Daewoo bidding begins anew
Corp.'s "K-Force" was sent scrambling back into action late last month as word came that Motor Co. was dropping its bid to acquire Daewoo Motor Co. Ltd. K-Force is GM's 100-member Korea strategy team, and Alan Perriton, in charge of Asia/Pacific business development, quickly recalled members from points all over the globe once it became clear GM was back in the Daewoo acquisition race. Following Ford's announcement, Korea's key cabinet ministers set new rules for the sale, which the government hopes to complete in principle by Oct. 20. GM-Fiat Auto SpA will be invited to submit a joint bid, as will Motor Co. Ltd.-DaimlerChrysler AG, if DC or another partner agrees. So far, though, DC is refusing to go along for the ride, calling a Daewoo acquisition still "too risky." This time, the government promises to demand binding bids before negotiations begin. Daewoo believes it got stung by not requiring a binding bid before opening up its books to Ford during the month-long talks. "It has cost us a lot of money to make all of the information available, and Ford was able to step away without paying us anything," says one Daewoo staffer.
Did Firestone kill Daewoo deal?
Whypulled out of the Daewoo deal remains unclear. The automaker, weak in Asia and small car expertise and lacking in European plants and presence, appeared to have the most to gain from an alliance with Daewoo. But in the end, Ford may have concluded the critics were right: Its initial $6.9 billion bid was too much to pay for a crippled Daewoo. "We believe that a proposal was not possible that would be in the best interest of Daewoo and Ford and their respective stakeholders," is all Ford Vice Chairman W. Wayne Booker would say. Rumors prior to Ford's withdrawal suggested the automaker was trying to reduce its bid to closer to $5 billion, in part by excluding Daewoo light truck affiliate Ssangyong Motors Corp. and its financial arm Daewoo Capital Corp. from the deal. And others say the Firestone recall, which has taken its toll on Ford's stock, may have been a factor, as well. Late last month, Ford's board approved a $5 billion stock buyback to help prop up its sagging share price. That's $5 billion Ford no longer has to spend on its Asia game plan.
PT Cruiser Toledo bound?
DaimlerChrysler Corp. isn't commenting, but it may be looking to Toledo, OH, as another source for PT Cruiser production, if demand for the retro truck remains strong. The Toledo Blade reports DCC is considering building the crossover vehicle at one of two aging Jeep factories in the city. However, sources tell WAW that a third assembly plant currently under construction in Toledo also is a candidate. While the new plant is scheduled to begin building the '02 Cherokee in mid-2001, flexible manufacturing techniques would allow it to accommodate the PT Cruiser. DCC is pumping out PTs at the rate of about 16,000 per month at its Toluca, Mexico, plant, but inventories remain low. At the end of August, PT's U.S. stocks stood at just a 17 days' supply.
GM: Cutbacks not Icahn-related
Timing suggests otherwise, butCorp. insists its recent decision to reduce "non-critical" white-collar expenses isn't coming as a reaction to billionaire investor Carl Icahn's plans to acquire up to 15% of GM stock. The cost reductions include restricting travel and overtime and eliminating contracted instructors and will remain in place at least until the end of the year. Officially, GM says the cuts are a reaction to signs the economy is slowing. GM also insists its mounting interest in selling or otherwise divesting itself of Hughes Electronics Corp. is not related to pressure from Mr. Icahn, either. GM took its ownership in Hughes down from 70% to 30% last spring via a stock distribution to shareholders. But that move apparently wasn't enough to keep corporate raiders the likes of Mr. Icahn at bay. Vice Chairman Harry J. Pearce recently told The Wall Street Journal GM would determine in "months, not years" what to do with Hughes. A spokeswoman says GM isn't paying any more attention to Mr. Icahn than any other major investor. "We like to have new and long-term shareholders," she insists.
Snell out at Federal-Mogul as third quarter looks grim
General Motors Corp. may have made its recent moves independent of Carl Icahn, but the billionaire investor surely played a role in the management shakeup at beleaguered supplier Federal-Mogul Corp. In March, Mr. Icahn acquired 3.6 million shares of Federal-Mogul stock, locking up 5.2% of the company. He got a bargain, as Federal-Mogul's stock price had plummeted from $65 per share a year earlier to about $12. Since then, it has been speculated that Mr. Icahn would force more changes. In late September, it was official: Richard Snell, a 59-year-old auto industry veteran who led an enormous two-year growth campaign at Federal-Mogul, departs "by mutual agreement" as chairman, chief executive and president. A search begins for a new CEO. A driving factor was projections that third-quarter earnings would be disappointing.
targets record ramp-up
Motor Mfg. Indiana Inc. plans a 29-day ramp-up for its new Sequoia sport/utility vehicle, the fastest ever for any Toyota product, company officials say. Job One production was set to begin the week of Sept. 25, and Toyota was aiming to top its previous 60-day ramp-up record achieved with the Tundra pickup. About 60,000 Sequoias and 90,000 Tundras will be built this year at the Princeton, IN, plant. But if demand for the Sequoia mirrors initial demand for the Tundra, Toyota may push production higher through overtime and Saturday shifts. Princeton will double its capacity in 2003, when it adds Sienna minivan output. The automaker also is considering building a V-8 plant alongside the facility, officials say. Both the Tundra and Sequoia are powered by Toyota's 4.7L i-Force V-8, now made in Japan. One obstacle to further expansion in Indiana is finding skilled labor. The worker pool in the Princeton area already is thin, one official says. A new engine plant would require an additional 600 to 800 new hires.
Amazon battle shaping up
General Motors Corp. and Ford Motor Co. appear none too happy about Amazon.com's plans to enter the Internet new-vehicle sales arena. Amazon is tying up with Greenlight.com to deliver cars to customers over the worldwide web. Under the two-year deal, Greenlight, headed by former Saab Automobile executive Joel Manby, will give Amazon $15 million and a 5% stake. Amazon already has rolled out its new vehicle sales site and has dealers signed up in 27 metro markets. "Our mission with new vehicles is like that with all our other products and services - to deliver things the way our 22 million customers want them delivered," says Jeff Bezos, Amazon founder and chief executive. However, both Ford and GM are hoping to throw up some roadblocks. Ford already has convinced, the second largest megadealer chain, not to do business with Greenlight/Amazon. And both Ford and GM are vowing to deny replacement vehicles to dealers who sell through brokers. Under the Amazon setup, shoppers pay a refundable $200 deposit to pursue a vehicle purchase. Referrals to one of the network dealers is made after an extensive display of discounted prices, lease or loan payments, accessories and even estimated trade-in allowances.
OSAT inks deal with Cole's ERIM
Auto analyst David Cole will keep his hand in at the University of Michigan's Office for the Study of Automotive Transportation thanks to a new deal between OSAT and Mr. Cole's new employer, the Environmental Research Institute of Michigan (ERIM). Mr. Cole announced in August he would retire from OSAT and join the non-profit ERIM. Under the pact, a portion of the activities performed by OSAT - including all OSAT conferences - will be transferred over to ERIM. Both the U of M and ERIM will have use of the OSAT name. The deal came after the university dropped a demand for huge compensation - some $5 million - to let OSAT types cut the umbilical cord and move over to ERIM, says one insider.
Tires, transmission cause more troubles for Ford
As they say, when it rains, it pours. After not having to do much damage control over the past several years in the U.S., Ford Motor Co. public relations staffers now are working overtime to cope with a growing list of troubles. The latest:General Tire Inc. is recalling 16-in. tires that were original equipment on 39,000 Lincoln Navigators. Second, a defective transmission part forced Ford to shut down its most profitable assembly plant, Michigan Truck, for more than a week in August. It only sold 866 vehicles with the problem transmissions, but it built more than 20,000 others that it has to fix. Further injury comes from three recalls for the highly anticipated Escape compact SUV during its first few months of production.