#Recall

Toyota’s Lexus GX 460 has been taken behind the woodshed by consumer reports. The SUV re-emerged with two black eyes. CR issued a “Don’t Buy” rating and declared the GX 460 a “safety risk.” Said TTAC’s Edward Niedermeyer: “Expect GX460 sales to fall off a cliff until the model is fitted with an electronic straitjacket.” Fall off a cliff? Sales are zero as of this morning.

The Detroit Free Press sure seems to think it’s “possible.” The paper reports that NHTSA’s “final notification” to Toyota includes a warning that it “would have faced a fine totaling $13.8 billion were it not for caps set by U.S. law on NHTSA penalties.” But then, that’s a bit like Toyota saying it would have manufactured its pedals to space shuttle specification if it didn’t cost so much money to do so. Six paragraphs into the piece, the Freep concedes that

NHTSA said it could issue another fine depending on whether it decides the problems with sticking pedals are technically two separate defects, based on the manufacturing changes made by Toyota.

The AP reports that documents obtained by NHTSA say Toyota acknowledges CTS-manufactured pedals “had two separate defects that may require two separate remedies.” But that’s not all, folks…

The LA Times reports that “more than 100 suits seeking class-action status, as well as at least 50 personal injury cases” against Toyota have been consolidated to a single courtroom, under the jurisdiction of U.S. District Judge James Selna. According to Reuters, the ruling by the U.S. Judicial Panel on Multidistrict Litigation did state that:

We are initially persuaded that the centralized proceedings should eventually include the related personal injury and wrongful death actions

In September of 2007, Jim Press surprised the automotive world by leaving Toyota to become president of Chrysler LLC. Press, the first non-Japanese member of the Toyota board of directors, was generally considered to be a major factor in Toyota’s North American success, and his move still has people scratching their heads. It’s been generally assumed that Chrysler’s then owner, Cerberus, promised him a big pile of money. That assumption seems to be reinforced by Press’ inability to pay $1.35 million in debt and taxes last September, which he attributed to bonuses not received due to Chrysler’s meltdown. Still, regardless of the merits of working for the strugling Auburn Hills automaker, leaving Toyota in the first place seemed like a poor career choice.

The Detroit News has just published a quote that allegedly comes from a January 16 email from Toyota Motor Sales USA group vice president for environmental and public affairs Irv Miller to “company officials in Japan.” Miller’s quote reads:

I hate to break this to you but WE HAVE a tendency for MECHANICAL failure in accelerator pedals of a certain manufacturer on certain models. We are not protecting our customers by keeping this quiet. The time to hide on this one is over. We better just hope that they can get NHTSA to work with us in coming with a workable solution that does not put us out of business.

Lighten up, Toyota. You are not alone. Today, Nissan recalled 25,024 cars in Japan because some of their accelerator pedals have caught the stickyness sickness, and may not want to come back to idle once you take the foot off the gas.

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.

A few days ago, we reported that Toyota had caved in to demands of the Commerce Bureau and the Consumer Protection Committee of China’s Zhejiang Province. Under the agreement, Toyota will reimburse Zhejiang customers for losses sustained from the RAV4 recall. Toyota will send people to pick up and deliver the affected vehicles, and will provide a loaner while the car is in the shop. The whole thing was started by New York’s AG Andrew Cuomo who strong-armed Toyota into supplying similar services to recall-affected residents of the Empire State. The Zhejiang-accord had The Nikkei [sub] worried: “Such an agreement could lead to demands for similar deals from customers in not only other provinces, but also other countries.” It didn’t take long.

While others have a bit prematurely called for a Toyota death-watch, we’ve been following the story of comeback kid Toyota for a while. In Japan, ToMoCo’s production, domestic sales, and exports are solidly up. In the U.S.A., where Toyota had taken the biggest recall-pummeling, Edmunds predicted a 37.1 percent rise over March 2009. Looks like their crystal ball is in fine shape. Expect Toyota to surprise when March numbers come out.

A few weeks ago, we reported that the commerce bureau and consumer protection committee of China’s Zhejiang Province’s called on Toyota to compensate drivers for costs stemming from its recall of the RAV4. The bureau wanted that Toyota supplies loaner cars while the RAV4 is in the shop (Toyota says the reflash takes 30 minutes.) The Chinese also suggested that Toyota compensates drivers for gasoline and other expenses involved in bringing cars back to dealerships. At the time, Toyota had a polite “no thanks,” for the request. Now, Toyota changed their minds. They will pay.

Gawker reports that Toyota Motor Sales has sent a letter to ABC News President David Westin, requesting that Brian Ross’s report on unintended acceleration in Toyotas be retracted. Gawker had previously uncovered Ross’s deceptive video editing, and Toyota’s complaint built on allegations first raised by the website. Ross’s reliance on Professor David Gilbert and Sean Kane of the Safety Research & Strategies also received a withering attack from Toyota General Counsel Christopher Reynolds. Kane and Gilbert’s financial relationship with several law firms pursuing suits against Toyota was revealed during congressional hearings, and Gilbert’s research has been insistently refuted by Toyota, none of which was mentioned in the ABC report.

Toyota is a customer centric company. It now considers a recall that will please the vociferous crowd that thinks something is wrong with Toyota’s engine computer. Reuters reports that Toyota is discussing with NHTSA whether and how they should fix nearly 1.2 million Corolla and Matrix models. They are at risk of unintended stoppage. They might stall out because of flaws in their computer.

Volkswagen may be much closer to its goal of surpassing Toyota as the world’s largest automaker. In an exclusive interview with The Nikkei [sub], Akio Toyoda said, Toyota will make its top priority the quality, not the number of the cars it makes.

So far, VW wanted to subjugate Toyota by 2018. But Toyota has decided to go slow. Said Toyoda-san: