The Feds Are Going To Make Automakers Pay Not-Quite Out The Nose

Illustration for article titled The Feds Are Going To Make Automakers Pay Not-Quite Out The Nose
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1st Gear: Finally Some Kinda-Sorta Progress

Back when it emerged that General Motors put some defective ignition switches in its cars that ended up killing more than 100 people, most people agreed that the government should levy some sort of fine for that kind of thing. And the government did the best it could, handing out $35 million in penalties. That was a record civil penalty from the US Department of Transportation at the time, though it was a bit of a joke, as those penalties amounted to just three percent of one quarter’s net income for GM.

It wasn’t a drop in the bucket. It was the browsweat on a fly on a drop on a drop in the bucket. Obviously, something had to change.

There was pretty much universal agreement from the Obama administration, safety groups, and the DOT that the fine cap should be set at $300 million. But because we live in a democracy, and because that democracy involves Senate Republicans, that number’s going to be a bit lower, at just $105 million, according to Automotive News:

The new $105 million cap was part of a six-year surface transportation policy bill the Senate voted on Thursday. The measure also prohibits the rental of cars with unrepaired safety defects and proposes that dealers run a recall check when customers come in for routine service.

See everyone, we’re trying! Senator Bill Nelson proposed removing the cap limit altogether. Good on you, Bill.

2nd Gear: Subaru and Honda Are Making Ridiculous Amounts Of Bank

Just a little while ago, we noted that Subaru has been absolutely crushing it lately. But the words “crushing it” don’t put much into perspective on their own, so Subaru just put out some numbers to show just how crazy it’s been growing, via Reuters:

Japan’s Fuji Heavy Industries Ltd , the maker of Subaru cars, posted a 70 percent jump in quarterly operating profit as sales continued to climb in the United States, its biggest market, and a weak yen boosted the value of earnings overseas.


And in case you’re wondering, yeah, a 70 percent profit gain is practically unheard of. Which is too bad for Honda, which put up a big 20 percent profit gain of its own, thanks in large part to a weak yen. Of course, the weak yen helped Subaru as well, but Subaru got a boost thanks to a 28 percent jump in vehicle sales. Subaru just can’t build them fast enough.

3rd Gear: Maserati Isn’t Making Any Bank, But It Has A Plan

Maserati, on the other hand, isn’t making that much money. But it has a plan to save itself, of course. That plan being the typical automotive fallback at this point, the SUV. Fiat-Chrysler chairman Sergio Marchionne said the upcoming Maserati Levante will prop up the brand. Again, from Automotive News:

Marchionne said the launch of the Levante SUV in the first half of 2016 will boost Maserati’s earnings. “We need to wait until then,” he told analysts Thursday on a conference call.


Good luck, Maserati, but analysts are skeptical. I guess it worked for Porsche.

4th Gear: Why Not Just Bring Cadillac Back To The Bad Old Days?

Cadillacs aren’t selling like they should, and much of that is due to brand image. I mean, why spend all that money on “just some Cadillac,” when you can get a BMW? To fix that, Cadillac dealers think the best way forward the traditional way, meaning just throw some cash and rebates at buyers, just like GM is used to, according to Bloomberg:

One of the key points of contention between some dealers and de Nysschen is that the CTS has gotten much more expensive, said John Bruno, general manager of Potamkin Cadillac in Manhattan. A few years ago customers could lease the car, which is the size of a BMW 5 Series, for less than $400 a month. Those people are coming back and finding CTS leases now run more than $500 a month. Dealers complain that getting people into a smaller ATS is difficult, he said, and want incentives to make the cars more affordable.


But Cadillac chief Johan de Nysschen isn’t having any of it. Cheapen the cars, and you cheapen the brand, he says. It’s a long-term investment, with long-term payoffs. De Nysschen actually sounds like he’s got the right idea for now, but let’s hope no one takes his head for it.

5th Gear: GM Pulling Back On The Rental Car

Speaking of GM sales, it looked like GM was going all in with the dull, gray soup that makes up rental car fleets when it came out with the dull, gray soup that was the interior of the 2016 Chevy Malibu. But GM says they may actually post a small sales loss, if only because fleets aren’t buying.


Maybe it’s because no one dreams of going on a trip for work and expensing some dull, gray soup?


Reverse: Whatever Happened To Jimmy Hoffa?

On July 31, 1975, James Riddle Hoffa, one of the most influential American labor leaders of the 20th century, disappears in Detroit, Michigan, never to be heard from again. Though he is popularly believed to have been the victim of a Mafia hit, conclusive evidence was never found, and Hoffa’s death remains shrouded in mystery to this day.


Neutral: What actually makes for an appropriate fine on an automaker?

Photo credit: AP

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“Cheapen the cars, and you cheapen the brand”

Cadillac makes a couple of neat cars. I haven’t driven the V’s but I’m curious about them. At the same time, it’s not the brand I look to when I think luxury performance, as I still turn and look at BMW, Mercedes, and to some extent Audi. Cadillac used to be the king of luxury, but that was 60 years ago. They then became the butt of jokes for 20 years. It’s hard to change that perspective, but they were on the right track about 5 years ago. Prices have gone up though, and price was the thing that made people think about Cadillac over imports (I’m not saying that they should only compare price, but price point is a major factor).

They need to get into the game again the way the Japanese, and then the Korean’s, did. Prove build quality with a good price. Then in time, you can build things back up. A rebadged Volt, and just telling people that your in the same class as BMW and Mercedes (whether you or or not) after decades of being - pardon my french - crap, doesn’t mean you’re going to get people listening to you.