IHS Global Insight Perspective | |
Significance | The top official for the U.S. National Highway Traffic Safety Administration, David Strickland, has publicly lambasted Toyota for "not being truthful" in its accounts of its sudden acceleration issues, and for an inadequate response to the problem. |
Implications | The company has announced another recall in the United States, covering more than 600,000 Toyota minivans over a 12-year period, because of corroding spare tyre cables that could cause the wheel to drop onto the pavement, resulting in a collision hazard for other vehicles. |
Outlook | There is no end in sight to the investigations and quality issues at Toyota despite the company's best efforts to try to deflect attention elsewhere. As long as Toyota keeps issuing recalls and drawing the ire of federal investigators, it will continue to struggle with an image problem. |
U.S. National Highway Traffic Safety Administration (NHTSA) administrator David Strickland has blasted Japanese automaker Toyota for what he says has been a pattern of deceitful practices regarding the latest safety and quality recall issues. Strickland has accused the automaker of not being truthful in the latest investigations into sticky accelerator pedals conducted by federal regulators. The administrator has also criticised the automaker for not revealing software upgrades for the 2010 Prius anti-lock braking systems (ABS) until pressed, and for taking "shortcuts" with regard to safety and quality while it has been rapidly expanding in the United States and around the world. "The very thing that made them as popular and trusted as they had been in the United States is what had failed them", Strickland told the Detroit News. "They are paying for those decisions—and paying severely." Strickland recalled a 19 January 2010 meeting between himself and top Toyota North America officials, sales chief Jim Lentz and president Yoshimi Inaba. "Frankly, at that meeting, they were not truthful" about what—or when—they knew about sticky pedals, Strickland said, as quoted by the Detroit News. "They were not truthful", he repeated. "The only thing we ask of every manufacturer is to disclose timely and truthfully. And if you don't do that, I will make a recommendation and I will issue a fine." The NHTSA did just that earlier this month, imposing the maximum allowable fine of US$16.4 million, a decision that Toyota must decide by today whether or not to fight in court. The sum is well below what Strickland says he would like to levy against the automaker, however. "If Toyota again made decisions for recalls or safety campaigns in other countries that they did not relay to us...we will take action again", he said. Increasing the fine to "way more than US$100 million" would be a good start, said Strickland. "A higher penalty would help the process of negotiating because if you have a more significant penalty...there would be a much more aggressive evaluation of risk on the part of the manufacturers", he said.
Meanwhile, Toyota has issued another recall in the United States, this time covering over 600,000 Sienna minivans because of spare tyre carrier cable corrosion on 1998–2010 model-year vehicles. "This condition may appear on certain 1998 through 2010 model year Siennas that have been operated in cold climate areas with high road salt use", Toyota said in a statement. "In the worst case, the carrier cable may fail and the spare tire could become separated from the vehicle, a road hazard for following vehicles that increases the likelihood of a crash", it said. Toyota does not yet have a fix established for the problem, according to Reuters, but it is advising customers to bring their vehicles into their local dealers for an inspection to evaluate the risk of the incident occurring. The addition of this Sienna tyre cable recall now brings the tally of U.S.-specific vehicle recalls to 6.6 million since November 2009.
Outlook and Implications
Toyota's troubles do not stop there, unfortunately. Last week, a Consumer Reports article rated the Lexus GX460 sport utility vehicle (SUV) as a "Don't Buy" because of what the publication considers a poorly tuned electronic stability control programme. Two sources have said that Toyota will recall the Lexus SUVs today, offering up a revised stability control programme for the trucks. The NHTSA has also announced that it will be investigating the trucks as well, but seeing as how they reportedly meet all government safety requirements and there have been no complaints registered against them, it is hard to see what the government might have to complain about. Nevertheless, at this point in time the U.S. government is doing everything it can to be seen as proactively pursuing Toyota for what it feels has been a less-than-forthcoming attitude from the automaker regarding its massive safety recall issues. The NHTSA cannot fine Toyota more than US$16.4 million per offence, but the agency is already looking at other offences that it feels might have been committed that run contrary to U.S. regulatory law. If the NHTSA wants to push for higher penalties, it will have to gain support in Congress for legislation that would allow it to levy such fines. That will not be as easy to achieve as might be first thought, as any penalty laws that are changed because of Toyota's transgressions must be applied industry-wide, and this would be sure to draw the ire of the automotive lobby. It is an election year, however, and politicians keen to be seen championing public safety may yet climb aboard that bandwagon.
Some indication may come at a new Congressional hearing that has been set for 6 May, with Toyota testifying again. The House Energy and Commerce Committee and its subcommittee on oversight have asked Toyota to provide more information on its unintended acceleration issues. Congressional officials have now had a couple of months to digest the more than 70,000 documents that have been subpoenaed from Toyota and related organisations, and most reports have indicated that government officials are not pleased with how Toyota has handled the situation. It would seem that the company acted only after being leaned on quite heavily by the U.S. government, even despite internal pleas from executives and employees to improve attention on slipping quality, culminating in a stern letter from Toyota's own top public relations executive in January advising top officials in Japan to "come clean" on safety issues. All in all, it has been an extremely damaging episode for Toyota, knocking the company from its pedestal as industry leader on quality and giving competitors an amazing opportunity to level the playing field. The more recalls, lawsuits, and investigations that result from these problems, the less likely it seems that Toyota will ever regain its top quality and safety reputation in the global industry.