EU, Mexico sign trade pact Global automakers most likely will take a closer look at investment in Mexico following the completion of trade talks between the European Union and Mexico. The two countries are expected to implement the agreement on July 1, 2000. It still must be accepted by the EU's 15 member states and ratified by the Mexican senate. Under the agreement, an automaker in Mexico can ship a vehicle to the EU with no tariff as long as 50% of the parts are of Mexican origin. Rules of origin differ for parts and assembled vehicles. Tariffs on autos were a point of contention during the yearlong talks. The EU concern is that too many parts on Mexican cars would originate in the U.S. The free-trade agreement could push world automakers to build cars in Mexico with free access to both the EU and North America through the North American Free Trade Agreement (NAFTA). Additionally, once NAFTA's rules of origin expire in 2004 there is the possibility of European and Japanese automakers shipping cars to the U.S. through Mexico.

Ford launches Ikon in India Jacques Nasser, president and chief executive of Ford Motor Co., marks the recent launch of Ford's new Ikon by driving the first model off the assembly line at Ford's new state-of-the-art plant in Maraimalai Nagar, India. Ford is the first multinational automaker to design a car specifically for India. "To remain a global leader in the auto industry, you must be a player in Asia," Mr. Nasser says at the event. "With nearly a billion people, India is one of the key markets in this region. The Ikon was designed, engineered and built with the Indian consumer in mind, and it demonstrates our growing commitment to India." Ikon features Ford brags about include a stiffer suspension for India's tough roads, added backseat roominess, best-in-class headroom for turbans, and large door openings that provide easy access for women dressed in traditional saris. Ford says Ikon will be one of the most environmentally friendly cars in India. Along with being 85% recyclable, all Ikon models will be Euro compliant well before the government mandate.

Lopez to build Bahia facility Jose Ignacio Lopez de Arriortua, the controversial former purchasing chief for Volkswagen AG, is attempting to set up an automobile manufacturing facility in the state of Bahia, Brazil, near Camacari, where Ford Motor Co. is building a car factory. The plan is similar to one Lopez unsuccessfully has espoused for his Basque hometown of Amorebieta, Spain, in which suppliers would run the operation. His new manufacturing company is called Loar do Brasil and was founded recently with initial capital of $5,000. He expects to begin production in Bahia in 2002. The Loar brands to be produced are designed by Mr. Lopez and will be priced around $15,000. Walter Baldi, Mr. Lopez's representative in Brazil, says that the Bahia factory is being conceived to "radicalize the principles of production" that Lopez helped set up at the Resende Rio de Janeiro VW truck factory in 1996. Some 22 suppliers will assemble the modules and the final product at the Bahia facility. The factory will employ 6,100 workers and will be able to produce 300,000 vehicles per year. Investment by suppliers and financiers is expected to reach $1 billion. The fact that 17 major suppliers are moving to Bahia, thanks to Ford, makes Mr. Baldi believe the Loar project is feasible. "Our goal is to assemble five models on the same platform," Mr. Baldi says. They include a hatchback, a 4-wheel-drive vehicle, sedan, pickup truck and convertible.

Mitsubishi Australia awaits word on future The Australian Manufacturing Workers Union calls on Mitsubishi Australia to end the uncertainty about the company's future. The union reacted after the automaker said no announcement would be forthcoming regarding a $254 million investment by the company's Japanese parent in a new front-wheel-drive V-6 sedan to replace the Magna (Diamante) in 2004. Media speculation had Mitsubishi Australia announcing plans to design, develop, engineer and produce the new car. Further, the company would build a minimum of 40,000 sedans a year, mainly for the local market, and up to 20,000 4wd vehicles, with most of the light-duty models shipped to the U.S. Mitsubishi is not confirming any imminent announcement, but a local spokesman says Australian executives are optimistic, and a decision is expected early this year. An assistant South Australian secretary of union, however, says the company needs to make an official announcement as soon as possible. "The morale is very, very low on the shop floor," he says.?