Is This Toyota's Smoking Gun?

Imagine for a moment, just hypothetically, that you're a major automaker. Several of your car models seem to have an unfortunate tendency to accelerate out of control every now and then. People have died, and uncomfortable questions are being asked. You really, really want the problem to go away.

What do you do? 

A) Drop everything, put all of your best people to work full time on the problem until it's solved, and get all the affected cars fixed as soon as possible, cost no object. After all, your customers' lives and your company's reputation are on the line.
B) Come up with a cheap-to-fix "solution" that may or may not actually address the problem, restrict it to just 55,000 vehicles, persuade regulators to accept it, and celebrate it internally as a money-saving "win." After all, cost savings matter, and this move would save the company $100 million or more.

Guess which route Toyota (NYSE: TM  ) chose? If you guessed "B," you're right. And if you think this is maybe just speculation on my part, just one more guy in the media beating on Toyota, think again: There are documents.

I've seen them. In fact, lots of people have seen them.

And more to the point, so has Congress.

A new dimension to the drama
The document in question, which came to light Monday, is a PowerPoint presentation that was part of a vast load of papers turned over to a congressional committee last week. It's from Toyota's Washington office, and mentions a number of "wins" achieved by the company's lobbyists. One slide in particular, titled "Wins for Toyota-Safety Group," has some particularly eyebrow-raising bullet points. Among them:

  • Successfully got delays on new Federal safety rules, including rollover and side-impact protection standards;
  • Successfully persuaded regulators to close cases on safety issues with the Sienna minivan and Tacoma pickup without declaring the problems to be "defects" and requiring recalls to fix;
  • And the big one, in their own words [my notes in brackets]: "Negotiated 'equipment recall' on [Toyota] Camry/[Lexus] ES re: SA [sudden acceleration], saved $100M+, w/no defect found."

In other words, "We got 'em to recall just the floor mats, not the cars themselves. Saved us a bundle. High fives all around!"

Just when I think this mess can't get worse, it gets worse.

But dude, they're lobbyists. This stuff is what they do. What's the big deal?
It's probably true that Washington staffers for Ford (NYSE: F  ) and General Motors and Honda (NYSE: HMC  ) and the other automakers push back on rule-making and investigations … and that many other companies, from Pfizer (NYSE: PFE  ) to Monsanto (NYSE: MON  ) , from Altria (NYSE: MO  ) to Boeing (NYSE: BA  ) , maintain Washington offices, have close relationships with regulators, and employ lobbyists to do similar things.

But Ford and GM and Honda and those other companies aren't on a very public hot seat after years of foot-shuffling and obfuscation.

And only Toyota is now facing very public criminal investigations.

Wait. Criminal investigations?
Yes, folks, we've moved beyond congressional grandstanding -- even as that grandstanding is just getting started. Toyota said Monday that it had received two federal subpoenas: one from the Securities and Exchange Commission, and one from a federal grand jury in New York.

Of course, subpoenas don't necessarily mean that charges will ever be filed. But they're a sign that people -- federal law enforcement people -- are now thinking in those terms. Pending class action suits -- an aggrieved maybe-whistleblower, a former Toyota lead defense counsel who claims to have proof that the company withheld evidence of safety defects -- will add even more drama to the congressional hearings getting under way Tuesday.

So is it a smoking gun?
I don't think this document is likely to be remembered as the smoking gun. In truth, it is probably not atypical of the mentality found in many big companies' Washington offices. But it surfaced at an exquisitely bad time for Toyota.

The Associated Press reports that Toyota execs were expected to "apologize for the company's slow handling" of the sudden-acceleration problems during their congressional testimony. Given the current trajectory of events, apologizing could become quite a regular habit for them.

Read more about Toyota's ongoing crisis:

Looking for an investment that won't hit the brakes? Check out what could be the biggest opportunity this year.

Fool contributor John Rosevear owns shares of Ford. Monsanto and Pfizer are Motley Fool Inside Value recommendations. Ford is a Motley Fool Stock Advisor pick. 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 23, 2010, at 1:27 PM, Milligram46 wrote:

    et tu Consumer Reports? et tu?

    Top Picks for 2010 - Announced Today

    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

    Four Toyota models fell off the list from last year, the Corolla fell off three years ago. At its peak, Consumer Reports had 13 categories and Toyota once had 10 out of 13 vehicles on the list. Now they are down to just two, and one of them is a $71K luxury car. The other was sold as a loss leader through the 2009 model year. Yikes!

  • Report this Comment On February 23, 2010, at 1:29 PM, Jazzenjohn1 wrote:

    There is a vast gulf between what Toyota says and what Toyota does. If Toyota actually cared at all about the unintended acceleration problem, they would put a brake override in all their vehicles that have an electronic pedal. Simple, effective, and would cure the problem whatever the root cause. They are attempting to do that only with their more expensive vehicles, only fixing new cars in the future and only when they get around to doing it. They are trying to avoid fixing any defective car they currently have on the road. How is that demonstrating any level of safety or concern for their customers?

    It is also becoming clear from the documents that Toyota's "quality" is more a feature of the dealers fixing their cars under the table and not reporting the defects than actually having fewer warrenty claims.

  • Report this Comment On February 23, 2010, at 1:35 PM, TMFMarlowe wrote:

    Yup, that's a big dis from CR, who deliberately or not have sold an awful lot of Toyotas over the years. Further evidence that this is going to be more than a passing storm.

    But what surprises me most about that list? No Hondas.

    John Rosevear

  • Report this Comment On February 23, 2010, at 2:39 PM, Milligram46 wrote:

    @TMFMarlowe - no Hondas, and no Ford. Considering the heaps of praise that CR has been putting on Ford lately and saying, "GM still has a way to go."

    Just sayin'

    Not a passing storm. Lentz is testifying right now, but I'm stuck in a conference room. The bit I saw, more of the same. Indirect blaming of customers in carefully selected words and toeing the Toyota line.

  • Report this Comment On February 23, 2010, at 3:51 PM, TMFMarlowe wrote:

    I've been working on something else and haven't had a chance to watch any of it yet. I am keeping a half-eye on David Shepardson's (Detroit News DC bureau chief) live-tweeting, and it sounds like typical Toyota, as you said. Shepardson quotes Ed Markey saying that he wished Toyota was showing more humility today. Me too.

    John

  • Report this Comment On February 23, 2010, at 4:26 PM, JustMee01 wrote:

    Lentz is not doing well,

    Toyota went to a gun fight with a knife. How can they not attend with someone who has some technical expertise and therefore some credibility? He's a marketing executive, and when cornered, admitted that he had no authority at all outside of marketing. What's the point of his even being involved, if he has no role in operations?

  • Report this Comment On February 23, 2010, at 4:47 PM, TMFMarlowe wrote:

    Lentz is blaming the NUMMI closing on GM now... oh, this is going to be wild. I could get ten articles out of this for tomorrow. Holy smokes.

    John

  • Report this Comment On February 23, 2010, at 5:19 PM, PSU69 wrote:

    I hope all the talking heads drive the TM share price to $50. I'll buy a ton.

  • Report this Comment On February 23, 2010, at 5:22 PM, PSU69 wrote:

    I hope all the talking heads drive the share price down to $50. I will buy a ton of sharers and by fall it will be back to $110. I worked with TM in Tokyo, Koln, and Los Angeles. A bunch of dedicated people. They will get this phase behind them.

  • Report this Comment On February 23, 2010, at 6:12 PM, njdo wrote:

    Must be taking lessons fromGM, Wall Street and Washington, DC. The myth of Toyota's engineering superiority is just another good story. One solution is always to buy a 5 year old car, always keep a good car a long as possible and always check Consumer Reports before you buy.

  • Report this Comment On February 23, 2010, at 6:12 PM, wolfhounds wrote:

    I think Milligram has it right. Toyota may humble itself before congress, settle a bunch of lawsuits, and try to improve it's image through media. But people who buy Toyota's are very likely to get their information about cars from Consumers Reports. The publication has huge impact on consumer decisions, and the big drop of Toyota models from the top 10 will have more effect in Toyota's downfall (and I believe it will fall hard) than any other factor.

    This apparently long developing problem should be a reminder to all companies that put Hubris and profit before their customers. I no longer will be one. I'm on my third - a 2005 Matrix XRS - which I love. Before that I had two Camry's that lasted 13 & 15 years.

  • Report this Comment On February 23, 2010, at 6:54 PM, Milligram46 wrote:

    @TMFMarlowe

    Wow. Well short of an out of control Toyota crashing into the Capitol building and running over Joe Biden, I'm not exactly sure how today could have gone much worse.

    Toyota came out with almost zero humility. Lentz's opening lines were about commitments to being green and electric cars (gee, where is that electric car, the Nissan Leaf and the Chevrolet Volt are both in, or the bring of production as I type this - and didn't Toyota laugh at the Volt three years ago calling it, "technically impossible to build with current technology," ahh but I go off topic.

    Then they dropped the line about the floor mats and how, their customers aren't using the vehicles as they anticipated? What did they anticipate? The car not to be driven? Someone paying for all-weather floor mats to throw them in the trash when they got home?

    Then they stand up and say, our boys at Exponent have tested the electronics and its not the pedal. However as noted Lentz is a marketing guy, not an engineer, and gee, not an engineer in sight that could comment on this with any authority.

    Then it gets worse. Lentz admits that Exponent, the same experts who couldn't find anything wrong, took the same test methodology used by the Southern Illinois University and tried it out. What do you know, we learned two things. First, SIU testing wasn't "Audi-esque modifications," to make great TV. It was a valid test case. Second thing we learned, Exponent, Toyota's "experts," were able to recreate the tests on a Toyota vehicle. Whoa - but that means the problem is - electronic!

    But you know what? It's OK!!! Because then, instead of going, "OK we admit it, we have cabbage where gray matter should be," they add, but we were able to recreate the same test in a competitors vehicle. Well we have to assume the competitor wasn't General Motors, because SIU tested on General Motors products as their control vehicles and couldn't recreate.

    THEN they blame GM, and basically GM's owners in front of them for the closure of NUMMI. If you believe that, I've got some ocean front property I can sell you in Arizona. NUMMI was staffed with UAW workers, who cost more than non-union workers.

    Here is where Toyota really steps in it. You see, you can't make a statement like this while bragging about production numbers and being the world number one auto producer.

    There is a common misconception that the Toyota Matrix, the Pontiac Vibes near twin, is also built at NUMMI. That is not true. The Matrix is built in Canada, as NUMMI doesn't have the capacity to produce right hand drive vehicles. So the Vibe was a single, stand along product line. Do you know how many Vibes were built in 2008? 46,551. Here is the data:

    http://www.gm.com/corporate/investor_information/docs/sales_...

    Through August of 2009, when the last Vibe was built at NUMMI, they built 33,842 vehicles.

    So what else was built at NUMMI. Well the Toyota Corolla and the Toyota Tacoma. Isn't the Corolla the best selling car in the WORLD??? Toyota has all of a sudden decided they don't need a whole production line for Corollas and Tacomas and this is, GASP, GM's FAULT?!? Really??? So where is the Corolla going? Well production for the Corolla is going to Canada, where Toyota can not make another $500 per unit then building them in California. Tacoma production is going to Mexico, where Toyota can enjoy similar savings. And the United States? Well we get to lose 4,600 jobs directly, and an estimated 45,000 additional jobs indirectly, in a region where jobs are scarce to being with.

    So why would Toyota do this??? Well before the bottom fell out of the global economy in September of 2008, in Toyota's quest to become the number one car maker at ALL COSTS apparently, they invested heavily in new factories. A new truck and SUV factory in Texas. A new V8 engine factory in Indiana. Expansion of operations in Kentucky. A new Toyota RAV4 factory in Canada, and a Toyota Highlander factory in Mississippi. Oh wait a minute. Not a Highlander factory anymore, a Prius factory. Oh wait, the price of gas dropped $2 a gallon from its peak, well no factory at all. Instead Toyota has a complete, mothballed factory they paid almost $1 billion to build. At the end of 2008 Toyota had the capacity to build a hair over 10 million cars. They sold 6.8 million. 32% over capacity. That is bad enough to make Detroit blush with admiration.

    Why is Toyota closing NUMMI? Because they way over invested in production levels they simply cannot sustain in this or any other lifetime.

    Here is a hint, Toyota. Saying America is the boogey man, when you're killing your American customers, is not a good PR strategy.

    So lets recap. You admit that the gas pedal, floor pan, pedal reshaping and floor mat fixes don't fix all the problems. You admit that the SIU testing is valid and recreated, meaning your so called expert you hired to vindicate yourselves was wrong, by their own testing. You blamed your customers indirectly, you blame General Motors for the shedding of 4,600 of your jobs, which you're really just sending to Mexico and Canada, and didn't present a single engineering, technical expert, or even talk about ETC issues with the panel in any technical depth.

    The words epic fail come to mind. Not a good day for Toyota. Look out below - and pop some popcorn for tomorrow, its going to be even more interesting!

  • Report this Comment On February 23, 2010, at 6:59 PM, Milligram46 wrote:

    @PSU69, didn't you post that $70 was the magic number and you were so happy it was $76 last week?

    So now its $50??? What is your basis for this? What is your model, and now you're predicting Toyota is a two bagger in six months time???

    A TWO BAGGER?!?

    Pumping and dumping is a felony....just sayin'

  • Report this Comment On February 23, 2010, at 8:59 PM, TMFMarlowe wrote:

    @PSU69, if you pull off a double in 6 mos on TM, I will be quite surprised. I think there will be money to be made here, but I doubt it'll be a double anytime in the next year, and "opportunity" is not the same as "good opportunity". Put another way, are you sure that's the best risk/reward opportunity available to you?

    Let's just say that I definitely wouldn't do anything before Feb sales numbers come out next week. I think some interesting trends will come to light.

    Thanks for reading.

    John Rosevear

  • Report this Comment On February 23, 2010, at 9:03 PM, TMFMarlowe wrote:

    @Milligram46, every time I think this thing can't get worse, it gets worse. I'm hesitant to say that today was an "epic fail" only because I think there's even more epic stuff to come.

    This has become a textbook case on how not to handle a crisis. They'll be teaching it in B-schools 30 yrs from now. Amazing.

    John Rosevear

  • Report this Comment On February 23, 2010, at 11:12 PM, Milligram46 wrote:

    @TMFMarlowe - completely agree that this will be taught as a case study on how not to manage a crisis.

  • Report this Comment On February 23, 2010, at 11:56 PM, Milligram46 wrote:
  • Report this Comment On February 24, 2010, at 7:51 AM, 8Lives wrote:

    Question: How can a fearful/greedy investor not be drawn to GM, as a penny stock?

  • Report this Comment On February 24, 2010, at 9:06 AM, TMFMarlowe wrote:

    8Lives: Because that penny stock isn't really GM anymore. It's a shell company that holds all of GM's bad assets and it is in the process of being liquidated. GM's good assets were transferred, as part of the bankruptcy reorganization last year, to a new company -- General Motors Company -- that is not (yet) public. At some point, probably in the next year or two, that new company will do an IPO and that new stock will be the true GM stock. But the current "Motors Liquidation" stock is worthless, and will continue to be worthless. Don't waste your money.

    John Rosevear

  • Report this Comment On February 24, 2010, at 1:32 PM, Milligram46 wrote:

    Interesting line of questioning to LaHood - some of it a bit pointless. Amazing how clueless some of the people are.

    Congressman Jordan's line of questioning imply that GM, Chrysler and the UAW are somehow behind all of this is pretty laughable and makes me want to mail him a roll of tinfoil.

  • Report this Comment On February 24, 2010, at 2:07 PM, Milligram46 wrote:

    LaHood is good, I get why he is a government drone, he knows how to work the room.

    Quote of the day, "What a joy Mr. Chairman!"

    hour work meeting and this isn't on TV to record -- I won't get to see Toyoda testify.

    I think he is going to get eaten alive, ESPECIALLY if he doesn't work through a translator.

  • Report this Comment On February 24, 2010, at 2:41 PM, Milligram46 wrote:

    Oh man - Toyoda started this out very well with a, "I'm in charge and we need to get out of the board rooms to work on real problems," was the PERFECT message.

    Now they go right back to the party line, it's floor mats, it's no big deal, and we fixed the problem if you use the right floor mats. Apparently they haven't gotten it through their heads that a shrinking minority is the only group that believes this.

    Kudos for Toyoda using a translator, and using a female tanslator in addition.

  • Report this Comment On February 24, 2010, at 3:50 PM, Superdrol wrote:

    Toyota is up over 4%. Epic short squeeze.

  • Report this Comment On February 24, 2010, at 6:53 PM, TMFMarlowe wrote:

    Sounds like Toyoda did just about as well as could have been expected. Enough to turn the tide?

    John

  • Report this Comment On February 24, 2010, at 9:10 PM, Milligram46 wrote:

    I sadly could not see much of Toyoda's today due to a meeting conflict. The parts I did see he personally did very well, he did a much better job than Lentz did yesterday, where this was a train wreck.

    Did it help??? Good question - don't know. I just saw information that noted that Toyota brand loyalty is down 6% in the latest KBB survey, Chevrolet up 6.5%, Ford up 4.6% and Honda now has the highest brand loyalty of cars sold in the United States.

    This isn't a bruise that is going to way, this is going to leave a scar, a bad one, at the minimum. The question as you put so well is, what will the "new normal" look like.

    Right now the bigger issue is people are still dying in Toyota products, including products that onwer's have taken the floor mats out of. Congressional leaders rightly asked the question on the CTS pedal, why no deaths/injuries in cars with CTS pedals? Why are all the death/injuries from Denso pedal equipped cars? Toyoda and LaHood never answered that question. But clearly, given the fact not a single death or injury from a CTS pedal equpped car, the shim doesn't solve the "real" problem.

    I think the answer lies closer to what SIU has discovered and their ability to create exactly what customers have described in a repeatable, real world example, that has been validated by Exponent, the company Toyota hired, not anyone rammed down their throat to prove there was no problem. There is a problem, and until its fixed, the accidents and dark cloud will hang over this company, and the question will remain.

    There are enough stupid people in the world to keep GM, Ford and Chrysler in business, someone once wrote to me on the Fool, when I started writing about Toyota's growing problems in the fall of 2007. Well Toyota can be thankful that they have a dumb customer base also.

    But until the real problem is identified, and solved, or declared unrepairable, Toyota is facing their own Pinto issue right now, infamous "Pinto memo" and all, only in this case the Pinto Memo is a PowerPoint deck.

  • Report this Comment On February 25, 2010, at 5:56 AM, TMFMarlowe wrote:

    If this turns out to be a problem that won't be repaired by a reflash and that requires an electronic hardware replacement -- new ECUs, or whatever the Toyota term is -- this is going to get EXPENSIVE. Like, several hundred bucks a vehicle expensive. Multiply by what, ten million or so vehicles affected once we cut out the smoke and mirrors and really start looking at this? That's real money. Not to mention... how long does it take to design, test, tool, manufacture, and distribute all these new units for several different years of several different models? And is the company going to rent everyone a car to drive in the meanwhile? What'll that cost? How about the fines that are likely to be assessed by several different governments for all of this? Litigation settlements?

    So at what price is TM a buy? I'll let you know right after I figure out how to discount that scenario in a way that isn't just making up numbers.

    John Rosevear

  • Report this Comment On February 25, 2010, at 12:28 PM, Milligram46 wrote:

    @TMFMarlowe - remember if they come out and say, "it is the ECM," or the ETC, or the sensor arrays, and they have to develop a fix, impacted current model vehicles can't be sold under US law until:

    a) A fix is created

    b) The vehicle has been fixed

    Not only do they have the issue of replacing a part(s) that cost hundreds of dollars, and the potential for a lot of labor to replace, flash, and test, but you're talking about losing billions with a b in unit sales every week things are shut down top to bottom.

    The really concerning issue for me as an industry watcher, and if I owned TM, is that the SIU test methodology has been validated and recreated by Exponent, Inc. by Toyota's request. Despite that evidence, Toyota has back pedaled on their stance and said, " we still don't think there is a problem."

    LaHood and the NHTSA are going to look at the Exponent, and remember, Exponent was hired by Toyota, and the SIU testing, as well as the control groups that SIU used, Honda and GM vehicles (of which they said they could not recreate) and Exponents test group, of which they said they could recreate (but did not specify a make/model).

    If the SIU testing is a case of "Audi-ing" Toyota, it's a huge black mark against ABC News, who has lost Toyota advertisers in a 173 station southeastern US market, because of their leading the charge on this story. It is also a big boost for Toyota.

    On the other hand, if this is a plausible, real world test, showing a real world possible problem, and SIU opinion that the Toyota electronics don't follow industry practices, and are vulnerable to vibration, corrosion, dirt and short circuits, it become a huge stinking problem.

    A lot of "ifs" and a lot unresolved. We do know that people who removed their floor mats from their cars are still dying, as recently as January of this year. We know that no one has died or even been hurt in a CTS pedal equipped Toyota. We learned in these hearings that 70% of the complaints for UAI come from Toyota products never recalled. These facts all point to a much larger problem, and a much larger scope to deal with it. None of that is good for TM shareholders.

    I'm looking forward to seeing the numbers you crunch - also curious on if you found out about the supplier of the Toyota Corolla electric steering and the Chevrolet Cobalt electric steering, and if they are the same -- as they both facing investigations for an identical issue.

  • Report this Comment On February 25, 2010, at 12:40 PM, TMFMarlowe wrote:

    Good point... so while we can assume that they'll immediately implement whatever-it-is on the assembly lines, we have to look at existing inventory and realize that that isn't going anywhere until fixed.

    Geez, this adds up to large numbers, doesn't it? And we aren't -- really -- even clear on how many models are affected yet.

    Something else to ponder: What are the odds that it's a hardware issue (whether it's vulnerability to vibration or EM shielding or whatever) vs something that can be fixed with a reflash?

    FYI my latest article just got published here: http://www.fool.com/investing/general/2010/02/25/what-really...

    John

  • Report this Comment On February 25, 2010, at 1:56 PM, Milligram46 wrote:

    @TMFCogitarius

    Why on earth such a strong reaction to someone reporting a story, based on hard facts, and providing their opinion of those facts? What, are we suppose to bow to the altar of Toyota when posting on the Fool?

    Let me ask you question. An analysis of the Ford Pinto disaster reveals that of 3.1 million vehicles built, 27 people died. A deeper analysis of gas tank failures in the small car class of the same decade reveals, the Pinto was no more dangerous than its competitors, surprise!

    So why such a black mark on Ford, four decades later??? What is UP with that? The media is at fault? People doing a hatchet job? No, not even close. Let me go back to your words...

    ...Toyota goofed big time on this, particularly in reaching out to customers and staying engaged until both sides were reasonably satisfied...

    I don't think anyone can argue against that statement. But here is why Ford got roasted (pun intended) on the Pinto. There was the now infamous Pinto memo. Basically the Pinto memo said that the bean counters at Ford did an analysis, spend $36 for every Pinto built (that is in inflation adjusted dollars, it was $11 in 1978) and concluded it was cheaper to pay for a handful of roasted bodies than fix the cars. In other words, light casulaties are OK. We're talking Fight Club here, and people in general don't like to find out:

    a) Product X could kill me even if I do nothing wrong

    b) Company that makes product X KNOWS that it can kill me, even if I do nothing wrong

    c) Company that makes product X isn't going to fix it, because they don't care if it kills me

    Now lets fast forward to 2007, 30 years later, almost to the day. Toyota had a problem with Lexus ES sedans in Japan and the United States. Seems the gas pedals were getting stuck and people were, dying.

    So in Japan, Toyota replaced the floor mats AND installed new gas pedals.

    In the United States, same parts, same cars (in principal) Toyota fought hard not to do any recall at all. In September of 2007 they reached an agreement with NHTSA to do a cut down recall to replace all weather floor mats only on 55,000 cars.

    Toyota KNEW there was a bigger problem. Toyota FIXED the bigger issue in Japan.

    But then we get the Ford Pinto memo. But instead of a typed memo we get the Toyota Safety Group Lexus bullet. We saved $100 million by fighting to fix a known problem.

    People in general don't like to find out:

    a) Product X could kill me even if I do nothing wrong

    b) Company that makes product X KNOWS that it can kill me, even if I do nothing wrong

    c) Company that makes product X isn't going to fix it, because they don't care if it kills me

    Hatchet job? The only hatchet job being done to Toyota's reputation was done by Toyota. This is a powerful insight into how they view issues.

    Additionally, as I type this, people who have removed their floor mats, are still experiencing UAI and five more people have died. People doing what they were told would solve their issues, when Toyota knows there are deeper problems.

  • Report this Comment On February 25, 2010, at 8:27 PM, 8Lives wrote:

    TMFmarlowe-- Thankyou so much. Honestly, for your attentive response to my question.

  • Report this Comment On February 26, 2010, at 9:10 AM, TMFMarlowe wrote:

    8Lives: No problem -- it's a confusing situation if you haven't followed it closely. I should probably do a little article explaining exactly what happened and why that stock isn't "GM" anymore, because you're not the first person to ask.

    Thanks for reading.

    John Rosevear

  • Report this Comment On February 27, 2010, at 12:09 AM, pdxdevo wrote:

    Some good stuff in these posts. But, I was curious exactly what the SIU prof showed, and was fortunate to find this link:

    http://www.circuitsassembly.com/cms/news/9506-toyota-autos-m...

    In this description, and in the abc video it links to, the SIU prof demonstrates there are faults for which no error code is generated, which means 1) the safety overrides don't kick in; and 2) there is no post-incident record of any problem. However, when demonstrating the "sudden acceleration", he INJECTING (forcing) a fault to occur. So, he is not actually reproducing the sudden acceleration (as above comments seem to indicate), he is only showing that IF such a problem were to occur, it MIGHT not be caught by the override or detected later.

    Now, this still seems like a bad situation, and it indicates that (maybe) Toyota cannot rule out ECM defects as the cause of the problem. But its not any kind of proof that the ECM is at fault.

    Personally, when I first heard about this and thought about the statistics (several thousand incidents out of roughly 10 million cars sold in 10 years) I figured it was another case of Audi-esque driver error. Now, I'm not so sure, but I don't think ANYONE really knows yet. I would really like to see normalized (for # cars sold) statistics for sudden acceleration reports across all car brands. I saw some absolute statistics (which aren't too helpful) and Ford seemed to have as many issues as Toyota up until recently.

    All that said, the one thing I think is indisputable is that Toyota really sucks at responding to these situations. They need some serious help on the PR end.

  • Report this Comment On February 28, 2010, at 7:09 AM, WileyCyote wrote:

    I believe that the floor mat "problem and "sticking pedal" have worn thin.

    When someone raised the question of (ug) a SOFTWARE problem, well it was obvius to Toyota that it could not possibly be any of that!

    If you watched the testimony of the VP of sales for the US, you watched a typical marketing weenie do a dance of the seven veils. Not very convincing.

    The connect to the cruise control (which seems to be part of the problem) was initiated about 2000-2001 and there were some complaints at that time about acceleration. However there was noone killed (that I know of). If the problem (or set of problems) goes back that far but is not forced into the light until now, it seems to prove once again the theory that untill you KILL enough people - NOTHING is going to happen. Even now, the effort is to "repair" the reputation.

  • Report this Comment On March 02, 2010, at 1:02 AM, Milligram46 wrote:

    So GM has announced tonight they are recalling 1.3 million Cobalt and G5s from 2005 to 2010. The models being recalled are equipped with electric steering that can get hard to operate at speeds under 15 MPH and have too much travel and complete lack of on center feel at higher speeds. About 1,500 plus complaints, over 700 of them in the last six months, a few minor injuries, no deaths.

    But there is more to this story. The supplier of these fine electric steering systems? Why JTEKT of Japan. Because we all know, Japan builds it better, right.

    And guess who designed these electric steering systems? I couldn't make this up if I wanted to.

    Toyota. In cooperation with Denso. Denso should sound familiar as they are on the other end of the gas pedal controversy. Toyota has blamed their American supplier CTS, while 70% of all complaints come from cars with Denso pedals, as well as all of the deaths, but that is a different issue.

    I really wish I could make this up.

    But wait. It gets even better.

    You see Toyota has complaints too. On the electric steering that is in the 2009 and 2010 Corolla. Absolutely no on center feel that has led to accidents, a few injuries and a growing list of consumer complaints.

    The supplier? Well of course JTEKT of Japan!!! Their partner in electric steering since 2002.

    http://www.jtekt.co.jp/e/index.html

    http://www.msnbc.msn.com/id/35655693/ns/business-autos/

    http://www.thecarconnection.com/marty-blog/1042430_toyota-co...

    So what exactly is Toyota waiting for to do a recall??? Same supplier. Same system. Almost identical complaints, NHTSA investigation in play, and opened up just a couple of days after the GM investigation kicked in.

    I can just hear the excitement in the procurement department at GM back in 2004. "We got the JTEKT agreement! It's the same electric steering used by Toyota!!!"

  • Report this Comment On March 02, 2010, at 3:38 AM, Milligram46 wrote:

    Here we go again.

    933K more Toyotas. Not an, ehem, recall, Toyota is calling it, "limited service campaign."

    Turns out an oil hose on V6 Toyotas are leaking and causing engine damage and failures.

    http://www.msnbc.msn.com/id/35650004/ns/business-autos/ns/bu...

  • Report this Comment On March 02, 2010, at 6:17 AM, TMFMarlowe wrote:

    Aaaaand today's the day we learn the Feb sales numbers. This is going to be very very interesting.

    John

  • Report this Comment On March 02, 2010, at 2:27 PM, madinga wrote:

    So is it a bondfire or a smoking gun?

  • Report this Comment On March 02, 2010, at 4:59 PM, Milligram46 wrote:

    @TMFMarlowe:

    Ford up 43%

    The "new" GM up 32% (11.5% on old GM)

    Chrysler up 1/2% - first gain since 2007

    Honda up 13%

    Hyundai up 11%

    Nissan up 29%

    Toyota sales of 100,027 vehicles for February is worse than it appears. Sure, they did better than 99,xxx units they sold in January, but they couldn't sell 60% of their models during the last five selling days of the month. The sales ban was lifted on 2/1/10 (and why Toyota kept quiet about this I'll never understand). It is the second worst single month showing since 1999 - only January of 2010 was worse in the last 11 years.

    John - there is ALL SORTS of amazing things going on in these numbers.

    Honda sold a hair over 80K units, Nissan sold 75K units! So Nissan is closing in on Honda as the number two Japanese seller, that is another big development, and I'm going to guess the Consumer Reports Altima nod got traffic into the showrooms. Ford outselling GM also big news.

    I think the other big news is how light the lift the Honda and Hyundai had got. I would have expected 20% lift each. If anyone here won, it was Ford (which really shoots holes in the whole government out to destroy Toyota to drive GM sales theory).

    Here is Toyota sales data from February 2010:

    http://pressroom.toyota.com/pr/tms/document/February_10_Sale...

    But lets put this into some real context and look at the 2008 data over the 2009 data over the 2010 data.

    http://pressroom.toyota.com/pr/tms/toyota-reports-february-s...

    (you have to click the link to get the data).

    I just finished crunching the numbers John, and February 2010 for Toyota was a blood bath when you look at 2009 and then back to 2008:

    TOYOTA MOTOR CAR DECLINES

    Avalon: down 65% from 2009, 80% from 2008

    Scion tC: down 63% from 2009, 72% from 2008

    Scion xB: down 6% from 2009, 59% from 2008

    Scion xD: down 27% from 2009, 58% from 2008

    Yaris: down 13% from 2009, 55% from 2008

    Camry: down 20% from 2009, 51% from 2008

    Prius: UP 10% from 2009, down 26% from 2008

    Corolla: Down 6% from 2009, down 19% from 2008

    LEXUS CAR DECLINES

    SC: down 65% from 2009, 98% from 2008

    GS: down 18% from 2009, 86% from 2008

    IS: down 7% from 2009, 82% from 2008

    LS: UP 14% from 2009, down 50% from 2008

    ES: down 9% from 2009, 42% from 2008

    HS: N/A (no 2009 or 2008 sales, new model)

    TOYOTA MOTOR SUV DECLINES

    Sequoia: Down 55% from 2009, 73% from 2008

    Sienna: Down 24% from 2009, 70% from 2008

    Land Cruiser: Down 6% from 2009, 69% from 2008

    Highlander: Down 28% from 2009, 65% from 2008

    FJ Cruiser: Down 16% from 2009, 60% from 2008

    4Runner: UP 55% from 2009, Down 42% from 2008

    RAV4: Down 19% from 2009, Down 23% from 2008

    TOYOTA TRUCK DECLINES

    Tundra: Doiwn 5% from 2009, Down 65% from 2008

    Tacoma: Up 6% from 2009, Down 38% from 2008

    LEXUS SUV DECLINES:

    LX: Down 10% from 2009, 58% from 2008

    RX: Down 8% from 2009, 17% from 2008

    GX: Up 186% from 2009, down 6% from 2008

    These are simply awful. There is no way on earth to find any good news in this data. Toyota has a massive over capacity problem with manufacturing as it is today, and a completed factory in Mississippi sitting completely idle.

    If this is the "new normal," Toyota is in huge trouble.

    Also, current Toyota owners can lament the new incentives. 0% financing for 60 months, PLUS $500 to $3,000 rebates, and free service for two years to current Toyota owners. This is going to slash resale values. Further, Ford, Hyundai and GM can play the incentive game all day long.

    If you want I can e-mail you my Excel sheet with all of the sales data (sourced above).

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