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Another unintended consequence of "Government Motors"

AFP: "Is US bullying Toyota on recall?"

The US transportation chief's public rebukes of Toyota's handling of a massive safety recall have raised eyebrows, given the US government's major stake in rivals General Motors and Chrysler.

"The optics are terrible because -- and this is what happens when a government owns a company - the two companies that are going to gain the most out of this are General Motors and Chrysler," said Peter Morici, a professor at the University of Maryland's business school.

"But their behavior is consistent with the general policy of the US government, whether it's dealing with coffeemakers or cars."

... Transportation Secretary Ray LaHood sat down with reporters Wednesday to lay out a timeline of how US officials had "pushed Toyota to take corrective actions" on its pedal problems since 2007.

The meeting came a day after he issued a statement accusing the Japanese automaker of dragging its feet on recalling vehicles in danger of sudden, unintended acceleration due to pedals which could get trapped under floor mats or become "sticky."

He also caused a brief panic when he told a congressional panel that owners of 5.3 million Toyota vehicles affected by the recalls should "stop driving" them.

LaHood later sought to tone down his remarks, telling reporters: "What I meant to say and what I thought I said was if you own one of these cars or if you're in doubt, take it to the dealer and they're going to fix it." (emphasis added)

After the government assumed control of General Motors and then assigned a portion of its shares to the United Auto Workers, serious questions were raised about the future objectivity of the UAW; specifically, how could the UAW continue to fairly represent employees of Ford Motor Co. while simultaneously owning a significant share of GM?

Now another aspect of the auto bailout has reared its ugly head -- can our government be trusted to treat other auto manufacturers fairly (specifically foreign-based companies whose American factories are non-union) after it has formed a business alliance with our largest domestic car company and its employee's union?

As the AFP article correctly states, the US Government has long been involved in product safety issues and, in this case, the safety issue with Toyota's sticky accelerators seems to pre-date the government's GM takeover by some time.

But from now on, as long as the government owns a significant stake in major car manufacturer, any government activities involving the auto industry will be tainted by the suspicion of self-interest and cronyism. That's probably not the kind of change most of us have been hoping for.


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Comments (13)

Wow, this sounds so darned ... (Below threshold)

Wow, this sounds so darned similar...

J.

Isn't this alot like illega... (Below threshold)
Jeff:

Isn't this alot like illegal stock manipulation ? Making then retracting public comments that effect a stock price negatively ? I smell a Toyota stockholder class action lawsuit.

A local news station here i... (Below threshold)
Cindermutha:

A local news station here in Orlando had a poll on their website asking if you would buy a Toyota after this recall. As of the last time I looked at it, a majority said yes, they would buy a Toyota. So if they are deliberately trying to sabotage Toyota, it's not working very well so far.

My Toyota is one of the recalls and I will gladly buy another when the time comes. I've had it two years without a single problem. My last car was a GM product that started to fall apart as soon as I drove it off the lot.

The Obama administration re... (Below threshold)
Hank:

The Obama administration really can be excused.

They have no idea what the hell they're doing.

A local news station her... (Below threshold)

A local news station here in Orlando had a poll on their website asking if you would buy a Toyota after this recall. As of the last time I looked at it, a majority said yes, they would buy a Toyota. So if they are deliberately trying to sabotage Toyota, it's not working very well so far.

Nobody said they were GOOD at it, Cinder...

J.

That's the key Cinder. It ... (Below threshold)
SCSIwuzzy:

That's the key Cinder. It may be Toyota has an issue of trust right now, but they've got a few decades of good will with North American consumers to fall back on. Decades in which GM has been losing the same good will.
If someone had told me 30 years ago I would buy a car from Korea before I bought a GM, I'd have laughed. OR that FIAT would be in a position to buy one of the Big 3 at a fire sale... OK I would have bet IF it happened it would be Chrysler.

Hank -"The Obam... (Below threshold)
JLawson:

Hank -

"The Obama administration really can be excused.

They have no idea what the hell they're doing."

Thus there's even LESS reason for them to be excused. Someone who's 'expert' in a field should have enough self-awareness to realize when they're out of their depth and to gracefully back out and repair what they've already done.

Though how they could repair what they've done over the last year is pretty much unknowable...

I agree with Cinder. For y... (Below threshold)
P. Bunyan:

I agree with Cinder. For years and years I bought only "American" made cars. Primariy GM's but one Ford also. Decades ago they were fairly well built and reliable but they just kept getting cheaper and less and less reliable. The lone Ford I bought in '84 was the biggest piece of trash I've ever owned. The GM's I've owned lately always needed major warranty work almost immediately and after the warranty ran out the parts failures were even worse--I don't even want to talk about the Ford, except to say that I can personally vouch for the fact the the saying "Fix or replace daily" is true.

Finally about 4 years ago I bought a Toyota for my wife and 2 years ago I bought one for myself. We haven't had a singe problem with either (and we both drive 20-25 thousand miles per year).

I'll continue to buy Toyota, thank you very much.

If you put a gun to my head and forced me to buy one of the union made cars today I'd buy a Ford. I will never buy an Obamamobile.

What do you mean UNINTENDED... (Below threshold)
OLDPUPPYMAX:

What do you mean UNINTENDED consequence? The destruction of non-union competitors is PRECISELY what Hussein and his big money union contributors intended. The occupant of the Whitey House is a THUG, not a hapless buffoon like his vice president.

I'm not in the market to bu... (Below threshold)
firefirefire:

I'm not in the market to buy a car at present as I'm still paying off my pre-takeover Jeep product.
However, seeing as I was against the bailout of Automakers by the federal gov't IF I were in the market to buy a new car I would purchase one that was made by any other company than GM or Chrysler.
As for the wife,I would get her a Toyota.. ;)

Now they've added Prius to ... (Below threshold)

Now they've added Prius to the list of Toyota's they are going after. I mentioned this some time ago and repeated it yesterday with Toyota as a great example:

The government simply cannot be a player in the game and also act as the referee.

There's no way that works - ever.

Michael,One quick ... (Below threshold)

Michael,

One quick question - how sure are you that this consequence was 'unintended'? The government actions seem pretty deliberate to me. And who benefits most from it - the GM unions.

The finger prints of unintended consequences are all over this administration, but this seems a little more sinister.

The former GM employees,... (Below threshold)

The former GM employees, current UAW members, and soon-to-be former Toyota employees at the NUMMI plant in California are fuming over the UAW's conflict of interest and the targeting of Toyota.

The video posted below is an hour long, but chalk full of UAW members railing against their union's conflict of interest:

http://laborunionreport.blogspot.com/2010/02/uaw-members-at-nummi-toyota-has-kept-us.html




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