Daily Edition: Feb. 10, 2006 Page 2

February 10, 2006

LaSorda Hits Cost of Litigation

Lawsuits are adding $500 to the cost of every car and truck sold in the United States, said one of DaimlerChrysler AG's top executives. Thomas LaSorda, the chief executive officer of DaimlerChrysler's Chrysler Group, said during a visit to the Chicago Auto Show that the legal system levies what amounts to a tort tax, which results in higher consumer prices, higher insurance rates, higher healthcare costs, and less innovation by American-based companies.

"Perhaps a little blue-collar grounding and manufacturing common sense could go a long way in making sense of the U.S. legal system. It would allow all of us in business to use more of our limited resources where they count," said LaSorda, who was raised in a working-class household in Windsor, Ont., across the river from Detroit.

LaSorda said he was prompted to look at the high cost of the American legal system during his drive to cut costs within the Chrysler Group, which has eliminated 40,000 jobs since 2001. "It was the one area where costs kept rising and I asked why," he said.

What he found was that the legal system, which he says allows witnesses in product liability cases to tell only part of the truth, is badly in need of reform. In many states, juries aren't allowed to hear whether someone involved in an accident was wearing a seatbelt or if they were driving under the influence of drugs or alcohol.

"We need to set some reasonable and fair limits on damages," he added. "For every dollar awarded in tort liability, the typical injured party receives only about 46 cents to compensate them for injuries. That means the majority of every dollar goes elsewhere," added LaSorda, who noted that lawsuits have become one of fastest growing industries in the U.S. and now generate more than $46 billion in fees annually.

The U.S. now spends about 2.23 percent of its GDP on legal fees and other costs associated with litigation while countries such as France, Japan, and Canada spend less than one percent of the gross domestic product on litigation. "In my business, we have a word for this kind of non-value added cost: waste," LaSorda said.

LaSorda also said, "There is no question that the employer-based healthcare system is broken. While other countries have found a way to help their businesses with the burden, we've not done this in the United States. Healthcare is an important structural issue that needs to be addressed but this will require long-term solutions across all industries," added LaSorda. -Joe Szczesny


OnStar Readies New Service

General Motors Corp. used the tenth anniversary of OnStar's introduction back in 1996 to bring on a new service that offers drivers directions through the car's audio system. The new system will eliminate the need for video screens and helps the driver keep his eyes firmly on the road, according to Chet Huber, OnStar President. Users call an OnStar advisor and ask for directions. In turn, the advisor, using GPS, sends the most direct, step-by-step directions to the vehicle via the OnStar system. Audio directions are then played through the vehicle's stereo system when they are needed even if the driver is playing the radio or a CD. A small display on the instrument cluster also can be used to relay text directions. The system also will automatically issue corrective instructions if the vehicle strays off course. Huber said GM believes the new system will appeal to consumers who already depend on OnStar for peace of mind. GM is prepared to equip as many as one million new vehicles with the turn-by-turn technology at the start of the 2007 model year later this year, Huber said. The system uses an enhanced wireless data network and improved positioning technology. -Joseph Szczesny


Humvee Out, International MXT In the Army?

A quiet revolution is underway in the sourcing of military vehicles and the International Truck & Engine Corp. of Chicago is hoping that its new $69,900 MXT 4X4 can fit into the mix. "The new MXT is a symbol of our company's commitment to breaking through into new markets," said Dee Kapur, president of International Truck Group. Kapur said that International has been asked to provide prototypes of the truck to the U.S. Department of Homeland Security and the U.S. Department of Defense for use by agencies such as the U.S. Border Patrol, the U.S. Army, and other services. Kapur also confirmed that International also has won one contract from the DOD to build a prototype for a vehicle that would eventually become the replacement for the U.S. Army's fleet of Humvees. Lockheed Martin also won a contract to build a prototype. But AM General of South Bend, Ind., appears to have been shut out of the competition, which is being refereed by the U.S. Army's Tank & Automotive Command in Warren, Mich. -Joseph Szczesny

York: GM Should Drop Saab, HUMMER by Joseph Szczesny (1/10/2006)
Company has 1000 days of cash left, Kerkorian's wingman says.


MotorWeek Gives Civic the Nod

The Honda Civic walked away with "Best of Year" award from MotorWeek, the weekly PBS show that bills itself as television's "Original Automotive Magazine." John Davis of MotorWeek said that "the suite of Civics" that Honda brought out last fall were "the right vehicle for the right time." The Honda Civic also walked off with a Drivers' Choice award from MotorWeek as the Best Small Car, while the Hyundai Sonata was named the best family sedan. The Honda Odyssey was named the best minivan while the Pontiac Solstice was named the best convertible and the Infiniti M was named the best luxury sedan. The Ford Mustang was named the best peformance car and the Toyota RAV4 was named the best small sport-utility vehicle, while the Ford Explorer/Mercury Mountaineer walked off with a Driver's Choice Award as the best family sport-utility vehicle. The Ford F-150 was named the best pickup truck; the Toyota Highlander Hybrid was named the best eco-friendly vehicle; and the Chevrolet Corvette Z06, Dodge Viper SRT10 Coupe, and Ferrari F430 were named the best dream machines. -Joe Szczesny

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