The Truth About Cars » recalls The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sat, 12 Apr 2014 15:00:55 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » recalls GM Rallies Rentals, Braces For Further Investigation Mon, 24 Mar 2014 12:35:40 +0000 Saturn-Ion-RedLine

General Motors has issued a new recall for 355 vehicles, while also facing a possible lawsuit by an investor over “immorality”. GM may also face a new probe involving the automaker’s bankruptcy and its relation to the original recall that thrust GM into the headlines, just as the agency responsible for investigating the problem at GM faces an audit from the Department of Transportation.

The New York Times reports the Justice Department has added an additional probe into their ongoing investigation of the 2014 recall of 1.76 million vehicles over a defective ignition switch linked to 31 crashes and 12 deaths.

The probe questions whether GM knew everything about the problem going into the 2009 bankruptcy — the automaker said they were alerted as early as 2001 — and failed to disclose the defect in full to both the federal government and the public during bankruptcy proceedings. This separate probe is being handled by the same group of FBI agents and federal prosecutors in New York who also brought forth the fraud case against Toyota that ended in a $1.2 billion settlement last week.

Meanwhile, Automotive News reports Transportation Secretary Anthony Foxx has asked the Department of Transportation’s inspector general Calvin Scovel to conduct an audit of the National Highway Traffic Safety Administration as to whether or not the agency properly looked into the issues leading up to the February 2014 recall, in light of the aformentioned crashes and deaths. The audit, according to Foxx, is to ensure “that DOT and NHTSA have a full understanding of the facts regarding the GM recall and can take corrective actions to enhance NHTSA’s safety function to the extent necessary and appropriate.”

On the investor front, Bloomberg reports a GM investor has filed a lawsuit against both the automaker and current CEO Mary Barra over every recall issued since late February this year.

In filing his complaint with the U.S. District Court in Detroit, George Pio called the automaker’s lack of immediate action “illegal and immoral,” and that news of the recalls, investigations et al surrounding GM as of late “triggered a sharp decline in the company’s share price, wiping out billions in shareholder value.”

The suit is filed on behalf of any individual who purchased stock between November 17, 2010 and March 10, 2014; no money damages have been specified.

Adding fuel to the fire are two stories from Edmunds, with the first related to the original recall regarding free loaner vehicles to those affected while their own vehicles are serviced beginning next month.

GM has called upon Enterprise, Hertz, Avis and other rental companies to help the automaker assemble a fleet for affected owners to use until the ignition switch is replaced. Though the original policy states GM owners are placed into GM vehicles, the scope of the original recall means if no related loaners are available, owners will be placed into vehicles from Ford, Honda, Chrysler et al. Underinsured owners will see a temporary boost in coverage from the automaker, as well. One source in the rental world tells us that this has been a massive undertaking for GM – with so many owners of the affected cars being under 25 (the minimum rental age at many companies) arranging coverage for these owners has been an extraordinary task.

As for the second report, Edmunds says 355 vehicles will be recalled within the week due to a transmission shift cable adjuster defect that could lead to a handful of 2014 models rolling away from where they were parked. Affected models include the Buick Regal, LaCrosse, Verano and Enclave; Chevrolet Cruze, Malibu and Traverse; and the GMC Acadia. All affected have the issue in their automatic transmissions.

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GM Receives 107-Question Survey Over Ignition Recall Fri, 07 Mar 2014 18:53:35 +0000 2007 Chevrolet HHR

General Motors, in the midst of a 1.6-million vehicle recall involving a faulty ignition switch discovered a decade earlier — and the resulting silence until late February of this year — must now answer a 107-question survey issued by the National Highway Traffic Safety Administration about the recall by April 3.

Autoblog reports the 27-page survey aims to collect more information about the timeline between the time the fault was found to the point the recall was finally issued, though more pages could be tacked onto the survey before the NHTSA decides on the proper course(s) of action, including multi-million dollar fines and criminal charges.

Question in the survey include a detailed look at GM’s examination process, future improvements to be made, thorough looks over each complaint regarding the defect, and why a replacement for the switch was ultimately delayed until near the end of the Cobalt’s life.

Meanwhile, GM CEO Mary Barra will be conducting a similar survey among all employees involved with the recall independently through an outside law firm.

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Ignition Flaw Fallout Grows For GM Mon, 03 Mar 2014 15:00:24 +0000 Chevrolet Cobalt SS Supercharged Sedan

The years-long silence over a faulty ignition switch responsible for 13 deaths and a recall of 1.6 million vehicles made between 2003 and 2007 is about to take a greater toll on General Motors executives as federal investigations, lawsuits and penalties loom over the horizon.

Automotive News reports General Motors’ response to the flaw may be too little, too late for the automaker. Though GM North America president Alan Batey proclaimed last week that GM would take an “unflinching look… and apply lessons learned” from their internal investigation over the lack of action and resulting silence regarding the ignition switch, former National Highway Traffic Safety Administration administrator and former consumer group Public Citizen president Joan Claybrook said the apology was all for naught:

That was a desperate move on their part to avoid heavy penalties. Saying ‘we’re sorry’ is not enough.

NHTSA announced they would be investigating the issue and its handling, and could issue as much as $35 million in fines. Meanwhile, Atlanta attorney Lance Cooper believes GM may be trying to get out in front of a lawsuit related to the ignition flaw by issuing the recall last month. Cooper recently settled a related lawsuit on behalf of the estate of Brooke Melton — whose 2010 death in a 2005 Chevrolet Cobalt was the result of the switch cutting off engine power — for undisclosed terms:

I know a lot of good people at GM, and I know that GM is trying to turn itself around. But this is a black eye for the company, because of what they knew for so long and didn’t do anything about.

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GM Adds 588,000 Vehicles To Ignition Recall Wed, 26 Feb 2014 14:41:06 +0000 2007 Saturn Ion Red Line

Originally affecting 780,000 2005 – 2007 Chevrolet Cobalts and Pontiac G5s, General Motors has now added another 588,000 vehicle in a recall to fix ignition switches that can lead to the engine being shut off. So far, 31 crashes and 13 front-seat deaths have been linked to the issue.

Automotive News reports the newly affected models include 2003 through 2007 Saturn Ions and 2006 through 2007 Chevrolet HHRs, Saturn Skys and Pontiac Solstices, bringing the total affected by the recall to 1.37 million.

The problem was first discovered in 2004 as the 2005 Cobalt entered showrooms, though GM took no action until December 2005, when the automaker issued a service bulletin advising dealers to advise their customers to not use heavy or large key chains. GM also offered an insert that would prevent keys from hanging too low or swinging too freely, thus preventing unintended ignition cut-offs.

By MY 2007, supplier Delphi began shipments of an approved replacement switch, followed in February 2009 by a redesign of the key to further reduce the risk of accidental shutdowns from an ill-timed bump. By the time the Cobalt left production in 2010, however, the damage was already done: a cluster of crashes where the ignition switch was bumped from “run” to “accessory” or “off,” disabling the airbag and other power systems (like the steering and vacuum assist for the brakes) prior to each crash. It wasn’t until the end of January of this year — after internal investigations were concluded — that a safety recall was finally issued.

GM North America President Alan Batey said in a statement that though his employer may not have been quick enough in issuing the recall, an issue the National Highway and Traffic Safety Association plans to examine, GM will take “an unflinching look at what happened” regarding the ignition recall, adding that customer safety was No. 1 on their list.

In the meantime, owners are advised to use the ignition with nothing adorning the key until their nearest dealer has a chance to inspect and replace the faulty switch. GM is also working with their suppliers to increase parts output in order to quickly introduce replacements into the chain.

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Toyota Set to be #1 in Recalls for Fourth Time in Five Years Mon, 30 Dec 2013 13:00:36 +0000


Barring a last minute campaign from another manufacturer, Toyota will be number one in recalls on the American market for 2013. This will be the second year in a row that Toyota has topped the recall rankings. Since the 2009 sudden unintended acceleration controversy, Toyota has led the nation in recalls every year except 2011.

A recent overview published in the International Business Times highlights the recall problems of major OEMs globally, with a focus on the United States. Official NHTSA statistics for 2013 won’t be available until next month, but a rough count of major recalls places Toyota in the lead. In 2012, Toyota recalled 5.3 million cars for a variety of maladies. Honda was number two, with 3.3 million cars recalled. Lowlights in the recall race include Toyota’s 870,000 units with randomly deploying airbags due to spiders, Chrysler’s 280,000 units with potentially faulty rear axles and 2.7 million Jeeps for potential  fire hazard, BMW’s 569,000 units that could randomly shed battery cables leading to stalling, and Honda’s 777,000 units with missing rivets leading to airbag malfunctions.

None of Toyota’s major recall campaigns in the United States in 2013 were related to unintended acceleration. Instead, airbags and seatbelts top the list of problematic components. Besides the aforementioned airbag issues in Camrys and Avalons, Toyota recalled over 750,000 Corollas and Matrixes for problems with electronic circuitry that could lead to random deployment of airbags or seatbelt pretensioners. 209,000 FJ Cruisers and 342,000 Tacomas were also recalled for seat-belt issues, as were 170,000 other units for faulty airbag inflators. In addition, 615,000 Sienna minivans were recalled for transmissions that can slip out of park without prior application of the brakes. Although no cars in the U.S. were recalled for SUA-related issues in 2013, Toyota just announced a recall of 400,000 units in Saudi Arabia to install brake override systems. That recall is meant to address concerns about possible unintended acceleration.

Toyota’s problems with airbags can be traced at least partially to the widespread reliance of multiple manufacturers on large suppliers. As the IBT article explains, Toyota’s recall for faulty air bag inflators is part of a widespread problem that has also affected Honda, Nissan, and Mazda. All of these companies used air bags manufactured by the Takata Corporation at its Mexican facility from 2000-2002. All of these companies have announced recalls to address the same problem. This illustrates the way in which component defects at the supplier level can spread widely throughout the industry. If headaches like this continue for OEM’s, one has to wonder if they might insource more production of critical safety systems. At the very least, it is likely that suppliers of these components will face tighter scrutiny in an effort to avoid costly recalls.

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Hyundai’s R&D, Product President, Engineering and Electronics Chiefs Resign Over Quality Issues Tue, 12 Nov 2013 14:00:23 +0000 aje-new-oct-28

After consumer complaints over quality issues in its home market of Korea and a string of recalls there, in the U.S. and other countries. Hyundai Motor Group’s president for research and development, Kwon Moon-sik and two other executives in charge of engineering and electronics have resigned. The shakeup comes as the automaker prepares some important new vehicle launches.

The Hyundai group’s chairman, Chung Mong-koo, son of Hyundai founder Chung Ju-yung, has a reputation for firing (and rehiring) executives and he is also known for stressing quality. Chung is seen as responsible for changing the reputation of Hyundai from being seen as a maker of cheap, poorly made automobiles.

“The latest personnel change shows our firm commitment to quality management and reaffirms our will to continuously improve R&D competitiveness,” Hyundai said in a statement. The executives resigned to “take responsibility for a series of quality issues.” Replacements have not been named.

Last week Hyundai expanded its U.S. recall of the Genesis sedan to fix a potential problem with the brakes. So far almost 150,000 Genesis cars in the U.S. and Korea have been recalled. The recall notice comes as Hyundai is getting ready to launch the next generation Genesis in Korea later this month.

In April, Hyundai and Kia recalled more than 1.8 million vehicles in the United States because of a faulty brake switch, followed by a similar recall in South Korea, the largest in at least a decade there. Korean consumer have also complained of water leaks in Santa Fe SUVs and Elantra compatc sedans.

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2013 – 2014 Camaros Recalled Due to… Stickers? Wed, 06 Nov 2013 19:02:32 +0000 2014 Chevrolet Camaro

If you’re one of the few, proud owners of the slightly angrier-looking 2014 Camaro, or one of the many to own the slightly less angry 2013 model, you may need to send it back to correct a problem. No, not spiders this time. The recall is about stickers. That don’t stick.

The recall involves the air bag warning label on the sun visor coming undone, which warns both drivers and passengers that having an explosive bag of hot air and chemicals designed to save your life could also leave you with a few cuts and bruises upon impact. No word on how many have this particular issue, however (the stickers, that is).

In its letter to the National Highway Traffic Safety Administration, Chevrolet says owners can bring in their defective stickers to their nearest dealership to be replaced with either a much stickier sticker, or a new sun visor. They also state that owners who don’t have this issue — assuming they would notice — can send a note saying all is well with the world, and at least no spiders were involved. This time.

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Toyota Recalls 870,000 Units Due To Arachnophobia Sat, 19 Oct 2013 16:07:23 +0000 2012 Toyota Camry

One blah Monday morning, you’re commuting to the anonymous office park some 90 minutes away from the bedroom community you call a home in your equally anonymous Toyota Camry Hybrid, listening to yet another story about Congress kicking cans down roads and/or some wacky antics your favorite DJs had the past weekend while you take another swig of that mermaid-branded caffeinated goodness.


You’re not ready to deal with the myriad of reports you have to work on when you arrive at the office, and you’re certainly not ready for your colleague to rant about how his fantasy football team lost because one of his players sustained a career-ending injury on the first snap, but at least the piling traffic ahead of you seems to be delaying the inevitable, much to your mix of relief and chagrin.

Tired of being stuck behind the Dunkin’ Donuts truck (reminding you that you really need to hit the gym someday), you edge over to the (not really) faster moving lane on your left while wishing you could use the HOV lane at times like this when suddenly your airbag explodes, causing you to bash your alleged green machine into a Greyhound bus, kicking off a chain reaction that will take hours by the state police and first responders to sort out. You also make the news when the strangely chipper real-time traffic reporter chimes in about the wreck, which then leads to how Rockin’ Robin DeCradle “got totally wrecked” at the Waffle House of Blues this weekend.

Turns out the cause of your airbag going off was spiders, which you find out later that day when the local news reports that Toyota has issued a recall (again), affecting 870,000 vehicles including the one now residing in an insurance salvage yard that you, no doubt, are going to have a hard time collecting anything upon.

According to CNN Money, the 870,000 Toyotas are Camrys, Venzas and Avalons screwed together and sold for the 2012 and 2013 model years, hybrids included. The recall notice states that the webs spiders make within the confines of a drainage tube attached to the car’s AC unit could force water to drip onto the airbag’s control module, creating a short circuit followed by the airbag warning light (and the driver’s side airbag itself) going off. To make matters worse, the same issue can lead to loss of power steering, as well.

Toyota spokesperson Cindy Knight said that the company was aware of the spider issue, noting that 35 cases of the lights coming on and 3 airbag deployments have come to pass thus far, and the consistent cause of the problem were the eight-legged freaks who, for some reason, love making webs in AC drainage tubes.

The recall recommends owners take their cars in to their nearest dealer, who will then make the necessary repairs (and calls to the Orkin Man) to prevent water from causing unintended airbag deployments. The notice will be sent by mail, and the repairs will be on the house.

A similar issue affected Mazda back in 2011, when spiders set up shop in the vent lines of many a Mazda6′s gasoline tank, proving once again that nature is so fascinating.

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NHTSA Opens Preliminary Investigation Into Jeep Grand Cherokee Headliner Fires Fri, 23 Aug 2013 20:50:50 +0000 i2274785

Issues about fire safety continue to affect the Jeep brand as the U.S. National Highway Traffic Safety Administration announced today that it is opening an investigation into 146,000 2012 model year Grand Cherokees, after receiving reports from three consumers who say that the headliners of their cars caught fire near the passenger side sun visor.

“The customers reported a burning odor and visible smoke coming from the headliner while the vehicle was being driven. This was followed by flames from the headliner itself. Customers lowered the windows in an effort to clear the smoke but this increased the fire’s intensity. All three vehicles had to be extinguished with a fire extinguisher or by the fire department as they continued to burn after the vehicle was turned off . The fire also caused the sunroof to shatter in one incident, and in another, the fire spread to the passenger seat when the burning sun visor fell onto the seat. In each case, the incident resulted in the vehicle being inoperable requiring it to be towed to the dealership.”

A Chrysler spokesman said that the company is conducting its own investigation and that it is cooperating with NHTSA:

“Customer safety is paramount at Chrysler Group. Accordingly, our engineers are investigating this concern while also fully supporting the Preliminary Evaluation opened by the National Highway Traffic Safety Administration. The Jeep Grand Cherokee is among the safest vehicles on the road today. It also is the most awarded SUV ever.”

The investigation into burning headliners follows a voluntary recall of over 1.5 million 1992-98 Jeep Grand Cherokees and 2002-07 Jeep Libertys to address possible fires caused by leaking fuel tanks in the event of a collision, even though those vehicles met all applicable standards at time of manufacture. NHTSA has still not determined if it will crash test Jeep vehicles that have been recalled and retrofitted with a trailer hitch intended to protect the gas tank.

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NHTSA Administrator Says Compliance With Standards At Time of Production Not Enough Mon, 15 Jul 2013 17:59:22 +0000 strickland-2012

In an interview with Automotive News (registration required), National Highway Traffic Safety Administration director David Strickland said that if automakers want to keep their cars and trucks from getting recalled, those cars must not just meet standards in effect at the time vehicles are produced, but that the car companies must also make sure they stay as safe, statistically, as competitors’ products that use different designs.


Though he didn’t explicitly say so, his remarks could be read as saying that the agency will aggressively pursue recalls even though the involved vehicles met all standards in effect when they were built. Companies apparently will not be able to avoid recalls by saying that their cars and trucks met all applicable standards when sold new. Strickland’s comments were made against the backdrop of the voluntary inspection and retrofitting of trailer hitches on some Jeep models to reduce the risk of punctures to the rear mounted gas tanks in the event of rear collisions

“It really is based on the notion of unreasonable risk. And that is an evolving notion,” Strickland told the AN. He said that NHTSA is obligated to reassess risks “if state of the art moves all the peers in one direction, and it appears that there is another part of the fleet that has not made those same moves or improvements.” If car makers want to avoid recalls, they’ll have to remain “within the zone of reasonable risk”.

When Chrysler was first ordered to recall 2.7 million Jeep Grand Cherokee and Liberty SUVs, the company claimed that the agency was changing the rules. The dispute raised the issue as to what exactly is a “standard” if that standard is fluid and subject to retroactive change. ”NHTSA seems to be holding Chrysler Group to a new standard for fuel tank integrity that does not exist now and did not exist when the Jeep vehicles were manufactured,” the company at first said after the recall was announced, though as mentioned the company and NHTSA came to an agreement about Chrysler doing the inspections and retrofits voluntarily.

Though Strickland said that the use of fluid standards isn’t the result of any new interpretation of the laws the agency enforces, he also said that using the “reasonable risk” standard was a tactical solution to “upgrading” standards when the slow pace of  changing the Federal Motor Vehicle Safety Standards legislatively doesn’t move fast enough in the agency’s opinion.

“It’s very hard to change or upgrade a federal motor vehicle safety standard,” he said. “Sometimes it can be decades. Sometimes it can be 20 or 30 years.” Using a standard that changes retroactively based on the concept of reasonable risk, the NHTSA director added, allows the agency to “to backstop the inability to reach back and upgrade standards – because of cost and time and all sorts of other factors.”

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Does BMW Have a Fire Safety Problem With All of Its Brands’ Turbos? 2,916 More Non-Chevy-Volts Recalled For Fire Hazard Tue, 17 Apr 2012 18:07:56 +0000

It hasn’t gotten nearly as much attention as the handful of early production Tata Nanos that caught fire, or the Ferrari 458 recall, also for fire safety issues, or the newly expanded investigation into Jeep Wranglers burning, and certainly not nearly the attention given the near non-event with that one crash tested Chevy Volt, but BMW appears to have a corporate wide fire problem with turbocharged models that has now resulted in recalls of BMW, MINI and Rolls-Royce vehicles. Earlier this year BMW recalled turbocharged Mini Cooper models because the circuit board controlling the auxiliary water pump used to cool down the turbocharger after the engine is shut off could develop an electrical fault due to copper migrating between circuit traces, creating a fire hazard. Now comes word that BMW is expanding a previous recall (PDF) of some 2010 BMW and Rolls-Royce models to include 2011 and 2012 models. It’s not clear if it’s the exact problem as with the Minis, though it does involve the same component, the electronic controller for the auxiliary water pump. To their credit, BMW discovered the latest problem in internal testing and there is no word on any real-world fires with consumers’ cars. The Mini recall was prompted by reports of a dozen fires, eight of them while the vehicles were parked. The latest recall (PDF) affects 2011 BMW 5 Series, and 2012 6 Series, 7 Series and X5 and X6 vehicles. Also affected are 2010-2011 Rolls-Royce Ghosts, which are built with a BMW platform and share components with the parent brand. BMW says the problem exists with 100% of the turbocharged V8 and V12 powered models in those lines. A total of about 35,000 BMW made vehicles are affected by the original and expanded BMW and Rolls-Royce recalls.

In the initial voluntary recall last October, BMW attributed the problem to an unspecified malfunction in the electronic controller. It’s possible that it’s the same problem as with the Minis.

Under certain conditions, the pump’s electronic circuit board can malfunction. The malfunction can occur as a result of certain design features in combination with high operating temperatures. Under these conditions, this can lead to a failure of the water pump. In some cases, the circuit board can overheat. In an extreme case, overheating of the circuit board can lead to smolder of the water pump. If smoldering occurs, it cannot be excluded that this may also lead to an engine compartment or vehicle fire.

In the subsequent expanded recall, BMW attributed a problem with later production vehicles to improperly made turbocharger housings, resulting in leaking coolant.

It was discovered that for the additional production, there was a manufacturing process deviation at the supplier for this limited production run of pumps, this deviation could result in cracks in the pump housing. If this were to occur, then coolant could enter and contact the pump’s circuit board.

Whether or not it’s the same exact defect affecting Minis, BMWs and Rolls-Royces, it’s clear that BMW has quality and fire safety problems involving its turbochargers’ water pumps. The recall notice sent to NHTSA from BMW identifies the faulty component supplier as Pierburg Pump Technologies GmbH.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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Automotive Lawsuit History Unearthed, Junkyard Style: The Ford Park-To-Reverse Warning Label Sat, 31 Mar 2012 13:15:32 +0000 For decades, I’ve been seeing Ford-family vehicles with ugly, pointless warning labels stuck to their instrument panels: Unexpected and possibly sudden vehicle movement may occur if these precautions are not taken. I’d always assumed that these were ex-rental cars, but after I mentioned the warning stickers in this week’s ’75 Ford Maverick Junkyard Find post, several readers pointed out that the stickers were the result of Malaise Era litigation. Of course!
It turns out that many Ford automatic transmissions of the 1966-1980 period developed a tendency to slip from Park to Reverse, on their own, leading to lots of unpleasantness (if we are to believe Ralph Nader’s Center For Auto Safety, this problem caused 6,000 accidents, 1,710 injuries, and 98 fatalities). Since we’re talking about something like 23 million vehicles here, Ford resisted launching the biggest recall in automotive-industry history; the DOT agreed in 1980 to have Ford send out warning labels to the 23 million affected owners. Some of them used the stickers, most didn’t, and we still see them from time to time in junked Fords, Lincolns, and Mercurys. So, another bit of junkyard-learned Malaise Era automotive history, a nice chaser to the story of the FLOOR TEMP warning light.

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Can’t Bring Me Down: Toyota Brand Unaffected By Recalls Wed, 15 Feb 2012 16:00:52 +0000

The massive wave of recalls that brought some 9 million Toyotas back to the dealers, amidst a frenzied coverage by a sometimes hysteric media, did less damage to the brand than imagined. A study from North Carolina State University shows that Toyota’s safety-related recalls that began in 2009 had little to no impact on how consumers perceived the brand.

Dr. Robert Hammond, assistant professor of economics at NC State, launched the study because he wanted to see how consumers respond to recalls. Hammond looked at used-car markets as a measure of how much Toyota owners were willing to accept when selling their vehicles – and how much used-car buyers were willing to pay for them.

Hammond found that there was very little effect on what consumers were willing to pay for a Toyota. Hammond found that the average price of affected vehicles declined by approximately 2 percent relative to comparable, unaffected vehicles (such as similar Honda models). That 2 percent decline is within the statistical margin-of-error for the study. What’s more, the effect was temporary: The first Toyota recall was in November 2009, and the apparent decline in vehicle price had leveled out by January 2010.

Initial reports of drops in resale value turned out to be premature. In 2011, Toyota and Lexus were back on top in the Kelley Blue Book rankings.

Hammond did a similar analysis of Audi vehicles that were recalled due to similar acceleration concerns in 1986. The impact there was more significant. Audi showed an average price slide of over 16 percent relative to similar, unaffected vehicles over the course of six months.

The paper, “Sudden Unintended Used-Price Deceleration? The 2009-2010 Toyota Recalls” will be published in the Journal of Economics and Management Strategy.


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Rattled Toyota Turns To Women, Foreigners For Help Thu, 25 Nov 2010 11:28:59 +0000

There is no “all clear” at Toyota. The company is still “on a crisis footing a year after the first of a wave of recalls of more than 12m vehicles.” This is the bottom line of an article the Financial Time wrote after talking to Shinichi Sasaki, the board member responsible for quality at Toyota. What is even more interesting: The article was put on The Nikkei [sub] newswire, which brought it to worldwide attention.

Sasaki makes some alarming statements:

“I don’t think the crisis is over. If we step down the level of our efforts at this point in time, it may mean we are sowing the seeds of crisis once again.”

Criticized for its insular, bureaucratic corporate culture, Toyota is contemplating the unthinkable: They are searching for foreign or female members for its all-male, all-Japanese board, Sasaki said. Diversity on a Toyota board? Someone call the police.

Sasaki is also preparing the public for the possible news that Toyota might hand the title “world’s largest carmaker” to GM. Sasaki said Toyota had won that race by default, and only because GM had serious engine trouble. Sasaki and Toyota would not “despair” if ToMoCo would become #2.

We had prognosticated last August that GM could dethrone Toyota this year. Everybody, including the perennial China-haters, thank China for buying much more than 2 million GMs this year.

Everybody thinks Toyota has left the crisis behind, but Shinichi Sasaki insists on disagreeing:

“If we truly feel all these people are looking and heading in the same direction as the company, we can say the crisis is over. But we’re still in the process of getting everyone looking in the same direction and taking the appropriate steps.”

Toyota was in a bad place (the U.S.A.) at a bad time. It got hammered by the recall affair. It lost market share in the U.S. and Europe. Ironically, GM did not pick up the share. Ford and Hyundai did. Toyota eyes the Korean competition with growing alarm.

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Toyota’s Sudden Acceleration: Stop Walking Along The Road Immediately! Wed, 13 Oct 2010 13:29:48 +0000

Remember Toyota’s alleged sudden acceleration? And the hysteria surrounding it? Dubious databases were searched for dead bodies. The Secretary of Transportation himself recommended to stop driving your Toyota, and to drive it to the dealer instead – very carefully. Luckless swing club entrepreneurs took to driving a Prius instead, brakes smoking. Lawyers around the nation had wet dreams involving a Gulfstream V (or a 80 foot Sunseeker as a fall-back position.) As nothing of substance was found, the NHTSA asked the august body of the National Academy of Sciences to find the ghost in the machine.

Don’t even bother to look, it’s a worthless search. That’s what Paul Fischbeck, a professor of social and decision sciences and engineering and public policy at Carnegie Mellon University, told the National Academy of Sciences.

The risk of dying in a traffic crash is 1.05 deaths per 100 million miles traveled, says Fischbeck. Analyzing the 2.3 million Toyota vehicles recalled for sticky pedals, Fischbeck said if all of them remained unfixed and on the road, the risk of dying would rise to 1.07 deaths per 100 million miles traveled. People have problems with large numbers, so Fischbeck puts it in perspective:

“If you canoe for half-a-mile you incur a 2-in-a-million risk of dying,” Fischbeck says. “Walking for 10 miles is about the same.”

Canoes must be immediately impounded. They are a menace to society.

According to Fischbeck, who is cited in a Detroit News article, the risk of dying while walking along the road is 19 times higher than that of driving in a recalled, but unfixed Toyota.

Walking along the road must immediately stop.

Fischbeck says it’s important to put the risk of sudden acceleration in context.

For instance, if you drive around in an unfixed Toyota for a whole year, you have the same risk of being killed in the line of duty as a police officer working for 2.5 days.

Get those cops off the streets, now (after they are done rounding up the people who walk along the road.)

The National Academy of Sciences will render its report sometime next year. It will remain interesting. Maybe.

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Kia Recalls Its Management Tue, 07 Sep 2010 14:47:04 +0000

I hate to get all “workers of the world unite”, but management seems to get away with a hell of a lot more than the rank and file. Take Prudential’s bid to take over AIG’s Asian arm. The bid failed and the whole exercise cost Prudential £377m (about $579.5m). Digest that figure for a second, then digest the next fact. The CEO, Tidjane Thiam, refuses to stand down over this mistake. Now consider this, if you, as a rank and file member, would cost the company you work for just 1 percent of that previous figure, could you honestly expect to keep your job? Now let’s look at the FIATsco incident. The whole affair cost GM $2b. Again, had you have cost the company you work for just 1 percent of that figure, could you keep you job? After writing this paragraph, I find the next story almost heartwarming.

The Wall Street Journal reports that Kia Vice President, Chung Sung-Eun has resigned. The reason for his resignation was to take responsiblity for a series of recalls which Kia had to issue. Michael Choo, spokesperson for Kia, said that Chung Mong-Koo, CEO of Hyundai, which owns 39 percent of Kia, allowed Chung Sung-Eun to leave as he failed to ensure the quality of Kia vehicles. The recalls in question are 104,047 units of the Soul, Sorento, Borego and Cadenza cars.

The problem was faulty wiring. Business Week posits that resigning over 104,047 recalled cars is a bit harsh, but that’s the way the industry is going since the recalls of Toyota. “Jeong (Chung) resigning is a pre-emptive action, “said Chae Hee Guen, Korean analyst for Mertz Securities Co., “Quality is a top priority for Kia and Hyundai Motor Co. management. They don’t want to tarnish their image.” While this is admirable, are we going too far in the other direction?

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Nikkei: Toyota Not Out Of The Woods Thu, 12 Aug 2010 11:42:18 +0000

The Nikkei [sub] reminds Toyota fanpersons and Toyota haters alike that Toyota “still faces uncertain times despite the preliminary findings of a U.S. Transportation Department investigation that indicate driver error may have been a contributing factor.” You mean, that wasn’t the fat lady? You mean, we have to wait for someone more obese?

The DOT says that they aren’t done yet with Toyota. It was an interim report only, and the search for the ghost in the machine continues.

The real ghost-in-the-machine investigations have been outsourced to experts in the search for extraterrestrials and other flummoxing problems, namely the NASA and the National Academy of Sciences. They will take their good ole time before they say something

NASA could release findings as soon as this month or next, but don’t be surprised if they say that “further research is needed.”

The NAS already said that one shouldn’t expect anything from them before next spring. These guys are thorough. Even making nice by pulling out of Iran won’t help. The DOT has Toyota on slow roast. The longer there is Fear, Uncertainty and Doubt (FUD), the better for the domestics.

The Nikkei is needlessly pointing out that “Toyota is still having a relatively rough time, with new-car sales in the U.S. slipping 3 percent on the year in July.” However, the brand hasn’t lost its luster: 57 percent.  of new Toyota cars sold were bought by customers who had been driving other brands. “This was the first time since the recalls that the rate has topped 50%,” enthuses a Toyota official.

The Nikkei also reminds us that “back in the 1980s, German automaker Audi AG faced a strong backlash in the U.S. over allegations of unintended acceleration. Even though the transportation department ultimately ruled that the cause was driver error, it took a long time for Audi’s sales to recover.” Ain’t that the truth. And to celebrate that truism, a really bad rendition of “Out of the Woods.”

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Recalls Leave Toyota Traumatized Fri, 30 Jul 2010 14:51:21 +0000

Some people (like about half of the nation) are convinced the Government has a conflict of interest when it comes to Toyota. Many believe there is a witchhunt against Toyota by a government, and by unions that want GM’s major competitor bleed money and market share before the big GM IPO. 25 percent believe the criticism stems from an outright desire to help GM, while 38 percent disagree and 37 percent aren’t sure. Whatever the reason may be, Toyota is beginning to show battle fatigue.

The Wall Street Journal found a forecast that says that Toyota’s July sales will be shown with a minus in front when they are published on Monday, “while nearly every other car company’s sales are up.” Jesse Toprak, an analyst with TrueCar, says that “Toyota is going to be the only major auto maker to post a sales decline in July.”

Toprak’s crystal ball sees Toyota down by 4.4 percent in July, while Honda will be up 4 percent, Ford should increase 8.4 percent, and GM a whopping 23 percent. Toprak thinks by the end of the year, Toyota’s U.S. market could be less than16 percent.

According to the WSJ, it’s Toyota’s own fault:

In a way it was market share, or Toyota’s obsession with it, that got the car maker into so much trouble. For decades Toyota built a reputation as a maker of dependable, well-built vehicles that rarely had problems. But in the past decade the company shifted its attention to gaining market share. As Toyota ramped up production to support increased sales volume, it may have sacrificed quality. Does this sound familiar? It is the same flawed strategy that had the Detroit Three looking like endangered species a year or so ago.

A little smear campaign also helps. Says the WSJ:

The bad news for Toyota is the advantage of perceived quality it had over nearly every rival car brand is gone. And with competitors making better vehicles than ever, it may never regain its lead.

There are at least 76,750 Americans who think that was the whole idea – if statistics can be believed.

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Toyota Recalls Sequoias For Unintended Deceleration Fri, 30 Apr 2010 02:33:29 +0000

The one thing I love about the car industry it its ironic sense of humour. Remember the four dead brands of GM? Who’d have thought SAAB would be the last man standing? When Ford was trading at $1 a share and their stock was labelled “Junk” status, who’s have thought they’d be where they are now? Now, I can’t speak for the rest of the B&B, but I’m, personally, sick of this UA business with Toyota. I’ve been rather sceptical from the start and very little has happened to change my mind. However, the God of Irony is still working in the car industry and whilst I was grazing the internet today, I came across this belter: Unintended deceleration.

The Spec reports that Toyota is announcing the recall of 50,000 Sequoia SUV’s in the United States and Canada. Now what could you think the reason could be? No idea? Well, the God of Irony strikes again. Toyota are recalling these vehicles because of unintended slowing. Yes, if the cars aren’t going too fast, they’re going too slow. The problem comes from an over enthusiastic Electronic stability control system which, at low speeds, could activate and prevent the vehicle from accelerating as it should. “Toyota is voluntarily launching this recall as part of our commitment to investigating customer complaints more aggressively and to responding quickly to issues we identify in our vehicles,” Toyota Canada said via a press release. Good job Toyota performed this recall, it may have saved them another $16.4 million.

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Just Like A Good Neighbor: State Farm Joins Toyota Shake-Down Thu, 15 Apr 2010 09:18:20 +0000

More and more Americans have recently detected that they have a rich uncle in Japan. The uncle’s name is Toyota. From LaHood to a bevy of lawyers, all have a yen for Toyota’s money. Latest (but surely not last) to join the fray: State Farm. You know, that same insurance company that had disclosed all those claims to NHTSA and never received an answer. They went public with the story a few days before the congressional hearings. Now we know why: Like a good neighbor, State Farms wants its money back.

“Armed with reports of accidents for which they’ve already paid claims, State Farm insurance has asked Toyota to repay them for any crashes related to unintended acceleration by its vehicles,” reports USA Today. The request for a little Farm Aid is just the beginning.

Other insurance companies are expected to – make that will follow and ask for money. In the trade, this is called “subrogation.” No, it’s not a kinky sex practice. It is a complicated matter on which a Wikipedia has a whole article, in case you are interested. Executive summary: The insurance companies did pay the claim, Toyota is supposed to hold the bag. To the tune of another $20m to $30m. If the insurers get their money back, customers who filed a claim may get their deductibles refunded. (Just make sure that you will.)

State Farm had sent a letter to Toyota in September 2007 asking it to pay for claims in an accident involving a 2005 Toyota Camry. State Farm wrote, “We are aware of several complaints to your company of sudden acceleration involving the Toyota Camry.”

The letter was copied to the National Highway Traffic Safety Administration. The NHTSA replied they had looked into similar complaints, starting in August 2006, and closed the investigation on April 3, 2007. State Farm wasn’t reimbursed.

What if Toyota refuses to pay? Easy, says USA Today: “The cost could trickle down to consumers, who could end up paying higher insurance rates for Toyota vehicles.” This gives the insurers more leverage than the law: Toyotas are cheap to insure at the moment. If it changes, it will hurt sales. Toyota must decide to settle now, or pay later.

Toyota has no comment.

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Don’t Bring Me Down: Toyota Raises Worldwide Output Tue, 23 Mar 2010 09:05:15 +0000

Despite having their hands full with recalls, class action suits, Prius hoaxers and gold diggers, Toyota is not falling into deep depression. To the contrary, they think demand in 2010 will be higher than originally planned. And they ramp up their production to meet the demand.

Reuters heard from a source inside of Toyota HQ that the Japanese auto maker is not lowering their targets. In the contrary, “Toyota has lifted its global production plans by another percent to 7.57 million vehicles for 2010, anticipating better demand in Japan and other Asian markets,” the deep throat in Aichi said. All in all, Toyota is planning on a 19 percent jump of worldwide sales, not even counting Daihatsu and Hino.

In December, Toyota had told its suppliers to prepare for 7.49 million Toyotas sold worldwide in the 2010 calendar year. After the Toyota troubles, observers had expected that number to come down. Instead, the insider tells Reuters that today in the afternoon, suppliers will be notified of an up revision.

Where does Toyota want to find willing buyers?

In Japan, Toyota plans to cash-in on the subsidy-led demand for fuel-efficient cars, and will lift domestic production plans by 40,000 units.

In “non-Japan markets,” Toyota plans to sell 100,000 units more. These “non-Japan markets” are most likely code for China, where the market experiences double digit growth. Says Reuters: “Toyota, like the rest of the industry, is counting on double-digit sales rises in China and India to make up for an expected fall in European car demand after government subsidies run out.”

What about that other “non-Japan market?” In North America, where there is a lot of anti-Toyota contamination to deal with, Toyota has lowered plans by 60,000 units. Most of these cars are, or make that could have been locally produced.

If anyone wanted to hurt Toyota, the attempt appears to backfire. The only damage is in North America, where it pains domestic suppliers and dealers.

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Toyota Installs Vice President Of Recalls Mon, 22 Mar 2010 10:51:55 +0000

Toyota currently has only five Vice Presidents. Soon, they’ll have a sixth.  According to The Nikkei [sub], Toyota HQ in Japan will install a new VP “in response to the increased workload in dealing with the recent massive global recalls of its vehicles.”

Apparently, Toyota is planning for the long term.

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Toyota Loses Critical Prius Court Case Sun, 21 Mar 2010 11:13:08 +0000

“If we lose that case, we will lose heavily” said Toyota in Delhi’s High Court. The judges had no sympathy for Toyota’s pleadings. Their decision might impact seriously on Toyota’s plans to market the Prius in 40 countries worldwide. As if Toyota doesn’t have enough problems with recalls and class action suits, now this:

The Delhi High Court is teaching Toyota a long needed lesson: A trademark is not a god given right. You must monitor your trademark and “vigorously defend” it against all infringers, lest you will lose it. Or not get it in the first place, as it is the case in India.

Eight years ago, Prius Auto Industries, a maker of “automobile accessories, bumper grills, bumper guards, side beeding (sic) and head lamp accessories” did set up shop in Delhi. They properly registered Prius as a trademark. As there was nobody else in India who had that mark, they received it, used it, and lived happily ever after. Until …

Toyota showed their Prius at the Delhi Auto Expo, Jan 5th to 11th. Then it dawned on them that a little known manufacturer of side beeding had the Prius name. Toyota also had bad (or greedy) lawyers. They should have told Toyota that Toyota has no case. India is a “first to file” country. When Prius Auto Industries filed,  there was no prior Prius in India, and Toyota did not object.

Therefore, “The Delhi High Court has rejected Toyota Motors claim to exclusive trademark right over the name ‘PRIUS’ for launching a new car in India,” as India’s Tribune reports.

The court also tut-tutted Toyota for approaching the court “six years after Prius Auto Industries got its trademark registered and started its sales,” reports The Hindu. The court was especially unsympathetic to Toyota’s plight because “Toyota slept over the matter and idled over it for a long period,” as the ruling reads. The court also intimated that Toyota should have known better, because Prius Auto Industries has grown into a big company with large orders from companies such as General Motors, Hyundai and Mahindra and Mahindra.

Moral: If you register a mark, research it carefully, in all the markets you want to use it, especially in growth markets such as China and India, which, coincidentally, both follow the “first to file” doctrine. Many others, such as Mexico, do the same. A lot of whining about trademark infringement comes from the misunderstanding of the difference between “first to use” and “first to file.” Another reason for pain is lack of monitoring of the “first to file” countries. If you are too lazy or too stingy to register your mark in these countries, then you should at least monitor trademark applications there and object if something comes too close.

The court thinks that the buyer of Toyota’s spare parts will not get confused with the products of the Prius Auto Industries and will not be deceived into believing that their side beeding is from Toyota. As far as India goes, Toyota must be content with living as Prius inter pares. Or find another name. Priapus maybe?

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Toyota Off The Charts In China. Not In A Good Way Thu, 11 Mar 2010 12:26:02 +0000

Remember when Akio Toyoda, coming back from the U.S.A. went to Beijing in a hurry? China is an important growth market for Toyota. Toyota had been doing well in China, last year they sold 709,000 units, about the same as GM China if you don’t count the Wuling vans. Suddenly, Toyota is falling from grace in the Middle Kingdom. For the first time in years, Toyota dropped off the top 10 list of the best-selling cars in the Chinese market last month, reports Gasgoo, citing data released by China Passenger Car Association.

Toyota China recently said its total sales in February rose 30 percent from a year earlier to 45,400 vehicles. However, that underperformed the market that had risen 46 percent in February.

The reason? You guessed it. A survey by Chinese website shows that 73.6 percent of 258,000 online respondents said they would not buy Toyota or Honda branded cars after the recalls, with only 16.4 percent saying Japanese cars are still their favorite choices. In a market with more than 100 auto makers, that’s a vote of confidence.

Toyota is wooing  Chinese buyers with zero-interest financing for some of its models, they are also throwing in a year’s premium of car insurance and two years of 24-hour roadside assistance to new buyers. Let’s watch the charts of the coming months.

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Many NHTSA Complaints Unverifiable Sat, 06 Mar 2010 12:36:12 +0000

Just as Paul Niedermeyer, Edmunds, Consumer Reports or anybody else who has the time to download and analyze 103.1 Mbytes worth of customer complaints to NHTSA, Toyota is pouring over the data. However, their attempts are being thoroughly frustrated.

According to The Nikkei [sub], Toyota found out that oftentimes complaints submitted to the NHTSA “either are unverifiable or lack vehicle-owner information required to facilitate follow-up.” In other words, a lot of the complaints look like they are bogus. Even if they are real, their validity cannot be ascertained.

And herein lies the rub:

Anybody can file on-line complaints at NHTSA without a VIN number. Try it. With any car make you hate. Anybody can give a bogus email and a likewise bogus physical address. There is no on-line checking. That information is as useful as most of the email we receive each day: It is garbage. Counting garbage intermixed with real complaints is useless unless the garbage has been removed. Drawing statistical conclusions from a 0.03 percent complaint rate, poisoned by data that just asks for being abused and messed with, is an exercise in futility. It takes us back to the witch-hunts of the Middle Ages, where anybody could point at a woman, call her a witch, and get her submitted to the sink or swim test. At least in the Middle Ages, you couldn’t do it anonymously and on-line. As Wikipedia says: “In modern terminology ‘witch-hunt’ has acquired usage referring to the act of seeking and persecuting any perceived enemy, particularly when the search is conducted using extreme measures and with little regard to actual guilt or innocence.”

If Carfax can correlate a VIN number with a car’s whole history, then the NHTSA should at least be able to cross-reference a VIN-number with an owner. Why does the NHTSA accept and publish a complaint without a VIN? Does the IRS process your tax return without a SSN or tax payer’s ID? If I can’t order a book at Amazon without a credit card number that matches my address, why can I report dead people to the government without the merest of checks? Idiocy or intentional? You decide.

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