Daily Edition: Jun. 8, 2004

June 8, 2004

New rollover ratings: SUVs still at issue

The federal government released new results regarding vehicle rollover risk for some models Monday, including much-anticipated results for the Ford Explorer. The Explorer was given an overall rating of "three" on the five-star system, meaning the vehicle showed a rollover risk that was about the same as other vehicles in its class. The new ratings are based on track-test observations in rapid left-right swerving at 35 and 50 mph. In the new tests, it was noted that the Explorer, along with several other SUV models tested, tipped up on two wheels. Of the 30-plus cars the National Highway Traffic Safety Administration (NHTSA) revealed rollover ratings for, the Mazda RX-8 was the first and only vehicle to earn a five-star rating, meaning the risk of rollover in a single-car crash is less than ten percent.
2004 Mazda RX-8

2004 Mazda RX-8

Most of the SUVs tested in this round - including variants of the Mercury Mountaineer, Ford Explorer Sport Trac, Chevrolet Tahoe, GMC Yukon - scored three stars, meaning that the percentage risk is between 20 and 30 percent. Most of the passenger cars in the test received a better four-star rating, which corresponds to a 10- to 20-percent risk, mostly due to their lower center of mass. Meanwhile, Ford Motor Co. is still dealing with the aftermath of its Firestone-Explorer tire-defect rollover scandal in the courts. Just last week, a San Diego court made a $369 million judgment against Ford Motor Co. for a motorist who had been paralyzed in a rollover accident.

Recall, Rollover, and Safety Info
Search the government's databases for safety info on your car.


Lear Daily Edition

Ford to Focus on China with new concept

Ford Focus China concept

Ford Focus China concept

Ford Motor Co., a latecomer to the booming Chinese market, has introduced its first-ever concept designed specifically for the Asian nation. The Focus concept will officially go on display later this week when the Beijing Motor Show opens its doors to the public. The prototype is a slight bit larger than the current Focus models sold in the U.S. and other markets, especially in terms of interior and trunk space. There's a more rounded look than today's angular model, as well. "This Concept presents the four-door as the style setter for the next generation of car buyers in China," explained Paul Gibson, Ford's design manager for the Asia/Pacific region.
Ford Focus China concept

Ford Focus China concept

Specific production plans are unclear, but Ford is now trying to build a position in China, where it lags behind such competitors as Volkswagen, DaimlerChrysler, and General Motors - which just announced a $3 billion expansion program. Ford only began production in China in January of 2003, working with its partner, Changan Automotive Group. It now produces Chinese versions of both the Fiesta and Mondeo and is expected to continue building on the lineup. At this year's auto show, Ford will also display import models from a number of its global brands, such as Volvo and Aston Martin. -TCC Team

Preview: Beijing Motor Show by TCC Team (6/7/04)
Though sales slow a bit, China's car industry remainshot.

Ernst & Young Daily Edition STD

Cracking down on China's logo look-alikes

Honda Motor Co. is now accusing Chinese motorcycle maker Chongqing Lifan Industry Group Co. of stealing its logo, launching a claim in a China court for more than $2 million in damages. Chongqing Lifan uses an "SOR" logo on its motorcycles that Honda says is too close to its "SCR" logo, and that it is even applied to the same place on the bike. The lawsuit is only the latest in a string of recent claims against Chinese automakers. Toyota is still going after automaker Geely for trademark piracy. Honda is also suing Chongqing Lifan for use of the name "Hongda" on its vehicles, and has also waged a lawsuit against Hebei Shuanghuan Auto Co. for making a much cheaper CR-V look-alike called the S-RV.

Roche, former GM chief, dies

Former General Motors chairman and CEO James M. Roche died Sunday at age 97. Roche held the top spot at GM from 1967 to 1971 and was active on the board of directors until 1977, through a time that included the 1967 Detroit riot. Roche first joined GM in 1927 as a statistician for Cadillac's Chicago office, then after several other positions was named Cadillac's general manager and GM vice president in 1957. Roche was also known for his interest in assisting in Detroit's economic recovery, and in establishing employee assistance programs and progressive hiring practices. In a company release, retired GM chairman Jack Smith said of Roche, "If there ever was a was a template designed to merge corporate and community leadership into one role, Jim Roche was the example."

Some PT Cruisers recalled

2002 Chrysler  PT Cruiser

2002 Chrysler PT Cruiser

DaimlerChrysler is recalling about 438,391 PT Cruisers from the model years 2001 through 2005 - or build dates from January 17, 2000 through April 26, 2004 - because of a potential fire issue. In vehicles equipped with the 2.4-liter non-turbo engine and automatic transmission, the power steering hose could rub against the differential cover, possibly damaging the hose and spilling the power steering fluid. There have been no injuries or deaths due to the problem, although there have been a few reported fires. Chrysler will have dealers inspect and relocate the affected hose. Poll: Rising gas prices mean lower consumer spending

According to a new Cambridge Consumer Credit Index survey, 56 percent of Americans say that rising gas prices are a major concern for their household budgets. Meanwhile, 53 percent of those polled said that they will have to make spending cutbacks because of the gas prices. Low-income people are being hit the hardest, of course. Of those earning $25,000 a year or less, 69 percent said that they would have to cut back on other spending because of the higher gas prices, while for those making more than $75,000 annually, only 34 percent claimed watching their budgets because of gas prices. The index does have an important point: that the effect of high gas prices on lower income people will lead to a drop in consumer spending, especially on luxury items. At the same time, Cambridge reports that its "reality gap," representing the difference between debt consumers believe they can pay off and debt they actually pay off, grows broader. The figures are based on a telephone poll of more than 1000 adults.

Gas Prices Stabilize -- For Now by Joseph Szczesny (6/7/04)
With no major relief in sight, purchase decisions may soon catch up with consumer unease.

DAILY IN DEPTH

Lexus Way Stands for "Perfection" as Dealers Prosper

How does an automaker solidify dealer relations? A surefire formula, laid out in Forbes Magazine (June 21) says, Do it the Lexus way. Build stylish cars that please customers and last forever, freeze U.S. dealerships at a mere 207 locations, furnish not only free loaners during service calls but do so hundreds of miles away when vehicles need to be picked up and returned for warranty repairs. And finally, as the Forbes headline reads in part, "Make Sure Dealers Get Very Rich."

In the early import days, franchises were planted a dime a dozen among hungry domestic-brand dealers. In Cleveland, an MG franchise was awarded to a Ford store a block away from a Pontiac-GMC outlet. That fostered "over-dealering" and caused cut-rate sales of imports, pretty to look at but prone to break down or just not start when needed. When Toyota and Nissan unveiled their Lexus and Infiniti franchises at the first Detroit International Auto Show in 1989, the philosophy of franchising every Tom, Dick, Loretta dealership went down the drain. Dedicated stand-alone stores were required and the first dealer groups each were less than one hundred in sum. Today, Lexus has only 207 dealerships sharing sales of about 22,000 cars and SUVs a month and posting average sales per dealership last year of 1,280 units - more than any other automaker except parent Toyota's 1323.

As Forbes writer Jonathan Fahey reports, Lexus stores have become "destinations" for their customers. There's a lavish lounge and putting course outside the No. 1 Lexus store, JM Lexus, Boca Raton, Florida; a manicurist at Fletcher Jones Lexus, Las Vegas; a driving range at Ray Catena Lexus of Monmouth, Oakhurst, New Jersey, which also stocks gourmet sandwiches and salads in a dedicated customer fridge. More pointedly, Forbes says that Lexus' drive to leadership in the luxury segment has never been accompanied by a dealer margin cut or invoice price increase. Lexus inventories are held low, at a 21-day level this year. Auto dealer analyst Sheldon Sandler, of Skillman, New Jersey, estimates that Lexus dealers average gross profits of $4.5 million a year from sales of new vehicles.

The main downside of a 207-store network is the distance from customers and the fact that several low-population states still lack even one Lexus outlet. Lexus asked dealers facing this problem to open satellite stores closer to unserved growth areas, as Catena is doing in Freehold, New Jersey, and Lexus of Lansing (Michigan) has done in Ann Arbor. Lexus has become such a symbol of perfection that archrival Tom Elliott, chief of Honda's North American Operations, says, "It's what all of us would like to do at the dealership level." Honda started the first Japanese upscale brand, Acura, in 1986, but its sales per dealer - 653 at 263 stores last year - are half those of Lexus. Infiniti sold 717 at 169 stores. That less is more has paid off handsomely for each, but especially for Lexus. -Mac Gordon


FROM THE SOURCE headlines from the latest press releases

PRNewswire

Due to the popularity of Chrysler Group's 2005 Chrysler and Dodge Minivans with the Stow 'n Go(TM) seating and storage system, the company today announced plans to invest $113 million at its St. Louis (Missouri) South Assembly Plant to accommodate increased Stow 'n Go production. The investment will be put towards the tooling, facility and process changes needed to add flexibility, enabling the plant to build short-wheelbase, long-wheelbase and Stow 'n Go minivans on the same production line. Previously, Chrysler Group only manufactured Chrysler and Dodge minivans with Stow 'n Go at its Windsor (Ontario) Assembly Plant.


THE TICKER

Name Symbol Last Change
Autobytel, Inc. ABTL 8.97 +0.19 (+2.16%)
Autoliv Inc. ALV 43.09 +0.74 (+1.75%)
AutoNation Inc. AN 17.08 +0.15 (+0.89%)
ArvinMeritor Inc. ARM 19.53 +0.41 (+2.14%)
American Axle & Mfr. Holdings Inc. AXL 36.68 +0.81 (+2.26%)
Ballard Power Systems Inc. BLDP 9.48 +0.08 (+0.85%)
BorgWarner Inc. BWA 43.70 +1.28 (+3.02%)
Collins & Aikman Corporation CKC 5.68 +0.14 (+2.53%)
Cummins Inc. CMI 61.31 +1.84 (+3.09%)
Dana Corporation DCN 19.98 +0.42 (+2.15%)
DaimlerChrysler AG (ADR) DCX 47.40 +1.39 (+3.02%)
Delphi Corporation DPH 10.51 +0.07 (+0.67%)
Dura Automotive Systems DRRA 10.25 +0.23 (+2.30%)
Eaton Corporation ETN 60.82 +1.29 (+2.17%)
Ford Motor Company F 15.20 +0.29 (+1.95%)
General Motors Corporation GM 47.11 +0.89 (+1.93%)
Gentex Corporation GNTX 38.57 +0.97 (+2.58%)
Goodyear Tire & Rubber GT 9.04 +0.38 (+4.39%)
Honda Motor Co. Ltd. (ADR) HMC 22.85 +0.65 (+2.93%)
Johnson Controls Inc. JCI 55.16 +0.81 (+1.49%)
Lear Corporation LEA 61.58 +1.08 (+1.79%)
Magna International Inc. MGA 83.71 +0.71 (+0.86%)
Motorola Inc. MOT 20.41 +0.64 (+3.24%)
Nissan Motor Co. Ltd. (ADR) NSANY 21.43 +1.06 (+5.20%)
Sonic Automotive Inc. SAH 21.73 +0.16 (+0.74%)
Sirius Satellite Radio SIRI 3.21 +0.05 (+1.58%)
Toyota Motor Corporation (ADR) TM 76.71 +2.15 (+2.88%)
TRW Automotive Holdings TRW 19.95 +0.16 (+0.81%)
Tower Automotive Inc. TWR 3.81 +0.15 (+4.10%)
United Auto Group Inc. UAG 28.97 +1.02 (+3.65%)
Visteon Corporation VC 11.26 +0.24 (+2.18%)
XM Satellite Radio Hold. XMSR 24.37 +0.63 (+2.65%)

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