17
TRW INC TRW 53.30 +0.10
UNIT AUTO GRP UAG 13.28 -1.62
VISTEON CORP VC 6.59 +0.02

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