INDUSTRY REPORT: Jan. 25, 2004

January 25, 2004

Kerkorian Not Lying Down

Billionaire investor Kirk Kerkorian on Wednesday challenged findings by a court-appointed official in the investigation of an evidence snafu that halted the trial of his lawsuit against DaimlerChrysler AG last month. Kerkorian's lawyers filed papers in the Delaware court where the trial has played out, complaining there is still no explanation for the sudden appearance late in the trial of documents Kerkorian's attorneys say were important to his case. Former Chrysler CFO Gary Valade last month produced some 70-plus pages of notes taken by him and assistants at the time the merger of Chrysler and Daimler-Benz was being deliberated inside Chrysler's board of directors. The notes had not surfaced in two years of discovery, and were produced on the eve of Valade's testimony. Collins J. Seitz, the special master charged with investigating the circumstances behind the late discovery of the documents, concluded the documents had been honestly mishandled by outside copying vendors in two different cities, not hidden by DaimlerChrysler attorneys. U.S. District Judge Joseph Farnan is expected to make a final determination on the appropriate remedy for the late discovery of the notes soon, and announce when the trial will resume and when closing arguments can be made. Kerkorian's suit says he, formerly Chrysler's biggest single shareholder, was hoodwinked into backing the 1998 merger, billed as a "merger of equals" by Daimler-Benz and Chrysler management. — Jim Burt

Zetsche: It's DaimlerChrysler For Good by Joseph Szczesny (1/19/2004)
No chance on giving up on Chrysler, says group CEO.

Judge: Leach Can Work Again

A judge in U.S. District Court has ruled that former Ford exec Martin Leach can seek work with other automakers after having been fired by the number-two car company. Leach had contended in court that Ford had fired him, nullifying his non-compete agreement; Ford had argued that Leach had resigned and as such, the employment contract rider still was in effect. Last Friday, U.S. District Judge Paul D. Borman decided that Ford had indeed fired Leach in August of 2003 after the company discovered he'd been trying to land a job at Fiat. A Ford spokesman told the Detroit Free Press the company would examine its options. The ruling leaves Leach able to sue the company for damages.

Ford Uses Car Few Will Buy In Super Bowl Ads

2005 Ford GT

2005 Ford GT

Ford said Thursday it will run two ads for the GT supercar during the pre-game of the Super Bowl. By bypassing the actual game broadcast, the company says it is spending its money wisely because, says Ford Division marketing communication manager Rich Stoddart, attention wanes from the kickoff on.

Two TV spots, one 30 seconds and one 60 seconds, will run that are little more than video postcards of the screaming, growling GT, which "goes on sale" this summer for a sticker of $139,995, though dealers who actually sell them to customers instead of keeping them for their own garages are sure to charge more.

Ford executives have been carried away with the GT ever since chairman Bill Ford introduced the concept at the 2002 Detroit Auto Show. Why spend big money in a pricey Super Bowl venue on a car that doesn't need to be sold? "The answer is, this car is a testament to the capabilities of Ford Motor Co.," said Stoddart. "This is a car no one else can build. It's the perfect car to launch 'The Year of the Car.'" After spending the past few years beefing up its truck and SUV business, Ford this year is launching the Five Hundred sedan, Freestyle crossover and Mustang to go along with the GT, rescuing the beleaguered Taurus and Crown Victoria from having to do battle alone with Honda Accord, Toyota Camry, and Nissan Altima. The GT, Ford hopes, will sprinkle stardust on the more pedestrian offerings.

Still, it seems odd that Ford wouldn't at least mingle in images or teasers of the 2005 Mustang, a car the young men watching the pre-game will actually be in a position to buy in the fall. It's not the first iffy advertising move made by Ford Division chief Steve Lyons. Last year, Lyons introduced "If you haven't looked at Ford lately, look again," ad slogan. It was meant to play off the infamous "Have You Driven a Ford Lately" tagline of yore, but has come a cross as an apologetic "please pick me" plaintiff cry in Ford's Centennial year, a year that should have had a more prideful, celebratory advertising tenor. And while the F-Series launch can hardly be criticized, the success of the advertising has come from the enormous media weight put behind the ads. The ads, always created by J. Walter Thompson's Detroit office, themselves have been fairly hum-drum considering the importance of the vehicle launch. As far as the super low-volume GT car goes, some dealers can earn the honor of selling the GT by winning a customer service satisfaction survey, and other GTs will go to the highest-volume dealers. The rest of the nearly 800 GTs that will be sold this year will go to dealers chosen from a lottery system. The company plans on making around 3500 over the course of two and a half years. The GT commercial will be shown again during the Ford Championship at Doral, which will be broadcast on NBC in March. It will also air during the American Idol finals, set for May on the Fox network. — Jim Burt

2005 Ford GT by Marty Padgett (10/20/2003)
Rich in history, richer in speed.

CEO Pitches Diesel as "Clean, Fast Fun"

Diesel engines have become a "clean, fast and fun-to-drive" alternative to gasoline in internal-combustion engines — says Dr. Kurt W. Liedtke, chairman and CEO of Robert Bosch Corp, whose parent Robert Bosch GmbH manufactures key components and systems for the fast-growing number of diesel engines used on European vehicles. Addressing the Automotive News World Congress, Dr. Liedtke said Robert Bosch's new common-rail system reduces emissions by up to 20 percent. Future after-treatment technology, combined with advanced diesel particulate filters, will remove nearly 98 percent of the particulate matter in emissions.

Declaring that "clean diesel" achieves about 30 percent better fuel economy, Liedtke said this adds up to nearly 30 percent less fuel costs annually for the average driver. In a statement that "greens" will receive warmly, Dr. Liedtke said diesels will also help reduce emissions of carbon dioxide, the greenhouse gas. Conceding that hybrid engines will gain popularity, mainly in congested urban traffic, Dr. Liedtke pointed out that hybrids and fuel cell engines still will not alter the status of internal combustion engines as the majority powertrain between now and 2025. The Robert Bosch case for wider use of diesels is bolstered by their greater torque — up to 50 percent above conventional gasoline engines, and the development of fuel economy booster gasoline direct injection. From 20 percent of the European market in 1997, diesel engines now account for 44 percent, said Liedtke, plus nearly 70 percent of premium luxury brand sales. By contrast, diesel sales in the U.S. account for only three percent of total vehicle sales and one percent of new light vehicle transactions. But, by 2015, according to Liedtke, who is based in Farmington Hills, Michigan, diesel sales will take 25 percent of the U.S. market.

Liedtke's talk did not refer to the U.S. diesel-engine fiasco of the early 1980s, when GM offered diesel engines on a number of higher-priced brands. Motorists were plagued by hard-starting engines, especially in wintry weather, smoky exhausts, and foul odors from the front end. Times have changed, as diesel power will be offered this summer on Chrysler's Jeep Liberty SUV. Chrysler says it is considering dieselizing the Town & Country for Americans if the Liberty sells well stateside. —Mac Gordon

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