Episode 333 – Toyota Brags Over Avoiding Recalls, GM Rehires Fritz, China Encourages Mergers

February 22nd, 2010 at 12:00pm

Runtime 6:22

Internal documents indicate Toyota bragged about how it delayed and avoided certain investigations and recalls. General Motors rehires former CEO Fritz Henderson as an adviser. China will implement rules this year to help its larger automakers take over the smaller ones. All that and more, plus a look at the Bentley Continental Supersports.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Toyota brags of how it avoided recalls. GM hires Fritz back as an adviser. China wants its big car companies to buy up the small ones.

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

This is Autoline Daily for Monday, February 22, 2010. And now, the news.

This could be very damaging to Toyota. The company turned documents over to the House Sub-Committee that will hold hearings on Wednesday about Toyota. The AP reports that one of the documents brags about Toyota’s ability to delay and avoid certain investigations and recalls. In a statement Toyota says that its “. . . first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong.” Even so, you can bet this will be the centerpiece of questioning that Toyota faces on Wednesday.

And here’s a development that did not get posted on GM’s website. The Detroit News reports GM is going to pay CEO Ed Whitacre $9 million a year, in salary and stock. That’s more than GM paid Fritz Henderson, when he was CEO of GM. Fritz got $5.5 million a year. GM says that since Whitacre has more CEO experience, he deserves more. It also says he is paid less than what GM considers its peer competitors. But Fiat just announced it’s going to pay CEO Sergio Marchionne $6.5 million, which is significantly less than Whitacre. And in a bizarre move, GM hired Fritz Henderson back as an adviser. They’ll pay him about $700,000 for one year.

China will implement rules this year to help its larger automakers take over the smaller ones. According to Gasgoo, the government will reward companies that arrange mergers with tax credits and other incentives. There are over 130 automakers in China with most of them selling less than 10,000 units a year. Only five automakers reached sales of over 1 million last year. The government also wants Chinese-brand vehicles to make up at least half of passenger car sales by 2015. Last year the total was 44 percent.

Ward’s reports that the president of Valeo’s South Korean organization is asking the company’s board of directors to cease operations in the country (subscription required). The executive made the announcement after Hyundai, the French company’s largest customer, advised that it plans to change suppliers because of Valeo’s frequent strikes and labor unrest.

Last week we reported that Germany was skeptical over GM’s reorganization plan for Opel, and now Reuters reports, the government wants GM to increase its share of costs before it gets any aid. GM’s plan calls for a 3.3 billion euro investment. The company is looking to get 2.7 billion from European countries that have Opel plants with 1.5 billion of that coming from Germany. However, Germany wants GM to pay at least half to get the loans it needs.

Cadillac is creating a new sales network in Europe, after its previous distributor, Kroymans collapsed last year. The new organization will import, distribute and market Cadillac’s through fully authorized sales and service centers. In related news, GM’s premium brand is filtering a little high-performance magic down market. Cadillac announced that it’s offering Recaro sport seats from the CTS-V on premium and performance trim levels of the regular CTS sedan. The 14-way adjustable, leather- and microfiber-lined chairs will be available in limited quantities for a price of $2,800.

Coming up next, a look at the Bentley Continental Supersports. Can an exotic supercar be a little too understated?

We get a lot of interesting cars to test drive here at Autoline Daily, and here’s a look at one that really got my attention.

It may look understated on the outside, but not on the inside. We’ll have more on the Bentley Continental Supersports later in the week.

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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40 Comments to “Episode 333 – Toyota Brags Over Avoiding Recalls, GM Rehires Fritz, China Encourages Mergers”

  1. G.A.branigan Says:

    The Toyota plot thickens…….that’s no surprise.Why is it when a company builds up to world leading products…they fall down?Too big for their britches?Toyota is in for a world class smack-down now,LOL.

  2. Nick Stevens Says:

    I don’t mind if FORD pays Alan Mullaly a zillion $, since 1. it is a PRIVATE company and 2. he richly deserves it, BUT i am OUTRAGED that the BUFOONS that run GOVERNMENT MOTORS are paying this senile geezer clueless imbecile Whiteacre $9 million ($8.9 million more than he deserves!) and have to hire back that LOSER He nderson at the equivalent of many millions per year, as a consultant, to tell above clown Whiteacre what to do!

    Which failed clown will they hire next with my tax dollars? RICK WAGONER???

  3. Nick Stevens Says:

    Hey John McElroy:

    The Bentley is not a supercar in the way Ferraris and lambos and even porsches are. No serious supercar for 2 weighs 5,000++ Lbs!!! They can cram 1,000 HP into the stupid thing for all I care, and it will STILL not Behave like a true supercar, but instead like an UNnecessarily OBESE Luxury coupe (touring coupe, NOT sports coupe!).

    Let’s have some TRUTH IN ADVERTISING here!

  4. Kit Gerhart Says:

    I just read some interesting results from a study CR did regarding “unintended acceleration” incidents in 2008. One in 50,000 Toyota drivers reported unintended acceleration events to NHTSA that year. The number was one in 65,000 for Ford, but was one in 500,000 for GM. Whether floor mats, pedals, or electric motor powered throttles, it certainly appears that there are differences in car brands regarding this issue.

  5. HtG Says:

    I dunno John, the Bentley gives me whiplash when one goes by. Then again, understatement is a way of not drawing the wrong kind of attention.

  6. Kit Gerhart Says:

    The article I sited was in AutoWeek magazine.

  7. Nick Stevens Says:

    I drove to Wash DC on Friday and came back on Sunday (via Baltimore, when I had breakfast with friends). At some point on Friday i realized m cruise control did not work. Before I made a fool of myself and my dealer rich, I saw what the stupid problem was, and fixed it in 2.5 seconds.

    Of course, it was the stupid mat that went under the gas pedal, and when the cruise control tried to depress it to accelerate, it probably found resistance from the mat and quit.

    Once I removed the mat from under the pedal, the cruise worked JUST FINE.

    Remind anybody of some problems with 1 out of 10,000 TOYOTA owners?

  8. T. Bejma Says:

    “Nick Stevens Says:
    February 22nd, 2010 at 12:17 pm
    I don’t mind if FORD pays Alan Mullaly a zillion $, since 1. it is a PRIVATE company”

    I think you meant to say PUBLIC company. GM is a private company, Ford is a public company, hence the shares that trade on the stock market…

    GM is still under Government control when it comes to salary, so don’t blame the GM leader, your elected officials approved Ed’s salary.

  9. pedro fernandez Says:

    Bentley, the official car of the NBA. by the way I think more Buicks are involved in “oops! I meant to step on the brake” type accidents involving old people and store fronts.

  10. pedro fernandez Says:

    Hey if they dug up Roger Smith then he’d be worth $15 Million?

  11. Nick Stevens Says:

    TB: Thanks for the correction. Sure, I meant that FORD was not bailed out by the US Government and is not supported by the Taxpayers like G M is.

    if my elected officials approved Ed’s Salary, they are damned fools, because even obama barely makes 0.5 million, or 5% of what he gave Whitacre, and the two senile idiots Pelosi and Reid, our “leaders” in Congress, barely make 2.5% of that!

    This is not an unusual situation, our (public!) University President gets over $500,000 (over $700,000 with all the benefits), and when she goes to beg for money from our Governor, it is quite ironic, since that Governor (also deservedly, due to her gross incompetence) makes less than a third of that! This is not allowed in other states, like FL, where other public officials can;t make more than the Governor..

  12. John Says:

    “China will implement rules this year to help its larger automakers take over the smaller ones.”

    It is good to see COMMUNIST China has not lost its touch.

    Will they use Red and Yellow colors on their emblems with their favorite “Hammer and Sickle” ingrained in their latest knock-off vehicles ?

  13. Nick Stevens Says:

    Y4eah, let’s clone Roger Smith. His Clone will proceed to order the design and production of another Loser Civic and Corolla fighter like the Saturn.. but will name it “Neptune” to show how original a thinker he is.

  14. Nick Stevens Says:

    Send in the Clones!

  15. Zieke Says:

    Hey John,
    I love that Bentley just as it is. With a little understating on the outside, you are not “showing off” the fine auto you can afford, which will hopefully deter jealous vandals in parking lots.
    Looks like Toyota has got their real problems again, making GM or Ford look like real bargains. I sincerely hope quality keeps getting better in all of them, making consumers the ultimate winners. Maybe Whiteacre needs to show he’s worth 9 mil. before he collects his checks. Kind of a performance incentive.

  16. Chuck Grenci Says:

    While styling is the most subjective of all car criteria, I put the Bentley in the ‘slug’ category.

    Nine million, whether GM or any CEO, is just too much (and let’s not even get into sports salaries).

  17. Max Christensen Says:

    Toyota is proving that the old adage “Made In Japan” still rings true………..

  18. Kit Gerhart Says:

    Chuck Grenci Says:
    February 22nd, 2010 at 12:55 pm

    “Nine million, whether GM or any CEO, is just too much (and let’s not even get into sports salaries).”

    I agree that CEO and sports salaries are too high, but some of the sports figures deserve it more than the CEO’s. There are thousands of people who would do as good as, or better jobs than many CEO’s, but there are not thousands of people who could play basketball better than Michael Jordon in his prime.

  19. Salvador G. Says:

    I wonder how someone answer the question… How do you explain your executives bragging about saving millions in ignoring safety problems and here you claim that safety is your number one priority??
    -I think Akio Toyoda could have a Tiger Woods like apology ready -
    and we could call it… Akio DID A Tiger Woods.

    Also, JohnMc, too bad you couldn’t get your hands on a Ferrari 599 GTB as well and have a drag race… YOu know- It hit me- that the Bentley and the 599 have pretty similar specs so I went and check on the Ferrari -And they do have pretty similar Specs and they cost about the same, other than that I think the Ferrari beats the bentley overall.
    _Well, I hope your enjoy your almost a ferrari drive.

  20. dcars Says:

    Toyota deserves to be on congresses menu this Wednesday. They’ve done their best too pay off and deceive the american consumer in the pursuit of GM’s title. It’s ok to want be the number one car maker but achieving it at the expense of safety and integrity isn’t right. The part that is disappointing is they would have been number one by staying true to their roots of building cars methodically with sound engineering principles.

  21. Andrew Charles Says:

    As I have said before, Toyota’s quality problems stem not from over expansion (after all they have been simplifying and trimming the number of models so they’re hardly anymore overtaxed on the engineering side), but from its relentless focus on cutting costs. Perhaps they cut costs in properly securing floor mats, they certainly cut costs by not specifying a pedal linkage protected from condensation issues. After last year’s huge losses, their response has been not to shutter plants correct mistakes in product planning, no, Toyota does not make mistakes, therefore the answer according to Toyota—”Cut costs by 20%!” This is far from over, the damage to the company’s reputation and competitiveness has at least another 10 years to go—if, and this is a big if, they begin focusing on product more than costs. The “new” Avalon (exactly the same as the old Avalon) is not a good harbinger. The Corolla placing 11th in a test of 13 global compacts last year is just the beginning.

  22. dcars Says:

    I can’t really believe that anyone that pays over $60k on car is ever looking to be understated. The only reason your buying a Bentley or Ferrari etc… is proving to the world that you can.

  23. HyundaiSmoke Says:

    By the way, my Baby Boomer Friends, most Journalists say Sonata NOT BEATS THEM but SLAUGHTERS the Established Players (Camry, Mailibu, Fusion,Accord), and not only that gives many Luxury Companies like Mercedes a wake-up call, or some will say “They (Benz, BMW) need to learn a lesson or 2.

    Just read some of the reviews, and Kit if you havent read a review yet Ill let you know that the Performance is one of this car’s Strong Suits and Assets, with some even comparing the Cornering and driving dynamics to BMW, and Benz.

  24. Frank Nelson Says:

    I think that Toyota’s ‘alleged’ quality issues are largely imagined. There may have been a floor mat issue with the State Trooper’s family. But, since then, the media have jumped on, and people are looking for anything little quirk or bump and thinking that their cars are having these issues. I don’t believe it. And I don’t drive a Toyota or think that Toyota is America’s car company. I just don’t think they would have produced that many cars with these kinds of problems.

  25. HyundaiSmoke Says:

    That’s why I shop Hyundai, becuase when they say they are going to dosomehing, they get to it and either:

    A. get it right the first time

    B. Get it mostly right the first time, and then leaves enough for a refresh to fix.

    They said this car would be 2 notches above the Camrys, Fusions, etc… of the world= They did it.

    They said this Car would make many Luxury Companies pay even more attention= They did it (Espcially after the Paint Commercial, Handling Awards, and Reviews Today)

    Remember, this is a Middle of the road Product for Hyundai, and if they can do it like this then WOW.

    After today the Days of Comparing Hyundai to Toyota are over. The Company said the Sonata Language is the base for all of the other cars. Its the car you judge the new directon of Hyundai with.

    Hyundai is not a dumb company, they wouldnt say that if it was an empty statement.

  26. HyundaiSmoke Says:

    Maybe you Detroit guys are use to Empty Statements and Promises, but Im not. This is a Company that refuses to play second fiddle to Anybody whether its Toyota, or Benz.

  27. pedro fernandez Says:

    H/S guy, I must hand it to you, you’re as passionate about your favorite car company as Tiger is about poon-tang.

  28. HyundaiSmoke Says:

    Nobody has had anything bad to say just highlighting the shorter rear door openings than old.

    Some journalists say you’re an idiot if you buy anything else. Most people compare it to Lexus ES350.

    This car will be 2011 North American Car of the Year, especialy since its Slaughters the Fusion.

  29. HyundaiSmoke Says:

    And if it doesnt win NACOTY its either becuase:

    A. Something mind blowing came along that compelled the judges to vote for that.

    B. They wanted an American car to win and they were going to have their way regardless.

    C. They smoked crack before they voted.

    Like I said before the fit and finish on this thing is not too much cheaper than Genesis, another NACOTY winner.

  30. HyundaiSmoke Says:

    Im going to repeat that statement this entire year too. Unless something comes along, and I test it myself and confirm that its a Sonata Beater.

  31. HyundaiSmoke Says:

    Yeah Pedro, wow the poon tang.

  32. Max Christensen Says:

    I think it’s H/S who is smoking the crack…..

  33. pedro fernandez Says:

    No matter how much they try to beat up Toyota, loyal owners will remain so, the more the government gets involved, the more people will think it’s part of a plot to help the domestics recapture market share. Word of warning to VW, you keep trying to be #1 and unseat Toyota, be careful what you wish for, just a few years ago Toyota was trying very hard to unseat GM from that spot, now look where it got them.

  34. dcars Says:

    Good CEO’s are worth every penny their paid. The decisions they green light or stop will have long term effects on the company’s they control. If these guys run unchallenged and assume ultimate control they can spell death to a company, Rick Wagoner comes to mind! Think what would have happened at GM if they wouldn’t have spent billions on Saturn, Fiat, Saab and Hummer? Rick and his management team had a rubber stamp to do what they pleased and the US government and its citizens were the ones who paid the bill. If that’s not a good enough example look at Ford and their Premium Automotive Brands – Volvo, Jaguar, Land Rover, Lincoln and Aston Martin. How about Chrysler’s Robert J. Eaton and Diamler’s Jürgen Schrempp they masterminded a deal that ultimately killed Chrysler and severely damaged M&B.

  35. HyundaiSmoke Says:

    You got a point about that dcars. What a shame about MB, I love that company too.

  36. HyundaiSmoke Says:

    Nick, but John is right. The Hyundai Genesis looks more exotic on the outside than the Supersports does. You cant have an exotic luxury car that goes for $250K look cheaper than a Near Luxury car that’s $21K?

    Hyundai in its march upmarket earlier last decade wore those Bentley/Maybach designs out. Hyundai using the template really cheapened the design.

    A $250K Supercar is supposed to be a 21st Century Dussenberg man, and not something a wannabe luxury company like Hyundai can just easily copy.

  37. HyundaiSmoke Says:

    I do think however, the days of Rolls Royce, Bentley, and Maybach are doomed in the long run. I think BMW, Benz, and Audi will go even further upmarket and tae their spots. These companies are well on their way.

    Comparing an 80s Benz to a modern one is like comparing an Excel to an Accent, there’s no comparison.

    Benz is slowly but surely marching upmarket, Audi too, and BMW to a smaller extent.

  38. HyundaiSmoke Says:

    Many Rich people prefer the BMW, Audis, and Benzes to the traditional pomp and circumstance of the Rolls Royce, The Aston, or the Bentley. Im not saying that people dont buy these cars, its just that they are moving out of favor.

    VW is Audi 10 years ago, and its time for the Automotive community to admit it. Treat them like the luxury company they have become.

  39. Kit Gerhart Says:

    Maybe Rick Wagoner did one thing right, if he had something to do with GM’s having 1/10th the complaints about unintended acceleration that Toyota has. Did he tell the people involved to make it a very high priority that mats don’t get in the pedals, the “drive by wire” doesn’t screw up, etc? It’s possible. Even if so, it doesn’t make up for everything he did wrong.

    BTW, Roger Smith is the one who begat Saturn, and all the wheeling and dealing with Ross Perot and Hughes.

  40. dcars Says:

    All these guys are human and the huge scale of money that they can spend has got to be daunting, but, they do get paid lots or money.
    Not every decision that Rick Wagoner made was wrong and your right Kit, Rick had to deal with some bad decisions made by the guys before he got their.