Feature Story

RECAP OF '98 AUTO WORLD

by Bob Hagin

November 27, 1998

The year 1998 will end as one of the most bizarre in recent automotive history. Big mergers, big takeovers, strange marketing schemes and the even stranger reappearance of an old favorite high- lighted the year. These are the auto stories we reported on last year that we found the most interesting to the general public:

DAIMLER AND CHRYSLER TAKE THE MARRIAGE VOWS - Who would have believed the 1997 rumors that Daimler and Chrysler would merge? Not me - but I was wrong again. But there it was in December - Daimler/Chrysler - the biggest auto merger in history. It had to be voted on by Chrysler stockholders, of course, and not all of those who cast their ballots were smiling. The fly in the ointment was that German executives would be eligible for compensation American-style. While the top pay for Daimler big-wheels averaged just under $2 million last year, Chrysler's head man Robert Eaton received just under five times that amount. It wasn't a popular subject at the Daimler stockholder's meeting in Germany either. The fear there is that the stoic German company would become "Americanized", which means flamboyant in The Fatherland. The chairman's chair will have to be wide - Robert Eaton of the-company-that-used-to- be-called-Chrysler will share that office with Jurgen Schrempp of Daimler - at least until the first shakeout.

BEETLEMANIA RETURNS - We auto journalists had been made ready for the resurrection of the venerated Volkswagen Bug by virtue of the fact that New Beetles were in the regional "press fleets" before they hit the showroom floors. But I don't think that any of us were prepared for the public outpouring of nostalgia that greeted the "friendly-faced" car that is, in reality, a rebodied VW Golf. Volkswagen launched a media blitz early in 1998 and when the cars were finally delivered to dealers, pent-up Beetlemania exploded. The cars were sold almost before they came off of the delivery trucks. The emotional attraction was undeniable: a great percentage of our Baby Boomer population had owned, driven and loved (sometime not) an original Volkswagen "Bug", a name the company wishes would go away. To them, the new version brought back fond memories of college days, hippie happenings and simpler times. To younger buyers, the New Beetle was seen as a practical link to the '60s and '70s that they had only heard of. The car enjoyed a spate of light-hearted and nostalgic TV advertising and now at year's end, the New Beetle has settled into being just another item in the Volkswagen market mix.

DAEWOO TRIES IT AGAIN - In late '97, the Daewoo was scheduled to start selling its line of low-to-medium priced sedans in this country. Most automotive pundits in this country snickered behind their word-processor screens at the idea of yet another Korean automaker entering an already-glutted field. Over the past decade, Korean-built vehicles have developed a reputation for lack-luster designs, poor quality and inadequate service. It was felt that with the financial maelstrom that was (and still is) taking place in Asia, it would be fool-hardy to take on both the domestic and Japanese manufacturers in the rough-and-tumble American market. But Daewoo had a plan: it would recruit college students on major campuses around the country to become sales "advisors" and sign up 18 to 24 year-old collegians. To imprint its persona on the kids, it backed rock concerts and other youth- oriented events. But reports are that the company's campus endeavors have been somewhat less than successful (the $15K to $20K price range is a bit steep for most college kids) and late in September of '98 it was announced that Daewoo was opening 15 factory-owned retail stores in the 10 states and would handle its own advertising in-house. By year's end only 700 cars had been retailed to the general public, but Daewoo likes to do things its own way.

LINCOLN TOPS CADILLAC - The most amazing vehicle sales story of '98 was that more Lincolns were sold than Cadillacs. When Henry Leland walked out as head man of Cadillac in 1917, he and his son hadn't intended to go into the car-making business. But it happened, and for many years after Henry Ford took it away from the Lelands in 1922, it actually outsold the G.M. luxury car that had fostered its inception. But that lead was relinquished in 1940 and the balance tipped in favor of Cadillac. Until now, that is. The story in a nut shell is that Lincoln started selling its SUV, the Navigator, a gussied-up Ford Expedition last year, and Cadillac has just gotten on that truck-based bandwagon with its Escalade, a Chevy Tahoe in fancy dress. The Lincoln father-and-son team must be laughing in their graves over that fact that it took a Lincoln "truck" to unseat Cadillac.

ROLLS ROYCE: VW WINS THE CAR BUT BMW GETS THE NAME - Like two Teutonic knights, Volkswagen and BMW spent the year jousting for the hand favors of Rolls-Royce. VW outbid its rival and wound up owning the prestigious but flagging British company for almost $800 million. But BMW stated that it has been supplying engines for the luxo-limo for several years and that if VW won the battle, it would have to come up with its own powerplant immediately. The upshot was that VW would keep producing Rolls-Royce cars with BMW engines until 2002 after which it would have to produce its own engine for the car. The down side is that VW would have to rebadge the R-R as the Bentley, a somewhat less prodigious little sister of the mighty Rolls. In a move that still seems incredulous, VW sold the Rolls-Royce name (undoubtedly the most patrician in the car world) to BMW for $66-million which is lunch money in those circles.

Come back in a year and we'll have another "end of" review for your pleasure, but that one will be a Duesie. Next time we'll review the single most influential auto happening of the century.

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