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!

It’s getting a little hard to keep up with all of the Toyota recall news these days. Late Friday, Toyota announced yet another safety-related recall. This time it is for the Tacoma pickup. In some 2010 model year Tacoma 4WD trucks, the front drive shaft “may include a component that contains cracks that developed during the manufacturing process.  As those vehicles are used, the cracks may eventually lead to the separation of the drive shaft at the joint portion,” according to Toyota. Owners of the affected vehicles will be notified next month. Toyota says that there are approximately 8000 vehicles that have the potentially bad drive shafts.

The recalls are truly piling up now, and it’s hard to imagine how Toyota’s reputation can survive much more of this. As I’ve said before, Toyota literally built its reputation on the high quality of its products, and seemed to actively encourage its customers to think of their products as appliances, but appliances that never fail to get you where you are going. Because they have foregone trying to make any real emotional attachment to their products, how will consumers react now? You can get better quality and better styling, performance and prices elsewhere. Brands that come to mind are Ford, Chevrolet and Hyundai. This is clearly a case of living by the sword. Now the sword has turned on them, and they may die by it - or at least severely injured.

Toyota may find themselves answering this question from their customers, “If the big wheels don’t keep on turning, how will I get home to see my kin?”

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.

Toyota’s problems seem to multiply everyday. The latest in the saga of Toyota’s quality issues involves other car companies, namely General Motors and Ford. Yesterday, GM added an extra incentive to its existing ones specifically for Toyota and Lexus owners, giving them an extra $1000 which they can apply in three ways: 1. Those who choose to lease a vehicle may waive three payments for up to a total of $1,000. 2. Qualifying customers who are financing a vehicle purchase can receive 0 percent financing for up to 60 months. 3. Cash buyers can receive $1,000 off their purchase. It is noteworthy that GM did not “announce” this new incentive. They didn’t want to appear like they were gloating over Toyota’s situation. Ford followed suit shortly thereafter, but with a twist. Ford’s program targets people who own Honda, Acura, Toyota, Lexus or Scion vehicles that are 1995 models or newer. The owners of eligible vehicles would get $1,000 for trade-in assistance on either a purchase or lease of a new Ford, Lincoln or Mercury vehicle. That money is stackable on any other incentives already on a Ford Motor product.

In straw #2, the suppler of the pedals in question, CTS, (sort of) fired back at Toyota. Toyota, you might remember, was quick to drive a bus over CTS by naming them as the supplier of the faulty pedals, prompting some reporters (me) to question where the buck stops at Toyota. Mitchell Walorski, head of CTS Corp. investor relations, said the Elkhart, Ind., supplier is not part of the problem. CTS has “no knowledge of any accident or injury” stemming from the accelerator assemblies it supplies Toyota, he said. Walorski told Automotive News that CTS engineers are assisting Toyota, “but this is their recall.” CTS was not consulted about Toyota’s decision to issue the recall or to halt certain vehicles’ sales, he said.

In straw #3, the National Auto Auction Association announced that all of its member auctions would be required to make an announcement concerning the affected vehicles at their auctions. This is regular procedure for any auctions that have issues, and NAAA said Toyota is no different. The reason is simply full disclosure so everybody knows what they are getting. The impact is that Toyota’s residual (resale) values just took an immediate and substantial hit, which will affect trade-in values and, further down the road, lease payments. A lower residual value makes the lease payment higher, absent additional incentives. So lower residuals will hurt sales (especially leasing) or make them more costly to Toyota.

Straw #4 is an update to #3. The NAAA changed course and advised its member auctions to halt the selling of the affected Toyota models until the issues are resolved. This takes the ramifications in #3 and magnifies them significantly.

Straw #5 concerns rentals. All of the largest rental companies -  Hertz, Enterprise, Alamo, National, Avis, Budget, Dollar and Thrifty - all said they would stop renting vehicles covered in the recall.

In Straw #6, Toyota yesterday said it would recall an additional 1.1 million autos in the United States to fix floor mats that may jam accelerator pedals and cause unintended acceleration. The action is an extension of last fall’s recall, in which Toyota recalled 4.3 million vehicles in its largest-ever U.S. safety action. Today’s amended recall involves 2008-10 Highlanders and 2009-2010 Corollas, Venzas, and Matrixes, Toyota said in a statement. The action also covers 2009-2010 Pontiac Vibes made in a joint venture with General Motors Co. This brings the total units recalled for the 2 separate problems to over 6 million.

Lucky Straw #7 goes overseas. Toyota announced that it will extend the recall to an estimated 2 million units in Europe and about 75,000 in China. Let’s see, that now makes over 8 million units worldwide, about the same as Toyota sells worldwide in a year.

For Crazy Straw #8, Ratings agency Fitch, placing Toyota on watch negative, said the recalls and production suspension damaged Toyota’s reputation for quality and could hamper its recovery. If they ultimately lower Toyota’s credit rating, this will make borrowing to fund operations more costly. If it is only a short-term hit, then it will be unlikely to affect Toyota very much, as Toyota has more cash on hand the the pharaohs did.

I wonder if the camel’s back is getting weary yet?

As you might expect, all these straws are having an effect on Toyota’s stock. It has fallen over 15% since last week, reducing the camel’s market capitalization by $25 billion. That’s not going to make the shareholders very happy.

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

On the heels of the latest recall of 2.3 million additional vehicles a few days ago, Toyota announced today that it is suspending sales and production of 8 models whose accelerator pedals are the subject of the latest recall. Toyota does not yet have a fix for the problem, so it is taking this step to prevent any more of the vehicles from getting into customers’ hands (and feet) until the problem is corrected.

“Helping ensure the safety of our customers and restoring confidence in Toyota are very important to our company,” said Group Vice President and Toyota Division General Manager Bob Carter. “This action is necessary until a remedy is finalized. We’re making every effort to address this situation for our customers as quickly as possible.”

Toyota’s accelerator pedal recall and suspension of sales is confined to the following Toyota Division vehicles: 2009-2010 RAV4, 2009-2010 Corolla, 2009-2010 Matrix, 2005-2010 Avalon, certain 2007-2010 Camry, 2010 Highlander, 2007-2010 Tundra and 2008-2010 Sequoia.

No Lexus Division or Scion vehicles or other Toyota division models are affected by these actions.

Obviously, if sales are being halted until a resolution is finalized, Toyota wants to stop production of the affected models. Therefore, the following plants in North America are also going to be shut down the week of February 1 to avoid making more units with the problem. Why not halt production right now? Because production schedules are set far in advance and it is very difficult to stop in the middle of a week. In an emergency, they of course could and would stop production. This isn’t an emergency though. The affected plants are Toyota Motor Manufacturing, Canada (Corolla, Matrix, and RAV4), Toyota Motor Manufacturing, Indiana (Sequoia and Highlander), Toyota Motor Manufacturing, Kentucky – Line 1 (Camry and Avalon), Subaru of Indiana Automotive, Inc. (Camry), Toyota Motor Manufacturing, Texas (Tundra). Shutting down this many facilities will force the shut down of many supplier plants. Toyota did not indicate whether their workers would go on temporary layoff, but Toyota typically does not lay off workers. It will likely reassign the workers to maintenance work and/or training during that week. Workers at Toyota’s many supplier companies will not likely be so lucky.

I keep saying it, but it bears repeating. Toyota has built its entire reputation on its quality. With all of the quality lapses recently, it is only a matter of time until sales start to reflect the damaged reputation. The question is not “if” but “when” and “how much” the sales will be hurt.

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

This is getting very repetitive. Yesterday, Toyota announced that it is recalling ANOTHER 2.3 million units to fix a sticky accelerator pedal. Trade journal Automotive News reported that the newly identified problem is caused by a mechanism that controls the accelerator pedal’s return to the idle position after being pressed to the floor. This problem is unrelated to a similar acceleration problem related to the pedal getting stuck under the floor mats.

Yesterday, Toyota spokesman John Hanson said the problem is rare and stems from pedals that “prematurely wear” because of a supplier’s faulty pedal design. Today he said condensation can prevent the pedal from fully springing back into position, but he did not identify fixes Toyota is reviewing. He also said the issue involves only part supplier CTS, one of the two parts makers that build the pedal mechanisms for Toyota. Interesting how Toyota is blaming its supplier for the problem. Where exactly does the buck stop?

This recall covers 2005-10 Avalons, 2007-10 Camrys and Tundras, 2008-10 Sequoias, 2009-10 Corollas, 2009-10 RAV4s, 2009-10 Matrixes, and 2010 Highlanders.

Toyota (literally) built its reputation in the US based on its “bulletproof” quality. Customers have been known to buy Toyota products only because of the actual and perceived quality advantage over other manufacturers’ products. They gave up other attributes such as style and features and excitement to get the quality. With Toyota now at the top of the US recall list (therefore losing the “actual” part of the equation), one wonders whether those customers will now have any reason to shop at the Toyota store at all. Past slogans such as “Who could ask for anything more!” and “Oh what a feeling!” and ”I love what you do for me..Toyota!” take on new meaning with all of Toyota’s recent quality issues.

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.

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