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."

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Mar 19, 2014 12:59PM
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
How much of the 1 billion is going to Toyota owners?
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