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Roadfly Magazine
Issue Ten
Table of Contents

Past Issues Index
Roadfly Magazine
Issue Ten
January 5, 2004
Los Angeles Auto Show 2004
Los Angeles Auto Show Photo Gallery
SEMA 2003
Toyota Tundra Double Cab Review
Infiniti QX56 Preview
Review PowerBook G4 17 inch
Coming Next Issue
Detroit Auto Show 2004
Jaguar S-Type Review

Industry News
Kerkorian News Story

The trial contesting one of the biggest mergers in automotive history was halted Dec. 15, after defense attorneys came forward with documents that had not been previously disclosed to the plaintiff in the case. DaimlerChrysler is currently in the midst of a legal battle with Chrysler’s largest single investor, Kirk Kerkorian concerning the merger of Daimler-Benz AG and Chrysler Corp., which occurred in 1998. Kerkorian filed suit in federal court in 2000, alleging that management for Daimler-Benz presented what was essentially a takeover as a merger to investors in order for the deal to be approved.

U.S. Judge Joseph Faman Jr. halted the trial Dec. 16, after several pages of notes that had not been made available to Kirk Kerkorian’s legal team, the plaintiff in the case, were turned over by lawyers for DaimlerChrysler Dec. 15. Defense attorneys said they realized that the two binders, which contained more than 60 documents and notes, had not been disclosed to the prosecution. They blamed the oversight on a copy service mistake.

“We are shocked,” said Terry Christenson, Kerkorian’s attorney, according to a story written by Sarah A. Webster, which appeared in the Detroit Free Press. Judge Faman scheduled a hearing to determine “how we got into this mess,” according to a story by Sarah A. Webster in the Detroit Free Press. On Monday Dec. 23, Judge Faman listened to testimony concerning the mishap of the documents, while his appointed special master Collins Seitz said, “It is a little troubling that documents do keep dribbling out. Is this it?” Judge Faman appointed Seitz before the trial began to oversee the gathering of documents related to the case. “These two documents are like the Bible,” said Christenson, maintaining that the documents were intentionally withheld from his client. “It’s like holding the New Testament and the Old Testament in each hand.” Many of the memos turned over to Kerkorian’s attorneys Dec. 15 contain statements that Christenson said bolsters his client’s claims about the consolidation of the two companies being a takeover rather than a merger.

In related news, DaimlerChrysler withdrew last week as the sponsor of the Lingerie Bowl, which will be held at halftime during the Super Bowl. The decision was announced by James Kenyon, a Chrysler Group spokesman, who said the decision came after several complaints from dealers, as well as female employees and customers. The bowl will feature two teams, Team Dream and Team Euphoria, which will be comprised of models, including some former Playboy playmates. The bowl will be held at the Los Angeles Memorial Coliseum and will be a pay-per-view event during halftime at the 2004 Super bowl.

Indy Racing League Changes

Two violent crashes during the latter part of 2003 have prompted Indy League Racing (IRL) officials to call for a change in the engine size of IRL cars. Engines sizes will be reduced from a 3.5-liter normally aspirated engine to one that is only a 3.0-liter. Citing a need to reduce the top speeds reached during IRL races, the league’s governing body has set May 1, 2004 as the date by which changes must be made. That will allow engine manufacturers five months to accommodate for the change and will give race teams three more races to use up any excess parts or engines before they become obsolete. No one is saying yet how much the move will cost, but manufacturers have said they support the decision.

The need to lower the top speeds reached comes as a possible reaction to two crashes in October where both cars got airborne. Kenny Brack suffered multiple fractures when his car went into the fence at Texas Motor Speedway. He has yet to return to the track and is not expected to return until this years Indy. Less than two weeks later from Brack's crash, Tony Renna was killed Oct. 22, at Indianapolis Motor Speedway.

The move should take away about 10 percent of the engine's output, or 75 horsepower, which would result in a drop of about 10 mph. League officials have said they prefer speeds in the 220 mph to 230 mph range. The 2003 Indy pole was won with a speed over 231 mph. Changes in aerodynamics for the cars will be announced in February and are expected to also impact speeds on the track.

Exchange Rate Story

For the first time, in a long time, an American company might be dethroned as the world’s largest auto supplier. Thanks to a weak dollar, coupled with a euro that has risen over 17 percent since January 2003, Robert Bosch GmbH is set to take the place that has been held by Delphi Corp. for the last five years. Bosch’s projections for 2003 sales are expected to match 2002’s earnings of 23.3 billion euros or $28.6 billion. Delphi, of Troy, Mich., is expected to report sales of $27.7 billion for the 2003 year.

However, Delphi is unperturbed by the news. “We’re not trying to be the biggest. We’re trying to be the best,” said J.T. Battenberg, Delphi CEO, according to a story in Dec. 15 issue of Automotive News. In recent years Delphi has closed factories manufacturing such low-profit items as batteries and headlights, and focused on higher-profit items, such as components for fuel systems and HVAC modules.

In the long run, suppliers will keep tabs on the volatility of the exchange rates, but they are unlikely to have any lasting effect on the market. One possible outcome might be that automakers decide to keep back off of buying parts in countries where the exchange rates are higher than the dollar as that results in higher prices for goods. However, don’t expect to see automakers shying away from buying anything off the Chinese market as China’s currency is fixed to the dollar.
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