Keith Naughton

Stories by Keith Naughton

  • 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...
  • 130910-naughton-things-tease

    '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...
  • The Blame Game

    It wasn't long after the World Trade Center had been toppled by a terrorist attack Tuesday morning that Osama Siblani received his first threatening phone call. "You had better pray to God that Arabs didn't have anything to do with this," hissed the unidentified caller, "or your ass will be next, Siblani." Siblani, editor of the Arab-American News in Dearborn, Mich., cursed at the caller and slammed down the phone. He would receive at least a dozen more calls throughout the day, many urging the native of Lebanon to "go back home."Now Siblani worries that Dearborn's large Arab population will be targeted for much worse than just phone threats. In the aftermath of the Oklahoma City bombing-before it was found to be an act of domestic terrorism-Arab-American businesses were burning and homes in Dearborn's Arab enclaves were vandalized. The windows of Siblani's newspaper office have been smashed, and his tires have been slashed after past terrorism attacks around the world. "There are...
  • The Growing Risks Of Fringe Lending

    Flip on the TV at 3 a.m. and you'll see how much banking has changed in the last decade. Slick announcers shouting "Bad credit? No problem!" entice once ignored, debt-laden consumers with the offer of easy credit and quick cash. Since 1995 there has been an explosion in loans to low-income consumers who have spotty credit histories. Banks hail these so-called subprime loans as the "democratization of debt," but it comes at a high cost to borrowers. Subprime loans charge between 10 percent and 24 percent interest rates and carry high fees. Those high interest rates make for fat profits, which is why the $300 billion subprime business has nearly quadrupled since 1995 and attracted the nation's biggest banks, including Citibank, Wells Fargo and, until last week, Bank of America. But critics accuse subprime lenders of preying on financially unsophisticated consumers, who now are struggling with their new debts as the economy slows. "I definitely worry about money more than ever," says...
  • The Split Personality Economy

    Listen to Tim Helton and Jim Hackett talk about the economy, and you might think they live in different countries. Helton and his wife, Michelle, just sold their home in Schaumburg, Ill., in a single day, for $184,000 ($2,000 more than the asking price), and bought a larger house for $245,000. Helton's job as a manager at a database company feels solid, so he's not worried about being the lone breadwinner for his family of four, carrying a bigger mortgage as well as $5,000 in credit-card debt. The economy, Helton says, is still humming along. "There's a lot of people spending money,'' he says.Don't tell that to Hackett. The CEO of Steelcase, the country's largest office-furniture maker, watched his profits plunge by 51 percent in the first quarter, forcing the executive to lay off 10 percent of his work force--1,450 people. He worries that another round of layoffs of as many as 500 workers may be necessary in the fall. "Business has not picked up enough yet to take away that threat,...
  • 'Big Dude' Gets Profiled

    It was one of the coolest moments of his life. Abdullah Al-Arian was finally old enough to vote for president, and George W. Bush, on a campaign hop through Tampa, Fla., had singled him out in the crowd. Bush called the college student "Big Dude" and posed for pictures with his Arab-American family--an ethnic group politicians have long ignored. Al-Arian had registered Democratic, but he was so encouraged by Bush's outreach to the Arab community that he voted for him and took a job this summer as a congressional intern. But his optimism faded his first week in Washington, D.C. During a meeting with Muslim leaders on the president's faith-based initiative last month, Al-Arian was ejected from a White House annex by a security guard, on an erroneous tip that the student had terrorist connections. "I thought with this election we were finally gaining ground," says Al-Arian, 20, a poli-sci major at Duke. "The next thing I know, I'm being profiled by the Secret Service."Al-Arian is not...
  • Car Phones: Dialing &Amp; Driving Don't Mix

    Driving down Manhattan's Ninth Avenue last week, Ray Payano was hard at work. With a client talking to him on Payano's handheld mobile phone and his boss weighing in on the car's speakerphone, the 28-year-old computer consultant was in the middle of a three-way conference call when an e-mail popped up on his mobile-phone screen. He glanced at the message, and then almost hit a car in front and one to his side. He recovered, but then another driver, also on his phone, veered dangerously close to Payano's Pontiac Bonneville. "I got off the phone and said, 'This is ridiculous','' recalls Payano.New York lawmakers couldn't agree more. Last week the state Assembly passed the nation's first statewide law banning the use of handheld mobile phones while driving. The law is likely to provide some momentum to similar bills pending in 38 other states. Such bans may reduce some of the risk posed by multitasking drivers, but mobile phones are only part of a larger problem. With automakers adding...
  • Big Blowout

    When congressman Billy Tauzin opened hearings into unsafe Firestone tires on Ford Explorers last year, he boasted that he was a proud owner of an Explorer. These days the Louisiana Republican is driving a Chevy Suburban, and last week he shot a hole in Ford's latest recall of 13 million Firestone tires. He charged that Ford was replacing the suspect Firestones with tires that had an even worse safety record. Ford CEO Jacques Nasser promised to look into Tauzin's allegations but warned: "Let's not scare the American public."It's a little late for that. After last week's hearing, consumers should have whiplash from all the confusing charges and countercharges between Ford and Firestone. Federal safety investigators now say they will review Firestone's allegations against the Explorer's stability. Bridgestone/Firestone CEO John Lampe testified that the SUV should "pull over, not roll over," after its tires shred on the highway. Congressional sources say Ford might yank some of the...
  • The Confused Economy: Is The Business Cycle Dying

    Something strange happened as recession threatened the American heartland. From their perch high in the gleaming glass towers of the Renaissance Center overlooking the decay of downtown Detroit, Michigan, the top executives of General Motors saw trouble approaching. Having invested billions in new computers and information technology during the boom of the late '90s, GM spotted the coming downturn in weak sales reports from the field. "Undoubtedly, it helped," says GM chief economist Mustafa Mohatarem. "We get much better information more quickly and we can react much more quickly... We could see the slowdown coming."And act. General Motors and the other big car companies slashed production by more than 20 percent, laid off tens of thousands and introduced the biggest discounts and givebacks in history. True, all the discounts cut sharply into profits, but if sales continue at the current pace they will reach 17 million vehicles--second only to the U.S. record set just last year....
  • Fixing Cadillac

    A few years ago, Ron Zarrella, a rising star at Bausch & Lomb, decided to reward himself with an expensive new car. He took several models out for a test drive, including a Cadillac Seville. But it lacked a certain panache and Zarrella instead went with a BMW 850. "I like performance cars and the BMW was just a bit better," he says. Today, Zarrella drives Cadillacs. He doesn't have a choice. He is now president of General Motors North America, maker of Cadillac. His assignment? Persuading fellow baby boomers to ditch their Beemers and Benzes and go home with a Caddy instead. "It's a huge job," he admits, "but we need to make Cadillac cool again." ...
  • Daimler Thinks Small

    While she was vacationing in Italy last year, Judy Law stumbled on a curious thing: a tiny, Popsicle-blue, bubble-topped vehicle, wedged between two large cars in a medieval back alley. "Oh, it's adorable," thought Law, an Atherton, Calif., real- estate agent. Actually, it's Smart--DaimlerChrysler's Smart, the world's smallest car and Europe's latest rage. Soon Law noticed Smarts navigating the narrowest passageways and squeezing nose-first into impossibly small parking spaces. "I don't know if I'd want to drive it back home next to all those SUVs," she says. "But it'd come in handy for shopping in San Francisco." ...
  • Try Lounging In Leather

    It's the end of a busy workday, and the 4:45 p.m. flight from Rochester, N.Y., to New York City is crammed with weary business travelers. But this is no cattle car in the sky. Passengers relax in wide leather seats and channel-surf on live satellite TVs. The silver-haired flight attendant handing out bags of blue potato chips actually turns out to be the airline's CEO. "Don't look at how the market ended," he warns one businessman. "Just tune in to the 'I Love Lucy' reruns." Best of all, a round-trip ticket on this luxurious new jet cost only $98. Is this some kind of blue-sky fantasy? No. This is JetBlue, a new discount airline flying out of New York's Kennedy Airport. ...
  • Fallout For The Bottom Line

    It didn't take long for American business to suffer some collateral damage from the spy-plane standoff. It came last Tuesday when Prescott Bush, uncle of the president, arrived at the elegant Fangshan restaurant in Beijing for a banquet hosted by China's vice minister of civil affairs. Bush, chairman of the U.S.-China Chamber of Commerce, had just arrived in the country as part of an American business delegation accompanying United Airlines' inaugural flight from Chicago to Beijing. But instead of a lavish celebration, Bush and his dignitaries were snubbed: the Chinese vice minister didn't show up to host the dinner because tensions were escalating over the spy-plane incident. "What horrible timing," said Mai Hoang, executive director of the U.S.-China Chamber. ...
  • Who Let The Well-Dressed Dogs In?

    Once the hot house for low-priced fashions, Old Navy is now trying to get out of the retailing doghouse by introducing a line of "canine couture." America's 62 million dogs now have a place to run to for collar-and-leash sets ($6.50) that match their owners' Capri pants. Or Fido can slip into an Old Navy sleeveless T shirt ($6.50) and wrap up in a blue floral bandanna ($3.50). The retailer promises its new line will have man's best friend looking like "a million barks." ...
  • A New King Of The Road

    Good news for the bigger-is-better crowd: here comes the Unimog mega-SUV from DaimlerChrysler. Three feet taller than a Chevy Suburban and a foot longer than a Ford Excursion, the Unimog weighs in at more than six tons. Live large with optional leather seats, walnut trim and seven-speaker stereo. Forget "road hog,'' the Unimog is a motorized mastodon with a price tag--up to $150,000--to match. "This thing makes the Hummer look anemic," says a DaimlerChrysler spokesman. ...
  • Billionaire Backlash

    The rich may be different, but they certainly aren't indifferent. Banking heiress and art patron Agnes Gund irritated some of her wealthy friends last week by going public with her opposition to President Bush's plan to repeal the estate tax. Many well-heeled Americans are eager to do away with the tax that allows the government to claim more than half of their wealth when they die. But Gund is part of a group of nearly 100 millionaires and billionaires who believe abolishing the tax would have a devastating effect on America by shifting the tax burden from the nation's richest 2 percent onto the poor and the middle class. "I've had a storm of people come at me saying, 'How could you be for this?' " says Gund. "They say, 'You're so weird'."Gund and her allies, including investor George Soros and actor Paul Newman, are part of a gold-plated petition drive by rich Americans who advocate that the government continue taxing their estates by up to 55 percent. The campaign is being...
  • Life In The Breakdown Lane

    The job isn't getting any easier for Dieter Zetsche. Ever since November, when Stuttgart-based DaimlerChrysler sent him to Detroit as the Chrysler Group's new CEO, the former Mercedes executive has had his hands full. The U.S. unit lost $1.7 billion in the last half of 2000 alone, and industry analysts say the worst isn't over yet. Wall Street expects losses to exceed $2 billion this year. In an interview last week, Zetsche acknowledged that the company is facing a major overhaul. "This cannot be fixed in one month," he said, with massive understatement.In fact, Chrysler is about to open another barrel of red ink: company sources have told NEWSWEEK the automaker is planning to declare a writeoff of between $2 billion and $3 billion in restructuring costs for plant closings, early retirements and severance packages for laid-off workers. Zetsche declined to confirm the figure, but he admits Chrysler's problems are even worse than he had guessed at first. He told NEWSWEEK: "There were...
  • BUSH'S MONEY POSSE

    The news took George W. Bush completely by surprise. Hunkered down in an Austin, Texas, hotel ballroom with a group of top CEOs last Wednesday, the president-elect received word that Federal Reserve chairman Alan Greenspan had just cut interest rates by half a point. Bush smiled broadly at his top economic adviser, Larry Lindsey, who was sitting nearby. The mood in the room lifted. At the meeting, Bush had listened to the business leaders' concerns about the nation's softening economy. Now, it seemed, Greenspan had delivered just the kind of aggressive quick boost they'd been hoping for. The stock market celebrated; Nasdaq posted its largest one-day gain ever. General Electric chairman Jack Welch and the other CEOs at the table raised their water glasses in an impromptu toast to the Fed chief.The exuberance, as Greenspan might put it, didn't last long. By Friday, stocks were once again diving, and economists continued their gloomy predictions of a coming economic downturn. The...