What does huge Toyota settlement mean for GM?

Former Chrysler exec Robert Nardelli weighs in on the announcement's impact on other automakers, especially as GM deals with a troubled recall.

By MSN Money staff Mar 19, 2014 12:21PM

The headquarters building of General Motors Co. in Detroit, Mich. © Jeff Kowalsky/Bloomberg via Getty Images
By Jeff Morganteen, CNBC


CNBC on MSN MoneyThe $1 billion settlement between Toyota (TM) and the Justice Department "sets the bar" for future government actions against automakers that mishandle recalls, former Chrysler CEO Robert Nardelli told CNBC on Wednesday.


"Now they're going to go through GM (GM) and they're going to go back through Ford (F)," Nardelli said on CNBC's "Squawk Box." "It's going to be a whole Pandora's [box]."


General Motors has come under fire for its handling of faulty ignitions and a subsequent recall of 1.6 million vehicles. GM announced Tuesday that it would recall an additional 1.5 million sport utility vehicles and luxury sedans. The automaker also plans to take a $300 million charge to cover costs related to 12 deaths linked to the ignitions.


Toyota's settlement with the U.S. government stems from its handling of consumer complaints tied to cars that accelerated unintentionally, an issue that caused the carmaker to recall millions of automobiles in 2009.


Nardelli, founder of investment firm XLR-8, said additional liability at GM depends on where the federal probe extends. He said GM's new CEO, Mary Barra, seems to be handling the recall troubles well, but in the end the responsibility lies with her. What's more, he added, it's likely that other top executives knew about the ignition problems.


"She's going to have to distance herself because she's been there 30 years and it's hard to believe that an executive wouldn't be aware of these types of problems," Nardelli said. "It's hard to believe something of this magnitude hasn't surfaced itself. ... It's hard for me to believe that this was cordoned off in a closet somewhere."


More from CNBC

2Comments
Mar 19, 2014 12:59PM
avatar
It means too bad for Toyota and good for the politicians who will now be able to extract more money from GM management for fear they will go to jail.  There is no more high road.  Still too many Americans who think there is justice in this country.  Another generation or two and folks here will be like those in China and Mexico where they don't trust or believe anything from politicans or the legal authorities.
Mar 19, 2014 3:04PM
avatar
How much of the 1 billion is going to Toyota owners?
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

115
115 rated 1
269
269 rated 2
445
445 rated 3
614
614 rated 4
684
684 rated 5
678
678 rated 6
608
608 rated 7
454
454 rated 8
310
310 rated 9
138
138 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ARCPAMERICAN REALTY CAPITAL PROPERTIES Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.