Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.
1st Gear: Toyoda Defends ‘Close Friend’ Exec Facing Drug Charges In Japan
Julie Hamp, Toyota’s global communications chief and the company’s top-ranking female executive, was arrested at a Tokyo hotel on Thursday on charges that she illegally imported several dozen oxycodone painkiller pills into the country, according to numerous news reports.
Hamp is a veteran of both Pepsi and General Motors who was hired by Toyota Motor North America in 2012 to help clean up the company’s image in the wake of the unintended acceleration scandal. Oxycodone is legal in notoriously tough-on-drugs Japan, but its importation is legally complex. Here’s Automotive News on the charges Hamp faces in that country:
On Friday, Japanese media reports cited police investigators as saying that a parcel addressed to Hamp and labeled “necklaces” contained 57 oxycodone pills buried at the bottom or in packages. The parcel contained toy necklaces and pendants as well as the pills, they said.
Meanwhile at a press conference, CEO Akio Toyoda defended Hamp, calling her his close friend and saying he does not believe she intended to violate the law. It’s not known whether Hamp had a prescription for the pain pills or a medical condition that required them.
2nd Gear: Fiat Chrysler Sucks At Recalls, NHTSA Says
Say what you want about GM’s approximately 86,743 recalls last year, at least it resulted in getting cars with defects fixed. Fiat Chrysler has been in the hot seat lately with federal regulators for not doing that enough, according to a document seen by Reuters that says the automaker “did not adequately remedy safety defects in a timely manner” or tell federal officials about ongoing problems:
The document, an official draft of a notice to be published in the Federal Register, contains the most strongly worded language to date by regulators at the National Highway Traffic Safety Administration and expands from 20 to 22 the number of recalls that NHTSA intends to scrutinize at a public hearing on July 2.
The automaker could face more than $700 million in fines and be required to buy back or replace vehicles if regulators find that it failed in its legal recall obligations.
Anyone else seeing a tougher NHTSA lately than we saw last year?
3rd Gear: Fiat Chrysler Also Took A Hit In J.D. Power, If That Matters
Speaking of Fiat Chrysler, while Hyundai and Kia are apparently the best thing ever in J.D. Power’s latest Initial Quality survey, the Italian-American automaker isn’t doing so hot, reports the Wall Street Journal:
Three Fiat Chrysler brands—Chrysler, Jeep and Fiat—were among the bottom five in its survey, which J.D. Power blamed on a range of “defect malfunctions.” The firm’s initial quality expert, Renee Stephens, said Chrysler’s relatively new 200 sedan, for instance, has a nine-speed transmission that attracted several complaints, and many Fiat Chrysler products suffer from routine problems that could be addressed before leaving the assembly plant, including unsatisfactory paint jobs or the way parts fit together.
What’s interesting here is that the survey, which we can all agree is kinda bullshit anyway, found the most often-cited complaint new owners had was with their infotainment systems — and Fiat Chrysler has one of the best in the industry. Looks like there are other quality issues at play here.
4th Gear: UAW Talks Disrupted By GM-Fiat Chrysler Merger Talk
Now, come on. No one really expects this talk of a GM-Fiat Chrysler merger, backed by activist investors, to go anywhere, right? (If it does, I totally predicted it would happen from Day One. Just you wait and see.) But as the United Auto Workers union retools its contract with the automakers, merger talk could be a big distraction, The Detroit News reports:
All of this is happening amid the run-up to national contract talks for a reason, however much of a distraction it’s likely to be. A deal of any meaningful magnitude that proposes to combine two of Detroit’s three automakers would require the support of the politically connected UAW, presumably in exchange for assurances on jobs, plants and product investment.
In short: If Marchionne’s merger proposition gains any traction in the next few months, there’s almost no way it won’t impact contract talks, notwithstanding Williams’ insistence to the contrary in his final roundtable interview before bargaining officially begins in mid-July.
Will it gain any traction?
5th Gear: Here’s Why It Might Gain Traction
On that same topic is The Detroit Free Press, with reasons why the merger noise ought to be taken seriously. Here’s one:
Max Warburton, a respected analyst who has watched Marchionne closely for years, issued a research note last week raising the possibility of Marchionne launching a hostile takeover bid for GM.
Warburton breaks it down this way: “The mechanics of such a bid look ambitious – in fact, they are without precedent. Selling it to shareholders, unions and anti-trust authorities would be hugely complex. But stranger things have happened.”
Even though FCA is a smaller company and is carrying a lot of debt, Warburton said, “We believe it’s necessary to start taking this idea more seriously.”
Reverse: A Mess At Indianapolis
After 14 Formula One race car drivers withdraw due to safety concerns over the Michelin-made tires on their vehicles, German driver Michael Schumacher wins a less-than-satisfying victory at the United States Grand Prix on this day in 2005. The race, held at the Indianapolis Motor Speedway in Indianapolis, Indiana, will go down one of the most controversial Formula One racing events in history.
Can anyone besides an increasingly desperate-sounding Sergio Marchionne and a few investors actually make the case that a GM-Fiat Chrysler merger is a good idea?
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