Episode 357 – Lawyers Threaten Bankruptcy, Porsche’s CAFE Exemption, GM Building Saabs

March 26th, 2010 at 12:42pm

Runtime 7:43

A consortium of attorneys say that if Toyota does not settle its lawsuits it will likely go bankrupt. Porsche lobbies the Obama Administration for its very own CAFE standard. Even though it’s owned by Spyker now, GM will continue to build vehicles for Saab, but which ones? All that and more, plus the winner of this week’s Autoline Trivia Challenge.

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Transcript and Story Links after the jump . . .

Here are today’s top headlines. Plaintiff attorneys threaten that if Toyota doesn’t settle their lawsuits it could go bankrupt. Porsche wants its own separate fuel economy law. And GM is going to continue building cars for Saab.

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

This is Autoline Daily for Friday, March 26, 2010. And now, the news.

Plaintiff attorneys are cranking up the pressure on Toyota. The AFP cites Tim Howard a Law professor who is leading who leads a consortium of plaintiff attorneys as saying Toyota will settle these cases rather than fight them. He says if they don’t settle this could force them into bankruptcy.

As you may recall Steve Wozniak, one of the original founders of Apple, went very public in saying that he experienced unintended acceleration because of the cruise control in his Toyota Prius. He blamed it on a software problem. So did Toyota get a hold of his car to find out what the problem is? It won’t say. Toyota tells Autoline Daily that it did reach out to Mr. Wozniak but that “the nature of those matters and conversations are between Toyota and the customer.” Rather odd that he trashes them publicly, but then they want to keep the whole thing quiet.

Bloomberg reports that Toyota is denying a report coming out of Japan that it is going to supply hybrid components to Mazda. The Nikkei English News says Toyota will start supplying Mazda in 2013. Toyota says nothing has been decided. I say, this is yet another example of the unraveling relationship between Ford and Mazda.

You may recall we’ve been tracking the progress of an American company called Paice that holds four of the key basic patents for all hybrid systems. It’s been suing Toyota and in fact won a lawsuit where Toyota had to pay it royalties. But Paice claims that Toyota continues to infringe on its patents and took its case to the U.S. International Trade Commission. It wants to block Toyota from importing hybrid vehicles into the United States. If Paice can prove it has an industry to protect it could win. But so far Paice is not manufacturing a hybrid system, nor has it licensed anyone to do so.

Last week we reported that Geely’s chairman said the negotiations to buy Volvo were going poorly and blamed Ford for the problems. But now it looks like things have changed. According to Bloomberg, the company says talks are going very well, and they expect to sign a deal with Ford next week.

But not everyone is happy over the Volvo sale. According to Reuters, its union members aren’t backing the deal and want answers about how the capital needs of Volvo will be met, which investors are backing the deal, and the composition of the management of the company. The union can’t block the deal but it won’t make the transition easy if there’s tension between the two sides.

In other Geely news, the company says it will hold off selling hybrids and electric cars in China due to a lack of demand. According to Bloomberg, the company says it’s ready to sell them but that Chinese consumers don’t seem to be that interested in them right now.

Most automakers have supported the new Corporate Average Fuel Economy rules that are on the books, but not Porsche. According to the Wall Street Journal, the company is lobbying the Obama Administration to allow it to meet easier targets. Porsche argues that it would have to boost its fuel economy more than any other automaker and that it would have to dramatically alter its cars to meet the requirements.

And as if that weren’t bad enough, Bloomberg reports that the new Mercedes SLS AMG is stealing customers away from the 911 even before it has reached dealers. Mercedes says orders have already been placed for the $237,000 vehicle and that its taking a lot of customers away from Porsche.

But it’s not all bad news for the company. This year it will celebrate 60 years in the American market. And according to a survey done by Kelley Blue Book, Porsche won three of its Brand Image Awards, including Best Performance Brand, Best Exterior Design for a Luxury Brand, and Coolest Brand in the U.S.

And speaking of “cool” cars, California has decided to scrap its “Cool Cars” proposal that would require windows to have a glazing on them that would keep the interiors cool. According to the Detroit News, the state caved under pressure from law enforcement and other groups who said the glazing could degrade signals from cell phones or criminals wearing ankle bracelet monitors.

Did you realize that General Motors is going to continue to build vehicles for Saab? In fact, it’s going to build them in Mexico. And we’ll be back in half a minute to tell you what that’s all about, and show you the vehicle GM will make for Saab.

On Autoline Detroit this week we have Mike Colleran, the president of Saab Cars USA on the program. He talks a lot about all the new products that Saab has coming out. And he talks about how General Motors is going to continue building products for Saab. Here’s part of that interview.

You can watch that entire interview on our website, AutolineDetroit.tv. And by the way, joining me on that show are Jeff Bennett from the Wall Street Journal and Todd Lassa from Motor Trend magazine.

Well, it’s Friday and you know what that means. It’s time to answer this week’s trivia question. We asked you to identify what car this iconic hood scoop is from. And the correct answer is it was available on the Plymouth Road Runner. And the winner is Brad Wandrey from Kouts, Indiana. Congratulations Brad, you’ve just won a Autoline Detroit coffee mug.

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

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, Car Chat, WardsAuto.com and WWJ Newsradio 950

30 Comments to “Episode 357 – Lawyers Threaten Bankruptcy, Porsche’s CAFE Exemption, GM Building Saabs”

  1. Nick Stevens Says:

    Yeah, i can see the long lines of customers waiting to buy Saabs made by GM… what nonsense.

    But John missed the much better news that GM is building all the Equinoxes it can, and still can’t satisfy the demand, so it has devised some expensive scheme whereby it will ship semi-finished Equinoxes from one plant to another etc.

    I have frequently praised the Equinox here and even took John to task for voting for that lame-ass ugly FOrd Transit Connect for Truck of the year, when the Equinox not only looks far better and delivers a STELLAR 32 MPG hwy vs the measly 25 of the smaller, lighter Connect, it also sells ten times the units that the Connect sells each month!

    But I wonder if it makes sense for GM to build more of them to satisfy the demand, at considerable cost, instead of lifting some of the Incentives on them, so it can sell just how many it makes and no more, and help their resale value too.

  2. Jim Says:

    Why in hell should Porche be able to skirt the cafe stantard when American oem’s can’t. I say tough ,if you are going to make Chevy meet them no matter what even if they have sell stuff we don’t like then make the germans suffer the same plight.What we realy need is a EPA that has some type of logic for the overall good of the country not environuts.

  3. Chuck Grenci Says:

    Didn’t BMW and M/B already obtain a favorable ruling by EPA in which they could continue to sell vehicles in the U.S. by an extention (just to them)of maintaining the gas guzzler tax to circumvent (the new law that requires that the manufacturer meet the requirements or not be able to sell) So Porsche is also requresting this same exemption? Well, fair is fair; either maintain ‘gas guzzler’ provision for all or eliminate it for all.

  4. Andy S Says:

    John, what is Porsche’s problem with CAFE? Under VW ownership, don’t Porsche vehicles get rolled into the VW fleet average just like Audi vehicles? Lexus gets rolled into Toyota’s fleet, Cadillac into GM’s fleet Lincoln into Ford’s, Acura into Honda’s, and Infiniti into Nissan’s. When Jaguar, Land Rover, and A-M were owned by Ford, these premium British brands were rolled into Ford’s CAFE fleet. Could the real answer be that VW/Audi’s diesel strategy doesn’t fit the Porsche product positioning or VW/Audi’s fleet will be swamped be the poor fuel economy of the Porsches?

  5. HtG Says:

    I can just hear the music coming Ferrari claiming they should also get an exception because Chrysler FIAT shouldn’t have its CAFE score roughed up by the Scuderia.

    But then, as most Porsches and Ferraris spend their days in solitary confinement, how much gas are they really burning. Lassen gehen.

  6. Jim Says:


    Did Wozniak really “trash” Toyota publicly? I believe he said he thinks the Prius has a software problem related to the cruise control. I believe he has also gone on record as saying that he still likes his car very much.

    And yes, the lawyers will bankrupt Toyota just like they have bankrupt Ford for burning peoples houses down. Lawyers… the backbone of America.

  7. pedro fernandez Says:

    NatGeo TV had a documentary on the building of the Volt and after watching this I don’t think Toyota should be too worried about competition for the Prius, it looked as if they were making it up as they went along, holy crap! So now Toyota is the target of these lawyers, the leeches of American society, for destruction. I will never buy one of the government motors or frigging Fiat crap as long as there are used Toyotas around.

  8. Nick Stevens Says:

    That would explain the recent Ferrari 599 V12 Hybrid (no kidding!), complete with the silliest, most hypocritical green paint.

  9. Nick Stevens Says:

    These fools in Congress will regret that they ever put on this circus show with the sudden acceleration auto illiterates. They thought they were helping the domestics, but it will have the exact opposite effect.

    Toyota has the deepest pockets in the industry, and they can discount their excellent products for months. I will be very interested to see the March sales next Thu or Fri, and the April and may sales will be even more interesting. And Honda, the cheapskates, now also had to offer discounts.

  10. Nick Stevens Says:

    HtG: Most ferraris are impractical sunday afternoon fair weather divas, but many porsches are drivenm daily and are far more practical, you can put young kids in the back etc.

    Too bad used 911 prices are much higher than I’d like. The big sedans (S class, 7 series) that were more expensive than a 911 when new, cost 1/3 to 1/4th of a used 911 of the same year…

  11. Nick Stevens Says:

    PS a long trip on cruise control with either a Porsche 911 or a Corvette will give you far better MPG than an S class or a 7 series! Only Ferraris and Lambos (as well as Rollses and Bentleys) are guzzlers. Only on the track or at very high speeds does a porsche burn more fuel, but so will any lesser car too!

  12. pedro fernandez Says:

    I’m afraid if the first trials produce money for these plaintiffs, then we will continue to see more of these BS runaway Toyota stories, crashing into houses, though fences, storefronts, pedestrians. Where will it end?. “Get rich, crash your Toyota”. Then call 1800 scum-lawyer.

  13. HtG Says:

    Nick, I was just exaggerating for fun. I do that.

    But it is laughable that Porsche makes such a request. Unless they have some leverage, of course.

  14. Nick Stevens Says:


    The squeaky wheel gets the grease.

    As far as exotics go, Porsches are among the highest MPG ones

  15. Pedro Stevens Says:

    May as well be as big a moron as Nick the Nitwit & Pedro the Putz.

    Neither of you two birdbrians have a clue. Everytime you post you prove what idiots you are.

    Do the rest a favor and go away or shut the heck up.

  16. HyundaiSmoke Says:

    CAFE Scores are brand based, not Company Based. If they were Company based, then BMW wouldnt need a FWD small car as they have MINI.

    I have a feeling either, the law will be repealed, or many companies arent going to make it in time and will be forced out of the US market.

    Either that, or there will be a loophole, like the Carbon Credits in manufacturing, where maybe BMW buys credits from Hyundai that will bring their CAFE up.

  17. HyundaiSmoke Says:

    Lets say if in 2016 BMW somehow had a Miracle and managed to get their CAFE scores up to 30 MPG.

    If there was a system of CAFE credits, then BMW can buy not just from Hyundai or whatever company but from their own MINI too.

    BMW buys 3 MPG worth of Credits from Hyundai, and buys 2 more MPG worth of Credits from MINI. Its slick, but that’s the only way they are going to make it.

  18. pedro fernandez Says:

    GM must think that car buyers are a stupid bunch, build a GM vehicle in Mexico, put on a Saab badge and try to pass it off as some kind of European car, new Saab ad promo: “Saab, born from Government Motors desperation”

  19. Andrew Charles Says:

    CAFE scores are company based, not brand based. That’s why they are called “Corporate Average Fuel Economy” scores. I have actually read through the documentation for the new proposals (2011–2016). Although Porsche is now owned by VW, they are not yet integrated into VAG as Audi is, and the request for exemption predates the takeover turmoil. Mercedes and BMW don’t get exemptions, nor is the gas guzzler tax involved. They simply pay the fines imposed for not meeting their CAFE targets. Don’t forget also that CAFE is based on an old fuel economy test that is nowhere near as tough as the current EPA window sticker tests. What’s more the predominantly rwd vehicles built by BMW and Daimler will get a roughly 1.5 mpg credit for having a larger footprint than a comparable fwd car (and it actually increases as the standard gets tougher). There is a minimum corporate standard plus a higher calculated CAFE requirement if you don’t sell enough mid-large rwd cars (the effect not the intent). Selling smaller cars like Minis no longer helps as the CAFE burden incurred is so much larger for every small car you sell. For BMW and Mercedes it will most likely mean they will have to offer smaller engines in the US, as they do in Europe, and expand the range of new, efficient engines available in the US. For size and power, they already have the most efficient fleet on the planet, it just hasn’t been sold in the US before.

  20. Dave Says:

    IF it was so great for SAAB to have GM build the vehicles….wouldn’t they still be owned by GM and making money????

  21. HtG Says:

    Thanks for that explanation Andrew. I don’t understand then, why it was news today that Porsche had made such a request, when you imply they made it a while ago.

    Is it correct that Mini and BMW brand cars are lumped into BMW’s CAFE score? And that if BMW sold a 5 series with a 2 liter engine, it would help their score more than a 1.5 liter 1 series, just due to the regulatory effect of car footprint?

  22. HyundaiSmoke Says:


    Malibu Spotted:

    Nice Malibu, but it looks too conventional compared to the Current Model. The Current Model has Spice and Flavor, this seems to have sold out.

  23. HyundaiSmoke Says:

    This seems like it wants to be The New Camry (it could), while the Sonata and Optima are going for the opposite effect of giving the people something more that humdrumness.

  24. Nick Stevens Says:


    The most AWESOME Used car ad EVER.

    (It so happens it is a BMW 530Ti 1994 Wagon. Yours for only $2800, and looks like new (outside).

    Did somebody say BMW envy?

    Even at 17 years old, it looks far, far better than many new cars that cost 10 to 20 TIMES as much!

  25. Nick Stevens Says:

    “# Dave Says:
    March 26th, 2010 at 7:50 pm

    IF it was so great for SAAB to have GM build the vehicles….wouldn’t they still be owned by GM and making money????”


    Whoever has been buying all these losers, Jag, land Rover, Saab (Add Volvo etc) has a death wish to lose more and more billions every year.

    These dogs won’t hunt.

  26. Nick Stevens Says:

    “For BMW and Mercedes it will most likely mean they will have to offer smaller engines in the US, as they do in Europe, and expand the range of new, efficient engines available in the US.”

    They always offered only the largest engines here, gas or evne diesel. I am really looking forward to seeing them offered with the smallest, most efficient diesel engines possible. It could be 40-50 MPG (at 55-65 MPH, not … 85!) even for a big heavy merc or BMW.

    They did it because they would mot make as much $ as with the more upscale ones. Or they would not lose as much with the big ones as if they imported the smaller ones..

  27. Nick Stevens Says:

    “# pedro fernandez Says:
    March 26th, 2010 at 4:49 pm

    GM must think that car buyers are a stupid bunch, build a GM vehicle in Mexico, put on a Saab badge and try to pass it off as some kind of European car, new Saab ad promo: “Saab, born from Government Motors desperation””

    Everybody knows that the whole appeal of Saab was its exclusivity, some called them “Snaabs”. Who will buy this POS if it is made as above?

  28. Julius Lambert Says:

    Auto mfgs. are like fruit on a tree.Sooner or later the fruit falls off.Gravity takes over.

  29. Nick Stevens Says:

    That Saab guy was really pathetic, plus he did not know what the hell he was talking about.

    What a waste of John’s time and our time!

  30. Nick Stevens Says:

    John’s show may have you believe that Toyota is spending mor eon incentives than Ford or GM or Chrysler, but the truth is quite different!

    Read carefully:

    “March incentives are higher than in February, but not as high as the record pace of March 2009,” said Jessica Caldwell, senior analyst for Edmunds.com.

    March 2009 was the high-water mark for U.S. incentives: an average of $3,165 per vehicle, Edmunds.com says. That’s when automakers struggled to unload bulging inventories at the low point of the current slump.

    To be sure, while Honda’s and Toyota’s incentives have drawn closer to the industry average, the Detroit 3 still spend more.

    But the gap has narrowed. For example, in March 2009, Toyota spent $1,565 per vehicle, compared with $3,673 for Ford, a difference of $2,108, Edmunds.com said. But this month, Toyota is spending $2,242 and Ford $3,301, half the difference of last year.

    Edmunds.com estimates per-unit incentives this month will be $2,717, up from $2,642 in February. The consulting firm TrueCar Inc. has different figures: $2,800 this month and $3,100 in March 2009. Both companies include cash rebates, subsidized financing and leases, and dealer cash.”

    Read more: http://www.autonews.com/article/20100329/RETAIL03/303299936/1400#ixzz0jZnjnSMb