WORLD AUTO LEADERS SEE FUTURE IN THE INTERNET
BY JEREMY CATO

TOKYO-The Internet will transform the auto industry in every way imaginable, from the way cars are designed and engineered to how they are manufactured and sold, said Ford Motor Company chief executive officer Jacques Nasser, offering his vision of the next millennium at the Tokyo Motor Show.
Nasser said the astonishing power of the Internet is pushing Ford to transform itself into an on-line company from an assembly-line company.

He said that by the middle of the next decade Ford will offer everything online, from car manuals to service options. Ford plans to be everywhere in cyberspace. Certainly there will be Ford's own web site, but Ford also plans to be part of electronic communities such as iVillage.com, as well as in-car technology such as satellite navigation systems.
"This (the Internet) isn't just a communication tool; It's a different
way of running our business," said Nasser, speaking to a small group of Ford's senior executives and members of the news media.
Nasser said that integrating the virtual world and the physical world will cut costs and time out of the auto industry's present manufacturing and distribution system. One of the main benefits for customers is that the Internet will soon make it possible for buyers to configure a car to their specific needs for delivery in a matter of weeks, if not days.

Ford, in fact, has plans to have an early version of a build-to-order system in place by next year. The Ford system is also expected to includes products from other Ford owned or controlled companies, including Volvo, Aston Martin, Mazda, Jaguar, Lincoln and Mercury. 

Among Ford's rivals, Toyota Motor Corp. is also working on a build-to-order system and General Motors Corp. has established a whole division within the company to oversee Internet development and electronic commerce.  These initiatives are just the very earliest examples of how electronic commerce and the Internet are quickly transforming the car business, notes Gomez Advisors, a leading provider of Internet research and analysis.

Gomez predicts that the online car industry is poised for sizeable growth. Gomez Advisors forecasts new and used automobile sales initiated via the Internet will rise from three percent of all sales in 1999 to 20% in 2002. For more information about Internet trends and e-commerce, visit
Gomez.com, at www.gomez.com.

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HIGHLIGHTS OF THE TOKYO MOTOR SHOW

TOKYO-The 33rd annual Tokyo Motor Show began with the tough-medicine news that Nissan Motor Co. will shutter five plans and cut 21,000 jobs by 2003, gained steam with announcements of several new or enhanced alliances among the world's automakers and then finally gave way to the true stars of any auto show--the vehicles, especially the newest models to be launched and concept cars that might one day see the floor of a dealer showroom.

Ford Motor Co., the world's second-largest automaker, stood out from the pack with a huge and glamorous display that showcased the company's six nameplates: Mazda, Lincoln, Mercury, Jaguar, Aston Martin and Volvo. 

Ford had reason to be in good humour. The company had just announced
third-quarter earnings of $1.11 billion, or 90 cents a diluted share, up 11% from $1 billion, or 80 cents a share, a year earlier. According to First Call/Thomson Financial, Ford's results beat analysts' expectations of 85 cents a share, and they would have been higher still if not for two non-recurring items that pushed down third quarter net income by $.19 a share.  David Garrity, auto analyst at Dresdner Kleinwort Benson in New York, called it "a blowout quarter," then  raised his estimates for Ford earnings for this year and next.

Rod Lache of Deutsche Banc Alex. Brown, said Ford is enjoying strong sales of profitable models and that many observers have underestimated the earnings potential of Ford. Indeed, Ford's after-tax return on North American sales for the first nine months of this year was 6.3 per cent and 4.5 per cent in the third quarter, a period when new model introductions take a serious cut out of an automaker's bottom line. Ford has a long-term target of 5 percent. By contrast, last week General Motors Corp. reported that its third quarter net profit margin was 2.4 per cent.

Ford's strong third quarter had analysts scrambling to revise their earnings estimates.
Lache quickly raised his 1999 full-year earnings estimate for Ford to $6.02 a share, up from $5.70 a share, and raised his 2000 estimate to $6.25 a share from $6.10 a share. New York-based Lehman Brother analyst Nicholas Lobaccaro issued a note that he is also revising his estimates higher. Both are expected to bring in earings estimates of well over $6.00/share for both 1999 and 2000.

According to the most recent First Call/Thomson Financial survey of 13 analysts, the consensus estimate for Ford's 1999 earnings is currently $5.76 a share. A second survey of 12 analysts predicted 2000 earnings of $5.83 a share.  Ford's good news stood in sharp contrast to the dramatic restructuring plan unveiled on Monday by Nissan chief operating officer Carlos Ghosn.

He announced that Japan's second largest automaker will make large cuts to its global operations. Ghosn, who was brought in by Renault, which earlier this year took a controlling stake in Nissan, is known as "le Cost-Killer" for the work he did from 1996 to 1999 in restructuring Renault's operations.
The plan announced by Ghosn calls for:  cost reductions of 1 trillion yen and a net debt reduction from 1.4 trillion yen to less than 700 billion yen by fiscal 2002; a return to profitability in fiscal 2000 starting April next  year; 1 a consolidated operating profit of 4.5% of sales by  fiscal 2002; 1 a reduction in Japanese domestic annual production capacity by 30% to 1.65 million  vehicles from 2.4 million by fiscal 2002; the closing in March 2001 of the auto plant in Musashi-murayama, western  Tokyo and the auto body assembling operations at Nissan Shatai Co.'s  factory in Uji, Kyoto Prefecture and at Aichi Machine Industry Co. in  Nagoya; the shutting of Nissan's Kurihama engine plant in Kanagawa Prefecture and  Kyushu engine plant in Fukuoka Prefecture in March 2002; a reduction in Nissan's global workforce of 14%, or 21,000 workers; a cut in Japanese retail outlets of 10%; the implementation of a performance-oriented compensation system for management  in the end of fiscal 2000, with bonuses and stock options as  incentives. Analysts generally applauded the plan, but questioned Nissan's resolve and ability to carry it out. Shares in both Nissan and Renault dropped following the announcement. 

Nissan president Yoshikazu Hanawa and Renault chairman Louis Schweitzer
said in a joint news conference that the alliance of their two companies would generate savings of more than $3 billion a year from 2005 onwards. Long term they said they plan to achieve 10 per cent of the world's auto market. As they get their, the partners said they plan to achieve $1.7 billion US in savings between now and 2002, much of that achieved by combining the purchasing clout of the two companies. Officials from both companies have also said they plan to have 10 common platforms by 2010 and that average production volume for each platform should reach 500,000 unites from the current 280,000 for Renault and 100,000 for Nissan.

Meanwhile, Toyota Motor Corp., Japan's No. 1 automaker, and General Motors announced a new technological collaboration in their work towards producing more environmentally friendly vehicles.
GM, which already has alliances with Isuzu Motors and Suzuki, also said it is in talks with South Korea's Daewoo Motor Co. that may lead to another tie-up in the South Korean passenger vehicle market. Daewoo Motors is the auto unit of the debt-ridden Daewoo Group.

Ford's new chief financial officer, Henry Wallace, who also has responsibility for Mazda, said the two companies will offer a new small sport-utility vehicle. It will be built by both Ford and Mazda in Japan and the United States, and it will be worldwide. Total sales were expected at 250,000 vehicles per year.
The corporate drama overshadowed the Tokyo debuts of 29 new models and concept vehicles. Here's a quick rundown of some of the more interesting ones:

	MAZDA: RX-Evolv-It's not a successor to the RX-7, but instead a four-door sports car with an integrated child seat in the rear. It's powered by a 280-horsepower Renesis rotary engine that is more compact than the current RX-7 rotary. "We're attempting to redefine the sports car," says Martin Leach, Mazda managing director for product planning and design.
	HONDA: FCX-This concept is powered by a fuel cell not a gasoline engine. It has a long wheelbase to accommodate the fuel cell and its related components, without compromising passenger and cargo room.
	NISSAN: AXY-This concept is designed to make automobile use much easier for the elderly. Door handles, levers and assist grips are larger than normal, while the interior layout boasts a removable front passenger seat, a flat floor and sliding rear doors with no centre pillars that make for easier entry and exit.
	TOYOTA: RV-M4-This six-seat van is what Toyota calls the world's first hybrid four-wheel drive vehicle. The hybrid system includes a 2.4-litre gasoline engine with two electric motors and a continuously variable transmission. The engine recharges the batteries. Low-beam headlamps draw their light from a remote source using fibre optic cables and light emitting diodes and neon tail lamps save power.