LINDSAY CHAPPELL

Will parts scandal prompt Toyota, Honda to sue suppliers?

Lindsay Chappell is the Mid-South bureau chief for Automotive NewsLindsay Chappell is the Mid-South bureau chief for Automotive News
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The auto parts bid-rigging scandal being unearthed by the FBI in Detroit is a publicity mess for the big Japanese companies that are involved: Yazaki, Denso, Furukawa, Toyota and Honda.

But a bigger mess looms ahead. There is a matter to be addressed about how the injured automakers ought to respond.

Here's a suggestion for Toyota and Honda: Show some outrage.

If, as the U.S. Justice Department claims, the price-fixing of wire harnesses and other parts inflated the costs of finished vehicles, who ultimately suffered?

Presumably, the higher expenses were tucked into Toyota's and Honda's sticker prices. But even if the vehicles' transaction prices remained completely flat after the parts gigging, the hidden added cost still represented some amount of money that retailers could not negotiate away on the sales lot to satisfy a shopper.

Were dealers inconvenienced? Possibly. But ultimately, the expense came out of the consumer's pocket.

The FBI says the price fixing went on for 10 years. How many vehicles did Toyota and Honda sell in the United States between 2000 and 2010? Many millions. And arguably the buried cost was still there when the vehicle came back to the dealership to be resold as pre-owned.

Would it be fair to suggest that the automakers owe all those consumers a refund now -- a repayment of the amount the automaker had to dissolve into the sticker price of each vehicle to cover their bilking?

And if so, who should foot that bill? Is Honda to blame because a supplier illegally drove up the cost of manufacturing Accords and Civics?

Are Toyota's shareholders to roll over and absorb the legal consequences of artificially inflated Camry production costs?

In the process of sorting all this out, it will not surprise anyone if somebody in this chain of commerce gets sued.

The messy question is: Will it simply be consumers and class-action lawyers suing the carmakers for a refund, as usual? Or this time, will the carmakers take the opportunity to make a statement and join with consumers in suing the conspiring parts suppliers as a show of customer support?

You can reach Lindsay Chappell at lchappell@crain.com.

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