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Episode 315 – Toyota Halts U.S. Sales, China May Tax Emissions, Crustaceans Improve Car Odor

January 27th, 2010 at 12:00pm

Runtime7:21

Toyota is suspending sales and production of eight of its top-selling models in the U.S. The Chinese government is considering taxing vehicle emissions. Researchers are using crabs and shrimp to create odor-repellent textiles for cars. All that and more, plus John answers viewer questions about Delphi and Mitsubishi in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Toyota stops most of its sales and production in the U.S. China will start taxing emissions. And shrimp and lobsters can make your car smell good. It’s true!

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, January 27, 2010. And now, the news.

Well, no doubt you’ve heard the news that’s all over the media today. Toyota is suspending sales and production of eight of its top-selling models (subscription required) that account for over half the company’s volume, all related to its unintended acceleration problem. This one is not related to the floor mats. The Wall Street Journal reports it has to do with the friction lever on the gas pedal that needs to be coated with a different material. Toyota is closing five of its assembly plants in the U.S. and Canada, probably for a week or so to get the fix in place. Even so, this is going to hurt the company’s dealers and its suppliers.

This unprecedented action reminds me of when Tylenol pulled all its capsules off shelves after someone was poisoning them with cyanide. That’s when the company introduced tamper-proof containers, which assured the public that its products were safe. Toyota, which built its reputation around its quality, clearly saw that its reputation was in danger of being ruined, and decided to take drastic action.

Some people are making an issue of the fact that all the vehicles being recalled are mostly made in America, and that this casts aspersions on American quality. But that ignores the fact that this problem first surfaced in Europe with cars not made in the U.S. It also ignores other recalls that have plagued the automaker in the last few years, including in Japan.

The Chinese government has been pushing its citizens to go “green” with their vehicle purchases with tax incentives and now they may be giving them another reason to do so. According to Gasgoo, the government is considering taxing vehicle emissions. Nothing is official yet, but larger vehicles would be taxed higher than smaller ones and citizens would also be taxed on how much they drive.

Fiat announced it will stop production for two weeks. According to the AFP, starting in late February, production will be halted in Italy, temporarily laying off 30,000 workers. The company said orders for this month were even lower than orders from last January and needed to adjust production to meet demand. The company reported a net loss last year and only expects to make a profit this year as long as European governments continue “cash-for-clunkers” schemes.

Sure looks like the Saab saga is finished. Yesterday GM announced that it reached a binding agreement with boutique Dutch automaker, Spyker Cars, for the sale of the Swedish carmaker. As part of the agreement, Spyker will form a new company called Saab Spyker Automobiles. Right now the Swedish government is reviewing the transaction and the company’s request for financing from the European Investment Bank. If all goes smoothly, the deal could be finalized by the middle of next month.

This story is wacky! Ward’s reports that researchers at the Royal Melbourne Institute of Technology University in Australia are using crabs and shrimp to create odor-repellent textiles for cars (subscription required). Apparently the exoskeletons of crustaceans contain a natural bipolymer called chitosan, which scientists say mixes very well with fragrances, repels stains and has excellent antimicrobial properties. Crustacean-based fabric treatments aren’t on the market yet, but researchers are fine tuning the formula and say they aren’t far from getting it to market.

Coming up next, it’s time for You Said It!

And now it’s time for some of your feedback.

This is “You Said It!”

Pavilian1985 wrote in to ask, “Why doesn’t GM want to keep the Delphi plants? Wouldn’t keeping them in the first place have saved GM a ton of headaches over the last 10 years?”

Pavilian, automakers have found that with most components, they can get the cheapest prices from suppliers who sell to all automakers because they have the most economy of scale. It’s very hard for suppliers that belong to one car company to sell to another car company. That’s why GM spun off Delphi. The problem is that Delphi was saddled with the same legacy costs as GM, with labor rates twice as high as its competitors, and it couldn’t compete.

Dcars from Buffalo, New York, is wondering, “What’s the deal with Mitsu? I rarely see a recent Mitsubishi on our roads. How are they still in business, government bailout?”

Dcars, Mitsubishi Motors is a subsidiary of Mitsubishi Heavy Industry, a gigantic industrial conglomerate in Japan. Pride, if nothing else, is making the parent company bail out its automotive operations until they get their feet back on the ground. But you’ve got to wonder how long they can hold on. Mitsubishi has been in a free fall for years. They only sold a little over 50,000 vehicles in the American market last year and that is unsustainable for the company.

The ever vigilant Pedro Fernandez wrote in to ask, “What’s up with the Chinese tires? If they’re dangerous, then just ban them, if not, then is this a precursor to a tariff on Chinese cars, which will them make them about the same price as the other brands sold here?”

Pedro, it’s not a question of safety but of protection. The International Trade Commission found that that the sudden surge in sales of low-cost Chinese tires in the American market was disrupting the market and so it imposed the tariffs. The Chinese appealed to the World Trade Organization where the case is being reviewed. So is it a precursor to tariffs on Chinese cars? Now that is a good question. We’ll have to wait and see.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

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41 Comments to “Episode 315 – Toyota Halts U.S. Sales, China May Tax Emissions, Crustaceans Improve Car Odor”

  1. Paul Sapiano Says:

    John, every year I attend the Barrett Jackson and Russo & Steele auto aution in Scottsdale Arizona. I am to assume you know about the nasty 100 MPH winds, heavy rains and weather which blown away two large tents at the Russo & Steele auction site damaging hundreds of classic cars last Thursday 1-21-2010. I seen large steel poles which held the tents laying on top of as well as thru the tops of classic cars. It was an unbelievable site to see. As a classic car owner myself I heart goes out to these guys and gals as this was most certainly a catastrophe. I was hoping you could say a few words about this to your audience as well as go to YouTube and see what I just mentioned first hand. Thank you Paul Sapiano

  2. Alex Kovnat Says:

    Paul, I’m genuinely sorry to hear about the damage to all those classic cars. Having been to the Woodward Dream Cruise several times (including last August), I’ve come to appreciate the great job that classic car enthusiasts do to preserve the memory of such classics as the 1957 Chevy Bell Air, the 1964-67 Ford Mustang, and others. I hope that at least some of those cars damaged, can and will be repaired.

  3. Mike Knott Says:

    If Toyota’s recalling the corolla and matrix what’s the deal with the vibe? I haven’t heard anything about the vibe with regards to the acceleration isssues.

  4. Art DesJardins Says:

    I have to applaud Toyota for their strong stance on the unintended acceleration problem. I used to sell Toyotas twenty years ago and they always throughly test their vehicles for over a million miles before the first one is sold to a customer so that for a problem like this to get by their testing is very rare and unusual. They have high standards for their parts too. I know that they will come up with a solution that while it may cost them now will pay off in the long run for current and future Toyota owners.

  5. pedro fernandez Says:

    As much as I like Toyota, I recognize the fact they detest recalls, it tarnishes their reputation, I’ve owned 3 Toyotas and all had “silent” recalls. But this is too big and important much like the Ford SUV, Firestone tire fiasco, I just hope they fix this soon and quickly handle the cars that are out there on the road, in order to prevent anymore deaths.

  6. Nick Stevens Says:

    A first and comprehensive review of the Fiat Chrysler 500:

    http://www.thetruthaboutcars.com/review-2011-fiat-500-1-2-european-spec/#more-343143

    Sergio Macaroni-Castro may want to reconsider sending this challenged vehicle to the competitive US market, especially if it is as overpriced here as it is in Europe.

    This is no Mini. It is cheap inside and rides poorly. More like a “Dumb”, ans we know what happened to it…

  7. Nick Stevens Says:

    “Art DesJardins Says:
    January 27th, 2010 at 12:54 pm

    I have to applaud Toyota for their strong stance on the unintended acceleration problem…”

    That’s what I originally thought, but then saw that they HAD to do it, they did not do it voluntarily!

  8. Nick Stevens Says:

    The recall affects millions of Toyotas, it will cost it an arm and a leg, and depending how fast they can do it, they will lose days or weeks of sales as well. Honda will probably be the biggest beneficiary, then Nissan and the others.

  9. Eric Bensen Says:

    Hey John,

    With Toyota recalling most all there vehicles for throttle pedals sticking, there has nothing been said about recalling the Pontiac Vibe (same as a Toyota Matrix). Matrix being recalled but Vibe isn’t? What is up with this?

    EB – Farmington Hills, MI

  10. pedro fernandez Says:

    Sorry Nick but H/S and I believe that Hyundai?Kia will be the big winner in this Toyota tsunami and they will take over the automotive world while Toyota gently weeps and Honda sleeps.

  11. Nick Stevens Says:

    You may believe what you want, but the facts tell otherwise. Honda has inventory it can sell, while Hyundai does not. Hondas are of similar price and quality to Toyotas, while H-Kias are still not. There is even a “status symbol” component, Toyos and Hondas are more upscale than H-Ks. But the most important reasons are Availability and Price.

    H-K are doing well now because they have a ton of new product. When Honda counterattacks with the next gen Civic and Accord and now with a hybrid that tops Prius’ MPG (IF they succeed in it), it will change the sales stats Radically.

  12. pedro fernandez Says:

    Somebody should do a survey and ask prospective buyers if this Toyota problem has changed their mind or perception about the brand and if they would go for another brand instead.

  13. Nick Stevens Says:

    or one can wait 5 days until Feb 1 next monday and see the Jan sales, and then wait for the Feb sales on march 1, and know what the buyers actually did, not just what they said they would do.

  14. pedro fernandez Says:

    The 500′s obvious shortcomings must be overlooked because as Mr Macaroni said in his 8 hour Castroesque blab-fest: Americans are missing passion from their automobiles and Fiat will bring it back to the American market, leave the passion in the bedroom where it belongs Mr. Sergio, I want something better sitting on my driveway.

  15. Chuck Grenci Says:

    We’ll have to wait and see if Toyota actually loses sales over these latest recalls. For sure, Toyota’s quality has slipped a notch, and it will be interesting to see if other auto makers get some advantage (other than just Honda and Hy/Kia that has been mentioned); Ford and GM, both, should also be considerations as well as the other foreign manufacturers.

    Toyota has been on a slippery slope for quite a while lately; (will the latest recall become its avalanche)………..probably not, but they better stop the bleeding quickly as excuses (no matter how quickly or conscienciously rendered) are growing old.

  16. Jim Terruso Says:

    John,
    I’m still perplexed at what is going on with GM
    senior management. Ed Whitacre is an accomplished
    guy, but where are the car guys ?? Surely there
    are some more Lee Iaccoca’s and Bill Peterson,s
    out there some where ?? You need car guys, not
    bean counters !!

  17. Kit Gerhart Says:

    The Fiat 500′s success will depend a lot on the price. At Toyota Yaris prices, it should do OK. It is cute, the interior is kind of cool, if cheap, and with the 1.4 engine that will probably be used here, the performance should be adequate. If it is close to Mini prices, about $20K to start, it doesn’t have a chance. I suspect the 500 would be best served with a manual transmission; the automatic sounds too much like the one in a Smart, though I’m sure it’s not nearly that bad or the article would say so.

  18. Kit Gerhart Says:

    Nick Stevens Says:
    January 27th, 2010 at 1:21 pm

    “You may believe what you want, but the facts tell otherwise. Honda has inventory it can sell, while Hyundai does not. Hondas are of similar price and quality to Toyotas, while H-Kias are still not.”

    GM and Ford should also have a shot at some of the Camry shoppers, with Malibu and Fusion/Milan.

  19. pedro fernandez Says:

    If Ford and GM could somehow prove to the buyers that their products are much more reliable and durable than their predecessors, they should be able to sell a lot more of them. They do drive very well and have an upmarket “feel” to them. Leaps and bounds above the crap they used to sell before.

  20. dcars Says:

    Hi John, Thanks for the incite on Mitsubishi. Hard to believe they still cars in the US. Alfa Romeo’s look fantastic but reliability is a question mark. Before M&B took over, Chrysler had some very reliable cars.

  21. Nick Stevens Says:

    Yes, Ford with Fusion vs Camry or corolla and Chevy with the Equinox vs Rav4. I knew from the start my list was incomplete. But a better guess is by looking at the Jan 1 inventory numbers, those who have horses at the gate can race, those with too low inventories will miss an opportunity.

    Pedro: Hilarious one about the passion. And if the 500 gets you stranded in -40 F weather, it will be more like the passion of the Christ, Siberian version, and not the bedroom…

    dcars: alfas are the poor European’s BMWs, they have great styling and good performance at lower prices than 3s and 5s, but arre much less reliable.

  22. Chuck Grenci Says:

    And while I don’t arbitrarily support a gas tax, if China is intent on charging a user tax, a gasoline tax would make the most sense; if you use more gas, you pay more tax (pretty linear in my opinion).

    Now, on the other hand (and I’m speaking about the U.S. now), if you want to increase the gasoline tax, a good way to make it more palatible would have it so the tax would be earmarked for highway infrastructure repair; i.e. roads, bridges, etc., and while these revenues wouldn’t go into the ‘general fund’, they would free the general fund from having to subsidize funds for highway and road repair. (ouch, hate that I even suggested more fuel taxes)

  23. motorman Says:

    toyota has learned what happens when you push outside suppliers for a cheaper price they cut corners. when toyota like GM was vertically integrated and made their own parts and could control the quality.

  24. pedro fernandez Says:

    motorman: Toyota earned its reputation by doing everything in-house at the model of automotive efficiency and quality: Toyota City, Japan. That’s why Lexus still enjoys excellent reliability while Toyota has been outsourcing more and more and their quality has diminished because of it. The Camry plant in Georgetown Ky has had quality issues for close to a decade and management seems to be unable to remedy the situation. While build quality remains high, they have their shares of breakdowns in particular the Avalon and minivan. I guess the 6 cyl was too much for the transmission to handle

  25. Jim Says:

    My guess is that in the long run the problems imports have had will be forgotten by Joe public and they will continue to buy them. At the same time they will bad mouth the American car builders over a car they had a problem with in the seventies or eighties. The main stream press does the same thing.

  26. Nick Stevens Says:

    Jim: not really. I have colleagues that will not evne consider any import, and always buy new cars from the Detroit 3. Then they tell me they are poorly made. one of them bought Chrysler’s (the extinct “Eagle” brand), Saturns, Pontiacs and currently a jeep Patriot, but he can afford them because he does most of the repairs himself.

    Most car buyers do not read Car and Driver, where imports routinely ace the tests in any category. Far more of them read “Consumer Reports”, which is not journalist but real life data based, and is the only publication that does not have a conflict of interest, since it buys the cars retail, does not accept them free from the makers, and does not accept ADS either in its magazine. But they look at the cars as appliancess, focusing on reliability and not performance or longevity. if they did, the german cars would be as good if not better t han the japanese, and I can say that from my own experience.

  27. Nick Stevens Says:

    Chuck: Compared to their average wages, gas prices in China must be the highest in the world by far, but this may be misleading, because those that buy the cars earn far more than the average wage, they are successful businessmen etc.

    As for the gas tax, I would not trust it if it is dedicated to fixing the highways, as long as the current, deeply corrupt Congress (See “Lousisiana Purchase, $300,000,000.00 to buy that despicable mary Landrieu in LA to sign the health bill) is in power. I would not mind at all a huge gas tax, only if the $ is returned as an equal tax cut (needed now to get out of the recession-depression), and/or to repay the national debt.

  28. Nick Stevens Says:

    “You need car guys, not
    bean counters !!”

    Lutz was a car guy and he did some things but not as much as needed. You need a superior product, better than the competition, and even then it will take some time for word to go around. Look at public misconceptions about Diesels, based on the moronic GM diesels of 1980 and on all other diesels of the time which were noisy, dirty and poor performers. Modern Diesels are nothing like that, but most consumers do not know it and automakers are not educating them with commercials, they prefer the idiotic “zoom zooms” and “oh what a feeling!”

  29. Kit Gerhart Says:

    Lutz came up with some cool stuff over his career, but Vipers are not what the car market of the future is about, and it seems his contributions at GM have been underwhelming. The GTO comes to mind. It was car that looked like a big Cavalier, only with a tiny trunk, and with way too many indications of its right hand drive origin.

  30. Nick Stevens Says:

    At GM recently, Lutz also gave an “F” to the buick designs at the start of his product or design czar term, and the designers went back and produced the far better current lacrosse and regal (and maybe lucerne). The old lAcrosse sure looked far worse, the rear end looked as if it was hit by a tailgater or somebody.

  31. HyundaiSmoke Says:

    Pedro, I love Chinese Cars!!!

    Just the idea of them even coming to the US market is so controversial that its got all of the backwards minded people up in arms.

    I might buy a Chinese hatch just to piss people off, and use it as a disposable car just to beat up on.

  32. HyundaiSmoke Says:

    The way I see it, either they are going to get rich the easy way, or the hard way.

    Easy Way:

    1. Import Goods such as cars, and they make a Killing in the US market on people looking for a beater.

    2. Improve relations and commerce even more so that we can influence a revolutionary change in China.

    Hard Way:

    1. Put in Job/business Killing tarrifs against Chinese goods. Hence, putting their economy into a stranglehold.

    2. Worsen relations get tough on everything and continue on the current path to War involving Limited Nuclear Weapons with China.

    3. Put in Job/Business Killing tarrifs to purposely strangle the Chinese Economy to bread lines forcing revolution with paid US operatives as the New Chinese leaders.

    Easy way and Hard way will both lead to the ultimate conclusion= Peace with China.

  33. HyundaiSmoke Says:

    Lets be real My Generation WILL have a conflict with China, possibly a Hot war. We are pushing those people to bring back up that Bamboo Curtain.

  34. HyundaiSmoke Says:

    John, I think You’re too nice to SMART.

    Americans will not buy A segment cars en-masse unless they are priced below $8500. For a car that tiny, and for what it offers its way, way, way overpriced.

    Smart cant compete when you can so many small carsout here that are in that price bracket and even cheaper. Hyundai can sell a more reliable, equally as fuel efficient, 3 times the size, Radioless, Manual Accent for $9970. Basic Stripped down Nissan Versa is just $10 more than Accent.

  35. Nick Stevens Says:

    John McElroy nice to the “Dumb”? Not at all, he hates its worthless transmission and has pointed out its overall poor value many times, and he shared my astonishment why penske bothered with that utter dog, which didn’t even make it in $7-$9 gas europe for 10 years!.

    I also welcome any competition in the US market, as a consumer. I am not sure if chinese cars are ready. I am curious to see if that 50s styled truck from india, a spartan small diesel truck will make it in the low-income markets (Apallachians etc) it targets, or if it becomes another unreliable Yugo, the pickup version.

    The chinese have a huge internal car market they cannot satisfy, and have planned a huge xapansion of their plants from 12 to 21 million new cars a year in 2 years. Whenever their demand slows, they may try US exports, bu tit will not be soon in any large numbers..

  36. Nick Stevens Says:

    One would consider the “Dumb” if one lived in a big city with narrow streets and had to parallel park every day on the street to save on parking. Bu the few US cities that fit that description have a mass transit system one can take, and it would be foolish to use the “Dumb” instead. And if you buy it for the weekends, there is not even enough room for just a couple and their gear, let alone kids.

  37. pedro fernandez Says:

    The “Dumb” is just a stupid concept, perhaps with a tiny diesel, manual tranny and lower price it may have made sense. What they tried to pull off was a “premium” city car, well they failed miserably. The European Toyota Aygo would have done a lot better and at a lower cost with better engine and transmission.

  38. Nick Stevens Says:

    The “Dumb” also needs the ‘start-stop’ feature for much better MPG but it adds to the price. I have a former student, now a colleague, who was able to buy a demo “Dumb” at the Merc dealership (over in Europe) at a very low price, maybe 9k Euros, low for there, here it is $13k, and it had very low miles. He uses it daily and tells me he saves 65 Euros ($100 or so) weekly in fuel because before that he used his BMW 530 around town. He appreciates that he can parallel park almost everywhere, but in the summer he disables the “start-stop” because the A/C gets screwed, and the MPG goes down. Last Nov, when i was there, I and my significant other met with the guy to go to dinner, and of course the stupid “Dumb” could not take even 3 people..

  39. Nick Stevens Says:

    I also know a woman over there, a Judge, who has a 97-03 series 520, a very nice car, don’t remember if manual or auto, who wanted to also buy a TOyota Aygo, esp. because it was offered with an auto transmission, very convenient in stop-go city traffic, to use on weekdays. But I hear from another recent graduate who has two Toyota dealerships there, that the Aygo has not been a good car and people should get the yaris instead.

  40. Wolfman Says:

    As the Big Three have downsized they let loose with their least qualified managers and engineers. Culled the herd. Toyota expanded and was in need of “experienced” associates. Well look who ended up with our flunkies? Toyota!

    I suggest the beleaguered Toyota owners take their unsafe vehicle to a local car radio shop that installs remote car starters and have them install a “kill” switch that attaches to the drivers wrist. This will be the only way that the vehicle can be safely driven without worrying loved ones. The current system of an electronically controlled accelerator will never be as safe as the old system of a cable control.

  41. Ivan Sears Says:

    John, Ultimately, it will be proven that the unitended acceleration of Toyotas is more than a “sticky accelerator”, too. Otherwise they would be advising folks to use something mundane, like some oil, to lubricate the pivot points. On the other hand, the media have been pretty hands-off on Toyota, but at least it is being reported upon. If this were a GM, a Ford or a Chrysler, where the media has no issue with labasting the companies, one can only imagine the stink they would raise.

    Toyota is know for holding many “silent recalls” beyond normal warranty, if a customer complains. You only do this for one reason – I assume you can figure that out…

    I wish no real harm to Toyota or any other manufacturer, but one needs to step up and accept responsibility for themselves, or their company’s actions.