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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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John McElroy is an influential thought leader in the automotive industry. He is a journalist, lecturer, commentator and entrepreneur. He created “Autoline Daily,” the first industry webcast of industry news and analysis.
