In the boldest statement yet about the prospect of tighter safety regulations on larger pickups and sport/utility vehicles (SUVs), Ricardo Martinez, director of the National Highway Traffic Safety Administration (NHTSA), says the industry must pay more attention to the potential damage from huge trucks hitting passenger cars.
"I realize we probably don't have the ability to regulate design," says Dr. Martinez, who drives a Ford Explorer. "But there are other ways to skin a cat, like luxury taxes."
In addition, the U.S. Environmental Protection Agency, the Insurance Institute for Highway Safety and environmentalists recently have called for more uniform regulatory treatment of trucks and cars.
The California Air Resources Board, for example, wants to require minivans, pickups and SUVs to meet the same emissions standards as cars by as early as 2004.
Historically, trucks were given some regulatory breaks relative to cars because of their more commercial use. But with more people using trucks as passenger cars, pressure is growing to end any special treatment.
It's too early to measure how much, if any, threat this poses to the vehicles that have been the industry's cash cows during this most profitable run in its history.
A spokesman for a supplier heavily dependent on truck sales says that if it is simply a matter of adding crumple zones and stiffer bumpers, manufacturers will adapt and move on.
"Our members are concerned. We are getting calls," says Diane Steed, director of the Coalition for Vehicle Choice and a former NHTSA director. "But it doesn't seem all that strong."
Dr. Martinez says it is not NHTSA's intention to discourage people from driving SUVs. The agency does want to assure they are compatible with other vehicles on the road.
NHTSA is studying the crash dynamics of different-size vehicles in more detail than ever before. One possible solution is to set an energy constant so when two vehicles of significantly different size collide, the larger vehicle's design must absorb enough of the impact so the total energy created by the crash does not exceed the energy constant.
While Dr. Martinez says that's only one possible model, he points to Mercedes-Benz as a company that is designing safety into its M-class SUV and its cars.
"They're making their cars harder and their SUVs softer," by using reinforcement on cars and better crumple zones on trucks.
David Houston, safety manager for Ford Div., says he does not see truck sales being hurt by any prospective regulation.
"The problem is not going away," Mr. Houston says. "Ford is working strenuously on many programs."
He says development of better restraint systems and designs that better manage the energy created by crashes are two partial solutions.
Emissions Deal Reached With All But Four No one said compromise is pretty.
General Motors Corp., Ford Motor Co., Chrysler Corp. and Toyota Motor Corp. next year will begin delivering passenger cars in eight Northeastern states that will be 70% cleaner in their emissions of hydrocarbons than federal law now requires. The same models, which won't include most light trucks, will be offered throughout the rest of the country, except for New York, Massachusetts, Maine and Vermont, by 2001.
The good news for the industry is that in the 45 states signing the agreement, air quality standards will not change at least through 2004. The bad news: automakers will have to sell cars with ay different, and even cleaner, emission system in the four holdout states.
Kelly Brown, director of vehicle environmental engineering for Ford, says the cost of meeting the National Low Emission Vehicle requirements will cost about $100 per vehicle. To satisfy the four holdout states, manufacturer's cars sold there must be equipped with the same emission control system required in California. That will not be a major cost burden, he says. "There may be minor calibration differences, but the cost per vehicle won't be substantially higher," Mr. Brown says.
More onerous for the industry is the mandate requiring 2% of each automaker's sales in the state for the 1998 model year must be zero-emission vehicles (ZEV), otherwise knowns as electric vehicles. Even California has backed off that provision.
But if New York, Massachusetts, Maine and Vermont stick to their guns. GM would have to sell more than 2,700 EVs this model year to comply. Ford would have to sell 1,800 and Chrysler, 660.
Despite substantial tax credits and deductions, especially in Southern California, fewer than 600 electric vehicles have been leased in California and Arizona over the past 15 months.
The compromise, which the Big Three accepted Feb. 5, still awaits approval from other Japanese and European automakers competing in the U.S.
GMC Sierra:Brand image shifts With Cadillac about to steal its thunder in the luxury sport/utility vehicle (SUV) market, GMC has decided to abandon its mission of becoming General Motors Corp.'s premium truck brand and recast itself as a seller of "professional grade" products.
That's the word from Pontiac/GMC General Manager Roy Roberts, who says he believes the "professional grade" logo will carry the necessary weight with GMC's customers.
Ever since GM rolled out its brand management marketing philosophy nearly three years ago, GMC has tried to separate itself from Chevrolet by targeting more upscale customers. After GM management approved Cadillac's entry into the large SUV market, GMC found itself sandwiched between its two sister divisions.
Mr. Roberts says Cadillac's entry into the SUV market - the division will sell a version of the upcoming GMC Denali this fall - is warranted by the explosive growth of the luxury segment. "It will result in more money for GM, and that's what the game is all about," Mr. Roberts says.
The Pontiac/GMC chief also says he doesn't expect the government to issue new restrictive safety standards for trucks, despite recent controversial reports over the dangers the bigger, heavier pickups, SUVs and minivans present in collisions with passenger cars. Mr. Roberts says he doesn't believe the Clinton Administration wants to sponsor new "big-government" regulations.
"I can't say there are no people pushing new legislation on trucks," Mr. Roberts says, adding that GM is committed to supplying customers with vehicles they want. "The marketplace should prevail."
While declining to reveal specific new product plans, Mr. Roberts says he expects to see new entries in both truck-based and hybrid car-based SUVs. Speaking specifically about hybrid vehicles, Mr. Roberts says, if that's what the public wants, "we're going to be there."
Getting Out of Motown Could Become a Trend The news that Ford Motor Co.'s Lincoln Mercury Div. is moving to Irvine, CA, raises all sorts of questions and possibilities.
For example, Ford President Jacques A. Nasser said recently that executives expecting to move high at Ford must get foreign experience.
Well, will Southern California count as foreign experience? And then we wonder if this Lincoln Mercury move is unique, or the beginning of a new trend at Ford, to get closer to the customer or back to each product's marketing roots.
For example, will the brand manager for Taurus be told to set up his new headquarters in a Hertz Rent-a-Car lot so he can get closer to the typical Taurus customer to understand his needs better?
The F-series truck brand manager could be dispatched to Amarillo or Austin.
Will the competition sit still or follow? Maybe Cadillac will order its brand manager to set up his headquarters in Greenwich, CN, to figure out why everyone buys Mercedes.
The possibilities are endless.
Any Resemblance to F-150 Is (Un)Intended Same number, different letter.
In unveiling its new T150 fullsize pickup in Chicago, Toyota officials don't worry about any confusion they may sow over the identity of their new big truck and that of Ford Motor Co.'s F-150. C. Davis Illingworth, vice president and general manager, says Toyota is more interested in keeping its compact pickup owners from defecting than in co-opting the brand identity of a competing product.
But Seizo Okamoto, president and CEO of Toyota Motor Manufacturing Indiana, says the pickup's name gives a pretty good idea who the real target will be for the larger, more powerful pickup.
"It's called the T150. You figure it out," he says. Capacity still is officially capped at about 100,000 units at the Gibson County, IN, plant. But Mr. Okamoto says there's plenty of land on which to expand if necessary. Rumors also abound that the Indiana plant will build a sport/utility vehicle as well.
The T150 will share the 4.7L DOHC V-8 with the new Toyota Land Cruiser and Lexus LX 470.
Currently, those engines are made in Japan on the same line as Lexus V-8s. A Toyota staffer didn't discourage speculation that the V-8 production might migrate to the U.S. if the pickup is a hit.
"We build them in Japan. There's not a lot of demand for V-8s in Japan," he says.
Even the design of the concept truck, due to roll out as a real truck in spring of 1999, didn't exactly hide its positioning as an F-150 fighter. It will come in extended- and regular-cab lengths with short and long beds available.
Imports of the T100 will cease in August of this year as Toyota gets ready to switch over to production of the new models.
Richard Simmons (Not That One) to Head AIAG
The Automotive Industry Action Group (AIAG) has a new executive director in Richard T. Simmons - and no, we're not talking about the vivacious fitness guru.
Mr. Simmons is on loan to the AIAG from Ford Motor Co., where he has worked for 30 years, most recently as director of body and exterior parts purchasing.
He replaces Thomas Hoy, who has been on loan from General Motors Corp. Mr. Hoy will remain active in AIAG's Automotive Network Exchange (ANX) initiative for electronic data interchange and in efforts to help automakers and suppliers cope with Year 2000 computer glitches.
The Big Three have provided full-time loaned executives to AIAG since the not-for-profit trade association began in 1982. Each year, the executive director's job rotates among each of the automakers.
Delphi Shortens List of Plant Buyers If Delphi Automotive Systems has not announced who is buying its remaining seat-making plants by the opening of Society of Automotive Engineers week, just look at the faces of officials from the five bidders: Lear Corp., Magna International Inc., Johnson Controls Inc., Bertrand Faure and Visteon Automotive Systems. The company that isn't talking may be the winner.
All the bids were submitted by Feb. 1, but sources familiar with the process say Delphi did not offer enough detailed financial information for the type of formal bid that will be needed before a sales agreement is signed.
For sale are 18 facilities, including both just-in-time seat plants and complementary engineering centers.
"A decision is expected by mid-February," says one insider. "but there are still many unresolved issues like long-term purchasing agreements, work force age and pension benefit issues. The bidderswill need more information before those matters are resolved."
Visteon's interest caught industry observers by surprise. The Ford Motor Co. parts unit likely would be acceptable to the United Auto Workers union, but that union's pay scale has been cited as a major reason Delphi has lost more than $40 million a year on its seating business.
Lear is seen as the most likely to secure the business because its labor relations have been more peaceful than Johnson Controls, and Lear has considerable financial muscle if the bids are higher than expected.
But Magna could be the dark horse gaining on the outside of the pack. More recently it won a huge GM contract to supply up to 800,000 seat sets a year for the Delta platform program, which encompasses the next generation Saturn SL, SC and SW, Chevrolet Cavalier and Pontiac Sunfire and a small car-based sport/utility vehicle.
While Delphi will sell to the highest bidder, GM may have a strategic interest in cultivating a strong third seat supplier to counterbalance the growing market strength of Lear and JCI.
GM, Daewoo Agree to Work Together . . . Again General Motors Corp. and South Korea's Daewoo Motor Co. Ltd., plan to expand their relationship, which already includes five component joint ventures.
Industry observers say a bigger slice of the Daewoo pie could include all or part of Daewoo's extensive Eastern Europe operations.
South Korea's leading Chosun Ilbo newspaper reports that GM is likely to pay about $300 million for a 50% stake in Daewoo Motor, allowing Daewoo to keep managerial rights.
A GM spokesman would not confirm details of the agreement. "It's an ongoing process," he says, noting that GM has talked with a number of cash-starved Korean automak-ers, including Kia Motors Corp., due to the economic crisis in East Asia.
The talks could result in GM taking equity in Daewoo, sharing capacity in Korea and/or partnering in other parts of the world. "The talks run the gamut from buying the whole company to supplying springs," he says.
The new agreement sets in motion negotiations to re-establish a 15-year partnership between GM and Daewoo that ended in divorce in 1992, following disputes over sales strategy, overseas markets and investment strategies. At the time, Daewoo was building cars that GM sold in the U.S. as the Pontiac LeMans. Renewing its linkup with Daewoo would give GM long-sought access to Korea's car market, historically the most highly protected in Asia, and would help GM attain its ultimate goal of 10% market share in the Asia/Pacific region - an area GM is particularly focused on.
It also could allow GM a greater global reach, especially in fast-growing Eastern Europe, where Daewoo produces 350,000 vehicles a year out of plants in Poland and Romania. Daewoo already has agreed to build Opel Vectra cars for GM in the Ukraine.
Running on 'E' in India Only the very rich have chauffeurs in the U,S., but in many emerging markets they're very common among the wealthy - and government officials. So when they export, or produce, cars abroad, U.S. automakers must take into consideration that the owner may not be the driver - and that the guy in the back seat wants reading lights and other amenities not normally standard equipment. But Ford Motor Co. wasn't prepared for what it found in India where it's building the Escorts - yes Escorts - driven by chauffeurs. Fearful that the drivers will use any fuel remaining in the tank for personal use, or as a taxi during their off time, the owners put in just enough fuel for their journey, in effect running most of the time on "E." Says Richard Parry-Jones, group vice prersident for product development: "I defy any engineer or marketing guy in Dearborn, Germany or Britain to think of that" in advance.
'Kids Korner' Coming? Without great fanfare, Ford Div. displays a mockup of what a children's play area for Ford dealerships might look like at the National Automobile Dealers Assn. convention in New Orleans. Called "Kids Korner," it's not too different from the play areas located at selected McDonald's sites. Ford is seeking dealer feedback and researching other aspects of the concept such as legal (liability) and financial issues. It's also possible, sources say, that Ford might tie in with other companies. The idea, of course, is to get 'em while they're young - and also keep them busy while their parents are busy closing a deal. Meanwhile, Ford Div. already has distributed 4 million educational coloring/game books and crayons for kids visiting dealerships. Sample contents: A walk-through on automotive safety featuring Sesame Street characters.
