Toyota: It's Getting Even Worse

Toyota (NYSE: TM  ) has been on the hot seat for months over safety defects with a number of different vehicle models. The problem, as you'll recall, isn't so much the safety issues (though they're bad and they need fixing) as it is the company's longtime pattern of responding to problems with a mix of denial and foot-shuffling.

News flash: We can apparently add "regulatory bamboozlement" to that list.

According to Bloomberg, Toyota's Washington office hired former regulators from the National Highway Traffic Safety Administration (NHTSA), the car-safety arm of the Department of Transportation, and put them to work talking NHTSA out of forcing Toyota to recall cars.

It'd be easy to say, "Eh, that's business nowadays, they all do it," except that they don't: Ford (NYSE: F  ) , General Motors, Chrysler, and Honda (NYSE: HMC  ) all say they have exactly zero ex-NHTSA people employed to deal with the agency on defects.

Toyota, once again, is a unique and special flower.

It isn't going away
All of this negative news coverage has had at least two effects: Toyota's sales seem to have taken a hit, and officials in high places in both the U.S. and Japan have gotten cranky. On Tuesday, the Department of Transportation ordered Toyota to turn over documents related to the various safety issues. That may not sound like a big deal, but it is -- the DOT is aggressively looking for evidence that Toyota knew of safety defects but didn't take appropriate action.

And if they find that evidence? Oh boy. With Secretary of Transportation Ray LaHood personally involved, it's clear that the heat -- inside NHTSA and inside Toyota -- is now intense.

Is there fire behind the smoke?
Meanwhile, the company's senior management keeps trying to beat back the flames. In a press conference in Tokyo on Wednesday, Toyota made a number of interesting revelations:

  • The Corolla could be next. Responding to reports of steering issues with the Corolla, Toyota said that the company is actively investigating and made a point of noting that it is considering a recall. The Corolla is the world's best-selling car. A global recall for a serious safety defect would be a huge deal.
  • Brake-system modification to become standard on all new Toyotas. Control systems will be modified to ensure that pressing the brake pedal always overcomes acceleration. (Yes, fellow car geeks, this one's an eyebrow-raiser. I look forward to your comments.)
  • Toyota is creating a global quality task force. You mean they didn't have one already? Seriously?
  • Toyota will add more black-box recorders. Sounds great, but these are supposed to become mandatory in the U.S. by 2012 anyway.
  • Toyota is cutting production due to declining sales. Two U.S. factories will be idled for a combined total of 14 days. The company estimates that it has lost 100,000 sales due to the safety mess during this fiscal year, which ends in March.

Also, company president Akio Toyoda said that yeah, maybe they've overreached a little: "The basic rule of the Toyota Production System is to only build as many cars as there is demand for, and we ourselves broke that rule."

That's nice to hear, but it's not even the beginning of enough.

The upshot
Most consumer-facing companies have recalls every now and then -- Johnson & Johnson (NYSE: JNJ  ) , Mattel (NYSE: MAT  ) , Campbell Soup (NYSE: CPB  ) , Newell Rubbermaid (NYSE: NWL  ) ... I could go on and on, and I haven't even mentioned the other automakers. But all of those companies have had their share of recalls, as have many others.

The recalls, by themselves, aren't Toyota's big issue. The issue is what have they been hiding? And more to the point, can we trust their products?

With Congressional hearings starting later this month, and the full attention of regulatory bigwigs focused on finding smoking guns in the interim, it isn't going to get easier for Toyota any time soon. How bad will the damage be long-term? Only time will tell.

Fool contributor John Rosevear owns shares of Ford. Ford is a Motley Fool Stock Advisor recommendation. Johnson & Johnson is a Motley Fool Income Investor selection. Motley Fool Options has recommended a buy calls position on Johnson & Johnson. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 17, 2010, at 4:27 PM, joejoe22587 wrote:

    I have a Scion XD (aka Corolla hatchback)

    and it also has the steering problem. It wanders very bad at highway speeds. I'm surprised I have not been pulled over for drunk driving! My wife drove it one time and refuses to drive it again! I wonder what the 'fix' will be on this issue.

  • Report this Comment On February 17, 2010, at 4:29 PM, joejoe22587 wrote:

    I have a Scion XD (aka Corolla hatchback)

    and it also has the steering problem. It wanders very bad at highway speeds. I'm surprised I have not been pulled over for drunk driving! My wife drove it one time and refuses to drive it again! I wonder what the 'fix' will be on this issue.

  • Report this Comment On February 17, 2010, at 4:33 PM, Milligram46 wrote:

    Excellent summary of current events.

    Couple of things on your bullets above:

    On the Toyota Corolla the recall, if one happens, for steering would impact 2009 to 2010 vehicles only. It is worth noting that every reviewer in every media outlet who has spent any time driving a Corolla has universally complained about the incredibly poor quality of the steering in the Corolla, now numb, over boosted, and with no on-center feel to speak of. They really cheaped out on their electric steering and it shows. It is also worth noting that on this specific complaint Toyota is not immune, General Motors is facing its own investigation on 905K Cobalt models with electric steering for the exact same issue. I would be VERY interested to know if the same supplier provided the electric steering in both vehicles. Also of interest is the GM investigation does not extend to the Saturn ION, Pontiac G5 or Chevrolet HHR. Also worth noting the Corolla complaints don't extend to the Matrix or Pontiac Vibe. Stay tuned!

    On the issues of "black box" recorders. General Motors, Ford and Chrysler agreed on an open standard several years ago. The data in these, along with Honda and Nissan vehicles (which use their own systems) record about the last five seconds of data before an airbag deployment crash. This includes speed, gas input, braking input, is anti-lock brakes engaged or not, air bag deployment time, did it do a stage I or stage II deploy, which airbag(s) deployed, were the seat belts fastened, g-forces, lateral forces, etc. etc. Insurance companies, accident investigators, police, NHTSA, and the manufacturers are using this data now to computer model crashes, just like a black box in an airplane. Coupled with the OBD II data this is very powerful stuff for determining issues, fault, etc. etc. etc.

    In the case of Honda and Nissan, they use a proprietary system but that system is available to insurance companies, investigators, etc. etc. etc.

    So what about Toyota. Well Toyota only has one laptop in North America to access their black boxes. They typically contain two bits of information. Speed, and if the airbags went off. Toyota will only provide this data under a court order! They will not allow third party analysis of the black box! They provide the data from the box after pulling it off. How secretive can you get! As you noted, this information is going to be mandatory in 2012, and on a single system, so Toyota saying, "look at us, we're going to be doing more," is quite frankly - a load of crap. They are only doing what they've been ordered to do, and what their competitors have already being doing for years, in the case of General Motors, for about a DECADE!

    Toyota is CREATING a global task force on quality? WHAT!?!? They didn't have one?!?! I'm with you - I'm stunned by this. STUNNED! Had Toyota not said it, I wouldn't have believed it, not for a second. Toyota doesn't do this already??? Any questions on how they got into this mess now? That is really stunning.

    Finally, to the point of reduced capacity. This answers the billion dollar question, has the recalls and the secreitive nature of Toyota hurt sales. Yes. It has. Sales were suspended for five days (that's all - I was surprised to learn that too). Toyota PR once agian did an amazing job of dropping the ball and not saying, "our cars are for sale again folks!"

    Now it would be easy to say that after just a five day pause, pent up demand from people waiting would burn through the inventory. Shoot, we just had a big car sales weekend and the overall reports from the auto industry was, sales were much stronger than the previous two years. That is good news.

    But Toyota, which has already dialed back production, is pulling it back further on the Tundra, Sequoia, Camry, Avalon, and Venza. But wait, there is more.

    This month production at NUMMI in Freemont, California comes to an end. That means the permanent closure of a Corolla and Tacoma production line, slashing production on those vehicles. Tacoma production will continue in Mexico and Corolla production will continue in Canada - gee and I thought Toyota promised they would never layoff their US work force.

  • Report this Comment On February 17, 2010, at 4:50 PM, TMFMarlowe wrote:

    Milligram46, thanks as always for the added insight. That's a very interesting point re the Cobalt's steering issues... I'll see if I can find out who the supplier is.

    Re hurt sales... sales have definitely been hurt. The question there is whether the decline is temporary... or a new normal, and that will depend on how they (mis)manage this thing going forward.

    Thanks for reading.

    John Rosevear

    ps: Any thoughts on who might buy the NUMMI plant? Maybe Tesla?

  • Report this Comment On February 17, 2010, at 5:03 PM, Milligram46 wrote:

    BINGO! This goes back to the KBB survey done of potential car buyers. 27% responded they were no longer considering Toyotas. 49% of those people responded they will NEVER CONSIDER BUYING A TOYOTA AGAIN.

    That is 13% of buyers saying, they're done. When I posted this on METaR and suggested this was the new normal, I was dismissed by all. Why? Well consumers have a short memory and they'll come back and buy a Toyota.

    My response, I'm pretty sure during the 70's when the American car makers were building steaming piles of crap, and Toyota and Honda were just entering the markets, and they did their own surveys, and saw the same results, they said the exact same thing. BAH! They'll be back!

    Which small car has the best long term quality according to "they?" Why, the Hyundai Elantra does, NOT the Toyota Corolla. Which car company has the best fleet fuel economy in North America? Not Honda. Not Toyota. Hyundai. Who's midsize sedan is rated at the top of the pile? Not the Camry? The Hyundai Sonata. The Ford Fusion is now number two, the Chevrolet Malibu is number three and the Camry is in 4th place.

    Just like a small nimble Honda and Toyota ate Ford, GM and Chrysler's lunch in the 80s and 90s, a new, resurgent has their act together Ford, Hyundai, and a vastly improved VW, and a getting better GM are ready to go to war against a very battered, and apparently clueless Toyota.

    I will be very interested to learn if the Cobalt and the Corolla share the same supplier for electric steering. If that is the case, it becomes a HUGE smoking gun of a supplier based issue for both cars.

    Toyota is handling this steering issue much better (although GM fessed up about their complaints about two weeks ago), but gads, bringing it up on a Wednesday. I thought they had figured it out when they announced the Tacoma recall on a late Friday afternoon.

  • Report this Comment On February 17, 2010, at 5:06 PM, lowback1 wrote:

    I would like to know how many others have had their dashboard plastic develop cracks? My son & I both have Sienna’s, and they both have developed cracks in the dashboards. Toyota won't do anything to correct the defect! Our service man at the local Toyota Dealership said he has seen plenty of them, but, Toyota won't correct this defect. Ours cars have been garaged most of the time, so, it can't be the sun.

    JHK, Sr

  • Report this Comment On February 17, 2010, at 5:43 PM, buffalo2002 wrote:

    Its amazing how americans become "grass is greener on the other side" so quickly.

    Oh yeah, I guess thats why the majority of Americans voted for Obama, and are now changing their minds.

    Looks like its happening in the automotive industry too.

  • Report this Comment On February 17, 2010, at 6:36 PM, JimNKate wrote:

    My bigger question is the loss of a connection between teh steering wheel and the actual steering gear. I'm simply spooked that these cars have no direct (or hydraulic) connection between the "controls" and the throttle, steering, and other key controls. I have Windows computers at work, and the idea that software like that is controlling my car scared me silly. Give me an old-school wheel connected to a rack and pinion... could that possibly use that much power! The controls in these cars are just glorified joysticks. No wonder they sometimes don't do what you ask them to!

  • Report this Comment On February 17, 2010, at 6:38 PM, baldheadeddork wrote:

    About the brake override - it's a system that's already in place on VW/Audi models. It cuts the fuel if you step on the brake. (But, for old school driving enthusiasts, you can still give some gas while braking if you're heel-and-toe downshifting on manual transmission models.)

    Toyota has said they're going to implement this as part of both sudden unintended acceleration (SUA) recalls, but it requires existing hardware that might not be on all of the affected models. If you want to get your geek on, there are some good explanations when I raised this question at The Truth About Cars

    http://www.thetruthaboutcars.com/toyotas-news-conference-in-...

  • Report this Comment On February 17, 2010, at 6:39 PM, baldheadeddork wrote:

    About the brake override - it's a system that's already in place on VW/Audi models. It cuts the fuel if you step on the brake. (But, for old school driving enthusiasts, you can still give some gas while braking if you're heel-and-toe downshifting on manual transmission models.)

    Toyota has said they're going to implement this as part of both sudden unintended acceleration (SUA) recalls, but it requires existing hardware that might not be on all of the affected models. If you want to get your geek on, there are some good explanations when I raised this question at The Truth About Cars

    http://www.thetruthaboutcars.com/toyotas-news-conference-in-...

  • Report this Comment On February 17, 2010, at 6:46 PM, TMFMarlowe wrote:

    baldheadeddork, thanks for that. (Why am I not surprised that Audi has an unintended-acceleration defeat system?)

    I wonder if Toyota will accommodate heel-and-toe like VW did. Call me cynical, but it wouldn't surprise me if they didn't, at least in the US market.

    John Rosevear

  • Report this Comment On February 17, 2010, at 7:43 PM, Milligram46 wrote:

    GM has it to on their models, and also has the intelligence to deal with heel-to-toe driving techniques.

    When I bought my 2005 Grand Prix it was at the time the lowest cost car you could buy with an ETC as standard equipment. You bet your sweet ass I read about it in the Owner's Manual in detail, specifically how it deals with failures. Diagnostic on start up, and if it fails, you get a messge on the DIC about ETC Failed Diagnostic and the car won't start. Gee, how hard was that? Fail on the road, goes into limp mode to allow you to safely pull over, once the car is shut down, car won't restart (again how hard is that). And yes, it had go to idle on full brake.

    This isn't rocket science, and most cars today have these simple features included.

    I've also read that Toyota may reprogram or replace cars with push button ignitions to shut down after three rapid presses instead of holding it down for three seconds. This is how many cars with push button ignitions by Nissan, Ford and GM are designed today. It is more in tune with human nature in an emergency and the perception that a button is non-function. Not to hold it in, but to press it over and over again.

    Just stunning to me on how some very basic items have been screwed up so badly. I am no fan of push button start, and in race cars so equipped they have a second button for "off," its crystal clear.

    RANT

    Given how any mouth breathing knuckle dragging individual with a room temp IQ and the ability to see a barn from 20 feet away in noon lighting and has less than half-a-dozen DUIs can get a driver's license in the United States, putting race inspired technology like push button start into their hands, not so intelligent.

    /RANT

  • Report this Comment On February 17, 2010, at 7:44 PM, Milligram46 wrote:

    TMFMarlowe:

    Don't know if you're noticing this John, but as you've posted this series, the comments about Toyota get more and more negative, and the quiet masses with problems, some of them with big problems, are suddenly starting to speak up.

    Another data point in how badly this has been managed and how this story has now got a life of its own.

  • Report this Comment On February 17, 2010, at 7:47 PM, TMFMarlowe wrote:

    Really, there was nothing wrong with turning a key.

    John Rosevear

  • Report this Comment On February 17, 2010, at 10:51 PM, JonsZx2SR wrote:

    A colleague and former project manager at Ford explained that 10 years ago Ford elected to maintain the mechanical link in the steering to avoid the same problems Toyota is now having. Ford's EPS system assists the driver while maintaining road feel through the mechanical linage. Maybe we were wrong about one of the American car companies at the same time we were wrong about Toyota. The more I read about Toyota technology, the more I want to avoid buying any of their vehicles.

  • Report this Comment On February 18, 2010, at 6:59 AM, TMFMarlowe wrote:

    Milligram46, yes, I am noticing. There's a lot of pent-up frustration and resentment out there, between people angry about the decline of the US automakers (and blaming Toyota) and people who've owned Toyotas and feel like they've gotten burned. That's part of what makes this whole drama so interesting -- a sea change in Toyota's US market position really is possible.

    John Rosevear

  • Report this Comment On February 18, 2010, at 2:40 PM, vaporland wrote:

    All I can say is I have a 2007 Corolla and it is an excellent vehicle. When I am ready to buy another new car I will again buy Toyota.

    The issues being reported on are serious. My mother's best friend was killed by a suddenly accelerating Camry that propelled itself off a cliff on the Pacific Coast Highway.

    This being said, I still have no doubt that Toyota will bounce back from this and come out ahead in the long run.

    In the short run, I would not hold their stock...

  • Report this Comment On February 18, 2010, at 7:03 PM, Jazzenjohn1 wrote:

    I'm curious why you are so faithful towards the company that made the car that your mothers best friend was killed by? There is a great deal of evidence they knew of the problem and blamed it on drivers and actively subverted the investigations, and yet you will buy another? Why?

    I agree TM will bounce back at some point and wouldn't own it right now.

  • Report this Comment On February 18, 2010, at 11:05 PM, Milligram46 wrote:

    Jazzenjohn1 - I'm with you, but believe it or not, there is a name for this - it is called cognitive bias.

    The throught process goes likes this.

    My car is an extension of me. Despite the fact I know that the car maker who built MY particular car ALSO built a car that killed my mother's best friend in an unintended acceleration accident, for me to now say, "I will no longer buy from that company," is taking away part of my own identity. This is a huge issue with Prius owners in particular because of the deep attachment they have to the meaning/message of the car.

    I'm not saying this to bag on vaporland, cognitive bias is very common, and one of the best sociological examples of it comes from - the auto industry. Think two guys in a bar arguing Ford over Chevy trucks - the arguement is pointless because their cognitive bias won't even let them hear the argeuement, and they skew the facts in their own mind.

    Cognitive bias is a bit of a harsh term for brand loyalty. But I'd have to say, if product X killed someone I knew personally because product X was defective, I wouldn't buy product X anymore. Especially if maker of product X had a history of blaming others for the problem and trying to cover it up.

    That's just me - but the human mind is an amazing thing.

  • Report this Comment On February 19, 2010, at 11:28 AM, grant224 wrote:

    Does the acceleration problem bypass the neutral position on the gear shift? or park for that matter?

    J/W if all hope is lost or if there is some form of a solution if your pedal were to stick...

  • Report this Comment On February 19, 2010, at 1:21 PM, Milligram46 wrote:

    grant224:

    For Prius owners specifically (2005 to 2009 model year) many have stated that shfiting to neutral did nothing, the car kept accelerating. I don't know about other models. The transmission selector on most cars these days is electronic and not mechanical (unless we're talking a manual tranny). Computers, oh yes those computers, have gotten to the point that automatic transmissions offer better fuel economy, power delivery, and faster acceleration than their manual counterparts (that wasn't the case 20 years ago).

    The United States' affinity with the automatic is rather unique, in most countries a majority of cars are manual, not automatic.

  • Report this Comment On February 19, 2010, at 1:44 PM, casinojohn wrote:

    I have four Toyotas and haven't had any problems whatsoever. As a matter of fact I will buy only Toyotas because they are by far the most reliable, dependable, reasonably-priced vehicle on the market. I do not trust the media, pay no attention to politics, and quite frankly believe that this is pure propaganda put out by the new "managers" of GM to hopefully create jobs in the US and sell their junk. Are you all really that easily convinced? C'mon, think for yourself for Christ's sake!

    Throw your TV in the garbage!

  • Report this Comment On February 19, 2010, at 2:31 PM, grant224 wrote:

    Yea, I think that is true in most cases, although I thought I read an article on MF that said a guy drove his Prius all the way (back) to the dealership by shifting between neutral and drive, and allowing the engine to red line the whole time..

    If you think the computer over user trend in cars is bad now, wait until the automatic parallel parking systems (Hit a button and close your eyes!), the automatic "lane adjustment" systems (good luck avoiding that pothole or dead animal), and the automatic braking systems begin fouling up (don't follow that Mercedes on the highway too close!).

    Nothing is a worse idea than giving ultimate control of a moving vehicle to a computer over an operators eyes and legs. A high end Mercedes would be cool, but I don't think I ever want my car to begin making decisions for itself and overriding my actions- especially as a "feature" and not as a malfunction.

    Hopefully there will be a resurgence of quality "manual" cars that are do not limit the users control only to a clutch and gear shift. I think Lamborghini makes a model that focuses on the driver...

    People that require these elaborate set ups to get where their going should just take the bus- I hear that does the driving for you too...

    -g

  • Report this Comment On February 19, 2010, at 2:34 PM, grant224 wrote:

    Yea, I think that is true in most cases, although I thought I read an article on MF that said a guy drove his Prius all the way (back) to the dealership by shifting between neutral and drive, and allowing the engine to red line the whole time..

    If you think the computer over user trend in cars is bad now, wait until the automatic parallel parking systems (Hit a button and close your eyes!), the automatic "lane adjustment" systems (good luck avoiding that pothole or dead animal), and the automatic braking systems begin fouling up (don't follow that Mercedes on the highway too close!).

    Nothing is a worse idea than giving ultimate control of a moving vehicle to a computer over an operators eyes and legs. A high end Mercedes would be cool, but I don't think I ever want my car to begin making decisions for itself and overriding my actions- especially as a "feature" and not as a malfunction.

    Hopefully there will be a resurgence of quality "manual" cars that are do not limit the users control only to a clutch and gear shift. I think Lamborghini makes a model that focuses on the driver...

    People that require these elaborate set ups to get where their going should just take the bus- I hear that does the driving for you too...

    -g

  • Report this Comment On February 19, 2010, at 4:58 PM, Milligram46 wrote:

    grant224 - the man in question was driving a 2007 Toyota Avalon. He has had problems with it since the summer of 2009 with unintended acceleration. Dealer told him over and over again nothing wrong. He brought it to the dealer in November of 2009, same story. On December 28, 2009 it did again and the dealer told him to drive it in. So - he did. Shifting between drive and neutral and standing on the brake pedal at the same time. When he arrived the brakes were roasted and the engine screaming, no stuck gas pedal, no floor mat. Dealer could not determine what was wrong, Toyota corporate told dealer to replace the gas pedal, the ETC and related fuel delivery sensors. Problem went away.

    How much of a bigger smoking gun do people need.

    Whenever anyone brings out the government conspiracy nonsense I have to ask. How was it that all the way back in 2007 did the government know, even with a new administration (which was going to happen one way or another in 2008 as the administration at the time was hitting its 8 year mark and the VP was not running for President) on the way, that in 2009 they would end up owning two car manufacturers to help prop up a collapsed US economy. And THEN in that infinite wisdom, convinced State Farm to lie, when the complained to Toyota and the NHTSA, led by a different administrator than today, that there are excessive accidents with Toyota vehicles, and that it should be investigated. That is just amazing tinfoil hat grade clarity.

    Did I hear it on TV. No - I read about it, and I see ZERO gain for State Farm to lie. But I have to suggest to casinojohn that if State Farm is their insurance company, they too are part of the boogey man conspiracy, and he should cancel his policy IMMEDIATELY!

    Frankly I'm amazed at brand loyalty to cars in general. Every car I've ever purchased was done with extensive research, a hard look at my specific needs, and what vehicle filled those needs. I've owned cars from four different continents using that system, and only one was a dog. The most reliable car I ever owned was an American car built in Canada. The least reliable, a Japanese car built in Indiana.

  • Report this Comment On February 20, 2010, at 3:12 PM, Gardnermiles wrote:

    I bought a Toyota when it was first introduced to our country. In one month I had enough problems I traded it in for a Chevrolet. With the exception of that one month I have driven only products from the big 3 over a very long time period. All cars and station wagons from the big 3 were excellent investments and none were ever recalled. Oil was changed every 2500 miles and then greased and fluids etc.(standard maintenace and I was off and running again. You can believe or not but I determined that even if the initial purchase of a vehicle from the big 3 was higher that I saved way more in an overall picture.

  • Report this Comment On February 21, 2010, at 9:19 AM, HT3 wrote:

    TOYOTA MAKES CARS WE ALL KNOW THAT BUT THEY HAVE LIKE OTHERS DOMINATED FOR YEARS THE SMALL COMPACT CAR WHICH HAS HAD AN EFFECT ON THE AMERICAN AUTO INDUSTRY PEOPLE ARE COMPLAINING BECAUSE THEY HAVE RECENTLY LET THEM DOWN WITH A FEW COMPONENTS OF A NEW TECHNOLOGY THEY TRIED TO IMPLIMENT AND THAT IS A NEW STEERING DESIGN WHICH DOES NOT FUNCTION LIKE A MECHANICAL STEERING SYSTEM SOME THINGS THAT WORK JUST NEED TO BE LEFT ALONE. THEY HAVE BEEN A LEADER IN THE SMALL AUTO INDUSTRY. BUT NOW HAVE A FLAW. IT WILL TAKE TIME TO SOLVE. BUT I SAY TO TOYOTA. THINGS THAT HAVE WORKED WELL, FOR YOU SUCH AS A STABLE STEERING SYSTEM JUST CANNOT BE REPLACED. I FEEL SOMETIMES YOU HAVE TO PUT BACK SOMETHING THAT WORKS REALLY WELL AND DO NOT CHANGE TO FAST IT SHOULD BE TRIED BY COMPANY EMPLOYEES FIRST FOR AT LEAST A FEW YEARS BEFORE BEING PUT OUT TO THE PUBLIC TO TRY ! BIG MISTAKE ON YOUR PART AND SOMETHINGS JUST CANNOT TAKE THE PLACE OF A THING THAT WORKED FOR YEARS. MECHANICAL THINGS THAT WORK WELL FOR YEARS CANNOT BE REPLACED AS A TURNING RADIUS COMPONENT. AND SHOULD NOT BE IT IS THE STABILITY OF THE DRIVER BESIDES THE BRAKING SYSTEM INOVATION IS GOOD BUT TRY VIGOUROUSLY BEFORE SPRINGING ON THE PUBLIC BY HT.

  • Report this Comment On February 21, 2010, at 10:39 AM, defridgerator wrote:

    The quick fix to toyota cars? Buy something else.

  • Report this Comment On February 21, 2010, at 2:57 PM, Jazzenjohn1 wrote:

    The idea that the government is persecuting Toyota to favor GM and Fiat/Chrysler is truly absurd. The gov. couldn't have had any idea in 2002 that they would own them, but that is when the problems started. Neither has any stock now, and by the time it does come out, it won't make much difference.

    Automakers are tasked to report vehicle problems within 5 days of becoming aware of them, Toyota finally acted 5 YEARS after being informed by State Farm they were seeing an unnaturally high rate of complaints and crashes because of them.

    If an American automaker had done that, they would be Eviscerated! The fact that Toyota is still being allowed to sell cars is evidence of how Lenient our government is being with them, not the opposite.

  • Report this Comment On February 21, 2010, at 2:58 PM, Jazzenjohn1 wrote:

    The idea that the government is persecuting Toyota to favor GM and Fiat/Chrysler is truly absurd. The gov. couldn't have had any idea in 2002 that they would own them, but that is when the problems started. Neither has any stock now, and by the time it does come out, it won't make much difference.

    Automakers are tasked to report vehicle problems within 5 days of becoming aware of them, Toyota finally acted 5 YEARS after being informed by State Farm they were seeing an unnaturally high rate of complaints and crashes because of them.

    If an American automaker had done that, they would be Eviscerated! The fact that Toyota is still being allowed to sell cars is evidence of how Lenient our government is being with them, not the opposite.

  • Report this Comment On February 21, 2010, at 8:20 PM, echapman47 wrote:

    We have owned both a Toyota small sedan (cannot recall its name) and a Tacoma 4x4 pickup truck, both of which have performed very well. The sedan was involved in a crash when another driver pulled out in front of us from a private roadway. The other driver was charged. I will always remember how well the air bags in the Toyota worked to save us! The Toyata was a total loss but there were no injuries to those inside. The Tacoma is a 2008 model which is still owned, and to date we have never found any reason to complain. Although it is bad that Toyota has been slow to respond to complaints, most people who have owned a Toyota know that this is a quality vehicle. We are hoping that due to all the unfavorable publicity, all Toyotas will go "on sale" real soon!

  • Report this Comment On February 22, 2010, at 2:29 PM, Milligram46 wrote:

    Well, its gone from worse, to much worse:

    http://www.foxnews.com/projects/pdf/022210_toyotasafetywins....

    Calling out as wins delayed "green" legislation, delayed legislation for auto safety, and delaying implementation of ordered government safety improvements. Then but gutting the 2007 list of vehicles under recall, they celebrate the $100 million they saved.

    They shredded $30 billion in shareholder equity, $2 billion in the emergency recall, $2.5 billion in lost sales/production/supplier costs, and killed 34 people - but hey - they saved $100 million!

    The first rule of Fight Club...

    http://www.foxnews.com/politics/2010/02/22/toyota-boasted-sa...

    Oh, and so you can cry the evil press is out to get Toyota, here is the ACTUAL DOCUMENT from June of 2009...

    http://www.foxnews.com/projects/pdf/022210_toyotasafetywins....

  • Report this Comment On February 22, 2010, at 8:28 PM, TMFMarlowe wrote:

    My two cents on that interesting little presentation and its ramifications will be up sometime tomorrow morning.

    I was going to file it this afternoon but decided to wait until early morning so I could read tomorrow's headlines first...

    John Rosevear

  • Report this Comment On February 22, 2010, at 8:43 PM, baldheadeddork wrote:

    John - are you also digging into the Biller backstory? He and his records have been subpoenaed by Congress and he's scheduled to testify this week.

    If his claims that Toyota has withheld and destroyed documents to cover their ass in safety investigations and civil cases, I think the bottom is going to fall out on this company.

  • Report this Comment On February 22, 2010, at 8:56 PM, TMFMarlowe wrote:

    I've done some digging -- let's just say it's complicated and contentious. But I'm watching it really closely -- that's mostly why I'm waiting 'til tomorrow morning, to see if anything juicy surfaces from the pile of documents he turned over to Congress.

    And yes, if his claims pan out, that would be a Very Large Development, but... it's hard not to be skeptical when it's a former employee who is embroiled in a whole lot of active litigation with the company already.

    John Rosevear

  • Report this Comment On February 22, 2010, at 9:00 PM, baldheadeddork wrote:

    @Milligram46 -

    I agree that a lot of the reaction from current Toyota owners is cognitive bias, but I think most of it is that they haven't yet registered how this is going to affect them even if they never experience sudden acceleration in their cars. Neither are most TM analysts, and I think both groups are missing the biggest part of this story.

    Two things are a lock: Toyota is going to substantially increase their warranty coverage, and they are going to greatly increase the incentives they put on every new car they sell, for months if not years to come.

    Toyota owners don't yet see how both of those going to destroy the resale value of their SUA-tainted, out-of-warranty old Toyotas. These owners paid a premium because of Toyota's reputation for quality and having a higher resale value than other brands. Current owners are going to have a nasty surprise waiting when they trade in. That's when they're going to realize they've been screwed, and Toyota is going to pay hell (read: $$$$) getting them to buy another Toyota product.

    What analysts don't see yet is how the increase in incentives and longer warranty is going to be a one-two hit on Toyota's margins for years to come.

    Sudden Unintended Acceleration is a rare event. Toyota might have to write big checks to 10,000 plaintiffs. The actual recall on ~10 million cars is probably going to cost more than the liability settlements. But both of those costs are going to be dwarfed by how much Toyota is going to have to spend to get people to even consider their products, and how long this is going to carry on.

  • Report this Comment On February 22, 2010, at 9:05 PM, TMFMarlowe wrote:

    I agree that incentives are going to be part of TM's life for a while. Upsized warranty coverage... I'm less sure. The quality defect here isn't something you end up taking back to the dealer 20 times because it keeps coming back and annoying you, it's something that's quite rare -- but devastating. I'm not sure that even a lifetime warranty would assuage those fears.

    And yeah, if this doesn't blow over soon, resale is definitely going to be a big issue, and I don't think it will be limited to the models/model years currently under discussion.

    John Rosevear

  • Report this Comment On February 22, 2010, at 10:09 PM, baldheadeddork wrote:

    I think the warranty coverage is going to have to be increased to restore faith in Toyota's quality. It also backloads the costs to six, seven years down the road, for better and worse.

    About Biller, I'm of mixed emotions about what he's done and what he's doing. If he knew Toyota was destroying and willingly withholding evidence while he was running their product liability team, he should have reported it to the court then. I have zero doubts he brought this up in his suit only to leverage Toyota into settling. Atticus Finch he ain't.

    But I'm also pretty confident that he's got evidence to back up what he's saying. If he's lying about this, his entire life is over. He'll be disbarred faster than he can blink and Toyota will take everything he has or ever will have in a defamation suit. We've also seen hints of this in the ruling on motions in his case against Toyota. The arbitration judge's order to stop Biller from releasing any of the documents got all the headlines, but I think the real story was that the judge didn't give Toyota the dismissal they requested and they didn't order Biller to return the documents. Those two things only happen if Biller has a case and the documents are evidence to support that case.

    I don't know if you saw this ABC story tonight. If I'm reading what he's done correctly, this is a very big deal.

    http://abcnews.go.com/Blotter/toyota-recall-electronic-desig...

  • Report this Comment On February 23, 2010, at 1:19 AM, Milligram46 wrote:

    @baldheadeddork - (yikes can't believe I had to type that).

    I was going to post the Southern Illinois University findings. If this is accurate, if what they are saying is true. This is devastating for Toyota. Not only are they claiming they can prove its an electronic problem, and recreate it on four different Toyota models, but it is, to use their word a "fatal," flaw. Bad wiring, poor circuitry and fail-safe technology that didn't follow industry norm doesn't work. Even more embarrassing is the university used GM vehicles as their "control" set and could not re-create on the vehicles. They found, gasp, the construction and design vastly more robust.

    I agree with @John above also that the big one two hit is coming. The new normal for Toyota is going to be sales 10% to 15% off pace from what they are today, over-capacity, fatter incentives cutting into the bottom line, and John misses that they will have to step up quality. All of the decontenting and cost cutting they've done for the past decade has bit them in the arse with a vengeance. You can squeeze your suppliers by THIRTY-PERCENT and not figure that quality suffers in the process. They're going to have to give some of it back, which means the next shoe to drop, you watch, more American jobs, and thankfully Toyota doesn't employ THAT many Americans (they're shedding 18% of their US work force next month all of their union workers, funny how people are crying how the press is against Toyota but the NUMMI closure is getting almost no coverage). But if Toyota can save $500 per Corolla by building the in Canada, you better believe if costs go up in other areas they'll look at moving other models. They have a brand new RAV4 factory they just built in Canada running only one shift on one line at reduced capacity. Building Highlanders in the United States? Be afraid. Be VERY afraid.

    I think Toyota will extend their warranty, 5/100 or 10/100. Heck, they may go lifetime like Chrysler.

    But @John got it right. Longer warranties, deep incentives, and corrective action on the bad electronics is going to gut the models.

    There is also potentially one more bit of fall out non-Toyota related. Consumer Reports was rubber stamping Toyota models all the way to 2009, without even testing them. Three hours before Toyota announced their sales and manufacturing suspension Consumer Reports was quoted, on the record, as saying this was a "minor," issue. Talk about a devastating blow to the whole trust and "non-bias" equation.

    I think anyone holding TM and buying expecting a quick bump to $80 or $90 might be in for a very wild ride tomorrow, and may be joining the ranks of, "long-term investors," a polite way of saying they are in denial.

  • Report this Comment On February 23, 2010, at 11:47 AM, TMFMarlowe wrote:

    "Step up quality"... depends on your definition of "quality", I suppose. I spent a week driving a RAV4 in December and was seriously unimpressed with the interior trim and overall feel of the vehicle, but I feel reasonably sure it'll get to 130k+ miles before significant problems show up. I think if they lose the top-quality presumption they'll have to add content and finish -- put another way, sitting in a RAV4 will have to seem NICER than sitting in an Escape in order to make the sale, not just nice enough -- but I don't think that's the same thing as adding "quality".

    John Rosevear

  • Report this Comment On February 23, 2010, at 12:01 PM, Milligram46 wrote:

    @TMFMarlowe - the whole arguement of quality I think can be put to bed today. You see Consumer Reports just released their list of their Best Bets for 2010. Their top picks, based on thier ranking system. The RAV4, Camry, Highlander and Tundra all fell off the list. Corolla fell off three years ago. Here is the list:

    Best Small Sedan: Hyundai Elantra SE

    Best Family Sedan: Nissan Altima (2.5 or 3.5)

    Best Sporty Car: Volkswagen Golf GTI

    Best Small SUV: Subaru Forester

    Best Family SUV: Chevrolet Traverse (Buick Enclave, GMC Terrain)

    Best Sports Sedan: Infiniti G37

    Best Minivan: Mazda5

    Best Pickup Truck: Chevrolet Silverado 1500 (GMC Sierra 1500)

    Best Green Car: Toyota Prius

    Best All Around Money No Object Car: Lexus LS460L

    http://abcnews.go.com/GMA/YourMoney/consumer-reports-best-ca...

    Yup. Only the 2010 Prius remains (if you chaffe out the money is no object LS460L pick, which the average car buyer won't consider or can even afford).

    More amazing, two GM products are the only US products on the list, AND GM is the only other car manufacturer with more than one vehicle on the list, tying Toyota with two.

    Just three years ago Toyota dominated this list - not anymore. I figure there will be now the replies of how the media is biased agianst Toyota - but Consumer Reports??? These guys were rubber stamping Toyota products through 2008 without even testing them.

    Toyota's time at the top apparently is going to last a couple of years at best, and at a heavy cost of quality, lives, and brand equity. Being "number one" in volume, isn't what its all cracked up to be.

  • Report this Comment On February 23, 2010, at 12:19 PM, TMFMarlowe wrote:

    FYI, the new article (discussing the lobbyist "wins" from yesterday) is up:

    http://www.fool.com/investing/general/2010/02/23/is-this-toy...

    More to come.

    John

    ps: I would have picked the Flex over the Traverse, but I'd be happy with either as a kid-hauler.

  • Report this Comment On September 13, 2010, at 12:20 PM, aiyanalunette wrote:

    I recommend using NJ Toyota check them out at http://www.1800autoland.com

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