GM May Borrow Ford's Car Group Idea General Motors Corp. may develop a luxury car group like Ford Motor Co.'s Premier Automotive Group (PAG), Ward's has learned. GM's still-secret plan is to group Cadillac, Saab, Corvette, Alfa Romeo and GM's Holden Special Vehicles (HSV) operation in Australia into one engineering, marketing and sales group.

As yet the group has no name, but one senior GM executive's business card carries the title of "Director Luxury Brands." Under the charismatic Wolfgang Reitzle, Ford's high profile PAG - Jaguar, Lincoln, Aston Martin, Volvo, Land Rover and Mercury - has the potential to build well over 1 million vehicles a year to become Ford's most profitable division.

GM knows its present portfolio of luxury models can't match Ford's, but it sees enormous possibilities. Especially following the alliance between Fiat SpA and GM that enables Alfa Romeo to be part of the plan, going up against Jaguar.

For two years, GM has been keen to link Saab and Cadillac dealers in both Europe and the U.S. to give both brands a stronger identity. Adding Alfa Romeo to the equation provides a solid lineup of non-competitive, compliementary brands. Fiat says Alfa Romeo can sell 60,000 to 80,000 cars a year in the U.S. and has the potential to double existing volumes to about 500,000 cars globally. Alfa wants to sell a near complete lineup in the U.S.

The surprise addition to the premium group is Holden as the muscle car brand. HSV builds high-performance Holden Commodore sedans, but apart from very limited sales in the U.K., Holden essentially is an Australian operation.

Corvette, meanwhile, will be quietly spun off from Chevrolet to become a brand in its own right. Insiders say GM has plans to develop Corvette over the next decade into a range of sports cars to take on Jaguar and Aston Martin. That includes a replacement for the current 2-seater Corvette with additional variants, including the distinct possibility of a sports wagon.

In Dearborn, Ford is implementing a worldwide marketing strategy to sell its premium brand vehicles by featuring them in consolidated dealer-ships.

"You would see different showrooms, different entrances, different parking spots for the customers," Mr. Reitzle says. The first PAG dealership in the U.S. will be in Phoenix, AZ. Opening date is undetermined.

GM Expects Tough 1st Quarter; Ford Optimistic It's going to get tougher before it gets better for General Motors Corp., Chief Financial Officer John Devine concedes. He forecasts a rough, near breakeven first quarter, with a stronger second half that should take the automaker close to consensus earnings projections of $4.25 per share for 2001.

Brutal conditions in the U.S. and key overseas markets saw GM earnings dip to $609 million in the fourth quarter, off 51.5% from year-earlier, on flat sales of $46.3 billion. The October-December stanza put total earnings for the year at $4.97 billion, a 12.6% drop from 1999's $5.69 billion.

Including some special write-downs, GM fourth-quarter income fell to just $89 million. Charges include $939 million related to the planned phase-out of the Olds-mobile Div., plus some extraordinary dealer incentives to help clear overstocked Olds models. Another $294 million charge was taken related to capacity reduction moves made in North America last year, and $419 million was written off on capacity cuts being made in Europe. GM saw a $1.13 billion gain from the sale of Hughes Satellite System to Boeing Co.

Hampering GM was its performance in Europe, where the automaker posted losses of $463million for the quarter and $257million for entire 2000. The results prompted Adam Opel AG Chief Executive Robert W. Hendry to resign effective March 1.

The continued struggles of Isuzu Motors Ltd., in the midst of restructuring, dragged down GM's performance in Asia/Pacific. Meanwhile, GM will spend another $600 million in the first quarter to increase its stake in Suzuki Motor Corp.

At Ford Motor Co., improved efficiency will combine with renewed consumer confidence to revive the automaker from its fourth quarter downturn, says Chief Financial Officer Henry Wallace.

When? "We do think it's going to strengthen in the second half," Mr. Wallace says.

Fourth quarter financial results from 2000 show a 32.4% drop in operating net income - $1.2 billion compared to the $1.8 billion earned in 1999.

For the year, operating net income was $6.7 billion, down 1.8% compared to 1999's $6.8 billion.

But these figures do not include earnings from Visteon Corp., the former Ford parts subsidiary spun off in mid-year. Nor do they include other one-time charges such as Ford's acquisition of Land Rover in July or a $133 million asset write-down from a joint venture to produce aluminum castings with Alfa Corp.

Mr. Wallace attributes some of the hardship to the Firestone tire recall. But an upward trend is almost certain, he says, if only because the market forces in 2000 are unlikely to recur.

Ford returned $5.7 billion in cash to shareholders through its "value enhancement plan." However, Ford continues to lose money in Europe ($35 million in 2000) and South America ($240 million).

PT Cruiser, MDX Take Car, Truck of Year Honors The 2001 North American Car of the Year (NACOTY) and North American Truck of the Year (NATOTY) award winners are the Daimler-Chrysler PT Cruiser and Honda Motor Co. Ltd. Acura MDX sport/utility vehicle.

PT Cruiser's grabbing of the '01 NACOTY laurels surprises nobody, as the Cruiser emerged as the hands-down, gotta-have-one vehicle introduced during the past year. The other NACOTY finalists were both hybrids: Toyota Motor Corp.'s seamless Prius and Honda's wonder-mileage Insight.

The Acura MDX, meanwhile, fought off a strong field that included the Ford Escape/Mazda Tribute compact SUVs and General Motors Corp.'s all-new heavy-duty pickups, not to mention Toyota's wholly worthy Sequoia and tastily redesigned RAV4 and even Hyundai Motor Co. Ltd.'s effective Sante Fe.

WAW senior technical editor Bill Visnic is one of the 50 NACOTY/NATOTY judges and, as usual, reports that his voting was effectively out of sync with the rest of the team: Although he voted briskly for the MDX, the PT Cruiser was not at the top of his ballot.

"The rest of those fools have been driving nothing but gargantuan `utes for so long, of course they'd vote for a car that wants to be a truck," he sniffs.

Explorer Gets Tire Pressure Monitor Effects of 2000's Firestone tire recall will be evident in Ford Motor Co. showrooms this fall when consumers will see '02 Explorers equipped with a new tire pressure monitoring system.

The sensor-based device, unveiled at the North American Intl. Auto Show, will alert drivers to low air pressure and warn of over-inflation.

Gurminder Bedi, Vice President-Ford North America Truck and Vice President-Ford's Truck Product Development, says the issue's "urgency was highlighted" by the recall and related circumstances.

The Explorer came under fire after it was linked to 148 traffic fatalities. In each case, the victim's vehicle was equipped with Firestone tires, prompting a recall of 6.5 million tires and numerous lawsuits.

Ford recently settled several cases, including one in which it sent executives to a Texas woman's bedside to apologize for her severe injuries.

In other Firestone fallout, the National Highway Traffic Safety Admin. (NHTSA) makes public its rollover ratings for consumers that assess the likelihood of a vehicle flipping, based on its physical dimensions. A Taurus earns four stars, an Explorer only two. The poorest performers? Chevrolet's Blazer and GMC's Jimmy and Envoy. Honda Accord was the only five-star vehicle.

Michelin Brings Eco Race to U.S. This is a race that's not about winning. In October, Michelin Group, the world's second largest tire producer (but No. 1 in sales), will sponsor in the U.S. a race of environmentally friendly cars from Los Angeles to Las Vegas.

The Michelin Challenge Bibendum 2001 is the third installation of a race that Michelin launched in 1998 in France to celebrate the company's 100th anniversary and as the first real-world test of advanced automotive technologies that dramatically reduce emissions. A second race was held in France in 2000. Some 50 to 60 cars participated in each race.

The Challenge Bibendum seeks to highlight "clean" energy sources, including hybrids, liquefied petroleum gas, biofuel, solar, diesel, electricity, natural gas and fuel cells.

Drawing public attention to these technologies is the focus of the race, rather than winning or losing. Before and after the race, there will be ample opportunity for engineers to share notes and conduct tests on noise management, handling and acceleration.

So why is a tiremaker sponsoring the race? Competition drives innovation, and there's a long history of technologies proven on the race track finding their way into production vehicles, Edouard Michelin, chief executive of the Michelin Group, tells journalists at the opening press conference of the North American International Auto Show Jan. 7.

Plus, several of the entries will be equipped with Michelin's new PAX tires, which can reduce rolling resistance by 30%, depending on the size of the vehicle.

The Oct. 28 race ends at the start of the Specialty Equipment Market Assn. show, the world's premier aftermarket and car buff event, where the race cars will be on display.

IntelliChoice's Best Value Picks The envelope, please. California-based IntelliChoice hands out its 15th annual Best Overall Value of the Year awards to a mostly "foreign" contingent including: Mercedes, Honda, Toyota, GMC and Nissan. IntelliChoice is a Web-based service that compares vehicles based on total cost of ownership.

Earning best car value under $22,500 is the Honda Civic HX coupe; best car value over $22,500 goes to the Mercedes-Benz E320 sedan. In SUVs, it's Honda, again, with its CR-V LX 4wd in the best SUV value under $27,000; on the high end, it's the Toyota Land Cruiser 4wd for best value over $27,000.

In trucks, the best under $22,000 award goes to the Nissan Frontier XE King Cab 2wd; the over-$22,000 truck award goes to the GMC Sierra C1500 2wd extended cab. IntelliChoice analysts looked at more than 800 vehicles in this year's market and rated the best in 75 separate niches.

Whoever Said Luxury Was Cheap? Former Chrysler Corp. Vice Chairman Robert A. Lutz is proud that his latest endeavor, the Cunningham Motor Co., has produced a concept that looks like an honest-to-goodness car (see cover story, p.34).

And a select few well-heeled car buffs might actually get to drive one, if they're willing to cough up $200,000 for the privilege of owning a Cunningham C-7 4-seat grand touring coupe.

The company will seek as customers "wealthy individuals in their 50s or 60s who seek something exclusive." Initially, the company envisions production of approximately 250 units, with established production settling at around 500 to 600 units annually.

Mr. Lutz says the Cunningham would be sold by dealers already retailing other exotic cars such as Lambor-ghini, and the company would focus on population centers on each U.S. coast and in several European capitals.

The 120-in. (305-cm) wheelbase coupe could see production in two to three years. Cunningham, however, will not produce anything; Mr. Lutz says all components and production will be outsourced. Main production, he says, could be handled by any number of specialist companies. The planned "American-sourced" V-12 engine doesn't yet exist, and Mr. Lutz says it likely would be fashioned from an existing V-6 or V-8 engine, although he declines to specify which, if any, domestic automakers Cunningham has approached regarding the engine.

Original 2002 Catera Design Was a Turnoff Cadillac's re-engineered and redesigned 2002 Catera will move into production next fall in Lansing, MI, but it could have arrived much sooner. Trouble is, the initial design was a turnoff, delaying the program. Donald E. Hackworth, General Motors Corp.'s manufacturing chief and commander of its vehicle line executives (VLEs) at the time (see p.76), had a special interest in Cadillac: He had headed the Cadillac/Luxury Car Engineering and Manufacturing Div. in the early '90s. "I told Wayne (design vice president Wayne Cherry) that we wanted to start over," he tells WAW. "We developed six teams and had a picture of what we wanted it to look like. It was a big decision because Cadillac was going to (return to) rear-wheel drive." The original Catera, built on an Adam Opel AG platform in Germany and imported since 1995, also is rear-drive. The new version, however, will be the division's first North American-built rear-drive model since 1996. Seville will switch to rear-drive around 2003, as will Cadillac's LAV crossover shown in concept form at the January North American International Auto Show in Detroit. And Mr. Hackworth doesn't rule out an upcoming Buick model off the platform. "We made a decision to let the designers get a new look for Catera" after he pushed for adapting the new small Cadillac to rear-drive, he says. Although the front-wheel-drive Seville has won plaudits even in Germany, says Mr. Hackworth, the switch to rear-drive likely will make it more competitive in global markets. "There are some things you can't do with front-drive," he says. There's a wider turning radius, for example, a drawback to meeting European-style handling requirements.

Mr. Hackworth says Cadillac will build between 2,500 and 5,000 Evoq coupes yearly in Bowling Green, OH, alongside Corvette when production begins in 2002.