Toyota to Recall More Than 1.5 Mil. Vehicles Worldwide over Separate Manufacturing Defects

Toyota has announced that it is recalling more than 1.5 million vehicles worldwide over defects with the brake master cylinder seal and fuel pump wiring, reports Agence France-Presse (AFP). The automaker's U.S. unit has said that it will recall almost 740,000 vehicles in the United States in order to repair defects with brake master cylinder as "a small amount of the brake fluid could slowly leak from the brake master cylinder," causing the brake warning lamp to light up. The U.S. unit added in its statement that if at this point the brake fluid is not replaced, "the driver will begin to notice a spongy or soft brake pedal feel and braking performance may gradually decline." The vehicles being recalled in the United States are the 2005-06 models of the Avalon, the 2004-06 models of the Highlander (excluding hybrid versions) and Lexus RX330, and 2006 models of Lexus GS300, IS250 and IS350 vehicles. Toyota will start notifying the owners of the affected models in the country from early November.

Similarly, in a filing with the Japanese Ministry of Land, Infrastructure, Transport, and Tourism, Toyota said that it will recall more than 600,000 vehicles in Japan. The automaker said that almost 599,029 units of the 11 models, including its Crown sedan and Lexus' IS and GS models, will be recalled due either defective fuel pump wire or brake master cylinder or both. The affected models were manufactured between May 2002 and March 2006. Toyota will also recall an additional 1,869 units of its Voxy and Noah models, sold exclusively in Japan, over defective speedometer. In rest of the world, Toyota is recalling almost 50,000 vehicles in Europe, 60,000 vehicles in China, 30,000 vehicles in Australia, and 50,000 vehicles in "other" markets in Asia.

Outlook and Implications

Toyota's latest recall comes just less than two months after the automaker recalled almost 1.3 million units of its Corolla and Matrix cars in the United States and Canada over stalling issues related to bad engine control units (see United States – Canada: 27 August 2010: Toyota to Recall Another 1.3 Mil. Cars in U.S. and Canada over Stalling Issue). The automaker has so far recalled more than 12.5 million vehicles worldwide over separate manufacturing defects in the past 12 months, an increasing number that seems to keep growing with each passing month, with no end in sight. Each recall continues to batter Toyota's already tarnished image regarding the quality of its vehicles worldwide; it has lost its position as the leading automaker in the U.S. market following the recent recalls. Regarding the latest safety recall, Toyota claims that the move is a preventive measure as it has not received reports of any accident caused by the defects in any markets so far. Toyota has already been criticised for not acting sooner over accelerator pedal recalls earlier this year and thus paid a fine of US$16.4 million levied by the U.S. Department of Transportation for transgressions related to its unintended acceleration recalls. Toyota has not disclosed the cost of repairs for the latest recalls, but it is expected that their impact will certainly be reflected in Toyota's upcoming quarterly and fiscal year (FY) financial results.

Nevertheless, the automaker is implementing several measures to improve the quality of its vehicles as part of its drive to regain consumer confidence in its key markets. According to statistics from the U.S. National Highway Traffic Safety Administration (NHTSA), in an average recall, almost 72% of repairs are made within 18 months. Toyota has so far repaired more than 65% of its total recalled vehicles in the country over the 12 months to the end of September. Steve St. Angelo, Toyota's chief quality officer for North America, recently said, "Toyota has made significant progress in recent months to help ensure that our customers can have complete confidence in the quality, safety and reliability of their vehicles, and our latest initiatives build on those accomplishments," adding that, "Our job is to look under every rock and turn every stone over to see if there's anything even suspicious." Angelo went on to say that, "The safety of our drivers is of utmost importance. Even if it looks just a tad bit gray, we're taking fast action... We're seeing probably more recalls than anybody would like to see, but I'm not going to do anything that could jeopardize the safety of our customers."

Toyota recently said that it will equip all its new models for sale in the United States, Japan, and Europe with brake override systems as soon as possible in order to ensure vehicle safety (see Japan – Europe – North America: 7 October 2010: Toyota to Equip All New Models for Japan, North America, and Europe with Brake Override System). The automaker will install this technology as a standard feature in all of its models produced for European markets starting this year and will equip all 2011-model-year vehicles with this technology for sale in the North American market. Toyota will also equip its entire vehicle line-up in Japan and the United States with event data recorders. Toyota will also maintain a message of safety in its marketing materials in the United States until customer perceptions change and its sales improve (see United States: 7 September 2010: Toyota to Maintain Safety Message in Advertising). However, recalls are nothing new, and given the complexity and highly technical nature of modern vehicles, partly as a result of customer requirements and government legislation, it is unlikely that they will ever be eliminated entirely.