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Jeeps Got Back!
Jeep's new Wrangler Unlimited ponies up more space
Automotive News

The 2004 Wrangler Unlimited is 15 inches longer than the Wrangler, giving more rear-seat legroom and cargo space.

The stretched 2004 Wrangler Unlimited is aimed at Jeep enthusiasts who find the Wrangler too small for carrying mom, dad, two kids and their camping gear.

Mike Accavitti, director of Jeep marketing and product planning, said the interior space is the third most common reason, after price and styling, why potential buyers reject the Wrangler.

"We asked those people, 'What did we do wrong?' " Accavitti said at a press event here. "They tell us, 'It's not you, it's me. It's my needs. I have children, I need some more space.' "

Engineers stretched the Wrangler 15 inches to create the Wrangler Unlimited. Sales began this month. It is being sold alongside the current Wrangler.

To create the Unlimited, engineers stretched the Wrangler's wheelbase 10 inches and the rear overhang 5 inches. This provided 2 additional inches of rear legroom and 13 more inches of cargo space. The Unlimited's cargo area can handle three small suitcases behind the second seat. The standard Wrangler's cargo area behind the rear seat has no space for suitcases.

Accavitti said noise is the fourth most common reason enthusiasts reject the Wrangler. So engineers padded the Unlimited's hood, the instrument panel and behind the rear seat, resulting in a 30 percent reduction in noise compared with the standard Wrangler. The rear padding reduced axle and exhaust noise.

Other changes include revised springs and gas-charged shock absorbers to handle the added vehicle weight and provide a smoother ride.

A sales goal was not given for the Wrangler Unlimited. Accavitti said: "This is not a niche vehicle. We are not talking thousands, we are talking about tens of thousands." The Unlimited is assembled on the same line as the Wrangler in Toledo, Ohio.

DCX Chief Loses Top Post
Chrysler COO Bernhard denied top Mercedes job; style, approach questioned
Automotive News

NEW YORK -- Wolfgang Bernhard's aggressive style and know-it-all approach has cost him the top job at Mercedes-Benz.

The DaimlerChrysler supervisory board decided Thursday that Chrysler's COO won't take over as head of the Mercedes-Benz passenger car division on May 1 as planned.

The move to oust Bernhard was driven by the man he was set to replace, Juergen Hubbert.

Hubbert, who has led Mercedes since the late 1980s, will stay in the post indefinitely.

Bernhard was only in Germany for two months, working with Hubbert. He and Hubbert were to jointly run Mercedes until Aug. 1, when Bernhard, 43, was to take full control.

Hubbert, 64, was to have stayed on as head of DaimlerChrysler's executive automotive committee until his retirement at year's end.

But in two months, Bernhard managed to alienate suppliers, union workers and Mercedes management, a DaimlerChrysler source said.

"There was such resistance to Bernhard that Hubbert decided to propose that he (Bernhard) not take over Mercedes-Benz," he said.

He said Bernhard approached Mercedes-Benz in much the way he did Chrysler -- by attempting to launch a massive restructuring plan.

The source said: "Mercedes is not a restructuring or rescue case and he tried to implement the same strategy as at Chrysler. That went down badly."

Everything Coming Up Roses
Operating profit doubles at Chrysler
April 30, 2004

Speculation that DaimlerChrysler AG CEO Juergen Schrempp might resign and concerns about other management changes at the company overshadowed positive news Thursday that the Auburn Hills-based Chrysler Group doubled its operating profit in the first three months of the year -- despite having to spend more money on workforce cuts.

Although its parent company reported lower profits, operating profit for the Chrysler Group surged $366 million on revenues of $14.8 billion, despite a $91-million restructuring charge. The charge was primarily for workforce reductions above and beyond the 35,000 jobs cut in the last three years.

In the first quarter of 2004, 460 employees took voluntary retirement, mainly at an electronics plant in Huntsville, Ala., which was sold to Siemens VDO Automotive Electronics Corp. What's more, 1,808 employees, mainly from the Huntsville plant, were forced to take early severance plans, for a cost of $1.2 million, the first-quarter report says.

In the first quarter of 2003, the Chrysler Group reported an operating profit of $166 million on revenues of $13.8 billion. So based on the improved performance and expectations that new products will be popular, the Chrysler Group upgraded its guidance for the year to "considerable positive earnings."

The Stuttgart, Germany-based parent company, however, saw net income decrease by more than 24 percent. That was largely blamed on the appreciation of the euro against the dollar, poor results in the Mercedes and financial service divisions, and losses from the company's 37-percent stake in Mitsubishi Motors Corp.

Net income for DaimlerChrysler decreased to $483 million, or 48 cents a share, on revenue of $39.8 billion. That compares with net income of $641 million, or 63 cents a share, on revenues of $36.7 billion, during the first three months of 2003.

DaimlerChrysler's operating revenue, however, increased 24 percent, to $1.9 billion from $1.5 billion.

Although worldwide sales of Chrysler Group's Chrysler, Dodge and Jeep vehicles were up 6 percent, to 684,800 vehicles, sales of Mercedes-Benz vehicles were down 9 percent, to 266,000 cars and trucks. Commercial vehicle sales, meanwhile, were up 18 percent, to 125,800.


DCX gives chief exec support - for now
But blocked promotion signal of some trouble
April 30, 2004

DaimlerChrysler AG's supervisory board voiced its "complete support" for embattled Chairman and Chief Executive Officer Juergen Schrempp on Thursday but decided not to allow Wolfgang Bernhard, a former Chrysler Group executive, to take over luxury carmaker Mercedes-Benz.

Bernhard's fate is unclear. The supervisory board, during a meeting in New York, reversed a February decision to promote him. The former chief operating officer of the Chrysler Group is still a member of the DaimlerChrysler management board, which is separate from the supervisory board. He could leave the company or be assigned to another senior position that opens up. But little else would match the prestige of running the company's marquee brand and most profitable group, where some said he was seen as an abrasive cost-cutter and an outsider.

The kink in Bernhard's career also was a strike against Schrempp, one analyst said. The move overruled Schrempp on the prized assignment he gave to a loyal champion of his vision. It also showed that the supervisory board would flex its muscle, as it did last week in rejecting Schrempp's plan to bail out ailing affiliate Mitsubishi Motors Corp. In recent years, the board has been criticized as just a rubber stamp for Schrempp's strategies.

"This is the final, last warning for Schrempp," said a European industry expert, who asked that his name not be used. "It shows 'We can do this to your guy, so watch out.' "

A European auto expert who advises investors on what stocks to buy and sell noted that DaimlerChrysler shares were gaining value in the morning, when investors believed that Schrempp might be forced out over the Mitsubishi development. The shares then turned downward after the board voiced its support for Schrempp.

Despite an announcement that DaimlerChrysler's financial results were slightly better than expected, the shares finished the day down 91 cents, or 2 percent, at $45. Investors have been outraged that DaimlerChrysler shares are worth less than half what they were in January 1999, when they topped $100. They have frequently called for Schrempp to step down.


Chrysler Cars - 14 years of Quality
DaimlerChrysler Statement in Response to J.D. Power Initial Quality Study (IQS) 2004
Wednesday April 28, 1:00 pm ET

Chrysler Group's 11-percent improvement in the latest J.D. Power IQS results marks our 14th consecutive year of quality improvement -- a claim that cannot be made by any other manufacturer and is further proof that our quality initiatives are being validated. Dramatic improvement in such areas as Chrysler and Dodge brand (each 12 percent), Jeep Wrangler (30 percent) and our minivans (17 percent for Chrysler and 12 percent for Dodge) are significant.

Our product launch discipline remains a strength at Chrysler Group with another improvement over last year (nearly 3-percent) improvement on new product launches (i.e., manufacturers traditionally experience a decline in quality on new launches). In addition, we can be proud of winning two Best- in-Class awards with the Dodge Ram Heavy Duty and Dodge Stratus coupe.

Jeep Goes J-Lo
Jeep's new Wrangler Unlimited ponies up more space
Automotive News

It's all about space.

The stretched 2004 Wrangler Unlimited is aimed at Jeep enthusiasts who find the Wrangler too small for carrying mom, dad, two kids and their camping gear.

Mike Accavitti, director of Jeep marketing and product planning, said the interior space is the third most common reason, after price and styling, why potential buyers reject the Wrangler.

"We asked those people, 'What did we do wrong?' " Accavitti said at a press event here. "They tell us, 'It's not you, it's me. It's my needs. I have children, I need some more space.' "

Engineers stretched the Wrangler 15 inches to create the Wrangler Unlimited. Sales began this month. It is being sold alongside the current Wrangler.

To create the Unlimited, engineers stretched the Wrangler's wheelbase 10 inches and the rear overhang 5 inches. This provided 2 additional inches of rear legroom and 13 more inches of cargo space. The Unlimited's cargo area can handle three small suitcases behind the second seat. The standard Wrangler's cargo area behind the rear seat has no space for suitcases.

Accavitti said noise is the fourth most common reason enthusiasts reject the Wrangler. So engineers padded the Unlimited's hood, the instrument panel and behind the rear seat, resulting in a 30 percent reduction in noise compared with the standard Wrangler. The rear padding reduced axle and exhaust noise.

Other changes include revised springs and gas-charged shock absorbers to handle the added vehicle weight and provide a smoother ride.

A sales goal was not given for the Wrangler Unlimited. Accavitti said: "This is not a niche vehicle. We are not talking thousands, we are talking about tens of thousands." The Unlimited is assembled on the same line as the Wrangler in Toledo, Ohio.

Last year, Jeep sold 70,093 Wranglers, an 8.9 percent increase over the previous year. This year, U.S. Wrangler sales are up 54.2 percent through March. It carries a $2,000 rebate.

The Unlimited has a $24,995 sticker price, including $610 destination. The base four-cylinder Wrangler starts at $17,855, including destination.

Standard equipment on the Unlimited includes automatic transmission, air conditioning, steel doors, fog lamps, tow hooks, 30-inch Goodyear Wrangler GSA tires, 15-inch Ravine aluminum wheels and four-wheel disc brakes. Also standard is a removable fabric top that offers a Jeep first, a sunroof, which creates a 45-inch-by-23-inch opening.

A 4.0-liter inline six-cylinder engine is standard, producing 190 hp and 235 pounds-feet of torque. Towing capacity is 3,500 pounds, up from 2,000 pounds on the Wrangler, largely the result of the longer chassis.

Mitsu Head Commits Hari Kari
Mitsubishi's CEO quits on DCX move
No money rescue due from German investor

TOKYO -- Rolf Eckrodt resigned Monday as CEO and president of Mitsubishi Motors Corp., days after key stakeholder DaimlerChrysler AG'sannouncement it won't offer more money to finance the struggling Japanese company's turnaround.

Mitsubishi Motors said in a statement that a replacement will be chosen soon, but Keiichiro Hashimoto, chief financial officer, will be acting president until then.

The Tokyo-based automaker, which is burdened with a multibillion-dollar debt, plunging car sales and a spate of recalls, was dealt a serious blow by the announcement Thursday by the German-U.S. automaker that it would not provide a multibillion-dollar cash infusion as had been expected.

German-born Eckrodt, formerly president of Adtranz, the rail systems unit of DaimlerChrysler, was sent in by DaimlerChrysler in 2001 to lead a turnaround at Mitsubishi Motors.

He had recently hinted he would step down. But expectations had been for him to make way for leadership that would carry out a new revival plan with extra cash from DaimlerChrysler, which owns 37 percent of Mitsubishi Motors.

Eckrodt, 61, will retire from a 38-year career in the auto business although he will provide support for Mitsubishi Motors at the automaker's request, the company statement said.

Eckrodt said he was stepping down because of DaimlerChrysler's decision against financial support and the subsequent decision by the Mitsubishi group companies to hammer out a different revival plan.

Mitsubishi Heavy Industries owns 15 percent of the automaker, trading company Mitsubishi Corp. a 5-percent stake and Bank of Tokyo-Mitsubishi 3 percent.

Eckrodt said the Mitsubishi team under the leadership of chairman Yoichiro Okazaki will work out a plan within a month.

DaimlerChrysler has not said what it will do with its 37-percent stake in Mitsubishi Motors. DaimlerChrysler's chief financial officer Manfred Gentz has said the two automakers' joint projects in Chrysler, Smart and other passenger cars will continue.

But analysts say Mitsubishi Motors' lagging sales are likely to dip even further now and its chances for recovery are precarious because Mitsubishi companies are unlikely to have enough cash to fund a revival plan.

Shares of Mitsubishi rose 1.3 percent in early trading today in Japan, the first gain in four days.


DCX Drops the Bomb on Mitsu Future
DCX decides it won't bail out struggling Mitsubishi
Announcement after meeting is surprising

DaimlerChrysler AG, which owns a 37-percent stake in Mitsubishi Motors Corp., will not be bailing out its troubled Japanese affiliate, as was widely expected and reported.

In a special meeting on Thursday, the management and supervisory boards of the Stuttgart, Germany-based automaker decided "not to participate in a capital increase" and "to cease financial support" for Mitsubishi, according to a short statement DaimlerChrysler released late Thursday.

The surprise announcement seems to throw the fate of Mitsubishi into the air.

Mitsubishi has been a key piece in DaimlerChrysler CEO Juergen Schrempp's vision for a global automaker. But Mitsubishi, hammered by losses from buyers with bad credit in North America, expects to post a net loss of $664 million for its fiscal year, which ended in March. So DaimlerChrysler has been helping Mitsubishi craft a new business plan.

"According to this plan, substantial financial resources are required to guarantee a sustainable financial recovery of the company," DaimlerChrysler said in a statement, noting that it could not find an acceptable way to provide that financial support.

DaimlerChrysler spokesman Thomas Froehlich said Thursday the company had no comment beyond the statement.

Mitsubishi has scheduled a special shareholders meeting on April 30 to approve its new business plan. It's unclear whether DaimlerChrysler's decision will change that business plan.

Nancy Carollo, a spokeswoman for Mitsubishi, said it's too soon to know what DaimlerChrysler's announcement means for Mitsubishi or its relationship with DaimlerChrysler.

Mitsubishi has been working closely with Chrysler Group on several projects, such as developing small-car platforms for vehicles that would be built at Mitsubishi's plant in Normal, Ill. They are also working together on an engine plant in Dundee. Hyundai Motors Co. is also a partner in that engine plant. DaimlerChrysler also owns a stake in Hyundai.

Production at the Dundee facility is scheduled to begin in 2005.

Chrysler could not say what, if anything, might happen to those projects.

Schrempp was reportedly behind the plan to bail out Mitsubishi, but analysts and others were calling on the company to pull the plug, saying DaimlerChrysler could not afford to spend more resources to save another failing unit. The company is just now getting its Chrysler Group division, which oversees Chrysler, Dodge and Jeep vehicles, on its financial feet.

Gov't Gives Gas to HydroPower
350 million in help from government announced in Detroit; private sector chips in $225 million


The federal government anted up $350 million Tuesday to back a variety of research projects aimed at creating a world in which cars and trucks are powered by hydrogen.

U.S. Energy Secretary Spencer Abraham announced the grants during a stop in Detroit, which has been one of the top locations for hydrogen research because of the billions of dollars spent by the auto industry to create hydrogen-powered fuel cell vehicles.

Private investment will put another $225 million into research over the next five years, bringing the total amount announced by Abraham to $575 million.

"The $575 million is just a down payment on new energy initiatives," Abraham said. "This is to show that hydrogen is not something that is just abstract, but something that is real."

Ford Motor Co. and DaimlerChrysler AG both used the event to announce new initiatives to put at least 67 fuel cell cars on U.S. roads by the end of the year. DaimlerChrysler said it wants to add 37 fuel cell cars to U.S. fleets as soon as this summer. Ford, during a news conference in Taylor, said it plans to build up to 30 fuel-cell cars late this year. Ford's vehicles would be distributed in Detroit, Sacramento, Calif., and Orlando, Fla. Out of those, Ford plans to split 10 cars between the City of Taylor and the University of Michigan in Ann Arbor.

BP plans to construct 30 hydrogen fuel stations in the same areas. Shell Oil, meanwhile, expects to complete its first hydrogen fuel station in Washington, D.C., by the end of the summer. Shell is working with General Motors Corp. on the project. GM is already supplying a fleet of hydrogen-powered cars used for test drives by members of Congress.


Your Friendly Neighborhood Dodge Dealer
...who is located 60miles away
Chrysler wants fewer dealerships

FRANKFURT, April 20 (Reuters) - DaimlerChrysler AG's U.S. unit Chrysler wants to consolidate its dealership network, German newspaper Financial Times Deutschland reported on Tuesday.

"The number of dealers should be reduced," Chrysler boss Dieter Zetsche told the FTD in an interview.

Zetsche declined to comment on how many would be closed, but he did say that the dealership consolidation should be brought about by "mergers or also acquisitions".

Chrysler has some 4,200 dealerships in the U.S.

Zetsche reiterated Chrysler's goal of posting a profit in the current year, and said this included potential one-off restructuring costs.

"We're letting ourselves be judged with the net result, and there's the clear statement that we want to close the year in positive territory," he said.

In 2003, Chrysler reported a loss of 37 million euros ($44.49 million), just missing its target of a slight profit from its operating business, but this excluded restructuring costs.

Chrysler took restructuring charges of 469 million euros last year.

My Zero Hero
DCX aims to rescue Mitsubishi
New executive to run carmaker

DaimlerChrysler AG, which owns 37 percent of Mitsubishi Motors Corp., will buy about $1.43 billion of additional shares in Japan's fourth-largest automaker as early as 2006 to take a majority stake, Mitsubishi executives said.  

Mitsubishi Motors will seek approval at its April 30 shareholders' meeting to issue as many as 5.92 billion new shares, or four times the number now outstanding, said the executives who declined to be named. The shares may be sold to DaimlerChrysler as early as 2006.

DaimlerChrysler is bringing in a new chief executive, Andreas Renschler of its Smart minicar division, to revive Japan's sole unprofitable automaker under a rescue plan costing about 700 billion yen, or about $6.6 billion, the executives said. Of that amount, DaimlerChrysler will invest 400 billion yen, or $3.8 billion.

The Tokyo-based carmaker has been hurt by recalls of more than 2 million vehicles, and 2003 U.S. sales fell 26 percent after the company tightened auto loan policies to counter surging defaults.

DaimlerChrysler, the world's fifth-largest automaker, has previously said it plans to raise its stake in Mitsubishi Motors to more than 50 percent after the Japanese automaker cuts its 1.14-trillion yen debt and return to profitability.

Mitsubishi group companies plan to invest about 120 billion yen, or $1.13 billion, in Mitsubishi Motors, with 100 billion yen, or $948 million, coming from Mitsubishi Heavy Industries Ltd., Mitsubishi Corp. and Bank of Tokyo-Mitsubishi Ltd., the executives said.

Other group companies, including Mitsubishi Trust & Bank Corp., Tokio Marine and Fire Insurance Co. and Meiji Yasuda Life Insurance Co., will invest about 20 billion yen, they said.

Mitsubishi Motors will probably borrow about 150 billion yen, of which no more than 50 billion yen may come from the state-run Development Bank of Japan, the executives said.

Mitsubishi Motors shares rose as much as 8.7 percent to 350 yen in Tokyo. DaimlerChrysler shares rose 25 cents to $41.38 on the New York Stock Exchange on Monday.


Will "The Pout" replace "The Horse"?
Chrysler could tell Trump: You're hired
Lavish praise on TV show finale could win spokesman job for him

Could "the Donald" replace "the Diva" as the face and image of Chrysler?

You would have to wonder after Thursday night if you were watching "The Apprentice" on NBC, along with 27.2 million other viewers. Moments after Donald Trump selected Loyola University graduate Bill Rancic over Harvard MBA Kwame Jackson, Trump swung the bat for Chrysler so hard that you could almost hear it split.

Chrysler, which sponsored the show, said despite Trump's kind words, it is not looking at him to be its new spokesman.

"Donald is the spokesman for Donald Trump, and he's been very open and honest about that," said Jeff Bell, vice president for Chrysler. DaimlerChrysler AG's Chrysler Group sells Chrysler, Dodge and Jeep vehicles, but only the Chrysler brand division sponsored the TV program.

Chrysler hired Grammy Award winner Celine Dion in 2003 to help move its mainstream image upscale, but she received a lukewarm reception and has largely faded into the background.

So it's likely that the billionaire TV host with the goofy coif will be the one remembered for pinch-hitting for the Auburn Hills-based automaker.

Trump told Rancic that in addition to his dream job, he would win a 2005 Chrysler Crossfire Roadster. But he didn't just hand him the keys to the polished blue sports coupe convertible, on which the camera lingered. No -- not the Donald, a real estate mogul famous for shameless promotion, usually of himself.

Trump looked into the camera and earnestly thanked Chrysler for its support of the program, which included the Chrysler Trump Golf Tournament that Rancic managed as his final task.

This not-so-brief moment of product placement gushing took place on the most important episode of NBC's most popular show this season.

So make no mistake, it was a marketing home run for the struggling Chrysler brand, which made a series of promotional blunders in recent years but appears to be making a comeback.

"That was as big as any Fourth of July finish that we've seen for a company," said Michael Bernacchi professor of marketing at University of Detroit Mercy. "They certainly were able to strike while the iron was hot."

New Models Push New Highs?
Optimism high at Chrysler
Zetsche to take on greater role in creating vehicles

With a slew of new cars and trucks now on sale in showrooms across the country, Chrysler Group executives say they expect to see a boost in sales this quarter -- a lift that could help the struggling automaker in its effort to achieve a slight operating profit this year.

"Things are taking off," Wolfgang Bernhard, the outgoing chief operating officer of DaimlerChrysler AG's Auburn Hills-based division told journalists Wednesday. "We should start to see some lift in the second quarter and throughout 2004."

Bernhard's remarks were made during a media luncheon for his replacement, Tom LaSorda. Chrysler's former head of manufacturing, LaSorda will take over the COO post May 1, when Bernhard returns to Germany to head the Mercedes division.

During the event, Chrysler Group CEO Dieter Zetsche told reporters that he will take on a larger role with creating vehicles.

Bernhard, LaSorda and Zetsche all seemed positive -- relieved even -- about the company's future during the event, a sharp contrast to the anxiety that has overshadowed the automaker in recent years.

Chrysler lost a combined $4 billion in 2001 and 2002, and, despite a 3-year turnaround plan that intended to generate a profit last year, the company posted an operating loss of $637 million in 2003. Some industry insiders have said Chrysler needs to prove itself this year, calling this a make-or-break year for the automaker.

Sales of Chrysler, Dodge and Jeep vehicles were up 3 percent through March, as the company increased incentives to clear out old inventories.

"Now, all the new stuff is coming," said Bernhard, whose sentiments echoed that of other Chrysler executives who have said this is the quarter the company's been anticipating for years.

Nine new products are slated for this year. Among the new vehicles now being produced or already in showrooms: the Chrysler 300 series, Chrysler PT Cruiser convertible, Chrysler Crossfire roadster, Jeep Wrangler Unlimited and Grand Cherokee, Dodge Dakota pickup and Ram SRT-10 pickup truck, Dodge Magnum station wagon and Dodge and Chrysler minivans.

Even though the chief operating officer is typically responsible for issues such as cost, quality and operations, Bernhard was instrumental during his three-plus years in the job for creating, developing and scrutinizing new products.

"I reviewed every minute detail, on the interiors, the exteriors, and ride-and-drives," said Bernhard, who arrived at the company in November 2000 along with Zetsche after major financial losses in the division.

Bernhard said there was a dearth of products on the drawing table and the company was "a mess" -- a situation he says has been rectified. "It gives me great satisfaction to say that the company survived."

ScatPack @ The New York Auto Show

Click on any photos to see the gallery! Enjoy!

Redundancy Department
Car News briefs:Chrysler says an SRT is an SRT

Chrysler says SRT will continue to stand for Street and Racing Technology, but to keep everything straight the people at Performance Vehicle Operations will henceforth be known by the same name, Street and Racing Technology.

Schrempp to face DCX's shareholder
Mitsubishi losses to be point of contention at the annual meeting

DaimlerChrysler AG CEO Juergen Schrempp, criticized by shareholders in the past for his $36-billion purchase of Chrysler Corp., will face questions at this year's annual meeting over the company's stake in Mitsubishi Motors Corp. and the failed development of a truck-toll system.

Mitsubishi Motors, 37 percent-owned by Stuttgart, Germany-based DaimlerChrysler, had a loss of 72 billion yen ($692 million) last fiscal year. DaimlerChrysler lost another 250 million euros ($305 million) on its Toll Collect GmbH joint venture after missing deadlines to build a satellite-based system for Germany.

Mitsubishi Motors needs 500 billion yen in fresh capital, people familiar with the situation said. This may fuel the anger of shareholders who have submitted 41 motions opposing management. DaimlerChrysler's annual meetings have developed into 12-hour attacks on Schrempp over the past five years after promised higher profits and share prices failed to materialize.

The company expects 10,000 shareholders to attend the annual meeting Wednesday at the International Congress Center in Berlin.

"Mitsubishi is threatening to replace Chrysler as the shareholders' nightmare," says SdK, an investor group with 12,000 members, in a motion opposing management. "With the Toll Collect fiasco, the board of management has managed to make DaimlerChrysler the laughingstock of Germany, Europe and the world."

Shares of DaimlerChrysler have lost more than half their value since Daimler-Benz AG bought Chrysler in 1998. The stock has fallen 5 percent so far this year compared with the 1 percent increase of Germany's benchmark DAX index. The maker of Mercedes-Benz cars and Jeeps had a 91 percent decline in profit last year.

Mitsubishi Motors, based in Tokyo, fell to a record loss in the year ended March 31 as sales of cars in the United States slumped 26 percent after the company cut back on loans to customers in its largest market because of rising defaults. The company had offered interest-free loans with no deposits or payments for a year.

Schrempp, 59, has dispatched Andreas Renschler, head of the Smart car unit, to Tokyo to come up with a reorganization plan for Mitsubishi Motors. Renschler will take over as CEO of the Japanese company from Rolf Eckrodt in June, according to people familiar with the situation.

DaimlerChrysler spokesman Hartmut Schick said the company may take part in a capital increase, depending on Renschler's findings.

Got Rice? Don't Got Insurance!
No Insurance Coverage: Forming A Policy Against Tuners
Insurance—Or Lack Of It—May Spell The End For Sport Compact Enthusiasts

Canadian Ron Shortt is a far cry from the fast and furious type: The 47-year-old Toronto man drives a 2002 Pontiac Sunfire back and forth to his job as a computer information technology specialist, and his driving record is snow-white clean—no accidents, no tickets.

None of that mattered when Shortt decided to dress up his Sunfire with off-the-shelf, bolt-on interior parts, special wheels, a trick exhaust and lowered springs. In response, his insurer of 15 years, State Farm, canceled his policy, citing the lowered springs as a big no-no.

As with muscle cars of yore, which faded away as much because of jacked-up insurance rates as the triple whammy of high gas prices, government emissions rules and safety regulations, insurance companies are embarking on a collision course with the booming population of drivers who insist on tuning their sport compact rides.

“The insurance industry may be able to accomplish what the police could never do,” says Shortt, “by making all these cars illegal to be on the streets because they can’t get coverage.” Shortt eventually wound up back with State Farm, but not before he reinstalled the factory springs and had the work verified by an insurance company adjuster.

Steve Budzinski of Ottawa also was dropped by State Farm because of performance upgrades to his Acura Integra Type-R. “My underwriter flat out told me it no longer wants to insure modified cars,” said Budzinski.

State Farm Canada spokes-man Derek Fee says the insurer has no blanket policy to refuse coverage to the sport compact segment, but he acknowledges some sport compact owners—particularly those involved in street racing—are a growing concern. “That subculture is causing difficulties for the rest,” Fee says.


RECALL: Slippy Gearshift
DCX recalls 2.3 million cars to fix gearshifts; Audi to fix wiring problem

Automotive News

WASHINGTON -- DaimlerChrysler AG is notifying owners of more than 2.3 million cars built in the 1993-99 model years that the shift mechanisms on their automatic transmissions should be modified or replaced.

The affected models are the 1993-99 Chrysler Concorde and LHS and Dodge Intrepid, 1993-97 Eagle Vision, 1999 Chrysler 300M, 1995-99 Chrysler Cirrus and Dodge Stratus, and 1996-99 Chrysler Sebring convertible and Plymouth Breeze.

The company discovered that in some cars with floor shifters, the transmission can be moved out of park with the key out of the ignition, or the key can be removed when the transmission is in a gear other than park. The condition creates the danger of a rollaway crash.

In documents filed with the National Highway Traffic Safety Administration, DaimlerChrysler says its research identified more than 600 complaints about the shifters. The complaints cited 127 rollaway crashes, resulting in 17 injuries and one death.

The automaker says the problem appears to be limited to vehicles that have had multiple and possibly abusive drivers, such as those from rental fleets. But the automaker is recalling all potentially affected cars.

The repair involves installation of a new push rod in the shift lever. If the shift assembly is damaged, the company will replace it. Some of the cars were recalled in 1998 for other ignition-park interlock repairs, records show.

Suit: DCX rigged loan system to discriminate
By Sarah Webster

Two former auto dealers, Gerald Gorman in Chicago and Rick Perez in Galveston, Texas, as well as their customers, have filed separate lawsuits against the Farmington Hills-based DaimlerChrysler Services North America LLC alleging discrimination.

They say the company secretly changed how the loan application program worked at their dealerships because they were in neighborhoods with a lot of minority residents. They also say company officials used racial slurs to characterize their customers.

The dealers contend that rather than allow the computer to review their applications, the computer change put loan decisions in the hands of subjective credit analysts.

DaimlerChrysler attorney Don Hubert maintains that the company's lending policies are fair, discrimination isn't tolerated and employees who made insensitive remarks have been dealt with appropriately.

The company acknowledges that it changed the computer system so that loans from one of Gorman's two dealerships would receive more scrutiny because it was investigating fraud allegations there. The company did not have any records indicating that it increased oversight of auto loans from the Perez dealership.

Less than a month after Gorman and his customers filed lawsuits against DaimlerChrysler in February 2003, someone anonymously faxed an internal DaimlerChrysler document from a metro Detroit area code to Gorman's lawyers. It provided instructions for changing the computer program so applications from certain dealerships would get more scrutiny.

Company spokesman William Porter said the company is investigating who leaked that document, which he acknowledged is authentic.

Porter said the company has no formal process to notify dealerships of changes to the computer program.

"It's strictly an internal process," he said. The computer program, called ACE, which stands for "automated credit evaluation," is the system DaimlerChrysler uses to evaluate auto loan applications and determine what loan terms, if any, to offer.



DAIMLERCHRYSLERS' RECORD: Lawsuits aside, firm points to big strides in minority outreach

"This is my 31st year with the company, so I consider myself somewhat of an authority about what has happened," said Frank Fountain, senior vice president for government affairs at Chrysler Group, the company's Auburn Hills-based unit. He also is president of the DaimlerChrysler Corporation Fund and executive sponsor of the DaimlerChrysler African-American Network, one of six employee resource groups.

Fountain recently spoke about the company's record at an African-American History Month event at the Chrysler Group's headquarters.

The company sponsored a February visit from Dorothy Height, a 91-year-old civil rights leader, author and chairwoman of the National Council of Negro Women. She spoke to more than 200 mostly minority employees about the struggle of African Americans and her friendship with leaders such as Dr. Martin Luther King Jr.

Such an event, Fountain said, might have raised eyebrows and suspicions among white employees at the company years ago.

"We have come light-years," Fountain said.



Jeep calls on partner to help develop entry-level, front-drive model
Automotive News

The Chrysler group is developing a Jeep model from a front-drive platform, a bold departure for a brand that specializes in rugged off-roaders.

Two industry sources say the new Jeep will be based on a small, fwd platform co-developed with one of Chrysler's alliance partners. One source says the partner is Mitsubishi.

The vehicle will be positioned as an inexpensive, entry-level SUV positioned below the Liberty. The vehicle is expected to offer four- or all-wheel drive.

Chrysler officials say the lineup will stay true to Jeep's robust brand image.

But the new vehicle represents a significant change for Jeep, a brand that has relied on dedicated 4wd platforms and assembly plants. Besides being built on a front-wheel-drive platform, the vehicle almost certainly will be assembled in a plant that also produces non-Jeep vehicles.

"Is there a chance that one of our alliance partners could use this same platform that we would use for one of the Jeeps? Absolutely," says a Chrysler source familiar with the project who asked not to be identified.

Mitsubishi and the Chrysler group are co-developing a fwd platform for a wide range of vehicles. The unnamed Jeep vehicle is expected to debut in 2006 or early 2007. "Final decisions have not been made on that," says the Chrysler source.

The vehicle is part of a plan to expand the Jeep line from three to at least five nameplates by early 2007, a source says.

The two-door Compass, a small, entry-level concept that debuted at the 2002 Detroit auto show, signals the styling direction for the new nameplate, an industry source says.

Some Jeep loyalists at the company believe creating Jeeps off shared platforms will erode its brand image. But Chrysler group CEO Dieter Zetsche has said Jeep can share parts, electrical systems, powertrains and portions of vehicle platforms, yet maintain its distinct identity.

Such sharing saves development time and money.

If a Jeep vehicle meets or surpasses a buyer's expectations, "nobody cares what's underneath," Zetsche says.

At a press event last month in Texas, Jeff Bell, Jeep's vice president for marketing, said, "You can take any type of platform" to create a Jeep. But Jeep characteristics, such as ground clearance and a tight turning circle, must be engineered into the platform from the beginning.

The exterior styling also must be true to the brand, he said.

Bell did not acknowledge the development of the new Jeep. But he did say that if Jeep shared a fwd platform used for cars, "it will be pretty unique. It is not going to be a car. It would be a Jeep 4x4."

Jeep will move into new territory, offering models that are less rugged than current entries.

The strategy will test Jeep's ability to retain the loyalty of die-hard off-roaders.

"It is such a well-accepted brand that you can take it in different directions without losing the heartbeat of it," says Ron Jelling, chairman of the Chrysler Jeep National Dealer Council and owner of Chrysler of Paramus in Paramus, N.J.

Jeep needs to expand its lineup because it has not kept pace with the SUV explosion in recent years.

In 1995, Jeep held a strong 24.3 percent of the SUV market in the United States excluding sport wagons. Last year, its share was 14.8 percent.

Historically, Jeeps have been capable of traversing the Rubicon Trail, an off-road route in California. But not all future Jeeps will be required to meet that rigorous standard.

Instead, the company will require that existing nameplates - including the Wrangler, Liberty and Grand Cherokee - retain their performance capabilities.

The new breed of Jeeps will be less rugged than current vehicles. But to safeguard the brand's image, the company is mandating that the new Jeeps be the most capable vehicles in the segments in which they compete, including in off-road capability.

Pushing the Pacifica
Chrysler hoping to boost sluggish Pacifica sales with new model, ads
Automotive News

To boost sales of the Pacifica, Chrysler is launching TV commercials and print ads designed to give the unusual vehicle a clearer identify. It is also adding a model with two rows of seats this summer.

"Pacifica is one of those products where we were a little overconfident that some things sell themselves," says Jeff Bell, vice president of Chrysler brand and Jeep marketing. "Unfortunately, in a cluttered market you've got to be loud."

The Chrysler group had expected to sell 100,000 Pacificas annually. Since it went on sale in March 2003, sales totaled 69,572 through February.

Bell is expected to unveil the model with two rows of seats next month at the New York auto show.

In August, Gary Dilts, Chrysler group senior vice president of sales, said the two-row model would arrive by mid-2004. The unit was part of the Pacifica's original product plan, the company said then.

The Pacifica's base price is $29,525, including the destination charge.

New Pacifica advertising works to better communicate what type of vehicle the Pacifica is, says Julie Roehm, Chrysler group director of marketing communications. A new 30-second TV commercial asks: "Can inspiration go beyond the SUV?"

Chrysler had high hopes for the Pacifica, a vehicle that the company says blends the attributes of a sedan, minivan and SUV. The Pacifica's initial national advertising began in May 2003. By June, company executives acknowledged that shoppers did not understand what type of vehicle it was.

Chrysler accepted blame for sending the priciest models to dealers first, turning off shoppers looking for a lower price.

"We didn't establish that it was a great value for the money," Bell says. "And we didn't put enough money behind it. We were getting outshouted by new vehicles like the Nissan Murano."

In the fourth quarter of 2003, Chrysler increased ad spending on the Pacifica, although the company will not specify the amount. Pacifica sales climbed to 23,304 units in the quarter, a 6.5 percent increase over the third quarter.

Chrysler also has spent steadily to support Pacifica sales, according to Jesse Toprak, director of pricing and market analysis for Edmunds.com, an online automotive resource.

The Pacifica's per-unit incentive cost totaled $4,370 in January 2004, according to Edmunds.com data. The figure includes manufacturer's incentives, dealer cash and consumer savings from lease promotions and discount financing rates.

"Pacifica has not performed up to Chrysler's expectations," Toprak says. "But it isn't a failure either."

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