GM should know now what's ahead after Toyota's $1.2B fine

The parallels are striking in the handling of vehicle defects by Toyota (TM) and GM, and TM’s $1.2B settlement establishes a template for GM to potentially resolve its own issues.

U.S. Attorney General Eric Holder made it clear in a statement that “other car companies should not repeat Toyota’s mistake; a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”

The use of the wire fraud statute in nailing Toyota means any GM statements regarding ignition switch problems that were less than truthful can be the basis for a criminal charge.

GM is still in the early stages of its internal investigation, which will take months to complete, but it now knows what it is likely to face: a hefty financial penalty and an outside monitor in exchange for avoiding a criminal conviction.

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Comments (21)
  • deercreekvols
    , contributor
    Comments (9849) | Send Message
    I am not seeing "striking parallels" between Toyota and GM. To connect the way these two companies handled vehicle/parts malfunctions is loose at best.


    GM knew of an ignition problem for how long? How many deaths resulted from inaction on this knowledge?


    The only similarity is that they are both car companies. The latest troubles are GM's, not Toyota's. Toyota will pay the fine and be done with it. GM's troubles are just starting.


    When do I get information from GM on the recall on my Enclave?
    19 Mar 2014, 07:46 PM Reply Like
  • tcbracing
    , contributor
    Comments (345) | Send Message
    Did you even read about the Toyota recall? They knew, people died, THEY LIED and admitted it!!


    "The problem prompted Toyota to recall millions of vehicles, beginning in 2009.


    But Toyota's statements about the recall misled the public because it didn't recall all the cars susceptible to the problems, caused by faulty floor mats, prosecutors said.


    'Someone will go to jail'


    A Toyota engineer concluded that the top-selling Corolla was among the worst vehicles for potential floor-mat entrapment, but the model wasn't included in the recall.


    The company also concealed from the public and regulators another type of unintended acceleration caused by pedals getting stuck, officials said.


    The company had canceled a design change to address the issue in the wake of the San Diego accident, prosecutors said."


    --AutoNews article [subscription required]


    GM has not lied, they informed NHTSA, there was just insufficient evidence on the root cause of the problem.
    21 Mar 2014, 09:09 AM Reply Like
  • rararocket
    , contributor
    Comments (11) | Send Message
    What have we come to when floor mats are considered faulty?


    Floor mats have been causing this since floor mats came into use. I have been driving for 55 years but I did not call a lawyer or TV station when it happened to me, I was too embarrassed. No one is responsible for their own actions anymore, it is always someone else's fault!!
    Unfortunately Toyota supplied the mats therefore they were easy prey for our judicial system.


    You recall the initial claim was the accelerator pedal was sticking causing sudden acceleration or in one case that moron in CA where the TV chopper followed him as he claimed the gas pedal was stuck and he could not stop all the while talking to the 911 operator on his cell. Asked why he did not put it in neutral his claim was he had to keep both hands on the wheel out of fear; he had no answer to the question of how he was holding the cell while talking and keeping both hands on the wheel (pre Bluetooth).


    Those sticking accelerator claims were never proven and most were proven to be driver error.


    Toyota paid to settle as most corps. due to the cost of litigation and fear of the US DOJ (Holder), lawyers and unions.


    No GM did not lie, they just did nothing when they realized the problem years ago. They have learned from the best (their owners at one point) using the lessons of "If you like your health plan you will be able to keep it"; "The demonstrations were the result of an offensive video", "The average family will save $2500/year" bla bla bla!!
    22 Mar 2014, 07:19 PM Reply Like
  • rghart
    , contributor
    Comments (6) | Send Message
    Eric Holder will continue to shake down private sector companies to fund liberal activities until he is justifiably impeached.
    19 Mar 2014, 08:33 PM Reply Like
  • deercreekvols
    , contributor
    Comments (9849) | Send Message
    Fast and Furious...never did explain that one, did he?


    The unwillingness to put any TBTF banker in jail and the continuation of handing out meaningless fines is Eric Holder's claim to fame.


    What a waste.
    19 Mar 2014, 08:37 PM Reply Like
  • Budavar
    , contributor
    Comments (1418) | Send Message
    Unfortunate for you to bring in politics into this equation.


    Back during its bankruptcy GM played the political card cleverly (in offense) to the extent that American taxpayers were hosed, if memory serves, to the tune of $10 billion, with the connivance of the administration.


    Now you want to play that card again (in defense) by attacking the administration.


    You cant have it both ways.


    GM's troubles have just started + intensified with a second, even bigger recall.


    This time GM, IMO, will be extremely fortunate if it can avoid a second bankruptcy.
    19 Mar 2014, 08:42 PM Reply Like
  • sugarsail1
    , contributor
    Comments (166) | Send Message
    you can't help but bring politics in to it when it was Government Motors for so long and it was Government Motors when these recalled cars were being produced if I'm not mistaken...maybe put the government on trial instead?
    19 Mar 2014, 09:25 PM Reply Like
  • satyr
    , contributor
    Comments (2011) | Send Message
    Budavar, it's important to note that the ignition issue came about prior to the bankruptcy. Therefore, they are 100% immune from any lawsuits that stem from this. There have been some recalls of later vehicles, but those were not involved in any injury accidents.


    What is at risk is reputation, possible loss of sales, the relatively small cost of doing the recall, and whatever penalty Holder levies upon GM to avoid criminal convictions. If the ~ $1 billion that Toyota just handed over to close the door on the DOJ charade is any indication, this is not going to come close to pushing GM into bankruptcy. Like it or not, these are the facts.


    As an aside, your assertion of "having it both ways" has a few holes in it. Keep in mind that when the US Government intervened (and tossed established law out on its ear), they had skin in the game. Ultimately, they took a major stake in the company, which means they had every incentive to prop up the company.


    They sold out their ownership late last year. So, now they can levy any penalties they like on the company and not be in the position of robbing their left pocket to fund their right pocket. Timing is everything.


    Regardless of what you think of GM and Toyota, you cannot wholly separate this situation from politics. It's reality.
    19 Mar 2014, 09:43 PM Reply Like
  • King Rat
    , contributor
    Comments (1902) | Send Message
    satyr, sorry, you are wrong on the immunity via bankruptcy claim.


    First of all, money speaks and both lawyers and juries find the deepest pockets. In this case the new GM.


    Second, the problem did not end after emergence from bankruptcy.


    Third, the same employees (agents) were present. Customers can sue GM on via suing those agents. Even one VP carryover in a position to potentially know of the issue would be enough. This is a civil issue. You need 50.00001% assumption of guilt, so it is very easy to lose a case as defendant.


    Fourth, even if 1, 2, and 3 did not apply, if GM honors pre-bankruptcy warranties, they are accepting liability for pre-bankruptcy issues. This is a catch-22 for GM because had they refused to honor pre-bankruptcy warranties, the bad PR would have cost them more in lost sales.


    You are right on inability to separate this from politics. Even if this were Ford, you would still have the issue of political influence/interference and issue of equity between treatment of foreign/domestic entity, even if Toyota had more domestic workers than GM/Ford.
    19 Mar 2014, 11:43 PM Reply Like
  • tcbracing
    , contributor
    Comments (345) | Send Message
    The government "hosed" the taxpayers by selling their shares at a loss. It was a government determination that instead of a loan, they would get back their money in shares, not a GM decision.


    Based on your logic, if you invest in a company and the share price goes down, the company owes you the difference.


    See how that works...
    21 Mar 2014, 09:13 AM Reply Like
  • tcbracing
    , contributor
    Comments (345) | Send Message
    The ignition recall only affects vehicles built up until sometime in the 2007 model year. Bankruptcy was in 2009. Based on these facts, your statement:


    "...the problem did not end after emergence from bankruptcy."


    lacks any merit.
    21 Mar 2014, 09:17 AM Reply Like
  • GotLife
    , contributor
    Comments (1377) | Send Message
    DOJ, comprised of lawyers and run legal by political appointees, nails corporations for "being less than truthful."


    Kind of like circus clowns accusing Jennifer Aniston of using makeup.
    19 Mar 2014, 08:42 PM Reply Like
  • capitolp
    , contributor
    Comments (716) | Send Message
    Talk about timing, ex CEO Dan Akerson jumping ship was perfect, hand picked Mary Barra as a replacement, ouch. Word of advice to Barra, don't take a private jet and limo to the Congressional hearings or drive a Chevy Cobalt.
    19 Mar 2014, 08:55 PM Reply Like
  • King Rat
    , contributor
    Comments (1902) | Send Message
    I would laugh at your humor were the situation less tragic. You have to wonder what Akerson knew. He will still be subpoenaed if and when this goes to trial. Mary Barra's life may have just gotten more stressful but in regards to culpability she is in a much easier position than he is.
    19 Mar 2014, 11:45 PM Reply Like
  • lemm
    , contributor
    Comments (1229) | Send Message
    Check out a weekly column written by Peter DeLorenzo.Very interesting if you are interested in the auto business.Some of what he says about Akerson is pretty funny,and some sad,apparently he was pretty much a bully.Just go back through former articles he wrote about him quite often.
    20 Mar 2014, 06:44 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
    Shareholders should be upset that bad management is able to skate by simply legally bribing their equity away.


    I'd rather see a few criminal trials..
    20 Mar 2014, 09:51 AM Reply Like
  • Mike P.
    , contributor
    Comments (83) | Send Message
    As an owner of this company stock, i am greatly disappointed and make posts on their Facebook page that they do not seek to pay back its investors and those that own the stock at prices they can manipulate to prevent shareholders who purchased at higher levels to take losses as though that is how banking works. If a company you purchase defaults on the loan you give them in the form of purchasing shares of the company stock, then maybe we should all just boycott the company in every way possible, social media and other means.
    20 Mar 2014, 11:06 AM Reply Like
  • tcbracing
    , contributor
    Comments (345) | Send Message
    Based on your logic, if you invest in a company and the share price goes down or the company goes under, they owe you the amount you invested or the loss when you sell?


    I wonder what fantasy world you live in to believe that the stock market works this way...
    21 Mar 2014, 09:20 AM Reply Like
  • jackfleming06
    , contributor
    Comments (4) | Send Message
    Toyota has accepted their mistake in their official statement and have shown positive attitude towards improving the efficiency of their cars.
    20 Mar 2014, 01:26 PM Reply Like
  • jackfleming06
    , contributor
    Comments (4) | Send Message
    Toyota has accepted their mistake in their official statement and have shown positive attitude towards improving the efficiency of their cars
    20 Mar 2014, 01:26 PM Reply Like
  • jackfleming06
    , contributor
    Comments (4) | Send Message
    This is becoming an industry wide epidemic with GM also running through the same issue. Points to regulatory failures.
    20 Mar 2014, 01:27 PM Reply Like
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