DAILY EDITION: Mar. 24, 2003 Page 2

March 23, 2003

ANWR Drilling Fails in Senate (3/24/2003)
Environmentalists take one away from the Bush administration on Alaskan oil exploration.


General Motors will recall nearly 51,000 Cadillac CTS sedans, the company said on Friday. The compact luxury sedan, brand new this year at Caddy, is suspected of having a loose bolt that could lead to problems with the car’s steering shaft. Two incidents have been linked to the problem but no injuries have been reported. Most of the recalled vehicles were sold in the U.S.


New-Car Sales Need A Shot In The Arm

Amid signs of softening among new-car sales, now that the Iraq war has intensified, the Big Three are debating how best to re-stimulate demand at the outset of the spring sales season. Among the remedies being considered are an extension of zero percent loan offers that worked so well after September 11, increased cash rebates and a revisit to ‘cheap’ lease packages now that the pool of off-lease vehicles is shrinking.

Dealer reports on new-vehicle sales in the first 20 days of March were predictably downbeat. The pre-war buildup caused the Big Three and even Toyota to report negative signals from their dealers, mostly attributed to “war jitters.” Dealers stepped up their local “price ads” as automaker promotions failed to rejuvenate sales from the seasonal lows of January and February. The sales pace continued flat in March despite consumer cash rebates of as much as $4000 on Dodge Durango and $3500 on Chrysler Group’s minivans, $3500 on Ford Crown Victoria and Lincoln LS, $3000 on Chevrolet Avalanche, Tracker and Saturn L-Series. Even higher dealer incentives are being paid — up to $5000 on the 2003 Volvo C70 and the 2002 Mazda Millenia, and a whopping $10,000 on the discontinued 2002 Lincoln Blackwood.

“There is no urgency or call to action from incentives anymore,” says veteran analyst Mary Ann Keller, who adds that spiking gasoline prices have hurt demand for large SUVs. Although March is three days longer than February and has five weekends, J.D. Power now predicts that the annualized sales rate this month will fall from February’s 15.4 million to 15.25 million. That compares with 2002’s sales of 17.1 million, a near-record total. Michael E. Maroone, president of the largest auto retailer, AutoNation Inc., called for a return of zero percent loans for 60 months across the board as a market stimulus.

Whatever emerges in the upcoming final ten-day period of March, it’s likely to be uncorked by the Big Three sooner rather than later. —Mac Gordon

Coil Broil Snarls VW On Eve Of Upmarket Push

Determined to overcome a nagging ignition-coil failure problem on six VW and Audi car models, German automaker Volkswagen is pressing to ship dealers enough replacement coils to complete the massive service task by early June. About 530,000 VW and Audi cars are equipped with defective coils, says VW of America spokesman Steve Keyes, and the automaker has lined up a second supplier to replace the four or six coils with which each car’s ignition system is equipped.

When the problem surfaced last year, most dealers did not carry enough coils to change all on cars brought in with one or two coils inoperable. Dealers were told to replace only non-working coils which left many owners facing return breakdowns and service visits when additional coils went kaput causing spark plugs to sputter or die. Owner complaints escalated, embarrassing the factory on the eve of launches of two upscale vehicles this year — the Touareg SUV and Phaeton sedan. Jens Neumann, chief of VW’s North American operations, recalling the Audi sudden-acceleration flap of the mid-1980s, said, “I know what it is like to lose the confidence of customers. We won’t let that happen again.”

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