DC to take stake in Fiat? Giovanni Agnelli, Fiat SpA's honorary president and major shareholder, has agreed to transfer his family's controlling stake in Fiat to DaimlerChrysler AG, sources in Italy tell Ward's. Fiat, which has been the target of takeover rumors for months, again denied the Agnelli family would sell its interest to DC. A DC spokeswoman in Detroit declined to comment on the new rumors. Sources say the deal was reached a month ago and at presstime was being poured over by lawyers and financial consultants for the two companies. While details remain unclear, the deal is expected to be a share swap, with the Italian side transferring its 30% controlling stake in Fiat in exchange for shares in DaimlerChrysler. Sources say DC already has decided the Fiat Auto brands management strategy: Chrysler would handle the Fiat marque, while Mercedes-Benz would be in charge of Alfa Romeo and Lancia.

Ford readies new 4-, 5-cyl. engines Ford Motor Co. will begin producing worldwide a new family of inline 4-cyl. and 5-cyl. engines that by 2004 could grow to annual production of 2 million units, or 25% of all powerplants the company makes. Ford isn't yet saying what vehicles will get the new engines. But it does say they will debut in '01 model car and lights trucks. They'll be made at Ford plants in Chihuahua, Mexico; Dearborn, MI; and Valencia, Spain; and at a Mazda Motor Corp. plant in Hiroshima, Japan. David Szczupak, powertrain chief engineer, says the inline engines will be a "very complex lightweight product." That likely means all-aluminum construction. The current 4-cyl. Zetec, which this engine replaces, has a cast iron block and aluminum head.

Magna strike in France cripples Smart output As if the Smart car needed yet another setback. A November strike at Magna International Inc.'s chassis plant in eastern France temporarily shuts down DaimlerChrysler AG's Micro Compact Car GmbH plant in Hambach, France. Some 900 Smart cars were not built due to a shortage of chassis and door parts from the Magna plant, where 65 workers walked out for more than a week demanding a 20% or $237 per month pay increase. Loaded with problems from the beginning, the vehicle was initially delayed six months after it flipped during testing. Once on sale, demand was slow, causing DC to reduce sales goals from 130,000 a year to 80,000. Additionally, Smart boss Lars Brorsen left the company on the eve of the Frankfurt auto show and has since been replaced by Andreas Renschler, former president and chief executive of MBUSI.

GM wants to stay on top; Riviera may return as 4-door How important is it for General Motors Corp. to remain the world's largest automaker as rivals snap at its heels? "Well, it's something I think is important," Chairman Jack Smith says. "We're not going to leap out the window or make a stupid move, but we view it as a very important factor in the business, (and) we certainly intend to (remain No. 1). We're hanging in there (so far) without any major acquisitions." GM has numerous talks under way, however, that could add billions to its revenue stream. As for future product, Mr. Smith says, "I think it would be a great car," when asked by a Ward's editor about the prospects for a 4-door version of the Buick Riviera, which bowed out in 1998. When asked how soon such a vehicle could debut, Mr. Smith skillfully eludes. "Buy a car now, and when the Riviera comes out, buy that."

Siemens hires Merrill Lynch but downplays potential sale News that Siemens AG of Germany has hired Merrill Lynch & Co. to assist in a strategic evaluation of Siemens Automotive is fueling speculation that the operations could be going up for sale. The company admits it commissioned the investment banker to come up with a strategy for the future and to help the company decide how to grow the automotive business. But the least likely scenario, says a Siemens spokesman, is that the automotive operations would be sold because they stand as one of Siemens' most profitable businesses. "The fact is Siemens has no interest in withdrawing from the automotive systems business," Heinrich von Pierer, chief executive officer of Siemens AG, says in a statement.

Way chides Wall Street; Meritor has a good year Despite a respected management team and record second-quarter sales, Lear Corp., like so many other auto sector companies, continues to fare poorly on Wall Street. And that frustrates Lear Chairman Ken Way. "They think the cycle is over. They just feel automotive has peaked," Mr. Way says of analysts. In addition, he says the auto industry is better prepared for a recession because of lean manufacturing. Analysts, he says, "don't realize how strong this business is, how we all have reduced inventory, how our scheduling systems are better. The system can react very quickly." Another supplier stumbling on Wall Street is Meritor Automotive, although the company reports fiscal-year earnings of $194 million on record sales of $4.5 billion. Per-share earnings are up 29% since being spun off from Rockwell International Corp. two years ago. After the earnings announcement, Meritor's stock price began inching upward.

Olds banks on Aurora rebound; GM readies 6-door Suburban Oldsmobile's sales will be about 15% lower in 2000, dropping to "the lower 300,000s," General Manager Karen Francis tells Ward's. But Olds hopes to recapture some lost ground when the all-new 2001 flagship Aurora arrives in showrooms next March. It is forecasting annual Aurora sales to reach 40,000 to 45,000, double that of the '99. The "Oldsmobile" nameplate also is more visible, on the rear trunk. "We're reintroducing the Oldsmobile brand to today's buyers because we now have relevant products to back that up," says Ms. Francis. She also hints that Cutlass may be revived. In addition, General Motors plans to bring a 6-door Suburban to market within a year or two, Ward's has learned. The fifth and sixth doors will open for entry to the third row of seats.

Nissan to sell part of transmission subsidiary Nissan Motor Corp. reportedly plans to sell part of its equity stake in JATCO TransTechnology Ltd., its automatic transmission subsidiary, to French auto parts maker Valeo SA. It's good news for JATCO, handicapped by its link to the Japanese automaker, which in fiscal 1998 saw domestic production crash to a 28-year low of 1.55 million vehicles. JATCO currently has around 15 customers, with Nissan accounting for 70% of total sales of Yen250 billion ($2.4 billion). Besides shifting market focus, JATCO hopes to attract new customers with its growing lineup of continuously variable transmissions. The company began production of a new toroidal CVT for Nissan in September (see story, p.118).

What's this about Y2K? No problem, says GM A faulty microphone may have caused "technical difficulties" at the beginning of his presentation, but Don Costantino is confident there will be no such problems when General Motors Corp. makes "the transition" to the year 2000 in a few weeks. After three years of Y2K work, the world's largest company proclaims all of its products will operate properly when the 21st century arrives. Mr. Costantino, GM's Corporate Y2K program director, says the company has analyzed more than 6,100 software applications, prepared 12,000 dealers, surveyed 40,000 suppliers and run 170 live production tests. Minor problems during those tests have been corrected. GM has 10 command centers scattered around the world to handle Y2K difficulties. Feel free to visit them for a little holiday cheer on New Year's Eve.

Supplier news briefs Cooper Tire & Rubber Co. completes the acquisition of Standard Products Co., creating North America's largest manufacturer of automotive sealing systems with $3.2 billion in annual sales. The new company already has booked more than $200 million in new business for the 2001-2003 model years. ... Meritor Automotive Inc. sells its light-vehicle seat adjusting systems business to Dura AutomotiveSystems Inc. for cash consideration of $130 million. The sale is part of Meritor's focus on its core businesses - undercarriage components and door and roof systems. ... Battery specialist Exide Corp. has reached agreement to sell its battery separator operations in Corydon, IN, to Daramic Inc. of Burlington, MA. Exide Chairman Robert Lutz also expresses disappointment that the state of Alabama has filed a complaint that the company sold refurbished batteries as new.