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GM Adds Team to Focus on Safety During Car Development

(Bloomberg) – General Motors Co. (GM) CEO Mary Barra, under fire for the company’s slow response to flawed ignition switches linked to 13 deaths, said she is creating a team that will make the company’s cars as safe as they are fun to drive.

“This new organization will build on the formula and specific actions we have taken in recent years” to make GM’s cars the best to drive in the industry, Barra said during an event in advance of the 2014 New York International Auto Show. “We will mirror this approach to focus on safety performance.”

The new global product integrity organization will report to Mark Reuss, head of product development, and include the new team headed by Jeff Boyer, the vice president for vehicle safety, she said. Barra spoke at a forum hosted by J.D. Power & Associates and the National Automobile Dealers Association (NADA). She and other GM executives are in New York as the automaker introduces new vehicles before the show.

The speech was Barra’s first public appearance since being grilled at U.S. congressional hearings on April 1 and 2. A House panel released more than 700 pages of documents that shed new light on why it took the Detroit-based company so long to recall 2.59 million small cars with potentially faulty ignition switches linked to at least 13 deaths.

Growing Crisis
Barra is struggling to contain the growing crisis that’s consumed much of her first three months on the job since she succeeded Dan Akerson as CEO on Jan. 15. She has said GM failed to act quickly enough and apologized for the deaths.

As it plays defense on the recall drama, which began Feb. 13, GM is also trying to garner publicity for new vehicles it’s bringing to the market this year. The automaker is showing changes to its 2015 Chevrolet Cruze compact car for the U.S. market, including a new front end that takes styling cues from the larger Impala and revised cup holders. GM also is showing the convertible version of the Corvette Z06 sports car.

GM also announced it will bring the Chevrolet Trax sport-utility vehicle to the U.S. Essentially a Chevy version of the Buick Encore compact SUV, the 2015 Chevrolet Trax will be the brand’s seventh small-vehicle introduction in less than four years in the U.S., the company said. The Encore, which is also sold as an Opel Mokka in Europe, went on sale in the U.S. last year.

Progress ‘Overshadowed’
Barra focused the first part of her speech on the progress the company has made including raising transaction prices, increasing retail market share in the U.S. and boosting sales in China.

“I think it’s fair to say that much of the progress we have made in the last two months has been overshadowed by the intensity of the recall coverage – but in fact there has been a lot of good news to report,” Barra said.

GM rose 1.8 percent to $33.97 at the close in New York. The shares have declined 4.5 percent this year since Feb. 12, the day before the ignition-switch recalls were announced.

Barra is also beginning to shape her executive team, with GM announcing April 14 that John Quattrone, a key deputy of hers who ran human resources for product development when she was head of the department, was named the new senior vice president of global human resources. GM also announced that Selim Bingol, head of GM’s public relations and global public policy operations, was leaving. A replacement wasn’t announced.

Bob Ferguson, who ran government relations and public policy before taking over Cadillac in 2012, is now running both the luxury brand and public policy, Barra told reporters later at a Chevrolet press conference.

Speak Up
Barra announced last week a program to recognize employees for speaking up about safety concerns and has suspended with pay two engineers involved in the development of the recalled cars.

“We agonized over that decision, but we felt it was right for the individuals and right for the company at this time,” she said of putting them on leave. Barra stepped around a question about what it might mean if more GM employees were discovered to be involved. “I don’t want to speculate on any aspect,” she said. “Let’s be really, really clear, these are real people with real careers.”

Barra reiterated that she is “focused on truth and then taking the right actions.”

After her presentation at the Auto Forum, Barra was swarmed by dozens of reporters and camera people as she walked off stage and tried to leave the ballroom. Reuss and aides worked to block Barra from the crush as spokesmen yelled for the crowd to back away.

Valukas Report
GM in March announced it hired Jenner & Block LLC Chairman Anton Valukas, who served as a Justice Department-appointed examiner of the downfall of Lehman Brothers Holdings Inc., to help lead the automaker’s internal probe along with GM General Counsel Michael Millikin.

The internal investigation remains on track to take 45 to 60 days, she told reporters yesterday after the presentation. She said she is not aware of any documents having been given to the U.S. Justice Department.

Barra has also asked for a review by lawyer Kenneth Feinberg, who determined compensation for survivors of the Sept. 11 and Boston Marathon terrorist attacks, on what GM should do for victims of the crashes. The automaker is currently shielded from paying claims for accidents prior to July 2009 as part of its bankruptcy terms.

Regulator Relations
The U.S. National Highway Traffic Safety Administration (NHTSA) said last week it’s fining GM $7,000 a day for failing to respond to one-third of requests for information about the recall with an April 3 deadline. An agency lawyer called an internal company probe the automaker cited as reason for the delay “irrelevant” and threatened to refer GM to the Justice Department.

GM has a team dedicated to working on the NHTSA questions, Barra said. “We work on those every day,” she told reporters. “We are trying to be as responsive as possible. But we will not sacrifice the accuracy.”

The automaker has produced 21,000 documents totaling more than 271,000 pages that span a decade to NHTSA, according to GM.

In documents released last week, GM officials expressed shock that the regulator described the company as “slow to communicate, slow to act” and harder to deal with than other automakers.

Boyer is having regular discussions with NHTSA officials about ways for the company to do better, Barra said. “They made some suggestions to us on how we can improve and we’re implementing them immediately.”

SNL Target
Her performance before Congress two weeks ago became the butt of jokes on NBC’s “Saturday Night Live,” which mocked her elusiveness in answering questions. The NBC show opened with a parody of the hearings, with cast member Kate McKinnon as Barra answering questions using dodges like “we’re looking into that” and “that’s part of our investigation.” “That was the old GM. I can only speak to how the new GM would handle it,” McKinnon said gravely, adding, “OK, it’s the new GM starting … now.” Later she said, “Your honor, may I approach the exit?”

Asked about the sketch, Barra said she’s watched the show most of her adult life.

“It’s important to maintain your sense of humor,” she said. “But I can tell we are very serious and very dedicated to doing the right thing for our customer.” Asked how McKinnon did playing her, Barra demurred. “Again, there are probably better people than me to judge.”

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U.S. Gasoline Prices Rise to Eight-Month High in Lundberg Survey

(Bloomberg) – The average price for regular gasoline at U.S. pumps rose 4.9 cents in the past two weeks to $3.6065 a gallon, the highest since July 26, according to Lundberg Survey Inc.

The survey covers the period ended April 4. It’s based on information obtained at about 2,500 filling stations by the Camarillo, Calif.-based company.

The average retail price is 4 cents lower than a year ago, Lundberg said.

“In general, the uptrend has been losing steam,” Trilby Lundberg, president, Lundberg Survey, said in a telephone interview. “This is a modest rise. Demand is higher than it was during the same period one year ago.”

Implied demand for gasoline fell 3.5 percent in the week ended March 28, remaining 0.8 percent above the five-year seasonal average, data from the Energy Department show.

The highest price for gasoline in the lower 48 U.S. states among the markets surveyed was in Los Angeles, at $4.04 a gallon, Lundberg said. The lowest price was in Billings, Mont., where customers paid an average $3.20 a gallon. Regular gasoline averaged $3.75 a gallon on Long Island, N.Y.

Gasoline futures on the New York Mercantile Exchange rose 2.34 cents, or 0.8 percent, to $2.9313 a gallon in the two weeks ended April 4.

Inventories of the motor fuel across the U.S. fell 1.57 million barrels in the week ended March 28 to 215.6 million, the lowest since November, according to Energy Information Administration data. Stockpiles have fallen 7.6 percent in six straight weeks of declines.

Crude inventories fell 2.38 million barrels to 380.1 million last week. It was the first decline in 11 weeks.

West Texas Intermediate crude gained $1.68, or 1.7 percent, to $101.14 a barrel on the Nymex in the two weeks to April 4.

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U.S. Gas Rises to $3.5572 Per Gallon in Lundberg Survey

(Bloomberg) – The average price for regular gasoline at U.S. pumps rose 4.74 cents in the past two weeks to $3.5572 a gallon, the highest since Sept. 20, according to Lundberg Survey Inc. The survey covers the period ended March 21 and is based on information obtained at about 2,500 filling stations by the Camarillo, Calif.-based company. The average is 15.02 cents below a year ago.

“It’s been six weeks of rising prices at the pump but this is a pace that has greatly slowed,” said Trilby Lundberg, president, Lundberg Survey. Consumers are paying more even as oil and gasoline futures have fallen because the price for ethanol, the government-mandated fuel additive, has risen, Lundberg continued. “Higher ethanol prices adds about a nickel at the pump.”

Ethanol prices have jumped 24 percent this month as winter weather and a shortage of rail cars slowed the movement of the biofuel from plants in the Midwest to fuel terminals, particularly in Chicago and the Northeast.

Highest Price
The highest price for gasoline in the lower 48 U.S. states among the markets surveyed was in Los Angeles, at $4.003 a gallon, Lundberg said. The lowest price was in Billings, Mont., where customers paid an average $3.18 a gallon. Regular gasoline averaged $3.73 a gallon on Long Island, N.Y.

Gasoline futures on the New York Mercantile Exchange fell 6.59 cents, or 2.2 percent, to $2.9079 a gallon in the two weeks ended March 21.

Inventories of motor fuel across the U.S. fell 1.47 million barrels in the week ended March 14, to 222.3 million, the Energy Information Administration reported March 19. Stockpiles have fallen four straight weeks, decreasing 11.1 million barrels.

Crude inventories climbed by 5.85 million barrels to 375.9 million last week. West Texas Intermediate crude fell $3.12, or 2.5 percent, to $99.46 a barrel on the Nymex in the two weeks to March 21.

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Ford Accused in Lawsuit of Infringing Turn Signal Patent

(Bloomberg) – Ford Motor Co., the second-largest U.S. automaker, was sued over claims it infringed a patent on technology for an automatic turn signal. Ford’s three-blink lane change technology infringes a 2008 patent held by Richard Ponziani, a former automotive design engineer for companies including General Motors Co. and Valeo SA, according to a complaint made public in federal court in Wilmington, Delaware.

Ford pitched the turn signal as the solution to one of the top 10 driving pet peeves when it announced the technology in 2009. The turn indicator is designed to blink three times and automatically shut off. The technology is used in Ford’s F Series truck, Taurus, Edge and Fusion models, according to the complaint, which seeks unspecified damages.

Kristina Adamski, a spokeswoman for Dearborn, Michigan-based Ford, declined to comment on the complaint. The case is Ponziani v. Ford Motor Co., 14-cv-00266, U.S. District Court, District of Delaware (Wilmington).

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Ford Planning to Drop Microsoft for BlackBerry in Its Car Technology System

(Bloomberg) – Ford Motor Co., struggling with in-car technology flaws, will base the next-generation Sync system on BlackBerry Ltd.’s QNX and no longer use Microsoft Corp.’s Windows, according to people briefed on the matter.

Using QNX will be less expensive than licensing Microsoft technology and will improve the flexibility and speed of the next Sync system, the people, who asked not to be identified because the decision hasn’t been made public, said Feb. 22. Ford has more than 7 million vehicles on the road with Sync using Microsoft voice-activated software to make mobile-phone calls and play music.

The switch may help Ford, the second-largest U.S. automaker, address customer complaints about malfunctioning technology systems and touch screens that have hurt it in surveys by J.D. Power & Associates and Consumer Reports. For BlackBerry, it’s a vote of support for a company that lost 95 percent of its value from mid-2008 to November and saw the collapse of a proposed $4.7 billion buyout.

“This would be a huge infusion of trust and confidence to have BlackBerry and QNX expanding into a Ford,” Thilo Koslowski, auto analyst for researcher Gartner Inc. in Santa Clara, California, said yesterday. “This is really the crown jewel in BlackBerry’s crown and could make the rest of the company shine as well.”

Shares Climb
BlackBerry rose 6.6 percent to $9.74 at 9:55 a.m. in New York. Microsoft fell less than 1 percent to $37.85. Ford gained less than 1 percent to $15.20.

Since becoming BlackBerry’s CEO on Nov. 4, John Chen cited software such as QNX and the BlackBerry Messenger service as assets he will look to capitalize on. Predecessor Thorsten Heins spoke often during his tenure for the potential of QNX to play a role in machine-to-machine settings such as cars interacting with parking meters.

Dearborn, Michigan-based Ford has said the quality of its vehicles has been “mixed” each of the past three years and fell short of its plan to improve those results in 2013. CEO Alan Mulally was said to be a candidate to become Microsoft’s chief until early this year,

Improving Sync is crucial for Ford to draw car shoppers who are increasingly looking to be connected at all times. In-vehicle technology is the top selling point for 39 percent of auto buyers, more than twice the 14 percent who say their first consideration is traditional performance measures such as power and speed, according to a study by the consulting firm Accenture released in December.

Customer Surveys
“We do not discuss details of our work with others or speculate on future products for competitive reasons,” Susannah Wesley, a Ford spokeswoman, wrote in an e-mail.

Peter Wootton, a spokesman for Redmond, Washington-based Microsoft who works for Waggener Edstrom, declined to comment. Paul Leroux, a spokesman for QNX, declined to comment.

Ford and Lincoln ranked Nos. 26 and 27 out of 28 brands in Consumer Reports’ annual auto-reliability survey released in October. While the Lincoln luxury line matched the industry average in J.D. Power’s Initial Quality study in June, the namesake finished 27th out of 33 brands.

Technology companies are competing to win business from automakers as in-car technology becomes an increasingly important selling point. Google Inc. announced an alliance with General Motors Co., Honda Motor Co., Hyundai Motor Co. and chipmaker Nvidia Corp. in January to bring the Android operating system to cars. Apple Inc. is working with Bayerische Motoren Werke AG, Daimler AG’s Mercedes-Benz, Nissan Motor Co. and others to introduce its iOS operating system to cars with devices such as the iPhone.

QNX Users
BlackBerry’s QNX Software Systems can be found in cars made made by Volkswagen AG’s Audi unit and BMW, according to its Web site. QNX and Microsoft are the main suppliers of automotive operating system software, according to researcher IHS iSuppli.

BlackBerry, at the time named Research in Motion Ltd., bought QNX Software Systems for $200 million in 2010. In addition to its presence in cars, QNX technology is used to manage nuclear-power plants and by the U.S. military for unmanned aerial drones. Its customers include Cisco Systems Inc., General Electric Co. and Caterpillar Inc.

The switch would be a significant blow to Microsoft’s automotive software business because Ford is by far its biggest customer, said Gartner’s Koslowski. Microsoft also has software in Kia Motors Corp., Fiat SpA models, Nissan and BMW models, according to its website. Getting into the Ford system will expand QNX’s industry leading position for automotive entertainment operating systems, which Koslowski said he estimates is as high as 70 percent.

Integrating Systems
The operating system in the car entertainment system has become more of a commodity and now added functions are more important, he said. QNX has done a better job of integrating compatibility with other operating systems such as those from Apple, Google and included emerging Internet standards, he said.

“You have to look at it more from a perspective of how much functionality do I get for what price and really move your investment budgets to other areas that become much more strategic for creating differentiation,” Koslowski said. “The industry is realizing it has to do a better job to create a unique experience for its customers.”

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Fiat Chairman Says Marchionne to Remain Chief Executive

(Bloomberg) – Fiat SpA (F), the Italian carmaker that controls U.S. auto producer Chrysler Group LLC, will keep Sergio Marchionne as chief executive officer at least three more years to push company growth, Chairman John Elkann said. Marchionne will be responsible for carrying out a new business plan to be presented in May, Elkann said at a briefing at the North American International Auto Show in Detroit. Fiat and Chrysler together offer a good “bench” of eventual successors to the CEO, Elkann said.

The Italian company said on Jan. 1 that it secured full ownership of Auburn Hills, Michigan-based Chrysler in a $4.35 billion deal that will be the biggest in the auto industry since Volkswagen AG agreed to combine with Porsche in 2009. The accord with Chrysler’s other owner was a step in Marchionne’s efforts since taking the helm at Fiat in 2004 to merge the Turin-based company with a competitor to challenge industry leaders Toyota Motor Corp. (7203), General Motors Co. (GM) and VW.

Any successor as CEO “should be an internal one,” Marchionne said at the briefing. Elkann and Marchionne discussed the need for candidates in a conversation yesterday during which they pledged not to repeat the hasty terms of Marchionne’s 2004 appointment, the CEO said.

In May, Elkann named executives such as Richard Tobin, now chief executive officer of Fiat’s truck and tractor affiliate CNH Industrial NV; Lorenzo Sistino, head of CNH’s Iveco trucks unit; Alfredo Altavilla, Fiat’s European chief; Mike Manley, head of the Jeep brand; and Cledorvino Belini, head of Fiat in Brazil, as managers who have been groomed by Marchionne and could eventually run the company.

Fiat rose as much as 1.9 percent and was trading up 0.5 percent at 6.75 euros as of 3:21 p.m. in Milan. The stock has gained 54 percent in the past 12 months, valuing the carmaker at 8.44 billion euros ($11.5 billion).

The merger that Marchionne is seeking for Turin-based Fiat and Chrysler would enable the manufacturers to pool funds and tighten cooperation between the Italian company’s Alfa Romeo, Lancia and Maserati brands and the Chrysler, Dodge and Jeep nameplates. Fiat is open to additional partnerships with other carmakers such as PSA Peugeot Citroen (UG) and Suzuki Motor Corp. (7269), Marchionne said.

Jean-Baptiste Thomas, a spokesman for Paris-based Peugeot, declined to comment.

Marchionne has said he favors a New York listing for the combined entity. Fiat’s board will look at the subject at the end of January during a planned discussion on the company’s structure, and a new listing for the merged manufacturer is technically possible in the second half of this year, he said today, without specifying a location.

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