GM: Aluminum Wheels May Not Be Standard, Wheel Maker Stock Price Falls

May 24, 2002

CHICAGO - Reuters reported that shares of automotive parts maker Superior Industries International Inc. dropped 12 percent Thursday after Prudential Securities downgraded the stock to "sell," saying new steel wheels for cars could replace the aluminum wheels made by Superior.

Prudential analyst Michael Bruynesteyn cut his rating on Superior from "hold" and said he expects a "fundamental shift" in wheel buying based on new designs for steel wheels. He said steel wheels can be produced at half the cost of aluminum wheels, potentially saving $100 per vehicle.

A spokesman for Van Nuys, California-based Superior was not available for comment.

General Motors Corp. (GM.N) spokesman Jim Parks said the world's leading automaker is looking at using steel wheels on the base models of some of its cars and offering aluminum wheels as an option as part of an ongoing cost-savings program.

"We got to the point where a lot of options have become standard," Parks said.

Detroit-based General Motors is now trying to determine on which models the consumer might be willing to pay for aluminum wheels as an upgrade, so the overall impact on wheel volumes is unclear at this point, he said.

Superior Industries, a valued GM supplier, is aware of the initiative, Parks added.

Shares of Superior were down $5.88 at $44.02 in afternoon dealings on the New York Stock Exchange, Trading in the shares had been delayed early in the day due to an order imbalance. Just two weeks ago the stock hit an all-time high of $53.80.

Superior in April reported a 7.6 percent rise in quarterly profit, citing strong wheel shipments.

A competing wheel and parts maker, Hayes Lemmerz International Inc. of Northville, Michigan, filed for Chapter 11 bankruptcy reorganization for its U.S. operations in December, citing declining market conditions and an excessive debt burden