DC suspends South American production

DaimlerChrysler AG plans to close or severely curtail production at its factories in Argentina and Brazil as part of a global cutback aimed at stemming losses. In Brazil, the automaker will halt production of the slow-selling Dodge Dakota pickup truck by the end of the year at its Campo Largo Parana factory, affecting 350 workers. The $315 million plant, inaugurated in 1998, garnered attention for the truck's “rolling chassis” provided by Dana Corp. Insiders say DCC received tax incentives to set up operations in Parana and now would face heavy fines if it shuttered the facility. Although the plant has a 40,000-unit annual capacity, it produced only 4,600 pickups last year, reportedly selling less than 7,000, with nearly 20% exported to Argentina. The factory may switch to a new product from either Chrysler or Mercedes-Benz, or from DC alliance partners Mitsubishi Motors Corp. or Hyundai Motor Co. Ltd.

GM approves AvtoVAZ JV, prod to start in 2002

Following nearly a decade of discussions, General Motors Corp. approves a project to build cars with Russian automaker AO AvtoVAZ. The plan is to create a joint venture with GM, AvtoVAZ and the European Bank for Reconstruction and Development (EBRD) as partners, Russian sources say. The company, which is yet to be named, would build AvtoVAZ's new small sport/utility vehicle (SUV), the Lada Niva 2123. The model likely would be badged a Chevrolet. AvtoVAZ's contribution is expected to be $101 million, including $65 million in the value of the new Niva and $36 million in facilities and land. GM is expected to invest $99 million, while the EBRD will contribute $40 million as an investment and $93 million as credit, sources say. The JV's ownership structure likely will be 41.5% GM, 41.5% AvtoVAZ and 17% the EBRD. The project still has to be approved by the EBRD and then will be announced to the public. The earliest the JV could start production is fall of 2002. Some 75,000 Lada Nivas reportedly will be built each year.

GM moves closer in offer for Daewoo

Larry Zahner, head of General Motors Corp.'s Asia/Pacific manufacturing operations, is back in Korea, fueling rumors that GM may be getting close to making an offer on bankrupt Daewoo Motor Co. Ltd. Sources tell WAW an offer likely will come this month. Joining Mr. Zahner is a high-profile GM corporate attorney from Detroit, who informed sources say has been assigned to Korea for a three-year period to serve as “chief legal counsel for the new entity.” Plus, two human resources executives supposedly are being assigned to Seoul from GM Asia/Pacific headquarters in Singapore. Also in Seoul are GM-trouble-shooter Scott Yoder and Alan Perriton, GM's executive in charge of acquisitions for Asia/Pacific. Richard Pyo, security analyst with Credit Suisse First Boston (CSFB), tells WAW that these new developments are in line with reports that his GM sources have provided. “As long as the labor issue is resolved at Daewoo, GM has the opportunity to grab quite a substantial product base at a very low price,” says Mr. Pyo, who has conducted financial analyses of the Korean car companies for several years. Daewoo suspended operations at its main Pupyong plant in February to reduce inventories and aims to cut nearly 7,000 workers. Mr. Pyo expects GM's offer to be low, with a very small amount of cash up front. Should the offer fall within the $2 billion to $3 billion range, Mr. Pyo says it likely will be accepted.

Mazda execs take sympathy pay cut

Mazda Motor Corp. executives agree to take a 10% pay cut, a sympathy move for the 1,800 workers being asked to take early retirement this month, Mazda President Mark Fields says in published reports. The uniform 10% cut applies to all 25 members on the board of directors. The pay cuts, Mr. Fields says, are designed to show that senior managers are doing their part “in taking painful action as the rest of the company.” Mazda has been trying to trim its workforce as part of a grand-scale economic restructuring plan, with a goal to reduce its 22,000-employee rolls by 8% through voluntary retirement of white-collar workers. The plan up to now has not met with success because white-collar workers were not volunteering to retire. So far, under the latest appeal, several hundred workers have agreed to an early retirement.