The runaway Prius that was the subject of so much media attention last week has been examined by both Toyota and the US federal government (NHTSA). NHTSA isn’t talking, at least not yet, but Toyota is. Toyota released a statement (see below for the full text) today that comes just short of accusing the driver of lying about the incident. While not actually saying he lied, it does say that his account is “inconsistent” with the examination of the actual vehicle that Toyota engineers performed over the last several days. Reports have circulated that the driver, James Sikes, has financial troubles, driving speculation that he is attempting to capitalize on the publicity surrounding the reports of Sudden Unintended Acceleration (SUA) in various Toyota models.

Toyota has steadfastly denied that there is any electronic cause for the problems, saying that the sticking pedal and misplaced floor mats are the only causes for the acceleration problems. Toyota has recalled over 8 million vehicles worldwide to address the problem. The statement shows that Toyota doesn’t intend to go down without a fight in the battle over the SUA problem. Anyone over 35 probably remembers the similar issue surrounding the Audi 5000, made famous by the CBS program 60 Minutes in 1986. Audi’s sales tumbled dramatically in the wake of the report, and took many years to recover. Toyota obviously intends a happier outcome for itself, though its handling of the problem hasn’t exactly been perfect. They’ve let this continue to be front-page news for many weeks now, which is the last thing they want. They need to get this off of the news cycle and let it die down. The longer this stays top of mind, the longer lasting and more damaging the problem will be.

Toyota’s Statement:

Toyota Offers Preliminary Findings From Technical Field Examination of Alleged ‘Runaway Prius’ in San Diego

The Wall Street Journal is reporting today that among the documents Toyota has turned in to the Congressional committee investigating acceleration-gate is a potentially damning document that apparently describes as a win their success in lobbying the National Highway Safety Administration (NHTSA) to limit the recall over sudden acceleration to only 55,000 units. The document claims the save to the company was $100 million. The document also claims other wins in eliminating other potential recalls, including the Tacoma pickup.

This is just the kind of “smoking gun” that Congress and safety advocates will say “proves” that Toyota intentionally put the company’s profits above the safety of its customers. Toyota said, ”Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong. Our values have always been to put the customer first and ensure the highest levels of safety and quality. Our recently announced top-to-bottom quality review of all company operations, along with new quality initiatives and a renewed commitment to transparency are all designed to reaffirm these values.”

It is entirely inappropriate to take a page from a presentation out of context and use it like this. Of course Toyota cares about its customers - just about every company does. Just about every company also cares about its profits, and they should. It is likely that the Toyota employees that put the presentation together would regard saving $100 million as a good thing - who wouldn’t? They likely also thought that because they were successful in lobbying NHTSA to limit the scope of the recall, NHTSA agreed that more vehicles didn’t need to be recalled. Given what the letters NHTSA stand for, Toyota logically assumed that NHTSA would push for the recall if it deemed it necessary. It apparently didn’t, at least until the publicity of the San Diego law enforcement officer’s death made this a bigger, more public issue.

Did Toyota act perfectly? It seems not. But to take this piece of paper as proof that they willfully put the lives of their customers in danger is silly, and dangerous.

That’s what I think - how about you? Please leave your comments below. Thanks!

As expected, Toyota announced that it will, in fact, recall 133,000 2010 Priuses in the United States and about 300,000 in the rest of the world, for a total of 437,000 units worldwide. Toyota also included 14,550 2010 Lexus HS250h models as well, because they utilize the same anti-lock braking system as the Prius.

Toyota’s explanation of the problem is that “the anti-lock brake system (ABS), in normal operation, engages and disengages rapidly (many times per second) as the control system senses and reacts to tire slippage.  Some owners have reported experiencing inconsistent brake feel during slow and steady application of the brakes on rough or slick road surfaces when the anti-lock brake system (ABS) is activated in an effort to maintain tire traction.” They go on to say that the affected vehicles are safe to drive, as increased effort will stop the car.

The fix is an update to the software that controls the anti-lock brakes. This update was already introduced for Priuses in production last month. Toyota says the update will take about 30 minutes.

Hidden away in the release is another recall, this one for the 2010 Toyota Camry. This one is for brakes also, but is unrelated to the Prius/HS250h ABS problem. In the Camry’s case, some 4 cylinder units have a power steering pressure hose in the engine compartment that is the incorrect length. If this condition exists, a crimp on the power steering pressure hose may come in contact with a front brake tube. Should this condition continue, a hole may wear in the brake tube and deplete the brake fluid in the vehicle.  As a result, the brake pedal stroke will increase and lead to greater vehicle stopping distance. Owners will be notified within the next week or 2. If affected, your dealer will inspect and, if necessary, adjust the space between the brake tube and the power steering pressure hose crimp.  Based upon the inspection results, the dealership may need to replace the brake tube.

In yet another issue, the National Highway Traffic Safety Administration (NHTSA) is considering opening a formal investigation into the 2009-2010 Toyota Corolla. An analysis by Automotive News found that the Corolla has been the subject of 83 power-steering complaints to the National Highway Traffic Safety Administration since April 2008. Seventy-six of those reports note that the vehicle unexpectedly veers to the left or right at 40 miles an hour and up. The complaints compare the issue to hydroplaning or being hit by a strong wind gust. NHTSA is reviewing the complaints and will decide whether to open a formal investigation. Following NHTSA’s initial review, a formal investigation typically begins with a preliminary evaluation which, if warranted by the evidence, can be upgraded to an engineering analysis. A recall can follow. Toyota switched from hydraulic to electric power steering with its 2009 Corolla, which first went on sale in February 2008. This is in addition to another Corolla issue. Since November, NHTSA has been investigating reports of engine stalls in the 2006 Corolla.

Wow. That’s about all I have to say. Toyota’s reputation has taken a slide so steep and so sudden that it would have been unimaginable just a few months ago. It is not just the recalls themselves that are the problem, strangely enough. The American people have a very forgiving nature. As long as you give them a real, heart-felt apology and fix the problem, they won’t hold a grudge. By all reports, Toyota has dragged its feet and has had to be forced by the US and Japanese governments to recall the biggest problem (at least in terms of number of vehicles affected - the accelerator pedals). This is why the media has been all over these issues. Toyota’s handling of these issues will be studied by students and businesses for years to come as an example of what not to do. It will be interesting to see, going forward, how they step up and if these issues continue to haunt them.

That’s what I think - how about you? Please leave your comments below.

The Slandy Report first told you about the Prius brake issue back in December, before it was known to most of the general public. Back then, they had only recalled 3.8 million vehicles for accelerator issues. That number is now over 8 million. Back then, Toyota was not the subject of congressional investigations for potentially withholding evidence of the safety defect and for stalling before doing anything about it. Now they are. Back then, their stock was trading in the US at almost $85. Now, Toyota’s market capitalization has lost about $18 billion, or more than 15% of its value in those 6 weeks. Apparently, much can happen in 6 weeks. The Lions, however, didn’t win anymore games. They still suck. But I digress.

Toyota acknowledged the Prius issue today with this release:

Toyota is aware that NHTSA has opened a Preliminary Evaluation centered on owner complaints of a braking issue with the 2010 model year Prius. Toyota will cooperate fully with NHTSA’s investigation.

Some customers have complained of inconsistent brake feel during slow and steady application of brakes on rough or slick road surfaces when the anti-lock brake system (ABS) is activated in an effort to maintain tire traction.  The system, in normal operation, engages and disengages rapidly (many times per second) as the control system senses and reacts to tire slippage.  A running production change was introduced last month, improving the ABS system’s response time, as well as the system’s overall sensitivity to tire slippage.

This preliminary evaluation addresses owner complaints specific to the 2010 Prius.  This condition is not related to either the floor mat entrapment recall or the sticky pedal recall currently in action.

Toyota will continue to evaluate the condition as it relates to owner complaints and will keep NHTSA informed of its progress.

At this rate, all of Toyota’s vehicles will be the subject of 1 or more recalls. Which is next, the 1957 Toyopet (the vehicle that launched Toyota’s sales in the US market)? It seems that Toyota can’t buy break (pardon the pun) these days. It seems that they are suffering from the same ailment that has infected the Detroit 3. for a long time, they could do no wrong and their sales were only limited by their ambition. They made the age-old error: they began to believe their own press. They have violated the basic tenants of their own systems that are the source of their great success to this point, believing they could violate them at will with no consequences. They were wrong.

That’s what I think - how about you? Please leave your comments below.

Perhaps you’ve been following the news about Toyota’s “issues”. Perhaps, even, you know a bit about automotive design and engineering and can see through the PR-speak and the smoke screen that they tend to put up in front of the real truth. If so, then you have already come to the same conclusion that I have. Congratulations, but this column is not for you. This column is for the people who are taking all of the news in, and are confident that Toyota is the greenest, most altruistic company that has ever walked (several inches above) the Earth. Toyota makes the best cars and trucks anywhere, and this little glitch only proves that they’re human, even if all previous evidence indicates that their headquarters is not in Japan, but on top of Mount Olympus.

To recap, Toyota is recalling over 8 million vehicles around the world for 2 separate, but similar, problems. In some vehicles, the floor mats can interfere with the gas pedal and cause it to stay depressed even when the driver takes their foot off of it. The other is for gas pedals that, on their own, stay depressed when the driver intends to slow down. Different problems, same effect - the car doesn’t slow down when the driver intends it to slow down.

Toyota maintains that the floor mat issue is simple to fix - the mat just needs to be secured properly. In other words, customer error. Toyota is taking the step of recalling the affected vehicles to fix this.

In the other, Toyota blames the pedal itself, and said a few days ago that it has a fix for cars on the road. A small metal part will be inserted into the accelerator pedal assembly to make sure that the pedal’s springs will work as intended and force the pedal up when the customer takes their foot off.

So far, so good, right? Wrong. Toyota says only the pedals made by CTS, an Indiana supplier, are affected. Pedals made by the other supplier, Denso, are not. Denso, by the way, is partly owned by Toyota. In the world of automotive purchasing, such an arrangement is called “dual-sourcing” (as opposed to “single-sourcing”). Two (or more) companies make the same part for the same vehicle from the same set of specifications from the automaker, and are used interchangeably. Neither Toyota nor the government has indicated that CTS is to blame in any way, but only its pedals need to be fixed, not Denso’s. The pedal design is to blame, according to everybody. If it’s a design issue, then why are Denso’s parts not part of the problem?

Something doesn’t add up.

Next, the issue being “fixed” is being called unintended acceleration, as in “the car keeps going faster than I want it to.” No matter if you’re talking about the floor mat issue or the pedal issue, neither one will make the car or truck go faster. The both would prevent the car from slowing down. Big difference. To be fair, to a panicking driver, these would likely feel very much the same, so maybe this is a case of a badly worded problem. However, if that were the case, wouldn’t Toyota or the US government use the proper wording when describing the problem? If the cars are, in fact, accelerating, Toyota’s “fix” won’t “fix” anything. It will simply pacify the masses while they really try to figure out the problem. If they really are accelerating, then the problem is likely to be in the vehicle’s electronics, in the software code that makes modern cars and trucks (usually) so reliable and fuel-efficient. Toyota itself said during a meeting with a congressional committee that “…sticking accelerator pedals are unlikely to be responsible for the sensational stories of drivers losing control over acceleration as their cars race to 60 miles per hour or higher.” In addition, there have been reports of the acceleration issue in vehicles that are not subject to either recall.

Something doesn’t add up.

Also, less than 2 weeks ago, Toyota said it did not know what the problem was, nor how to fix it. Yet on Monday, February 1, Toyota announced the fix, complete with a diagram, saying, “Toyota’s engineers have developed and rigorously tested a solution…” Toyota went from still investigating to a “rigorously tested” solution is less than 2 weeks. Just how “rigorous” is this solution?

Something doesn’t add up.

If the “solution” is so good for the cars already on the road, why then is the solution for cars and trucks yet to be built different? That’s right, kids, CTS is already making a redesigned accelerator pedal for the factory to use after they are back up and running next week. It is NOT the same pedal with an extra part inserted, as described above for cars on the road. Why?

Something doesn’t add up.

If the various “fixes” that Toyota is implementing do not correct the problem, they will have a PR problem that will make the Pinto look like a schoolyard argument. And something else won’t add up, either. Toyota’s sales and profits.

That’s what I think - how about you? Please leave your comments below.

In what has been an ongoing saga worthy of Charlton Heston epic, GM has finally decided that selling Saab for something is better than spending millions to shut it down. Apparently, the GM Board consulted with its economic advisors, who told them, “Getting money is better than spending it.” According to an insider, the board has formed a blue-ribbon committee to find out if this principle can be applied to other parts of the business.

The Swedish government has reviewed the transaction and the related request for guarantees of a Saab Automobile loan that has been requested from the European Investment Bank, and has apparently approved it.  Assuming quick action, the transaction is expected to close in mid-February, and previously announced wind down activities at Saab will be immediately suspended, pending the close of the transaction.

As part of the agreement, Spyker intends to form a new company, Saab Spyker Automobiles, which will carry the Saab brand forward.  The sale will be subject to customary closing conditions, including receipt of applicable regulatory, governmental and court approvals.  Other terms and conditions specific to the sale will be disclosed in due time.

As part of the deal, GM will get $74 million cash, $326 million of preferred stock, plus some other consideration that GM refused to identify. GM will also continue to provide powertrains, the upcoming 9-4x finished vehicles and engineering services on an ongoing basis. GM will continue to honor warranties until Saab Spyker sets up organizations in markets around the world. No word yet on whether the present plan to close down some of the Saab dealers will proceed under Saab Spyker.

That’s what I think - how about you? Please leave your comments below.

Toyota’s sterling quality reputation is taking another hit, this time for the Prius. The best-selling hybrid car in the world is now the subject of a safety investigation by the National Highway Traffic Safety Administration (NHTSA). thedetroitbureau.com is reporting that NHTSA has received 33 complaints of brake failure on the current 3rd generation Prius.

In the case of the Prius brakes, it appears that the transition from regenerative braking to hydraulic braking is not transparent to drivers. Under certain conditions, the driver needs to press harder on the brake pedal to obtain the same stopping performance the regenerative system working in conjunction with the hydraulic brakes initially provides. Drivers are clearly upset by longer than expected stopping distances.

The problem seems to occur when the car goes over a bump or pothole. Somehow, the jarring disrupts the regenerative brakes’ operation.

A Toyota spokesperson initially told TDB that he was unaware of the issue, but Toyota quickly supplied the following statement: “We are aware of the complaints filed with NHTSA. The agency has not opened an investigation. We are investigating the issue based on internet traffic, customer comments to Toyota Customer Relations, and NHTSA complaints. It is too early to speculate the final conclusion(s) of our investigation and subsequent actions.”

Toyota has had several recalls recently. Toyota is in the midst of huge recalls involving floor mats and accelerator pedals (3.8 million vehicles) and rusty Tundra frames (+100,000), among others; and it faces lawsuits alleging the withholding of evidence in safety investigations, as well as new charges of unintended acceleration, and stalling in some of its most popular models.
Toyota’s worst year for recalls, ever
So far this year, Toyota has said it will recall a total of 4.8 million vehicles in the United States, four times more than in any previous year. It recalled 1.1 million vehicles in 2004.

So far, Toyota’s sales have not been hurt by the quality issues. Only time will tell if they are hurt long term. The D3 weren’t hurt by their bad quality at first either.

That’s what I think - how about you? Please leave your comments below.

27 vehicles (19 cars and 8 SUVs) earned the Insurance Institute for Highway Safety’s Top Safety Pick award for 2010, substantially lower than for 2009, the IIHS announced recently.  The main reason for the lower number of recipients is that the IIHS added a requirement that the vehicles must score a “good” in a roof strength test to measure protection in a rollover is required to win. 94 vehicles earned the Top Safety Pick for 2009.

Ford was the big winner for the 2nd year in a row, earning 6 Top Safety Picks, while Volkswagen and Subaru were next with 5 each.  Chrysler earned 4, and IIHS commented specifically on Chrysler’s efforts, saying, “… continuing a recent trend of improving the crashworthiness of its vehicles.”  Notable in their absence from the list are Toyota (which includes 28 Toyota, Lexus and Scion models), and BMW.

3 of the best selling midsize cars notably didn’t make the list. Honda Accord and Ford Fusion just missed scoring a “good” on the roof strength test or they would have earned the Top Safety Pick.  Toyota Camry would have qualified with good ratings, except for its rear crash evaluation.  Camry’s seats and head restraints are rated marginal for protection against whiplash injury.

Keep in mind that all cars and trucks have to pass certain safety standards to be for sale in the US; the IIHS evaluates vehicles to determine which are the safest, according to their own standards.  In some ways, the IIHS is at odds with the federal government, which promotes fuel economy.  In the IIHS press release, they say, “Keep in mind vehicle size and weight, because larger, heavier vehicles generally afford better protection in serious crashes than smaller, lighter ones.  Even with a Top Safety Pick, a small car isn’t as crashworthy as a bigger one.”  All things equal, a “larger, heavier vehicle” will get poorer fuel economy than a “smaller, lighter vehicle.”  The smaller, lighter one will also generally be more maneuverable, thus helping avoid the accident in the first place.  My point is simply to remind you that there is no one way to evaluate a potential vehicle purchase.  Use your common sense (if you have any) to look at how the vehicle scores on many different criteria.

Here is the IIHS’s complete list of Top Safety Picks for 2010:

Large cars
Buick LaCrosse
Ford Taurus
Lincoln MKS
Volvo S80

Midsize cars
Audi A3
Chevrolet Malibu
Chrysler Sebring 4-door with optional electronic stability control
Dodge Avenger with optional electronic stability control
Mercedes C class
Subaru Legacy
Subaru Outback
Volkswagen Jetta sedan
Volkswagen Passat sedan
Volvo C30

Small cars
Honda Civic 4-door models (except Si) with optional electronic stability control
Kia Soul
Nissan Cube
Subaru Impreza except WRX
Volkswagen Golf 4-door

Midsize SUVs
Dodge Journey
Subaru Tribeca
Volvo XC60
Volvo XC90

Small SUVs
Honda Element
Jeep Patriot with optional side torso airbags
Subaru Forester
Volkswagen Tiguan

That’s what I think - how about you?  Please leave your comments below.

Fritz Henderson, who took over as GM’s CEO when Rick Wagoner was relieved of his position in March, resigned effective today, following the monthly board of directors meeting.  GM Chairman Ed Whitacre will assume the title of CEO while GM conducts an international search for a permanent replacement.

Henderson, 51, was a GM lifer, who had been with GM for 25 years, and has been hurt by that image. The press and government have portrayed him as a competent manager and finance executive, but one who would not provide the kind of outside influence that GM needs. GM spokesman Chris Preuss denied any government involvement in the decision, calling it a “board decision.”

GM issued the following statement:

At its monthly meeting in Detroit today, the General Motors Board of Directors accepted the resignation of Fritz Henderson as Director, President and CEO of the company.

Fritz has done a remarkable job in leading the company through an unprecedented period of challenge and change.  While momentum has been building over the past several months, all involved agree that changes needed to be made.  To this end, I have taken over the role of Chairman and CEO while an international search for a new president and CEO begins immediately.  With these new duties, I will begin working in the Renaissance Center headquarters on a daily basis.  The leadership team – many who are with me today – are united and committed to the task at hand.

I want to assure all of our employees, dealers, suppliers, union partners and most of all, our customers, that GM’s daily business operations will continue as normal. I remain more convinced than ever that our company is on the right path and that we will continue to be a leader in offering the worldwide buying public the highest quality, highest value cars and trucks.  We now need to accelerate our progress toward that goal, which will also mean a return to profitability and repaying the American and Canadian tax payers as soon as possible.

In closing, I want to once again thank Fritz Henderson for his years of leadership and service to General Motors; we’re grateful for his many contributions.  I look forward to working with the entire GM team as we now begin the next chapter of this great company.

Henderson’s bio, according to Wikipedia:

Henderson was born in Detroit, Michigan. Henderson is a 1976 graduate of Lake Orion High School in Lake Orion, Michigan. He holds a Master of Business Administration degree from Harvard Business School and a bachelor’s degree in business administration from the University of Michigan’s Ross School of Business. During his time at Michigan, Henderson pitched for the University of Michigan Wolverines baseball team.

Since joining GM in 1984, he held a number of positions with the company until 1992 when he became GMAC group vice president of finance in Detroit.

From 1997 to 2000, Henderson became GM vice president and managing director of GM do Brasil covering GM operations in Brazil, Argentina, Paraguay, and Uruguay. Here he was successful in introducing small, inexpensive cars such as the Celta subcompact and the Meriva microvan, both produced in Brazil.

In June 2000, he was appointed group vice president and president of GM-LAAM (Latin America, Africa and Middle East) and in January 2002, he moved to Singapore as president of GM Asia Pacific where he was successful in expanding operations in Korea and China.

In 2004, Henderson was appointed chairman of GM Europe, based in Zurich, Switzerland, where he undertook substantial restructuring including significant reductions in jobs.

After becoming vice chairman and chief financial officer in January 2006, in March 2009, he became GM president and chief operating officer. At the time, the Financial Times quoted him as saying: “Being part of a turnround at GM when, frankly, many people don’t think it can be done, is exhilarating, if you like challenges. I have never had a dull day in my time at GM.”

When GM exited bankruptcy, Henderson said, “This is an exciting day for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers. We deeply appreciate the support we’ve received. We’ll work hard to repay the trust, and the money, that so many have invested in GM.”

In August 2009, Henderson refused to move the economically priced, rear wheel drive, Pontiac G8, to another GM marque after slashing the brand.

Showing that they care much more about ratings and sensationalism that about actual facts, Fox “News” came out strongly criticizing the recent Department of Energy (DOE) loans to Fisker and Tesla.  Fisker was awarded $528 million and Tesla $465 million.  It is difficult to enumerate all of the false and misleading statements in the following video clips, but here is a sampling of the junk that they try to pass off as news:

• Many times, the loans are derided as a handout to “foreign” companies “creating jobs in Finland” and “going to build a car in Finland for $89,000″.  In fact, both companies are American, based in California.  The confusion on the part of Fox and its guests is from the fact that presently, Tesla only produces one model, which is made in Great Britain. Fisker doesn’t produce anything yet, but its first model, the Karma, will be assembled in Finland. However, the loans are for the development and eventual manufacture of lower-priced models from both companies that will be made in the US.
• Stating and strongly implying that the only reason that Fisker received the loan is because Al Gore is involved and was pulling the strings behind the scenes.  In fact, Al Gore is a partner in Kleiner Perkins Caufield & Byers, a major investor in Fisker.  However, another partner is Colin Powell, who once considered running for president as a Republican.  Fox offers no evidence of tampering by Gore or KPCB.  It just throws out the implication.
• They have David Williams of “Citizens Against Government Waste” to discuss.  He rails against the loans as wasteful.  Fine.  Disagree with the program if you want, but Fox also asks him about the cars and whether they are worthy of the loans.  This guy doesn’t know any more that the hosts when he says the money will not help the average American.  See first point.
• At the end of the first segment, almost as an after thought, the host mentions that Fisker says the money will be used to fund another model, but it isn’t even designed yet.  Great job on doing your homework.  Even for the best car companies, it takes years and millions (sometimes billions) of dollars to design and develop a vehicle to sell.  Fisker (and Tesla) are going to use these low interest loans to fund that very development, so of course the new vehicles aren’t developed yet.
• The 2nd segment includes a writer from the Wall Street Journal, who is no better.  Several times, he refers to Fisker as a “Finland company” and Tesla as a “British company”.  Then he says 3-4 times, “I don’t agree with this type of government largess, but if you’re going to do this, at least give the money to an American company.”  I almost expect this type of bluster from Fox, but not the Wall Street Journal.  They are supposed to at least be knowledgeable about business.  If they’re not, what value are they to anybody?  He even tries to equate this to the US contracting out the moon program of the 1960s to the Russians.  Unbelievable.
• They conveniently leave out the fact that 1 truly foreign company has already received over $1 billion in DOE loans - Nissan.  Ford and Nissan received funds in the first installment of the DOE program earlier this year.  As a US taxpayer, I would much rather my tax $ go to Fisker and Tesla than Nissan.  Nissan’s profits and intellectual property are in Japan, where the good jobs truly are located.

By the way, Fisker has issued a press release disputing the reports about the loan and about the company. Tesla has also attempted to calm the storm and get the facts out.  You can read the Fisker release here, and the Tesla release here.

That’s what I think - how about you?  Please leave your comments below.

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