Rough Day At Toyota

Bertel Schmitt
by Bertel Schmitt

Last evening, U.S. Transportation Secretary Ray LaHood declared he’d be seeking the maximum penalty from Toyota. That’s $16.4m, because “they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” That’s the largest civil penalty the U.S. Department of Transportation has ever sought. According to Reuters, “previously, the largest fine was $1 million against General Motors Co for failing to promptly recall windshield wipers in 2002-2003 model vehicles.” One would think Toyota can pay that out of petty cash. But the matter has Toyota concerned. Plaintiff lawyers are rubbing their hands.

There is no better way to tell the impact and importance of a news item in Japan than taking the fever of the Nikkei wire. One mention a day = no worry. Two mentions = eyebrows go up. Multiple mentions = Red alert!

Today is such a day.

At 9:37 in Tokyo’s morning, The Nikkei [sub] remains sanguine: “Toyota treads water after U.S. fine” is the headline as ToMoCo’s stock is unimpressed and trades at round 3820 yen, higher than the previous day’s close. The matter receives a few lines on the wire, and The Nikkei goes on its merry business.

Half an hour later, Japan is worried. The stock drops to 3750. At 10:38, The Nikkei [sub] sees the matter worthy of a bigger story. “Toyota to face largest civil fine over recalls” is the headline of a lengthy article.

The surprise is buried deep in the article. Flabbergasting U.S. commentators which “expect Toyota to appeal the fine,” as Reuters put it, the Nikkei carries an official Toyota statement “that it is unlikely to lodge a protest against the penalty.” Toyota even ”understands that the NHTSA has taken a position on this recall.” Admission of guilt? Lawyers in the U.S. who are still awake and sober reach for their cells and call their partners: “Did you hear what the nips just said? We’ll be rolling in dough.”

Thirty minutes later, The Nikkei [sub] ticker spits out another Toyota message: “Toyota falls on U.S. fine, S Korea recall.” To add insult to LaHood’s injury, South Korea ordered the recall of 13,000 Toyotas.

Five minutes thereafter, 11:15, The Nikkei [sub] reports that the Japanese government chimes in. It’s taking a wait-and-see position. The U.S. move is ”based on laws in the United States, and therefore it is difficult for the Japanese government to make any direct comment,” says Japanese Economy, Trade and Industry Minister Masayuki Naoshima. That’s Japanese for “we have no idea of what to do, please get lost.”

11:29, the next Toyota News: The Prius was Toyota’s best selling car in the 2009 fiscal year, says The Nikkei [sub]. “So what?” says the market.

11:45, the next Toyota News. Detail on South Korea. Affected are 13,000 Lexus ES350, Camry and Camry Hybrid: Accelerator pedals are getting entrapped by floor mats again. The market is taking a lunch break.

Back from lunch, The Nikkei [sub] reports at 1:09 pm that Toyota is between a rock and a hard place: “Admitting to the charge could strengthen the cases of car owners suing the firm, while refuting it risks inflaming U.S. public opinion.” There are more than 100 lawsuits pending against Toyota. The Toyota stock goes down.

Later in the afternoon, with no other news on the ticker, the stock inches back up to 3775 Yen.

Rough day at Toyota. And a bright morning for lawyers in the US.

“Ms. Dingelfinger, get me some brochures for that 150 foot Sunseeker.”

“Yes, Sir. Gulfstream just called, and are we still interested in that G5?”

“Tell them we’ll call back.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Rpol35 Rpol35 on Apr 07, 2010

    If the unintended acceleration problem is because the drivers are, as one poster surmized, "too old, too uncoordinated or too stupid" how come this problem isn't affecting cars like the Honda Accord, Nissan Altima, Chevy Malibu, Ford Fusion, etc.; all similar cars driven by the same cross section of automobile drivers. I don't want to get into the politics of this matter because I'd rather stay on point regarding the problem with Toyota's cars, their handling of this matter and the lack of this problem surfacing in competitor's models, ostensibly driven by the same type of driver.

    • Psarhjinian Psarhjinian on Apr 07, 2010

      The Grand Marquis and Town Car show similar rates to the Lexus ES and more than the Camry. The fleet-intended Crown Vic and the Camry-derived-yet-bought-by-younger-buyers Sienna don't. Toyota has a problem, but it's likely ergonomic (and more PR than anything at this juncture) and not due to the Christine factor. Ford has a similar problem, and across the board it's more prevalent among shorter, older and (usually) female drivers. Again, we're probably talking ergonomics again.

  • Rpol35 Rpol35 on Apr 07, 2010

    If it's ergonomics, then wouldn't it be more prudent to change the shape/size/material surface of the pedals, move the brake/accelerator further apart, etc. as opposed to looking at shims, sensors & pedal electronics (CTS vs. Denso) which is some of what Toyota is proposing? The focus on the fix, nevertheless, seems clouded. My sister has an '09 Camry and the recall notice that she received focuses on "pedal modification" (gnawing off the bottom of the pedal) and mat replacement; nothing to do with actual pedal assembly replacement. I've driven her car many times and find the ergonomics of pedal placement, shape, etc. to be fine. I can't see how her car is any different than similar, competing models which I have driven, thus leading to my previously suggested post. Also.....any information on unintended acceleration in manual transmission models? I have heard nothing on that possibility which if that's the case would then, I guess, point back to ergonomics of the automatic transmission models, i.e. pedal placement. I'll assume automatics and manuals use the same pedal assembly (don't know for sure).

    • Psarhjinian Psarhjinian on Apr 07, 2010

      I don't think it's anything obvious to someone who isn't an egonomist or kinesiologist. That it's not happening to youth-oriented Toyotas in any significant numbers, but is happening to fogey Fords is kind of telling. I really wish I had a few days, a Grand Marquis, Lexus ES, Buick LaCrosse and an adjustable kinesio dummy. The pedal shim might help matters a little, as will brake/throttle interlock. Tying the floor mats down and cutting the pedal probably helps a lot more. But the statistics are funny: they don't quite line up with mechanical problems with the pedal or electronic issues with the ETCS**---but they do point to something in how certain demographics interact with their cars. **(you'd expect less age bias; you'd also expect the Camry to place right with the ES in SUA rankings instead of well below it)

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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