NEWS BRIEFS FOR THE WEEK OF MAY 25, 2006

NEWS BRIEFS FOR THE WEEK OF MAY 25, 2006NHTSA Recalls Chevy, GMC and Isuzu PickupsWASHINGTON (May 2, 2006) - The National Highway Traffic Safety Administration (NHTSA) is recalling 404,733 Chevrolet, GMC and Isuzu pickup trucks because the brake lights may fail (NHTSA Campaign ID Number 06V139000; GM Recall No. 06030). Federal regulators report that the exterior brake light switch on the Chevrolet Colorado, GMC Canyon, Isuzu I-280 and Isuzu I-350 may fail and cause the permanent loss of the brake light functions or may cause the brake light to illuminate all the time. NHTSA is warning owners of the pickup truck that they may not be aware the brake lights have failed and this could cause a rear-end crash. According to the Agency, the center-mounted brake light is affected whenever the brake lights fail to come on or remain illuminated. Trailer brake lights connected to the pickups will "mimic the vehicles brake lamps when either condition occurs," NHTSA adds. If the truck lights fail, the trailer lights will fail. In trucks equipped with cruise control, the brake light switch failure will also disable the cruise control system, the Agency points out. Chevrolet, GMC and Isuzu dealers will replaced the brake light switch assembly when the recall gets under way. At press time, General Motors had not yet notified NHTSA of the recall or owner notification schedule. Owners may contact Chevrolet at (800) 630-2438; GMC at (866) 996-9463; or Isuzu at (800) 255-6727 for more information.(Source: ConsumerAffairs.com, NHTSA)How Much Do Consumers Trust You? ROCHESTER, NY (May 11, 2006) - Consumers are a tough crowd, especially when it comes to trust. For a new customer walking through your door, changing their minds about the automotive service industry in general can be a hard sell. Consumer Trust Level 
By ProfessionProfessionPercentageDoctor93Nurse92Dentist91Accountant86Banker83Automotive Mechanic80Lawyer80Financial Advisor80Insurance Agent72Realtor72Stockbroker63 (Source: Harris Interactive) When looking at a number of various professionals, consumers continue to be wary of the service community, according to a poll conducted last March by Harris Interactive Inc. Automotive service technicians ranked in the middle of a group of professionals that consumers felt they could trust.  The poll asked respondents "If you were getting professional help or advice from each of the following [representatives], how much would you trust them to give you advice which was best for you?" Respondents could answer "complete," "somewhat," "not at all" or "not sure." Doctors, nurses and dentists topped the list as professionals that consumers trust either completely or somewhat, with trust levels above 90 percent. Mechanics were tied with lawyers and financial advisors, all with an 80 percent trust level. Insurance agents, realtors and stockbrokers trailed the list, with trust levels in or below 70 percent.(Source: Harris Interactive)J. D. Powers: Used Car Buyers Are More Diligent WESTLAKE VILLAGE, CA (May 10, 2006) - J.D. Power and Associates says that vehicle history reports (VHRs) are becoming increasingly important to buyers of used vehicles. The results were part of the research firm's 2006 Used Vehicle Sales and Certification (UVSC) Study. The study concludes that the increase was the result of the large numbers of flood-damaged vehicles from last year's hurricane season and the questions surrounding their disposal. Two primary conclusions from the study emerged: 34 percent of used-vehicle buyers report obtaining a VHR before purchasing their vehicles, up from 30 percent in 2005; and 57 percent of respondents say they would refuse to purchase a used vehicle without a VHR, up from 53 percent in 2005. "Vehicle history reports are an inexpensive way to ease the concerns of consumers about potentially buying a vehicle that may have been heavily damaged in a hurricane or other natural disaster," says Jane Crane, director of automotive retail research at J.D. Power and Associates. The study also reviewed other alternatives. It noted that consumers often alleviate the fears associated with buying a used vehicle by purchasing a manufacturer-sponsored certified preowned (CPO) vehicle. Consumers typically pay an average premium of $1,680 for CPO vehicles, which have passed through inspections and often include extended warranties. However, the study finds that certified used vehicle buyers were less satisfied compared to 2005 with the price paid for the vehicle. In addition, motivated by high fuel prices, the study found that 44 percent of late-model used-vehicle buyers were willing to consider a preowned hybrid-electric vehicle rather than a traditional gasoline-powered vehicle, even at an additional cost. Major concerns with considering used hybrid-electric vehicles are the estimated higher maintenance costs, reliability and the lifespan of the vehicle's battery pack.  "Previously owned hybrids are perfect candidates for certification programs, where in-depth inspections and longer warranties help alleviate the concerns of buyers about purchasing used hybrids," adds Crane.(Source: J. D. Powers and Associates)New Module Delivers Fast, Secure Vehicle Data Transmission SAN DIEGO, CA (May 5, 2006) - Networkcar, a company specializing in remotely monitoring vehicle location and diagnostics, recently introduced its G20 wireless module. The company has partnered with Motorola Inc, which will deploy the modules in wireless vehicle management systems that will offer customers a number of secure wireless coverage options. Compatible with all types of light-, medium- and heavy-duty vehicles, the G20 integrated system collects and organizes detailed location and performance information directly from a vehicle's engine computer and a global positioning system (GPS). This information can be transmitted wirelessly from the vehicle to a network operation center, which can then be made available online for fleets or customers to monitor items such as current location, fuel consumption, mileage, emission status and speed. Aviad Gefen, manager of Motorola's wireless module unit says that the compact G20 wireless module is designed to facilitate fast and easy integration within an OEM product with low power requirements, reducing time to market and increasing cost-effectiveness. The unit also provides increased data transmission rates, enhanced security capabilities and broader geographic coverage, adds Gefen.(Source: Reynolds and Reynolds)Listen In To Wharton ProfessorPHILADELPHIA (May 11, 2006) - Knowledge @ Wharton, an e-publication by the Wharton School at the University of Pennsylvania offers a podcast featuring Management Professor John Paul McDuffie.  McDuffie addresses several ongoing issues in the automobile industry, including GM/Delphi, globalization, China, hybrids and high fuel prices. The 20 minute podcast can be accessed at http://knowledge.wharton.upenn.edu/article/1476.cfm# .(Source: Wharton School at U of Penn)Chrysler Wins Training Award AUBURN HILLS, MI (May 8, 2006) - The American Society for Training & Development (ASTD) presented DaimlerChrysler Academy (DCA) with one of the nine Excellence in Practice Awards. The award was presented in early May at the International Conference and Exposition in Dallas, TX. ASTD is an association dedicated to workplace learning and performance professionals.  DCA was chosen from a field of 78 submissions for the award and underwent a blind review process conducted by a panel of ASTD representatives and experts in the training and performance field. The automaker received the award for its certification program, which, says ASTD, delivers clear and measurable results for training and performance improvement services for its dealership employees throughout the United States.  According to DCA, sales consultants who complete the program and gain certification generate an average of 70 percent more sales than non-certified sales consultants. The certification also leads to lower annual employee turnover, adds ASTD. Employee retention of certified personnel is 62 percent higher for sales consultants and 34 percent higher for service advisors when compared to non-certified personnel "This award from ASTD confirms our belief that training can be an effective tool in helping a dealership to be successful," said Pat Kittle, DCA director. "DCA training enhances the ability of dealership personnel to contribute to the dealership's long-term profitability, customer satisfaction and brand loyalty. Certification represents a reciprocal relationship in which the dealership invests funds to train an employee and the employee invests time and effort to advance their career."(Source: DaimlerChrysler)MIT Investigating Ethanol Direct Injection BOSTON (May 3, 3006) - In an attempt to help reduce emissions and fuel consumption in America, researchers at Massachusetts Institute of Technology (MIT) are investigating whether the use of ethanol direct injection (EDI) could enable automakers to design smaller, more efficient engines that could be more cost-effective than conventional turbocharged or hybrid engines.  Currently, turbocharging an engine improves engine efficiency, allowing the same performance from a smaller engine. But turbocharging is limited by the presence of knock under high cylinder pressures. The researchers say that using EDI would facilitate enhanced knock suppression, enabling an increase in compression ratio and a twofold increase in manifold pressure relative to conventional engines. Knock - the auto-ignition of unburned gas within a cylinder - can be suppressed by a number of factors including higher fuel octane, high cylinder pressure and lower temperature inside the cylinder. MIT's concept envisions ethanol stored and controlled in a separate system from gasoline. For a tank of 20 gallons of gasoline, less than a gallon of ethanol would need to be stored separately. The ethanol would be direct injected, while gasoline could continue to be port injected. Directly injected ethanol would evaporate faster, providing more cooling of the fuel/air mixture within the cylinder, thereby lowering temperature and suppressing knock. Early ethanol direct injection, the MIT study noted, would lower the temperature even further.  The control system would include a knock sensor to provide 5 to 100 percent ethanol as needed. More ethanol would be used in higher torque situations, such as starting from a standstill, and less would be needed during lower torque scenarios, such as highway cruising. EDI would capitalize on ethanol's high octane rating and direct injection's evaporative cooling to enable more efficient engines. The scientists project that a 3.0-liter engine could potentially be replaced by an engine of about half its size, resulting in a 30 percent increase in fuel efficiency over a typical driving cycle. In addition to allowing engines to be downsized, the MIT team also suggests that EDI could provide a new opportunity to use ethanol more effectively to both displace gasoline and, more importantly, to increase gasoline utilization efficiency.(Source: MIT)Top Corporate Citizens Named NEW YORK, NY (April 27, 2006) - Business Ethics Magazine has released its seventh annual survey of the "100 Best Corporate Citizens" in its Spring 2006 issue. The closely watched survey has gained national recognition as an indicator of best practices in the area of corporate social responsibility. "Being a good corporate citizen requires focus, dedication and hard work. The companies on our list are to be congratulated," said Michael Connor, publisher and executive editor. There were no automakers on the 2006 list, but five automotive-related companies made it: 3M, Cummins Inc., Johnson Controls Inc, Balder Electric and Rockwell Collins. Cummins is the only automotive-related firm to make the list for all seven years.  Traditionally, firms have been judged on how well they serve stockholders. But in compiling this list, firms are scored and given a numerical rating in a variety of areas, such as community relations, corporate governance, diversity, employee relations, environmental impact, human rights and product. Scores are standardized and tallied to determine a firm's final overall score. The full list, rankings for individual areas and comprehensive methodology can be viewed by clicking here.(Source: Business Ethics Magazine)UAW Approves Strike At Delphi 
Over Wage Cuts

DETROIT, MI (May 23, 2006) - Earlier this month, the U.S. Bankruptcy Court for the Southern District of New York began hearings on Delphi Corp.'s Section 1113-1114 motions to reject its labor agreements and modify retiree benefits. The motions, if approved, would enable Delphi to void its labor contracts and cut worker pay by more than half. The next hearing date was scheduled for May 24. After Delphi makes its case for the motions, the UAW and other unions will have an opportunity to argue that the motions not be approved.

Building a War ChestOver the past few months various analysts such as Merrill Lynch, have commented on GM's accumulation of cash. They assert that the sale of various subsidiaries - including a partial sale of GMAC, the company's only profitable unit in North America - was undertaken in part to prepare for the Delphi-UAW situation. 

The timing of the just announced "GM Fuel Price Protection Program," which caps gas prices for Florida and California purchasers of selected vehicles, is noteworthy. Given the current Delphi-UAW loggerhead and GM's exposure, turning inventory into cash could bolster cash reserves over the short-term, analysts say.

In response, members at 21 UAW-represented Delphi facilities voted overwhelmingly to authorize the union to call a strike should Delphi use its bankruptcy court proceedings to unilaterally impose changes to the UAW-Delphi collective bargaining agreements. More than 95 percent of the votes cast authorized the UAW to call a strike.

In an interview with the Chicago Tribune, Morningstar Inc. analyst John Novak said, "A strike authorization is one way the union can send a message of unity to GM and Delphi. While there's bound to be plenty of rhetoric over the coming weeks, we think all sides will work toward a consensual resolution."

Sean Egan, managing director of Egan-Jones Ratings Co., noted that in the aftermath of General Motors (GM) posting a loss of nearly $11 billion last year, he expects a strike because, from the employees' perspective, "the economics supporting a strike are so compelling." GM, the world's largest automaker, posted $10.6 billion in losses last year. "GM is so vulnerable right now, it can't afford the pain of a strike," he said.

As the major supplier to GM, a strike at Delphi would impact the automaker significantly. Merrill Lynch analyst John Murphy said GM would "bleed" $7 billion to $8 billion in cash through the first 60 days of a strike, and more if it went longer. Merrill Lynch also noted that GM has been building up its cash reserves - selling off several holdings outright and a major portion of GMAC last year. The investment firm expects GM to have a cash position near $30 billion, which is more than enough to cover the cash crunch of both a short-term strike, as well as the liability it has in regards to some Delphi employees. 

A longer shutdown, analysts contend, could have consequences that go beyond Delphi and GM.

(Sources: UAW, Chicago Tribune, Marketwatch.com, GM)

USPS Goes Hybrid BOSTON (May 16, 2006) - For more than 200 years, the U.S. Postal Service (USPS) has been on the cutting edge in the development of every new mode of transportation in the United States - Pony Express riders, the early airmail pilots, and postal railway cars. This year, the USPS plans to take another major step.