Keith Naughton

Stories by Keith Naughton

  • Hip To Be Square

    When Honda's engineers set out to create hot wheels for the under-25 crowd, they didn't just set up focus groups, they visited kids in their natural habitat: the X Games. But they didn't find inspiration at the skateboard half-pipe. Instead, they noticed a long line of young men waiting to get into the Mountain Dew Airstream trailer. Convinced the answer they were looking for must be inside the long silver tube, the Honda gearheads piled in, only to find a bunch of boys lounging on couches, playing video- games and sucking down Dew. It turns out all the young dudes, once they've finished going vertical on their boards, just want to hang out in a big party wagon. So the Honda gang rushed back to their motel room and sketched out a big boxy van with hosable rubber floors, seats that fold into a bed and a removable glass roof. To Honda, a car that keeps the good times rolling was the perfect vehicle to reach out to the next big driving force: Generation Y. Explains Tim Benner, leader...
  • Lending Spree

    Last week marked the start of the 2003 model year, and the hottest offering on the showroom floor remains zero percent financing. With sales stalling, GM, Ford and Chrysler rolled out shiny zero percent deals on their newest models. GM is offering free-money five-year loans on popular cars like the '03 Pontiac Vibe. And GM kicks in an extra $500 rebate on top of the zero percent loans for slower sellers like its minivans. At Ford, you can get an '03 Mustang and a slew of other models with zero percent--but just on three-year loans. Only Ford's Windstar minivan comes with zero on a five-year note. Chrysler matches that with five-year zero percent loans on its popular minivans. Only the foreign auto- makers are resisting zero on '03s. Still, the array of deals this early in a new car-model year brings welcome new meaning to the phrase "sticker shock."
  • 'Angry Cat' On The Prowl

    What was I thinking? On a Saturday-morning drive to Costco with my 5-year-old strapped into his car seat, I threw the new Honda Accord hard into a turn and floored it. Now, I know from Honda Accords. Like the millions of American suburbanites who've made the Accord a perennial best seller, I've been happily driving these sensible sedans for years. But this new model lurched forward with such neck-snapping speed, I had to slam on the brakes to avoid ramming into the SUV in front of me. ("Dad, you're speeding!" my too-observant son admonished from the back seat.) With its redesign of the Accord, Honda achieved only mixed success trying to make it look racy. But with a 240-horsepower V6 and sports-car handling, it now definitely drives like a racer. And while the angry-cat styling doesn't move me, the Bauhaus cockpit is stunning. The backlit gauges glow like a Lexus, and the satin-nickel dash feels like an Audi. Not bad for a car that starts at $16,260 with a four-cylinder engine. (The...
  • The Perk Wars

    More accustomed to being praised than pilloried, Jack Welch tried to make the uproar over his perks-for-life retirement deal go away last week. When his wife's divorce papers this month laid bare the lavish lifestyle General Electric was financing for its former chief, Welch became the latest CEO in the cross hairs. Rather than doling out his storied advice from the gut, Welch was taking one in the gut, being compared to all the scoundrels at Enron and WorldCom. So Welch decided to give it all back (though he'll keep his $9 million annual pension). He'll write GE a check every year for about $2.5 million for all the stuff he was getting for free--the $15 million Manhattan penthouse, the 737s, the helicopter, the limo. But in a combative column in The Wall Street Journal, Welch continued to insist the deal wasn't "excessive." He just didn't want GE's reputation dragged down and to "look like someone who's out of touch in today's post-Enron world."Despite Welch's damage control, the...
  • More Than Zero

    Jim Holton was not in the market for a new car. But last month he bought a $38,000 GMC Yukon on a five-year, zero-percent loan. "It was all I could think about,'' says the contractor. "I had to buy this.''Detroit rolled out zero percent to jump-start the car market after September 11, but the come-on is still packing 'em in. Last month car sales roared ahead to set a record. GM, the first to offer zero-percent financing after the attacks, was assailed for capitalizing on the tragedy and steering the industry into "profitless prosperity.'' Now GM is hailed as the savior of the economy. And GM's prosperity is anything but profitless. Last week GM boosted its earnings forecasts. "What's good for GM is still good for the U.S. economy,'' says GM's chief market analyst, Paul Ballew. Not so fast, says Ford. Though it has followed GM, Ford worries Detroit is feeding a bad habit. "Zero percent is like dope, and each time the addict wants more," says Ford market analyst George Pipas. "But it...
  • Electric Avenue

    My gasoline-and-electric-powered Civic Hybrid died in traffic. Repeatedly. On purpose. Turns out the gas-stingy Hybrid shuts off when it comes to a stop. But as soon as I pressed the accelerator, Honda's new high-tech marvel sprang to life, its electric motor and tiny four-cylinder engine humming quietly and air conditioning pouring from the vents. (Don't want to swelter in a standstill? You can override the AC shutdown--but you'll use more gas.) Along with nifty ice-blue gauges that show when the electric motor assists the gas engine, it's the only way to tell you're not driving an ordinary Civic. You never plug in the car--just gas it and go, go, go. After 300 miles I'd burned only half a tank. But it isn't cheap being green. The Civic Hybrid costs $2,300 more than a comparable conventional Civic and $7,740 more than the cheapest model. With today's low gas prices, it'd take 10 years to get that money back at the pump.Tip: This green car is about saving the planet, not greenbacks.
  • More Head Wind For Martha

    Even when Martha Stewart cooperates with the insider-trading probe that's dogged her all summer, she still manages to appear less than forthcoming. Last week her lawyers delivered more than 1,000 pages of e-mails, phone records and other documents to congressional investigators demanding the domestic diva clear up discrepancies in her story about her ImClone stock sale. Stewart met the deadline for the document dump with an hour to spare. The only problem: investigators couldn't read portions of her documents because they were blacked out. Stewart's people contended the blacked-out sections "had nothing to do with ImClone." But investigators had run out of patience. "Her credibility has been stretched pretty thin," says congressional spokesman Ken Johnson. Late last week Martha's lawyers appeased investigators a bit by returning to Capitol Hill with unedited documents.Stewart herself may be trudging up to Capitol Hill soon. Congressional investigators, annoyed that she continues to...
  • Autos: Deals On Wheels

    Forget about bargain hunting in the wreckage of the stock market. The best deals these days are on new-car lots. That might sound like some car-dealer come-on, but as the auto industry closes out its 2002 model year, rebates, cut-rate financing and lease deals have never been better. Car sales remained strong during the recession thanks to the zero percent financing offers that began last fall, and buyers are hooked: when Detroit tried to back away from cut-rate loans this spring, sales tanked. So the Big Three brought back zero percent and dialed up rebates to record levels. In the first half of August, auto incentives averaged $3,200 per car, up 26 percent from last year, according to CNW Marketing Research. "This is a much better fire sale than you usually have at the end of a model year," says CNW analyst Art Spinella. "It's not a question of getting a good deal; it's whether you can get a great deal."The best way to move from good to great is to look beyond the nationally...
  • Honda's Midlife Makeover

    When Charlie Baker set out two years ago to redesign the Honda Accord, America's favorite family car, he spent many boring hours listening in on consumer focus groups. As the Honda chief engineer peered through a one-way mirror in a California research lab, he heard owners of his chief competitor, the Toyota Camry, drone on about their car as if it were a dependable household appliance. Drivers of his beloved Accord dutifully explained that they bought out of habit. But when the VW Passat owners appeared on the other side of the mirror, sporting piercings and goatees, they gushed about the Passat's sleek, industrial design and how cool they felt tooling around in the car. Stunned, Baker turned to a colleague and said: "Fifteen years ago, these were our buyers."Honda, like many of its baby-boomer customers, is suffering a midlife crisis. And in September it will try to recapture its lost youth by unveiling a dramatic makeover of its flagship model, the Accord. Instead of trying to...
  • The Mighty Fall

    Times are tough enough for Steve Miller, the chief executive who's trying to lead troubled Bethlehem Steel out of bankruptcy. But he never thought the rapidly expanding rogues' gallery of CEOs would make his job even harder. Last month Miller appeared before an angry group of workers at Bethlehem's mill in Steelton, Pa., to explain why he might have to eliminate their pensions. As he urged workers to "stay on board" through this financial crisis, one man stood and shouted out: "Mr. Miller, the CEO of Enron told his people to hang in there and all he did was feather his own nest. How are you any different?" Stunned, Miller, a veteran of corporate turnarounds, said he didn't negotiate a golden parachute or big stock deal when he became Bethlehem's CEO last year. "I have no financial incentive to kid you about anything," he said. "But at the end of the day, you'll have to make up your own mind if you trust me."But trust in CEOs has fallen faster than the stock market in recent months....
  • More 'Ridiculousness'

    Wielding a big knife and a look of determination, Martha Stewart kept her head down while chopping cabbage on CBS's "The Early Show" last week. But even in her weekly cooking segment, Martha couldn't escape the insider-trading scandal that's tarnished her homemaking empire. CBS brass warned her beforehand that she had to address the growing controversy if she wanted to come on "The Early Show" to whip up her summer salads. Stewart, after consulting her lawyers, agreed to take questions, but only if she didn't have to leave her kitchen to sit for a separate interview. So with Martha whacking away at the chopping block, anchor Jane Clayson laid out the worsening crisis and attempted to get the domestic diva to explain herself. "This will all be resolved in the very near future and I will be exonerated of any ridiculousness," Martha said, rolling her eyes and resuming her cabbage shredding. But Clayson, usually Martha's kitchen helper, continued to grill her. Exasperated, Martha huffed...
  • Road Test: Backroads Bully

    I'm aiming the hulking new Hummer H2 SUV straight into a yawning hole in the earth. As I go vertical, I see only mud through the windshield. I'm certain I'm about to be planted six feet under this ridiculous off-road course in Indiana. But as I slam into the ground, the H2 roars and crawls out like an angry grizzly. In this moment of weak-kneed relief, I realize the $49,000 H2 is no poor relation of the $103,000 Hummer H1 of gulf war fame. The H2--built on the same platform used in the Chevy Silverado--is the real deal. It's an unrepentant road hog that plows through anything in its path. All that 'tude will make the H2 the hip-hoppers' new gotta-have SUV. The rest of us, though, will enjoy how civilized this quiet, smooth-riding Hummer is on the open road.Tip:Get off the parkway at the next exit and climb a mountain in this beast.
  • Martha's Tabloid Dish

    As Joelle Kheel riffled through a stack of Martha Stewart pastel bedding at a Kmart in Manhattan last week, she became annoyed. "I don't know why I'm even looking at her products," huffed the retired actress. Kheel had heard Stewart was linked to the insider-stock-trading scandal at ImClone, and she isn't buying the domestic doyenne's claim of innocence. To Kheel, this is proof that Martha is not who she appears to be. "She has this pearly white name," says Kheel, shoving a Martha mattress pad back onto the shelf, "but something about her does not ring true."America has always had a love-hate relationship with Martha Stewart, with her maddeningly perfect hand-carved ice wreaths and Scandinavian cloudberry cakes. But now the multimedia domestic goddess is serving up a tasty new dish the tabloids are devouring. Here's the recipe for what the New York Post calls "Martha's Stewing." First, whip in the Wall Street scandal du jour: the arrest last week of Martha's old pal, former ImClone...
  • A Dash Of Style

    When office-furniture designer John Kaloustian first saw the interior of the Audi TT, he was sold. He couldn't resist the thick rawhide stitching on the tan leather seats. "Those baseball-glove seats were a must-have," he says. But Kaloustian has learned that it doesn't take a designer's eye to appreciate the TT's Bauhaus interior, with its brushed-aluminum gauges and riveted air vents. Wherever he parks his $37,000 roadster with the top down, it draws a crowd. The only problem: when admirers start fingering the upholstery, they set off the alarm. "It makes me a little nervous," says Kaloustian. "I feel like I'm going to get carjacked."Forget about looking under the hood. These days, interior decorating counts for more than horsepower. Drab plastic dashboards with a few cup holders just won't do. Auto-interior designers, once the Rodney Dangerfields of the auto industry, are now crafting sleek postmodern dashboards with metallic finishes and clocks that look like expensive jewelry....
  • Road Test | Mini Cooper : Mine Is Smaller!

    Idling at a stoplight in Detroit, you appreciate just how tiny the Mini Cooper is. A hulking Excursion SUV hovers behind me, its grill filling my rearview mirror. The Mini, just 12 feet long, is the smallest car on the road. Yet, the Excursion's helmsman gives thumbs-up as he rumbles on by. It seems drivers of the biggest rigs express the most Mini envy. The Mini is more than fun to look at; it's fun to drive. Unlike the Mini's puny European predecessor, which never fit America's big-car culture, this reinvented runabout holds its own. Mini's parent, BMW, retained the classic bulldog styling, but provided two extra feet in length, six airbags and a heater that actually works. Best of all, the original's buckboard ride has given way to taut Teutonic handling. My only gripe: the base model feels sluggish. A zippier 163-horsepower $19,850 Cooper S model is coming this summer. Driving that one will be living large. The Tip: Get in line now because demand is high.
  • Bargains Keep Rolling

    The dire predictions rattled through Detroit last fall. Sure, car sales soared thanks to the zero percent financing bonanza automakers unleashed in the wake of September 11, but it couldn't last. They'd definitely slump this year. Yet buyers keep coming as automakers keep pouring on discounts. This week the Big Three will announce new rebates of more than $2,000 per car, and they'll continue the zero percent financing. But look closely and you'll see the deals have gotten stingier. Rebates on Detroit's models now average $2,200, down from $2,800 in October, and zero percent financing is available only on three-year loans, rather than more popular five-year loans. The reason for the pullback: the deals decimated carmakers' profits.Even with the decline in rebates, cars are still the most affordable they've been in two decades, says David Littmann of Comerica Bank. But cut-rate financing may not give the lowest monthly payment. It's now cheaper to take the cash rebate--$2,002 from GM...
  • Mini-Me: Bmw's Cheeky Strategy

    Slide behind the wheel of the new Mini Cooper microcar, and you'll trip back to swinging London. This is, after all, the successor to the car that helped name the miniskirt. John Lennon and Paul McCartney both owned Minis when they wrote "Baby, You Can Drive My Car." So where will it make its first star turn? Where else, baby? Austin Powers will drive a shagadelic Mini in his upcoming movie.The buzz surrounding the Mini is anything but minimalist. And BMW, Mini's corporate parent, couldn't be happier. But unlike Mercedes, BMW isn't slapping its name on its cheapest model. "Please don't call us BMW Mini," gasps Jack Pitney, Mini's general manager. When it goes on sale next week, Mini's 70 U.S. dealers will already have long waiting lists, and some will charge thousands over its $16,850 starting price. Mini's Web site has been clogged with more than 50,000 visitors expressing interest in buying the car. Its bulldog styling and distinctive white top are turning heads. (For about an...
  • DUDE WHERE'S MY BENZ?

    When Maureen Totaro decided to buy her daughter a Mercedes for her 16th birthday, she worried what the neighbors would think. "I was embarrassed she'd look like a spoiled rich kid," she confesses. So before she turned over the keys, Totaro phoned the parents of several of her daughter's friends. She explained that the C230 model she bought Marissa starts at only $25,000. And she insisted she was buying it for its eight airbags. But the first time Marissa wheeled her metallic blue Benz into the student lot of her Sherman Oaks, Calif., high school, the other kids were more impressed by the silver star on the grille. "They were like, 'Dude, you've got to take me for a ride'," Marissa says.Move over, rich guys. The kid bagging your groceries is now driving your wheels of fortune. It's not just Mercedes with its hatchback (the only Benz to come with cloth upholstery). In a quest for younger drivers and higher sales, many other stately luxury-car makers are rolling out models priced under...
  • Roots Gets Rad

    Not since Monica has a beret caused such frenzy. After Team USA donned berets and sleek midnight blue jackets in the Winter Olympics opening ceremonies, American shoppers were clamoring to find the artsy chapeau made by Roots, official outfitter of America's Olympians. Last week 300 shoppers lined up outside the Roots shop in Park City. At the Beverly Hills store, Zee Spezzano elbowed through the crowd to snatch the last Olympic baseball cap off a mannequin. But she was still disappointed. "I'm going to come here every day until I get the beret,'' she insisted. ...
  • Japan Gears Up

    It was Chrysler's coming-out party for its most important new model. Surrounded by a throng of reporters at the opening day of the Detroit Auto Show, the Chrysler brass touted the "breakthrough" styling of the sleek Pacifica, a combo minivan-SUV-station wagon. But as Chrysler execs invited members of the crowd to come up onstage and sit in its latest creation, Shiro Nakamura, chief designer for Nissan, elbowed his way past hundreds of reporters to be the first to check out the Pacifica's interior. As he emerged from the car, relinquishing his seat to a line of eager journalists, Nakamura explained why he doesn't let anyone get in his way when he's scouting the Detroit competition. "You have to know who is doing what,'' he said. "Our goal is to capture the customer.'' ...
  • Crisis At Kmart: Not A Good Thing

    Growing up in a big family, Maura Gavin was devoted to the "BlueLight Special." Every week she and her five siblings would troop to Kmart with mom to hunt down deals. "I must have heard 'Attention, Kmart shoppers' a thousand times," recalls Gavin, 37, of Ohio. Now, however, Gavin shops Wal-Mart for low prices and Target for high style. "Kmart's stores are yucky; they don't have anything in stock, and what they do have is overpriced," she says. "Kmart used to be one-stop shopping, now it's no-stop shopping." ...
  • Another Auto Exec Heads For The Hills

    When Detroit faces tough times moving the metal, top executives often start heading for the exits.Just two weeks after Jacques Nasser lost his job as Ford's CEO, Ron Zarrella today announced he is resigning as head of General Motor's North American car business to become CEO of Bausch & Lomb, the eye-care company he came to GM from seven years ago. Zarrella's departure comes just three months after GM CEO Rick Wagoner recruited the highly regarded former Chrysler president Bob Lutz to become the General's product czar. Now Lutz will take over Zarrella's job running GM's American car business--the largest piece of the largest company in the world. And GM will weather the coming economic storm with a traditional "car guy" at the wheel, rather than a "brand management" guru who never fit comfortably into Detroit's insular culture. "The reason ['m leaving]is pretty simple," Zarrella told reporters in a conference call today. "I wanted to be a CEO and I wasn't going to be a CEO here...
  • Hit The Road, Jacques

    Bill Ford began preparing for the change nearly a month ago. Ford Motor Co. had been floundering. Its brand name had been sullied by the Firestone scandal. Its vehicle-quality rankings had plummeted. And dealers and employees had become fed up with its chief executive, Jacques Nasser. Nasser, an intense Aussie with a fondness for bold management experiments, had made acquisitions to diversify the carmaker, bought dealerships to toy with improvements and created a harsh employee-grading system. But while Nasser implemented his grand vision, sales fell and problems festered. So last Monday chairman Ford fired him, taking over as chief executive himself. "I saw us get off track in a number of ways, and people were increasingly saying to me, 'How could you let this happen?' " Ford recalled to NEWSWEEK the next afternoon, as Nasser's adjoining office sat dark and empty. "It just became evident we had to make this move."The firing is the latest episode at an institution whose history...
  • 'This Is Not A Time For Grand Visions'

    The end of Jacques Nasser's 34-month tenure as CEO of Ford Motor Co. came quietly and with no acrimony, according to the man who last week fired him and replaced him as the chief executive officer, Ford Chairman William Clay Ford Jr. "It was time to move on," says Ford simply. Indeed, Nasser's grand crusade to transform Ford into a New Economy powerhouse was in shambles. Sales, profits and quality were sinking fast, and dealers and employees were calling for Nasser's head.Ironicall, Nasser's larger-than-life persona no longer worked at Ford, a company founded and run by some of the biggest industrial titans of the 20th century. "For many, many years--probably all the way back to Henry Ford I and you can fast forward it right on through--there's always been a cult of personality that swirled around Ford Motor Co.," says Bill Ford, Henry's great-grandson and the first family member to take the wheel in two decades. "But this company is bigger than any individual and it's proven that...
  • 'Lock And Download'

    Terrorists scored a direct hit on the American economy, sending it spiraling into recession. The nation's defense contractors are a rare bright spot, with the stocks of many soaring by nearly 30 percent in the past month. Analysts are predicting that the defense budget will increase 66 percent to $500 billion by 2005. But the military build-up won't follow the old formula of cranking up production of tanks and battleships. In the war against terrorists, it's software engineers who are the architects of the Arsenal of Democracy. In a flurry of phone calls since the attacks, military procurement officers are asking contractors to accelerate delivery of high-tech spy devices, deadly satellite-guided weapons and sophisticated communications systems. Military suppliers call it "network-centric warfare." The goal: to provide equipment that can find and destroy the enemy in a matter of minutes, rather than hours or days. And the companies that provide such technologies will ultimately win...
  • Is Michigan A Terror Stronghold?

    With one of the largest populations of Arabs outside the Middle East, Detroit and its surrounding suburbs have become fertile ground for terrorism fund-raising and recruiting. "The Detroit/Dearborn area is a major financial support center for many Mideast terrorist groups," according to a Michigan State Police report obtained by NEWSWEEK. "Southeast Michigan is known as a lucrative recruiting area and potential support base for international terrorist groups. It is also conceivable that 'sleeper cells' may be located in that area of the state."The Michigan State Police submitted the "Three-Year Statewide Domestic Preparedness Strategy" report to the U.S. Justice Department earlier this month, to help support a request for federal funds to fight terrorism in Michigan. A police spokesman says the report "was not intended for public distribution."Almost every major terrorist organization has operatives in Michigan, according to the report. Citing information received from the Detroit...
  • Periscope

    The Feds couldn't have sounded more effusive at a Justice Department photo op last week with state and local police chiefs to tout cooperation in the war on terrorism. With more than two dozen local chiefs standing behind him, FBI Director Robert Mueller hailed a "spirit of teamwork and cooperation" that he called "truly remarkable." Attorney General John Ashcroft praised the locals as "our partners," adding that he was "honored to stand with you." But behind the scenes in the war on terrorism, some local cops are seething. The key complaint: the FBI has cut them out of almost every aspect of the probe and refused to share vital intelligence about possible terrorist suspects in their communities. "They're not sharing anything with anybody," says Michael Chitwood, the Portland, Maine, police chief, whose city has been a focus of the probe since it was learned that two of the hijackers, suspected ringleader Mohamed Atta and Abdulaziz Alomari, made a last-minute trip there on Sept. 10....
  • Patriotism Vs. Ethnic Pride: An American Dilemma

    Hasson Awadh grew up in a part of the world scarred by terrorism, but he never stared down the barrel of a rifle until last week. At 2:25 a.m. last Wednesday, a man wearing a white rubber mask and a black hooded coat walked into Awadh's Marathon gas station in Gary, Ind., and, with no evident purpose other than vengeance, opened fire with a high-powered assault rifle. The 43-year-old native of Yemen dived for cover behind his cash register, as a fusillade of bullets pierced the one-inch-thick supposedly bulletproof glass he stood behind. Awadh crawled to a back room and prayed to Allah to spare his life. "I still hear the sound of the bullets," says Awadh, whose assailant is still at large. "That scary mask. It is still in front of my eyes."As America reels from last week's deadly terrorist attacks, Muslims and Arab-Americans are experiencing an isolating terror all their own. In Washington, D.C., Muslim women have had hijab scarves snatched from their heads. A mosque in San...
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    'I Saw Things No One Should Ever See'

    These are dispatches from the front. Schoolteachers and firefighters, parents and police, trauma surgeons and tourists—they all struggled to explain the inexplicable. Here are their voices.
  • Michigan To Prosecute Price Gouging

    Beyond the panic in the streets of New York city, there was panic at the gas pump in some cities Tuesday. Motorists flooded to gas stations in the mistaken belief that the terrorist attacks on America would lead to a fuel shortage. Some gas station owners took advantage of the situation by hiking prices to above $5 a gallon.At one Sunoco station in Cleveland, cars snaked down the street waiting to pay $4 a gallon to top off their tanks. Police, however, shut down the station Wednesday morning, charging the owner with price gouging. Cleveland Police dispatched cars to several gas stations "in case fights break out," a dispatcher said.In Michigan, Attorney General Jennifer Granholm is filing charges against as many as eight gas stations for price gouging. Granholm was deluged with nearly 500 consumer complaints about gas prices that reached as high as $6.75 at one Jackson, Mich., station. Several consumers reported paying between $4 and $5 per gallon for gasoline that at the beginning...