Steve Jobs' Vision Spread To Cars, Auto Industry

AppId is over the quota
AppId is over the quota
By Michelle Krebs October 6, 2011

Apple co-founder Steve Jobs, who died Wednesday, leaves an imprint on many aspects of our lives, and today’s cars are no exception. As Edmunds.com’s technology editor Doug Newcomb points out, no external devices (nor any single company) has had as much impact on car infotainment as Apple's iPod and iPhone. I would add to that list the iPad, with the potential of its impact on the car and the auto industry nowhere close to being fully explored and realized.

As Newcomb explains, the iPod made CDs obsolete when it debuted a decade ago, and it soon became the default device for carrying music into the car. Then followed the iPhone. Loaded with GPS, Google Maps and other destination information, the iPhone causes consumers to pause about the need to buy a pricey in-car navigation system. Yet, it is given that today’s cars come equipped with plugs for the devices.  Now comes the relatively new iPad and we have yet to see completely how it will change the game but it certainly is the subject of experimentation, from automotive marketing to car design.

Always clever with its marketing, Korean automaker Hyundai jumped on the frenzied iPad buzz from the beginning by giving away an iPad (left) to consumers who bought the upscale Hyundai Equus. The iPad came loaded with the Equus’ owner’s manual. It showed how everything from the adaptive headlights moved to how the seats folded with the touch of the screen in a way no paper manual could. More recently, electric carmaker Tesla showed its upcoming Model S to potential buyers. The car features a modernistic dashboard that looks more like an iPad than a traditional instrument panel. In the styling studios of auto companies and the classrooms of automotive design colleges, much experimentation is ongoing with vehicle design that either imitates Apple products or incorporates devices like iPhones and iPads into the design.

Of course, the launch of any new Apple device is instantly followed by a steady stream of apps, and there’s an app for about anything one can imagine related to automotive. A clever ad by General Motors’ Chevrolet Division stars one of those apps – the ability to unlock a vehicle by remote. In the commercial, a young man has locked himself out of the car. He calls his significant other, who is boarding an airplane, to push the remote unlock button on her smart phone – which she does repeatedly to toy with him.

Steve Jobs, Apple and the entire consumer electronics industry has become so important to the car business that the Consumer Electronics Show held in Las Vegas every January is on the calendars of many auto industry executives. It has become as important an event as many auto shows. In fact, some years, CES has looked like an auto show, with car companies making major electronics-related announcements at the show or unveiling vehicles there. Earlier this year, Ford CEO Alan Mulally used CES as the stage to unveil the Ford Focus Electric car.

For pure entertainment, automotive enthusiast will always remember that Jobs brought the world the series of “Cars” movies through Pixar, a computer graphics company he bought from director George Lucas. But beyond the products, executives of numerous automotive companies constantly point to Apple as having the gleaming brand reputation and the rabidly enthusiastic buyer base that they would like to have for their companies. In that regard, no car company has come close.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.

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Accountability For The Auto Industry

AppId is over the quota
AppId is over the quota
Toyota CEO Akio Toyoda (Toyota).

If you want to fire up a populist, tell him that America’s CEOs are underpaid. Then, once his hair is aflame, point out that we have a free market when it comes to hiring folks. That is why George Clooney and Leonardo DiCaprio and Brad Pitt make more money in a week than most of us make in nine years. And why Tom Cruise once said, “They pay me that much because I’m worth it. When I’m not, they won’t.” Or words to that effect.

What’s more, those gentlemen don’t have to give any of their money back when they help create a movie so awful that it makes you want to do an Oedipus number on your eyeballs.

That wouldn’t matter to your populist conversation partner, of course. He would tell you that those men use every dime of their fortunes not dedicated to Gulfstream upkeep to do good. They spend their millions saving the environment, inventing alternative energy sources, and keeping George Bush’s trees covered in toilet paper.

Alternatively, as every progressive thinker knows, corporate CEOs use their ill-gotten dollars to do things like put Satan in charge of human resources, impoverish the proletariat, pollute the atmosphere, and send Alvin and the Chipmunks to Dachau. Or Bakersfield.

So how surprised were we all to see a CEO do something that’s a lesson to one and all?

Just imagine this: Akio Toyoda, the CEO of Toyota, beleaguered manufacturer of rogue floor mats and other hellish automotive components, has done something that I can recall few CEOs ever doing. He took a pay cut as payback for what happened, mostly, on his watch. He manned up, said it was his fault, and fined himself and his directors 10 percent of their pay.

This is doubly amazing when you consider the New York Times spiced its coverage with a factoid revealing that Chairman Toyoda and his 38 directors together take home less than some leaders of global auto companies make all by themselves. How much less? The Times said that Toyota’s gang of 39 together made $15.95 million, an average of about $409,000 each, for the year that ended in March. At Ford, CEO Alan Mulally had to scrape by on $17.9 million.

If you add to that the $11.5 million in total compensation paid to Mr. Mulally’s top three lieutenants, you arrive at a four-man executive suite drawing $29.4 million. Pile on Executive Chairman Bill Ford’s $16.8 million, and the total beats the Toyota package like Mustang drag racing against a Prius. Mr. Ford, it should be noted, has not taken his pay since 2004. When the company reaches the internal goals it’s set for itself, he’ll presumably catch up. Not a bad act on his part, now that I think of it.

Is the $29.4 million figure excessive? Maybe not. Consider that Ford has not been bailed out by you and 309 million of your fellow taxpayers. Furthermore, Mr. Mulally, who is the polar opposite of a figurehead, led Ford to a $2.7 billion profit in 2009.

Meanwhile, over at GM -- your car company -- CEO Ed Whitacre’s total compensation was $9 million. Nissan’s boss, Carlos Ghosn, made $9.5 million and grumped that he was underpaid compared to other global auto company leaders.

What would Mr. Ghosn think about Walmart CEO Michael Duke’s $35 million gift basket? That amount is 574 times a Walmart store manager’s salary, which is about $61,000.

Now, as far as I’m concerned, the salary of a CEO is the business of the company stockholders and the board of directors. Walmart, for example, has 37 billion shares outstanding. Mr. Duke’s salary impacts each of those shares by nine-tenths of one cent. This makes a stockholder uprising as likely as fiscal restraint in Washington, even though I’m quick to say I don’t think any executive is worth $35 million.

And I do not think any CEO or executive top gun who sends a company down the rat hole deserves even a bronze parachute. Executives who have utterly failed should be acid-dipped and have their bones ground into powder and scattered on the fairways of their country club. Or, in the case of BP’s Tony Hayward, dumped into his yacht club’s harbor.

I do think that the relationship between top-executive pay and average-employee pay is way out of whack. The ratio, for example, will rightly vary from industry to industry because some employees cost more than others. But 573 to 1, CEO to store manager? Come on.

The Institute for Policy Studies, a “progressive” think tank claims that the ratio has risen from 30:1 in the 1970s to 319:1 today. But averages can be misleading and, as ludicrous as executive pay may appear, anything on the order of a national CEO salary cap would be even dumber.

Worse yet would be punitive taxes that let the government waste the salaries instead of the executives themselves. And executives do spend. Who do you think keeps the Porsche and Ferrari dealerships in business? And good restaurants? And antiques dealers? And classic-car restorers? And Tiffany and Neiman-Marcus? And pool boys?

Both sides of the executive pay issue have defensible points, and both sides are more than capable of stretching the truth. At Ford, a union spokesman called Alan Mulally’s pay an “outrage,” overlooking that each Ford hourly worker, all 41,000 of them, got a $450 profit-sharing check for 2009. Their pro-rata share of Mr. Mulally’s salary was $436.59. So it’s hardly an outrage on the accounting front, particularly when you consider the rise in Ford stock value and that the union health-care fund owns a ton of Ford stock.  

But there are not two sides to Mr. Toyoda’s act. His willingness to take a hit should be a lesson to every CEO, here and around the world. How different his move was than those of yesteryear. In 2007, Reuters reported that Rick Waggoner, then CEO of General Motors, saw his total compensation jump by 64 percent to $15.7 million, even as GM lost $39 billion for the year. Mr. Waggoner took the money anyway, and GM’s bankruptcy came soon thereafter. 

I remember when one of my comic-strip idols, Oliver “Daddy” Warbucks in Little Orphan Annie, faced off against a man who bitterly criticized him for being a multi-billionaire. Warbucks, wearing his trademark tuxedo with a walnut-sized diamond stud sparkling in his shirt, did some quick arithmetic and arrived at the man’s per capita “fair share” of the Warbucks wealth. The money due the disgruntled socialist, or whatever he was, amounted to a dime, which the industrialist cheerfully handed over.

Warbucks, an outspoken capitalist, albeit of the cartoon variety, made his first fortune in World War I and became a three-star general in World War II, becoming an exemplar of the military-industrial complex years before President Dwight Eisenhower gave it its name.

“Daddy” frequently lost his vast fortune in shaky business ventures but always recovered, on his own and without government bailouts. Oliver Warbucks believed that you pay for your mistakes in business.

He would have admired Mr. Toyoda’s deed.

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