DAILY EDITION: July 15, 2003

July 14, 2003

TCC'S DAILY EDITION: July 15, 2003

NHTSA Releases Rollover, Side-Impact Ratings

The National Highway Traffic Safety Administration (NHTSA) has released the results from its latest round of rollover and side-impact testing — and Toyota’s Tacoma, BMW’s 3-Series and the new Mazda6 are on the losing end of the tests. The agency reports on its Web site (www.nhtsa.dot.gov) that in side-impact ratings of ten new sedans and SUVs, the Kia Sorento, Mercedes-Benz C240, and Volvo XC90 scored five-star ratings at all positions, while the Honda Element scored all fives save for the left rear seat position, where occupants could be at slightly higher risk for head injuries. The BMW 3-Series and Mazda6 were given three starts, which reflects an 11- to 20-percent chance of serious injury in a crash, according to the agency. In the mathematical tests used to predict rollover potential, the NHTSA found that only 17 of the 52 vehicles it rated were worthy of a five-star rating; they include the Audi TT, Buick LeSabre, Chrysler Concorde, Dodge Intrepid, Ford Mustang, and Mercedes-Benz E320. The ’03 Toyota Tacoma extended-cab pickup got just two stars in the rollover ratings.

SUV Wars Roll into Court by Joseph Szczesny (6/2/2003)
Groups sue the NHTSA to keep new fuel-economy rules from taking effect.

Toyota Adding Hybrid Technology to Trucks

2004 Toyota Prius

2004 Toyota Prius

Toyota, just weeks away from selling the new second-generation Prius hybrid sedan, will add three more hybrids to its lineup, according to the Associated Press. The company will add hybrid versions of the Highlander crossover wagon and Sienna minivan to its range in the 2005 model year, and would join the coming Lexus RX 330 hybrid on the showroom floor. Toyota also is said to be working on a hybrid V-8 powertrain that could be marketed through its Lexus channel. Toyota president Fujio Cho has said the company would have six hybrid vehicles in its lineup by 2006.

Hybrids Growing, Diesels Too? by Joseph Szczesny (6/23/2003)
Uncertainty reigns in Detroit over which higher-mileage option will win the day.

Hyundai May Build R&D Center

Automotive News reports that Hyundai is looking for a home for a new research and development center for its Hyundai and Kia vehicles — and the home could be in Michigan or Alabama. The weekly says the Korean automaker is studying sites near Pittsfield Township, Mich., and in Alabama, where the company has broken ground on a new assembly plant on the south side of the state capital of Montgomery. The new R&D center would represent an investment of $240 million and could be as large as 200,000 square feet.

2004 Hyundai XG350 by Robert Ahl (6/30/2003)
The Koreans build a Japanese luxury car.

Mitsu Hires SpongeBob to Sell the Endeavor

2004 Mitsubishi Endeavor

2004 Mitsubishi Endeavor

Mitsubishi Motors North America is turning to SpongeBob Squarepants to move its Endeavor SUV off dealer lots and attract families to the new model. In phase two of the ad campaign, which began last spring, the same hip music (“Horndog” by British band Overseer) and atmosphere of the ads is kept, but the animated character is added to emphasize the family features of the vehicle including an available DVD option. Mitsubishi sales are hurting this year as it has had to pare back on incentives and low-quality lending that drove sales in the last two years. The company’s sales were off 20 percent through June versus last year despite two new models — the Endeavor and Outlander SUVs. Later this year, the company launches an all new Galant and Lancer sportback. The commercial also shows off Endeavor’s car-like handling qualities by opening with shots of the vehicle crossing a rough bridge grate with zero noticeable effect on the smooth ride. Describing the vehicle, the narrator observes: “Loaded from front to back, it’s perfect for families.” Mitsubishi has the youngest average age buyer in the industry at under 36 years old. But its penetration of families is less than the company would like, especially with its new SUVs. —Jim Burt

2004 Mitsubishi Endeavor by Robert Ahl (5/12/2003)
Just how goofy can SUVs get?

GM Very Unlikely to Bow to Fiat Put

While Wall Street has been long speculating on whether GM will have to absorb struggling automaker Fiat into GM Europe, GM insiders say it probably will never happen. Fiat has an option, based on the deal that gave GM’s control of 20 percent of Fiat in 2000, to make GM buy the rest between 2004 and 2009. But one GM executive said that the deal would likely not happen because Fiat would not accept a third-party assessment that the company was worth less than zero dollars and because GM could drag the validity of the option through courts for many years.

Meanwhile, The Financial Times had quoted Fiat CEO Giuseppe Morchio as telling investors that GM believed legal problems made its promise to buy Fiat Auto by 2004 invalid, although Morchio believed the put option was enforceable.

“The put is a right that begins in 2004 and is valid until 2009,” Morchio said in a statement. “I never made comments about GM's position regarding the put.”

GM officially doesn’t deny the legality of the put, but executives say Fiat wouldn’t even try to exercise it because they know of the prolonged legal hurdles. GM is only interested in taking on Fiat in the distant future and on its terms.

GM bought 20 percent of Fiat Auto for $2.4 billion in 2000 but last year wrote down its value to $220 million. The 2000 “Master Agreement” gave Fiat the right to force GM to buy the rest from 2004 to 2009.

In a filing with the U.S. Securities and Exchange Commission, GM said in March the put option “could become non-exercisable under other provisions of the Master Agreement (or) could be rendered unenforceable by reason of actions Fiat may have taken.” —Jim Burt


Suzuki Prices Verona from $16,499

2004 Subaru Verona and Forenza

2004 Subaru Verona and Forenza

American Suzuki Motor Corp. on Monday priced its new mid-size car, the Verona between $16,499 and $19,499. The first 300 Veronas, made by GM Daewoo Auto & Technology in Korea, were shipped to the United States on Monday. They are due to arrive in U.S. dealerships by late August. The Verona is the first of two vehicles produced by GM Daewoo for Suzuki. The second vehicle, a compact sedan called the Forenza, is expected to reach the United States next year. The Verona is the largest car ever sold by Suzuki. The company hopes to sell about 25,000 units of the Verona annually. Simultaneously, the company, an affiliate partner of GM's, is planning on raising its ad spending into next year to support a new branding program in an attempt to gain better brand recognition. Currently, most surveys put Suzuki well below Kia for brand awareness. Suzuki sales were off 1.9 percent through June and the company is on track to sell just 65,000 vehicles this year.


Ford Scuttles New Ga. Plant?

Automotive News reports that a proposed replacement plant for Ford’s top-ranked Atlanta assembly facility has been scuttled. Ford is said to have searched for a greenfield site that, with supplier parks and a new assembly plant, would have replaced its aging Atlanta plant. But financial considerations have apparently put the plans on hold, meaning that Ford will not be moving to suburban Morgan County, Ga., or Meriwether County. The decision, reported by the weekly, could be seen as preserving employment levels through the upcoming UAW contract talks; the plan also keeps intact one of Ford’s highest-ranking workforces in terms of product quality. The Atlanta plant churns out Tauruses and Sables and regularly finishes in the annual Harbour Report as one of the country’s most efficient assembly plants. A source tells Automotive News that Ford will freshen the Taurus in 2006, ostensibly leaving it in production at the Atlanta plant through 2009.


DAILY IN DEPTH

Asbury Folds Used-Car Lots at Wal-Marts

An experiment in selling used cars at Wal-Mart store parking lots has been called off by Asbury Automotive Group, a publicly-owned megadealer based in Stamford, Conn., as cited in Automotive News (July 14) and the Wall Street Journal (July 11). Asbury said that the pilot program, launched last year at four Wal-Mart locations in Houston, resulted in losses of $2.3 million this year. Not enough Wal-Mart shoppers stopped by the “Price 1” showrooms or adjacent used-car inventory displays to warrant continuation of the program. “Customer traffic was lighter than expected,” according to Asbury CEO Ken Gilman. Allen Levenson, Asbury’s vice president of sales and marketing, indicated that sales “ended in the 50-per-store-per-month range.”

Veteran dealers recalled that in the 1950s, Kaiser-Frazer Corp. franchised Sears stores to sell its Henry J subcompact car as the Allstate model. The department-store plunge into auto retailing ended when Kaiser-Frazer, based in Willow Run, Mich., went out of the auto business in 1954. The Sears episode prompted many states to amend their auto franchising laws to require that only dealers with “contiguous” service facilities could obtain franchises to sell motor vehicles. Sears stores were servicing Allstate cars in distant auto service centers.

Wal-Mart, the largest general retail network in the U.S., rented space to Asbury for the Price 1 outlets but did not otherwise participate in marketing or servicing at the Houston locations. —Mac Gordon


Top Brass Assemble in Tokyo for “Auto Summit”

A glittering array of world CEOs and COOs has been lined up for the Tokyo International Automotive Conference 2003, scheduled October 20-21 in Tokyo, to be held at the New Takanawa Prince Hotel. According to the ad posted in the Wall Street Journal (July 11), it is billed as an “auto summit unprecedented in scale.” Organized by Nikkei Business Publications, Inc., with special sponsorship by the Japan Automobile Manufacturers Association and the Wall Street Journal as one of its cooperative supporters, the conference will present top leaders of eleven automakers as speakers and honor GM CEO G. Richard Wagoner, Jr. with the Athena award for “excellence in automotive leadership.”

The industry speakers list includes CEOs or COOs Helmut Panke, BMW; Carlos Ghosn, Nissan; Nicholas Scheele, Ford; Rolf Eckrodt, Mitsubishi; Jujio Cho, Toyota; Dong-Jin Kim, Hyundai; Bernd Pischetsrieder, Volkswagen; Jean-Martin Folz, Peugeot-Citroën; and Takeo Fukui, Honda. Other industry speakers include Juergen Hubbert, chief of the Mercedes car group of DaimlerChrysler and Frederick Henderson, GM group vice-president and president of GM Asia Pacific.

A dinner October 20 will be keynoted by Karen Elliott House, publisher of the Wall Street Journal, and U.S. auto analyst Maryann Keller. A discussion will follow with Wagoner and Honda Chairman Yoshihide Munekuni. The focus session is planned around the China market and environmental issues. Conference theme is “new technologies and markets in the automotive industry.” Further information is available at 81-3-3479-5875 or [email protected].

FROM THE SOURCE headlines from the latest press releases

PRNewswire

Gov. Bob Riley joined with officials from Toyota Motor Manufacturing Alabama on Monday to announce an historic major expansion of the company’s facility currently located in the Huntsville/Madison County area. Toyota’s expansion will include an additional investment of $20 million in its Alabama facility and will add 150 new jobs, a figure that raises the facility’s total workforce to approximately 500 employees. The additional investment will allow Toyota to produce 130,000 Alabama-made V-6 Tacoma and Tundra pickup engines and bring its total production to 250,000 engines per year.

THE TICKER

Name Symbol Last Chg
AUTOLIV ALV 28.10 +0.25
AUTONATION INC AN 17.01 +0.51
ARVINMERITOR ARM 19.07 +0.07
AMER AXLE & MANU AXL 27.71 +0.42
BALLARD PWR SYS BLDP 13.93 +0.19
BORG WARNER BWA 66.30 +1.12
COLLINS AIKMAN CKC 3.34 0.00
CUMMINS INC CUM 37.98 +0.26
DANA CORP DCN 15.86 -0.10
DAIMLERCHRYSLER DCX 36.08 -0.25
DELPHI CORP DPH 8.80 +0.20
EATON CORP ETN 83.01 +1.20
FORD MOTOR CO F 11.31 +0.02
GENERAL MOTORS GM 36.30 +0.56
GENTEX CORP GNTX 32.62 +0.25
GOODYEAR TIRE GT 5.30 +0.10
HONDA MOTOR CO HMC 21.00 -0.02
JOHNSON CONTROLS JCI 86.21 +0.41
LEAR CORP LEA 49.33 +1.03
MAGNA INTL MGA 73.79 +1.52
MOTOROLA INC MOT 9.50 -0.01
NISSAN MOTORS NSANY 20.79 +0.48
SONIC AUTOMOTIVE SAH 24.00 +0.19
TOWER AUTO TWR 4.07 +0.07
TOYOTA MOTOR TM 55.64 -0.38
UNIT AUTO GRP UAG 23.28 +0.14
VISTEON CORP VC 7.02 +0.04

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