Behind the Wheel with Phil Lebeau

Toyota Recalls More, While GM Repays More


It might be a stretch to say GM and Toyota are going in different directions, but Monday was the clearest sign yet these two automakers find themselves in completely different places than they have in the past.


Lets start with Toyota. The Japanese automaker announced it's recalling 9,400 of the '10 Lexus GX 460 to fix SUV's Vehicle Stability Control software. The update of the software is expected to keep the GX 460 from fishtailing and potentially tipping over when the driver oversteers at a particular speed.

This is what many expected to happen when the situation first popped up last week following a warning from Consumer Reports. At the time, the head of CR's auto testing division, David Champion, predicted that eliminating the potential rollover issue in the GX 460 would probably be an adjustment to the vehicle's stability control system. He was right.

The good news is this recall comes before there were crashes and injuries or deaths. The bad news is this recall re-enforces the perception Toyota has dropped the ball with quality control.

Whether you love or hate Toyota, there can be no denying the GX 460 recall and the temporary suspension of sales will add another hurdle for Toyota dealers. It's not a huge hurdle and incentives will help get potential buyers past their doubts.

As for GM, the news is much more encouraging. We broke the story earlier today that GM plans to repay the U.S. and Canadian governments even earlier than planned. The company has said for some time it will repay what remains of the $6.7 Billion it borrowed from the U.S. Government ($1.4 Billion from Canada) before June 1st.

I'm told it will now happen well before June. Chairman and CEO Ed Whitacre Jr. will announce the repayment plan on Wednesday in Kansas City. When he does it will be more than just a symbolic announcement

GM is moving quickly to not only get back in the black but also go public as soon as possible. I've said for some time that GM could be profitable by the third quarter even though the company remains cautious in saying profitability in the second half of the year is more likely.

Once GM repays its loans ($4.7 Billion the U.S. and a little over $1 Billion to Canada) the focus will shift to when we see an IPO. GM isn't predicting timing as of now, but if the markets stay strong and GM gets back in the black in the third quarter, there's a good chance it won't be too much longer until GM shares are being traded on Wall Street.


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