toyota

Toyota’s Profit Plunges After Japan Disaster

by AP on May 11, 2011

Huffington Post…

TOKYO — Toyota’s quarterly profit crumpled more than 75 percent after the March earthquake and tsunami wiped out parts suppliers in northeastern Japan, severely disrupting car production. The maker of the popular Prius hybrid gave no forecast for the current fiscal year through March 2012, citing an uncertain outlook because production continues to be hampered by shortages of parts. Toyota is expected to lose its spot as the world’s top-selling automaker to General Motors Co. this year because of the disasters. The automaker’s president Akio Toyoda said he and others at Toyota are “gritting our teeth” to keep jobs in Japan. He promised to disclose earnings forecasts by mid-June. Toyota Motor Corp. reported Wednesday that January-March profit slid to 25.4 billion yen ($314 million) from 112.2 billion yen a year earlier. For the fiscal year ended March 2011, Toyota’s earnings doubled, showing that the Japanese automaker had been on the way to recovery from its recall crisis when the magnitude-9.0 earthquake struck on March 11. But Toyota also said efforts to fix production, including using other plants and finding replacement parts, were going better than initially expected, with car manufacturing expected to gradually pick up in Japan and abroad from next month to 70 percent of pre-disaster levels. Toyota earlier said such production improvements wouldn’t start in Japan until about July, and overseas in August, with a full recovery not expected until late this year. “Our priority is to get our production back to normal and recover from the disaster,” a somber Toyoda told reporters. When a full recovery would come was still unknown, he said. By the end of May, the crisis has cost the company production of 550,000 vehicles in Japan, and another 350,000 overseas. Production is now back at about 50 percent. “By reviving our company, we want to help bring Japan’s comeback,” said Toyoda. Analysts say the quake and tsunami have sorely hurt Toyota but a production recovery could come quickly. “I think chances may be good that getting production back would be speedy,” Shotaro Noguchi, analyst at SMBC Nikko Capital Markets in Tokyo, said in a recent report. Still, Toyota may face a different kind of challenge in the months ahead because the government has asked for a shutdown of the Hamaoka nuclear power plant, which is located on a fault-line and furnishes the power supply for the region where Toyota is headquartered and has many of its plants and suppliers. The request came because of growing fears about the safety of nuclear power after the tsunami damaged the cooling systems at the Fukushima Dai-ichi plant on the northeastern coast, sending it to the brink of a meltdown. Toyoda did not say how much the Hamaoka shutdown would reduce production, but promised the company would do its utmost to secure a stable power supply. He said production at all lines for all models would be back at pre-disaster levels by November or December at the latest, but efforts are under way to do it faster. The hit Toyota has taken makes it likely a resurgent General Motors will regain the title of world’s No. 1 automaker by annual vehicle sales. Toyota overtook GM as the world’s biggest automaker in 2008, a distinction the American manufacturer had held since 1932. Toyota said it sold 7.31 million vehicles for the fiscal year through March 2011, up by 71,000 vehicles from the previous year. For the January-March period, Toyota sold 1.79 million vehicles worldwide. That is fewer than the 2.22 million vehicles GM sold and fewer than No. 3 automaker, Volkswagen AG of Germany, at 1.99 million. Toyoda said the automaker was still missing about 30 types of parts, although that was an improvement from the 150 it had lacked before. Toyota hopes to be producing at 70 percent of its pre-quake levels by June. The automaker’s full-year results highlight how, when the quake struck, Toyota had been on its way to a recovery from the recall fiasco, affecting 14 million vehicles worldwide, which had battered its reputation for quality. Sales for the January-March quarter dipped 12 percent year-on-year to 4.6 trillion yen ($57 billion), according to Toyota. For the fiscal year ended March 2011, profit doubled to 408.1 billion yen ($5 billion) from 209.4 billion yen the previous year. Annual sales edged up 0.2 percent to 18.99 trillion yen ($234 billion). Toyota said vehicle sales fell in North America, Japan and Europe, but it had robust sales in other regions, such as the rest of Asia, Africa and South America. Toyota is especially struggling in the U.S., where its April sales rose just 1 percent from the previous year, while GM’s car and truck sales surged 26 percent and South Korean rival Hyundai Motor Co. posted a 40 percent jump in sales. Like other Japanese exporters, Toyota has been hurt by the surging yen, which erodes overseas earnings. The dollar has now fallen to near 80 yen from about 90 yen a year earlier. “Despite negative factors such as a rapid rise in the yen and the earthquake, our profit sharply rose, thanks to massive cost-cutting and sales efforts,” said Toyoda, referring to the full-year result. Honda, which reported a quarterly profit drop of 38 percent last month, has said it doesn’t expect to return to full production in Japan until the end of the year. Toyota shares closed up 0.6 percent at 3,270 yen ($40) in Tokyo, shortly before earnings were announced. That is still down 9 percent from before the quake. ___ Associated Press writer Shino Yuasa contributed to this report.

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Toyota’s Profit Plunges After Japan Disaster

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Toyota’s Production Won’t Return To Normal Until November Or Later

by AP on April 22, 2011

Huffington Post…

TOKYO — Toyota’s global car production, disrupted by parts shortages from Japan’s earthquake and tsunami, won’t return to normal until November or December – imperiling its spot as the world’s top-selling automaker. President Akio Toyoda apologized to customers for the delays due to the March 11 disasters that damaged suppliers in northeastern Japan, affecting automakers around the world. “To all the customers who made the decision to buy a vehicle made by us, I sincerely apologize for the enormous delay in delivery,” Toyoda said at a news conference in Tokyo. Toyota Motor Corp. earlier said it has suffered a production loss of 260,000 cars. Earlier this week, it resumed car production at all of its plants in Japan for the first time since the quake, but the factories are running at half capacity due to the parts shortages. Japanese manufacturers are also grappling with power shortages. Aftershocks from the magnitude 9.0 quake have slowed progress, Toyoda said. “We’ve seen some of the recovery work set back to square one many, many times,” he said. The setbacks could cost Toyota its top position in the global auto industry. Last year, Toyota sold 8.42 million vehicles, barely keeping its lead over a resurgent General Motors Co., which sold 8.39 million, thanks to booming sales in China. Given Toyota’s production woes, GM could reclaim the title of world’s largest automaker that it lost in 2008. Adding to those worries, customers in some overseas markets are raising questions over possible radiation contamination of exported vehicles due to radiation leaks at a tsunami-damaged nuclear plant in northern Japan’s Fukushima prefecture (state). In response to that concern, Japanese automakers have begun checking radiation levels on some cars and tires before shipment. “We want to erase their worries by taking this measure,” said Hirokazu Furukawa, a spokesman for the Japan Automobile Manufacturers Association. He noted that no radiation has been detected on cars bound for overseas markets so far. Toyoda and other Toyota executives said normal production for some vehicles inside Japan could resume by July, with normal output beginning to be restored by August overseas. But it will take until late in the year for the company to bring its production lines back to full capacity for all models. “In November or December means that all lines and all models will go back to normal and we will be able to receive orders and make deliveries as usual,” Toyoda said. The company would not provide details on which vehicles might become fully available first. The announcement Friday was meant to facilitate dealers’ discussions with customers, Toyoda said. “Even if it is only the timing we can share with others … we may be able to deal better with people working on the front lines,” he said. “Dealers cannot discuss deliveries or any other specifics and they are having a hard time right now.” The parts crunch has been felt around the world, from Malaysia to Europe to the United States. Nissan Motor Co. and Ford Motor Co. have said several North American plants would be closed for some of April, and Chrysler CEO Sergio Marchionne has said his company will see disruptions. Toyota has extended production cuts at its North American factories into early June, a move that will likely result in widespread model shortages. Its factories in China are operating at 50 percent capacity, and production at three Thailand plants is being cut by 70 percent. The company has pledged not to lay off any of its 25,000 workers in North America and says it will use the extra time for training to make improvements at its 13 factories in the region. The disaster has left Toyota and other Japanese manufacturers who pride themselves on just-in-time efficiency in an awkward bind. Toyota executives say that while the industry’s supply chains were designed out of necessity to maximize competitiveness, the company might consider ensuring that its plants have alternative suppliers or that each region is relatively self-sufficient. “I don’t want to think about this, but we are in an earthquake-prone country, so we will have to give serious consideration to what we will do in the future,” said Shinichi Sasaki, an executive vice president. ___ Associated Press writers Shino Yuasa and Malcolm Foster in Tokyo and Grant Peck in Bangkok contributed to this report.

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Toyota’s Production Won’t Return To Normal Until November Or Later

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Japan- Toyota tackles output crisis

April 16, 2011

Japan- Toyota tackles output crisis

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Toyota Will Begin Suspending North American Production Next Week

April 9, 2011

LOUISVILLE, Ky. — Toyota Motor Corp. said Friday that it will suspend production at its North American plants in a series of one-day shutdowns this month as a result of parts shortages caused by the earthquake that hit Japan. The temporary shutdowns will affect 25,000 workers, but there will be no layoffs, the world’s No. 1 automaker said. A March 11 earthquake and tsunami damaged auto parts plants in northeastern Japan, causing shortages. All 13 of its North American plants will have down time, though the duration may vary at a few plants, Toyota spokesman Mike Goss said. For most plants, the one-day shutdowns will begin April 15 and end April 25, the company said. Toyota said future production plans will be determined later. “We’re just monitoring supplier progress on a daily basis, and we’ll make decisions as we go along,” Goss said. The North American plants have been using parts in their inventory or relying on those that were shipped before the earthquake. “We are slowing down to conserve parts yet maintain production as much as possible,” said Steve St. Angelo, executive vice president of Toyota Motor Engineering and Manufacturing North America. Toyota gets only about 15 percent of its parts from Japan for cars and trucks built in North America. Those parts include electronic and rubber components, and a paint additive, Goss said. The production shutdowns will total five days – April 15, 18, 21, 22 and 25 – at its North American vehicle plants, except at Georgetown, Ky., where production will be halted four days. The Kentucky plant makes the popular Camry, along with the Avalon and Venza vehicles. Most of the company’s North American engine and component plants will follow the same schedule, the company said. The schedule might vary for just a few of those plants, Goss said. The incremental stoppage in production is meant to “keep as much production going on a weekly basis as we possibly can so we keep vehicles flowing to our dealerships,” Goss said. Shortages of parts from Japan are also affecting manufacturers outside the country. Ford Motor Co. and Nissan Motor Co. recently said that several North American plants would be closed for part of this month. Chrysler Group LLC is cutting overtime at plants in Canada and Mexico to conserve parts from Japan. Toyota said its North American plant workers will focus on training and reviewing operations when production is halted so that they can still earn a paycheck. However, they can also take vacation or unpaid time off. Meanwhile, Toyota announced Friday it will resume car production at all its plants in Japan at half capacity from April 18 to 27. The March earthquake and tsunami had forced the company to halt manufacturing due to shortages of parts and power. The company said production at the plants will then halt from April 28 to May 9, which includes a holiday period when factories would normally close.

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Totoya To Shutdown North American Factories Due To Parts Shortage

April 4, 2011

LOUISVILLE, Ky. — A Toyota Motor Corp. spokesman says it’s inevitable that the company will have to shut down its North American factories due to shortages of parts from Japan. Spokesman Mike Goss says the shutdowns are likely to take place later this month, affecting about 25,000 workers. But he says no layoffs are expected. He says the length of the shutdowns is unknown and depends on how fast earthquake-damaged Japanese parts factories get back in operation. Toyota gets about 15 percent of its parts from Japan for cars and trucks built in North America. The company has more than a dozen North American factories. Goss made the comments Monday before an appearance in Louisville by Toyota’s head of North American operations.

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Japan- Toyota targets annual sales of 10m vehicles

March 10, 2011

Japan- Toyota targets annual sales of 10m vehicles

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Recall of 1.7 million Toyota vehicles worldwide

January 26, 2011

Recall of 1.7 million Toyota vehicles worldwide

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7 insurance companies take Toyota to court

January 4, 2011

7 insurance companies take Toyota to court

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Video: Burns Says Insider Trading to Be Priority at SEC in 2011

December 31, 2010

Dec. 31 (Bloomberg) — Douglas Burns, a formal federal prosecutor, talks about possible U.S. Securities and Exchange Commission investigations in 2011. Burns also discusses the SEC’s probe of Goldman Sachs Group Inc. and Toyota Motor Corp.’s vehicle recalls. He talks with Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Petrobras signs $820m deal with Toyota Tsohu

October 31, 2010

Petrobras signs $820m deal with Toyota Tsohu

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Most Reliable Cars: Honda, Toyota Top Consumer Reports Rankings

October 26, 2010

DETROIT — The most problem-free cars and trucks are made by Honda and Toyota, but U.S. automakers Ford and General Motors are closing the gap in quality, according to an annual survey by Consumer Reports magazine. Ford and GM continue to narrow the disparity that once separated Asia-based automakers from their Detroit rivals. Large overhauls of American car companies in the last few years have resulted in fewer brands and better vehicles from Detroit. For the third year in a row, Toyota’s Scion had the fewest problems of any brand in the survey. It was followed by Porsche, Acura, Honda, and Nissan’s Infiniti luxury brand. The Toyota brand ranked sixth, down from third last year. It was followed by Subaru and Volvo. Lexus, which had been a top finisher in past years, fell to ninth. Ford was 10th, but rose from 16th the previous year. Consumer Reports rankings, released Tuesday, are widely used by buyers shopping for cars and trucks. The magazine ranks No. 3 on the list of information sources used by Americans to pick vehicles, topped only by brand loyalty and recommendations from friends and family. Scion, Toyota’s youth brand, was tops because it sells just three models, the xD hatchback, xB wagon and tC coupe. Those models haven’t been revamped recently. As a result, they have fewer reliability problems, said David Champion, senior director of auto testing for Consumer Reports. Toyota generally fared well in the survey despite recalling more than 10 million vehicles worldwide for safety problems including sticky gas pedals, floor mats that can trap accelerators and brake fluid leaks. “Toyota’s taken a slight knock from the issues with their recalls,” Champion said. He said the magazine’s survey asks owners to ignore recalls unless they have experienced a problem, easing the impact. Toyota’s luxury brand, Lexus, has expanded its model lineup and the quality has slipped, he said. The survey of about 960,000 of the magazine’s subscribers also restored recommended ratings for eight recalled Toyota brand models. Toyota in January recalled 2.3 million vehicles in the U.S. due to sticky gas pedals, including the 2009-10 RAV4 crossover, 2009-10 Corolla, the 2009-10 Matrix hatchback, the 2005-10 Avalon, the 2007-10 Camry, the 2010 Highlander crossover, the 2007-10 Tundra pickup and the 2008-10 Sequoia SUV models. It stopped selling the models until the vehicles on dealer lots were fixed. When sales were halted, Consumer Reports yanked the recommended ratings. Champion said Honda is the top manufacturer for reliability, with the Honda and Acura brands consistently at the top of the survey due to a continued emphasis on quality. Champion said the Dearborn, Mich.-based Ford has several individual models that have better quality than Toyotas. Ford’s quality resurgence was led by the Fusion midsize sedan, which outranked Honda’s Accord and Toyota’s Camry, two of the most reliable cars on the road. Ford’s improvements began five years ago and have continued, Champion said. General Motors showed the most improvement. GM had 69 models with average or better reliability, up from only 21 last year. GM’s top-ranked brand was Chevrolet at 17, up from 25 last year. GM shed some poor-quality models when it got rid of Saturn, Hummer and Pontiac, Champion said, and its new models like the Chevrolet Equinox crossover and Buick LaCrosse sedan are performing well. The Chrysler brand was ranked last of 27 brands shown in the survey, the magazine said, while Jeep ranked 20th and Dodge was 24th. No Chrysler vehicles scored above average in reliability. Champion said the company under its previous owners cut costs, and it’s showing in the quality rankings. The company’s in the process of updating its entire model lineup. New models like the Jeep Grand Cherokee are showing promise. The most reliable vehicle in the survey was the Porsche Boxster sports car, while the least reliable was the Jaguar XF luxury car. Complete rankings and recommendations will be revealed in the magazine’s December issue.

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‘Somos Muchos’: Toyota Offers Free Hispanic Pride Stickers

September 7, 2010

TORRANCE, Calif. — Toyota Motor Corp., hoping to solidify its standing as the top brand for Hispanic buyers in the U.S., is offering drivers a series of stickers that celebrates their Hispanic heritage. The decals contain the phrase “somos muchos,” or “we are many,” followed by cultures, regions and popular descriptors from all over Latin America, such as “somos muchos Mexicanos” and “somos muchos Hondurenos.” The decals, designed to be stuck on bumpers or windows, come in more than 100 different versions and are available in the U.S. and Puerto Rico. Toyota is offering the stickers free on the Spanish-language version of its Facebook page. It’s also distributing them at upcoming festivals in Los Angeles, Houston, Dallas, Miami, New York and Chicago. Toyota is the top brand among Hispanic buyers in the U.S., according to vehicle registration data gathered by R.L. Polk and Associates. The automaker says it has held that title since 2004. In a recent speech to the National Council of La Raza, Toyota President Yoshi Inaba said one of every four Hispanic car buyers in the U.S. bought a Toyota last year.

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Toyota Recalls 1.1 Million Corollas, Matrixes

August 26, 2010

NEW YORK — Toyota recalled 1.33 million Corolla sedans and Matrix hatchbacks in the U.S. and Canada Thursday because their engines may stall, the latest in a string of quality problems at the Japanese automaker. The recall covers vehicles from the 2005-2008 model years sold in the U.S. and Canada. Three accidents and one minor injury have been reported, though Toyota said a link to the engine issue has not been confirmed. Toyota’s latest recall is one of its largest since it began recalling cars and trucks last October. The automaker has now recalled more than 10 million vehicles worldwide for problems that run from faulty gas pedals and floor mats that can trap accelerators, to problems with its Prius hybrid. Toyota said Corollas and Matrixes equipped with 1ZZ-FE engines may contain a defective engine control module, the computer that regulates the performance of the engine. In some cases, a crack may develop on the module’s circuit board, which could prevent the engine from starting or could cause harsh shifting or an engine stall. Separately, General Motors Co. is recalling 200,000 Pontiac Vibes in North America due to the same problem, GM spokesman Alan Adler said. The Vibe is similar to the Matrix and was built under a joint venture between Toyota and GM at a now-closed factory in Fremont, Calif. Both automakers said they will replace the engine control modules on the recalled vehicles at no charge. The companies will begin mailing notifications to owners of the affected vehicles in mid-September. The engine control module with the possible defect was manufactured by Delphi Corp., a large auto parts supplier headquartered in Troy, Mich., according to documents filed with federal regulators. The automaker has been more aggressive in its pace of recalls in recent months. Its last recall was in late July, when the automaker said it would fix half a million cars, mostly Toyota Avalon sedans, over a steering issue. U.S. regulators hit Toyota with a $16.4 million fine earlier this year for failing to promptly tell the government about its car defects. Toyota has been working to overhaul its quality controls and respond more aggressively to customer complaints in the fallout of its recall crisis. The National Highway Traffic Safety Administration has been investigating the possibility of engine stalling in the Corolla and Matrix models since late November. On Tuesday, the traffic safety agency said it had intensified its investigation. NHTSA spokeswoman Olivia Alair said Thursday that the probe is ongoing. Toyota spokesman John Hanson said the automaker is cooperating with the safety agency on the probe. He said it was the automaker’s decision to issue the recall, adding it was not pressured by NHTSA to do so. U.S.-traded shares in Toyota Motor Corp. fell 34 cents to $68.72. ___ AP Autos Writer Stephen Manning contributed to this report from Washington.

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Steve Parker: Is NHTSA Working for Toyota or To Find the Truth?

August 12, 2010

Last week we asked, based on conclusions drawn by a Wall Street Journal auto industry reporter, if Toyota had been right along with their contention that “driver error,” and not electronic gremlins, was the main culprit behind thousands of owner claims of “unintended acceleration.” Not to mention the hundreds of injuries and even several deaths which are claimed to be the result of known problems in Toyota-built vehicles, cars and trucks both. Readers responded with their own thoughts on what could now be called “the Toyota scandal.” It appears that, among this blog’s readers, at least, the majority of people responding felt there was something wrong with these Toyotas and that owners were possibly being left out in the cold with Toyota’s claims of driver error. A report in Tuesday’s Automotive News , the world’s daily publication of record for the auto industry, would seem to bolster the company’s claims … especially so, considering Toyota says their source for this information is from NHTSA, the US agency of record when it comes to automotive safety. Here’s what Automotive News said: “Brakes weren’t applied by drivers of Toyota vehicles in at least 35 of 58 crashes blamed on unintended acceleration, U.S. auto-safety regulators said after studying data recorders.” The National Highway Traffic Safety Administration also saw no evidence of electronics-related causes for the accidents in reviewing the vehicle recorders, known as black boxes, the agency said today in a report to lawmakers. The preliminary findings bolster Toyota’s contentions that there’s no evidence of flaws in electronic controls on its vehicles and that motorists in some cases confused the accelerator and brake pedals. Toyota, the world’s largest automaker, has recalled more than 8 million vehicles worldwide in the past year for defects such as pedals that stuck or snagged on floor mats. “At this early point in its investigation, NHTSA officials have drawn no conclusions about additional causes of unintended acceleration in Toyotas beyond the two defects already known — pedal entrapment and sticking gas pedals,” the agency said in the report provided for a briefing to lawmakers in Washington. In addition to the 60 percent of cases where brakes weren’t used, NHTSA cited accidents in which the brakes were applied partially or the data recorder failed. Toyota has conducted more than 4,000 on-site vehicle inspections, and said today it has not found electronic throttle controls to be a cause of unintended acceleration. “Toyota’s own vehicle evaluations have confirmed that the remedies it developed for sticking accelerator pedal and potential accelerator pedal entrapment by an unsecured or incompatible floor mat are effective,” the company said. “We have also confirmed several different causes for unintended acceleration reports, including pedal entrapment by floor mats, pedal misapplication and vehicle functions where a slight increase in engine speed is normal, such as engine idle up from a cold start or air conditioning loads.” In all of the cases studied by federal regulators, the driver made an allegation of unintended acceleration. Of the 58 recording devices analyzed, 35 showed that at the moment of the crash impact, the driver hadn’t depressed the brake pedal at all, safety officials said. Fourteen more cases showed partial braking. In another nine cases, the brake had been depressed at the “last second” before impact. The government’s preliminary examination also said there were a handful of other crashes where the brake was pressed early and released, or in which the brake and gas pedals were pressed at the same time. There was one case of pedal entrapment by a floor mat. In five cases, NHTSA said, the electronic recording device failed to work. The agency is continuing its review of Toyota defects and is working with NASA, the U.S. space agency, and the National Academy of Sciences to probe the cause of the crashes.” So how WILL this all turn out? No one wants to jump to conclusions, especially considering that both Toyota and US government agencies are terribly litigious. And no one wants to get caught-up in what I think will be a long and international court battle between the entities involved. But there still is freedom of the press, at least last time I checked. Given that, what’s the next move by either Toyota and/or NHTSA? We all knew this would be solved (or made more involved) in the courts. I know people from Toyota and NHTSA (and more) read this blog and this is kind of a back-door way of giving your opinion directly to the participants; as if we’re Switzerland or Finland — that usually and officially secret third party in negotiations about, for instance, the Middle East — and we’re shuttling messages between the two main parties. So now’s your chance! What happens next? And why? And are you happy with it? And how should we treat NHTSA’s report which seems to take Toyota’s claims of “no electrical problems” with even less than a grain of salt? Listen and join-in with Steve Parker every weekend on www.TalkRadioOne.com … Visit that site to find out local showtimes in your area!

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Koua Fong Lee, ‘Toyota Defense’ Driver Who Killed Three In Crash, Will Go Free

August 6, 2010

ST. PAUL, Minn. — Koua Fong Lee dreamed of life outside prison, of returning to the family he left when a jury didn’t believe he tried to stop his Toyota from speeding up a highway ramp and a judge sentenced him to eight years for the ensuing crash that killed three people. On Thursday, Lee fought back tears, suddenly a free man after the same judge ruled new evidence and a shoddy defense entitled him to a new trial. The county prosecutor agreed, and said she wouldn’t bring charges again. “It’s not a dream. It’s true,” Lee said, as his wife, Panghoua Moua, buried her head in his shoulder. “When we are asleep in the cell, sometimes I dream and I wake up in the little room, still in the little room. But now my dream come true.” Lee, who immigrated to the U.S. from a Thai refugee camp in 2004, was driving a Toyota Camry when it plowed at high speed into the back of an Oldsmobile as Lee exited a St. Paul freeway ramp in 2006. He insisted during his trial that he did everything he could to stop the car but couldn’t. Jurors weren’t convinced and Lee’s own attorney suggested his client might have accidentally stepped on the accelerator. But Lee sought a new trial this spring in the wake of Toyota’s widely publicized problems with sudden acceleration in some newer models. Even though his 1996 Camry never had been recalled, Lee was granted a hearing. Prosecutors opposed a new trial, arguing Lee hadn’t offered conclusive new evidence in the case. But after the judge’s ruling, County Attorney Susan Gaertner conceded Lee’s team had shown his trial attorney was “ineffective.” “I think it’s time to bring this very sad situation to a close,” Gaertner said. Lee and Moua have four children, ages 8, 5, 3 and 2, and Moua said her husband barely knows the youngest two because of his time in prison. Changing that was Lee’s first intention, he said. “It’s a long time, very long time, and they don’t know me. I want to know them, who I am, I am their daddy,” he said. During four days of testimony this week, Lee’s attorneys didn’t prove his car had a sudden acceleration problem. But they argued evidence backed up Lee’s account he was trying to brake. They also argued his defense attorney did a poor job. And they called a parade of witnesses who testified they had sudden-acceleration experiences in Toyotas similar to Lee’s. Ramsey County District Judge Joanne Smith – who presided over Lee’s original trial and had sentenced him to the maximum – said if that testimony from the other Toyota drivers had been introduced then, it would “more likely than not, or probably, or even almost certainly” have resulted in a different verdict for Lee. Smith also said Lee’s limited English was a factor in her conclusion, as well as the work of his defense attorney. “There were multiple errors and omissions by his attorney that necessitate this result,” Smith said. Lee’s release capped a dramatic day during which he earlier rejected prosecutors’ offer to set him free and vacate his sentence. But that offer had included several conditions, including a stayed remainder of his sentence that meant he could face prison for a new violation in the future. Javis Trice Adams, 33, and his 10-year-old son, Javis Adams Jr., died in the 2006 accident. Adams’ 6-year-old niece, Devyn Bolton, was paralyzed from the neck down and died shortly after Lee was convicted. Two others were badly hurt. Bridgette Trice, Devyn Bolton’s mother, welcomed Thursday’s ruling. The victim’s families had supported Lee’s effort for a new trial, but Trice was crying outside the courthouse as she spoke to reporters. “I’m happy for him but I’m still sad for us, cause he’s going back to his but ours are never coming back to us,” Trice said. Lee said he wanted the victims’ families to know he didn’t intend to cause the accident. “I want them to know that I will pray for them and I also want to ask them to forgive me and to believe me,” he said.

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Toyota Profit Hits $2.2 Billion Despite Recalls

August 4, 2010

TOKYO — Toyota reported a quarterly profit of $2.2 billion, reversing from red ink a year earlier as the world’s top automaker benefited from a global sales recovery that offset lingering doubts about the safety of its cars. The company, which makes the Camry sedan and Prius hybrid, raised its full year earnings forecast Wednesday, and said it now expects to sell 7.38 million vehicles worldwide for the year through March 2011, up from 7.24 million the previous year. Previously it forecast sales of 7.29 million vehicles. The numbers show that Toyota Motor Corp. is on a recovery track from the sales battering it took from the global financial crisis two years ago and the blows to its image from massive recalls that began last October. Toyota acknowledged uncertainties lie ahead, including the surging yen, which erodes the value of overseas earnings, but is expecting sales to expand in Asia, South America, and other emerging markets. Still, Toyota’s car sales remain far lower than the 9 million-plus vehicles it was selling globally while on its way to overtaking General Motors Co. as the world’s No. 1 automaker. At that time, an ambitious Toyota, which had appeared unstoppable as U.S. rivals GM and Chrysler stumbled, had set a goal of reaching global sales of 10 million vehicles within several years. Toyota’s revenue for the April-to-June quarter surged 27 percent to 4.87 trillion yen ($57.3 billion) as car sales jumped in North America, Japan and other parts of Asia including Thailand and Indonesia. The only trouble spot was Europe, where auto sales were lagging partly because of concerns about Greece’s debt crisis, according to Toyota. Its quarterly profit of 190.47 billion yen ($2.2 billion) was achieved despite worries that Toyota’s recalls of popular models would hurt sales. The result was a sharp improvement from a loss of 77.8 billion yen the year before when the global recession crushed car sales. Toyota said cost reductions of 50 billion yen ($588 million) also helped its latest results, offsetting the damage from a stronger yen, estimated at 30 billion yen ($353 million). The car maker raised its profit forecast for the year through March 2011 to 340 billion yen ($4 billion) from 310 billion yen ($3.6 billion), underlining the staying power of the automaker amid fears about quality control. It increased its annual sales revenue forecast to 19.5 trillion yen ($229 billion) from 19.2 trillion yen ($226 billion). Revenue the previous year was 18.95 trillion yen. Toyota had long been lauded for creating a manufacturing system that ensured a consistently high standard of quality. But the automaker has recalled about 10 million vehicles globally since October for various problems including faulty floor mats, sticky gas pedals, braking software glitches and steering malfunctions. Its reputation has also taken a hit from more than 300 lawsuits it faces in the U.S. claiming damages for deaths and injuries suspected of being linked to acceleration problems and from owners claiming the value of their cars has diminished because of alleged defects. North American auto sales have turned around from a 30-year low in 2009, but the recovery could be fragile. Toyota’s U.S. sales in July jumped 20 percent from June because of the generous rebates being offered to appease customers worried about safety recalls. But they were 3.2 percent lower than the same month the previous year, which was before the recall crisis struck. Tsuyoshi Mochimaru, analyst at Mitsubishi UFJ Morgan Stanley Securities Co., said Toyota may lose some market share to rivals because of the recall but many consumers will see them as routine. “For most people, they are just regular recalls,” he said. “Many people will accept them as part of life.” Senior Managing Director Takahiko Ijichi acknowledged it was difficult to assess what effect the recalls had on Toyota’s latest earnings. He said Japanese government-backed incentives for green vehicles like the gasoline-electric Prius hybrid are set to end in September, and that could hurt sales in Japan. He declined to detail plans for North America, including how long rebates will last, merely expressing hopes for more growth. “We will try to regain trust from our customers as quickly as possible and we will continue our effort to improve sales,” said Ijichi. Toyota shares edged down 1.6 percent to 3,090 yen in Tokyo. ___ Associated Press Writer Mari Yamaguchi contributed to this report.

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Steve Parker: GM Sets Volt Price While Toyota Delays US-Built Prius

July 28, 2010

There was big electric vehicle and hybrid news Tuesday, as General Motors stuck by their guns, but Toyota seems to be acknowledging that they expect sales of all their cars, including Prius, to slow for quite some time. First, GM has announced the their “extended range hybrid EV” low emission/high mileage Chevrolet Volt will sell for $41,000 when it is introduced later this year –and that’s just the base price. We can be certain that in the great car dealer tradition, there will be a good amount of options available for the car (dealers make a lot of money on those extras and car-makers like to keep their dealers happy). That $41K tab is in somewhat stark contrast to Nissan’s recent announcement that their Leaf EV will cost under $33,000. That’s an amount which, with federal, state and local incentives, might see its true base price drop to as low as near $25,500 after those credits are applied (the incentive amount all depends what state and municipality you’re living in). Former GM vice-chairman Bob Lutz introduces the first version of the Volt to be presented to the public at the Detroit Auto Show So a base Volt, even given a buyer being able to take advantage of the full $7,500 federal incentive, and let’s say $1,500 from the state and, perhaps, county or even city, will still tip the money scales at a price very near $32,000. And that’s near the base price of Leaf before any incentives are applied. But GM, apart from Volt’s high technology, edgy styling and oh-my-gosh interior, will be depending on one main thing to draw buyers to Volt from less-expensive “pure electrics” (like Leaf and Mitsubishi’s i-MiEV), and it’s called “range anxiety.” It’s a new term in the auto world, but it means just what it says: people driving cars which use any fuel other than gasoline worry about how far they can go without running out of that fuel. Volt’s gee-whiz interior, gauges and controls should impress buyers Here’s where Volt starts to sound like a great idea: While Nissan predicts a 100-mile range per charge-up for Leaf, GM says their car will have a range of around 600 miles per gasoline tankful, that gasoline powering an engine which keeps Volt’s battery charged. Volt will also have the ability to charge its battery by plugging into an electric outlet, so it appears an owner would have a tough time running out of range in Volt. Most car-makers plan on their initial EVs being second or third commuter-type cars. And because the average American’s round-trip work commute is said to be 40 miles or under, a 100-mile range should allay any range anxiety. But Volt, at its price, size and features, is clearly being aimed at buyers as a primary family car. That $32K which an incentivized base-level Volt may actually cost, is right smack dab in the middle of the biggest part of the marketplace, where Taurus and Camry and Accord are located. GM first called Volt an “extended-range hybrid” because Volt has a small on-board gasoline engine which is used to keep Volt’s battery charged. Because there is no direct connection between the gasoline engine and the electric drivetrain, GM decided they could legitimately call Volt an electric vehicle. It seems they’ve gotten their way even though in many minds the issue is still somewhat confused. GM has seen the media pick up on the EV claim (probably because “extended-range hybrid” is long and hard to explain in articles), making their EV claim, so far, successful. Volt, which, with its small gasoline engine and electric motor and drivetrain, seems more-or-less an interim vehicle until GM comes up with their own pure EV and we’d love to see that product. Now that we know more about Volt’s price, it makes it easier to see where GM is aiming this new car and gives the competition some fodder when it comes to the cost of ownership. Prius Won’t Be Built in US In addition to GM’s pricing announcement for Volt, Toyota said on Tuesday that plans for building the Prius in the US, the car’s biggest market, have been delayed. Delayed for possibly as long as (get this) six years! The Los Angeles Times reports that, “Toyota had intended to let a thousand Priuses bloom from its new Mississippi plant. The new plan is to wait until the car is remodeled and, more to the point, to wait until the global economy is a bit more sales-friendly.” Sure, but six years!? Putting-off the Prius being built in the US is no big surprise; the very Mississippi plant where Toyota planned on putting these cars together has seen its own construction stop-and-start due to the worldwide recession and a very uncertain car market (last month, on June 17th, Toyota announced construction has resumed on the plant and the factory will produce Corollas starting in Fall, 2011). Toyota’s plug-in Prius has yet to become a reality In May, 2008, Toyota announced sales of over 1,000,000 Prius gas/electric hybrids worldwide. Sales began in 1997 in Japan and in 2000 throughout much of the rest of the world. North America was by far the largest Prius market, with almost 600,000 of those initial million being sold here. So slowing the ability to build those cars in the US shows Toyota’s worries about the future; and not only their own future specifically, but that of the entire industry. Beginning in the 1980′s, the largest import car companies decided to “build ‘em where we sell ‘em” and in theory it was a good idea. It would cut all sorts of costs from building the vehicles and get them to markets much less expensively than shipping them across an ocean. Car-makers went on a tear, opening plants all over the world (and experts say the average car-making plant costs about $1 billion). In the US, import companies have set-up shop in what the industry calls “greenfield” areas of the country like Mississippi. But now they are seeing their rapid growth through the 1980′s and ’90s and early part of this century challenged by the realities of the worldwide economy. Interior of the new 2010 Prius Greenfield describes, to car makers, an area low on jobs and as devoid of unions as much as possible, mostly in our nation’s Southeast and Midwest. For instance, Toyota has plants in, among other places, Indiana and Texas, Honda is a major economic force in Ohio and Nissan builds many of the cars and trucks it sells in the US in Tennessee. Some may remember that even Volkswagen had a plant (which they’d bought from Chrysler) in the US during those years in Pennsylvania which built their ill-fated pickup truck. The plant closed in 1987 but now they’re coming back to build in the US –in Tennessee. But many of these plants are now being seen possible future white elephants. As the world gets greener, but the recession hangs on (and maybe comes back), even the building of the world’s most popular low emissions/high mileage car has been put on hold in its largest market.

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Toyota Subpoenaed By Federal Grand Jury

July 20, 2010

TOKYO — Toyota Motor Corp. said Tuesday it has been subpoenaed by a federal grand jury in New York to submit documents related to problems with rods that connect a vehicle’s steering system to its front wheels. The world’s largest automaker, which is trying to repair a reputation damaged by recalls of millions of cars worldwide since October, said the federal grand jury issued the subpoena to its U.S. subsidiary in late June. Toyota said it was the company’s second subpoena from a federal grand jury – a panel that can determine whether evidence exists to bring criminal charges. “The company and its subsidiary are sincerely cooperating with authorities on the probe,” Toyota said in a statement. Defective steering relay rods led Toyota to recall 4Runner sports utility vehicles and T100 pickup trucks in the United States in 2005. Toyota said the grand jury’s subpoena did not specify vehicle models and it was not clear that the subpoena was linked to the 2005 recall, which came several years before safety lapses erupted into a global recall crisis late last year. The automaker has recalled more than 8.5 million vehicles worldwide since October, including 6 million in the U.S. alone, to address the possibility of unintended acceleration and to fix a braking problem in its Prius hybrid. In February, Toyota was subpoenaed by a U.S. federal grand jury seeking documents related to unintended acceleration in its vehicles and the braking system of its Prius hybrid. Earlier this year, Michigan’s attorney general also asked Toyota to submit information on the recent U.S. recalls, Toyota spokeswoman Ririko Takeuchi said. She declined to elaborate. Toyota paid a record $16.4 million fine for being slow to recall vehicles with an accelerator pedal problem and is facing hundreds of state and federal lawsuits. Congress is considering an upgrade to auto safety laws in the aftermath of the Toyota recalls that began in October. In Tokyo, Toyota shares fell 2.6 percent Tuesday to close at 3,055 yen before the subpoena announcement was made.

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Fox Business Segment On Runaway Toyotas Teased With An Awkwardly Sad Song (VIDEO)

July 14, 2010

Earlier today, the Fox Business Network decided to tease a segment on unexpected acceleration in Toyotas with an odd musical choice. A Toyota internal investigation and a preliminary government report, Reuters notes today , suggests that driver error may play a bigger role in some of the Toyota throttle problems than previously thought. A full government decision on issue has is not expected for months. Apparently wanting to make light of the situation, which has resulted as many as 89 deaths, Fox Business decided to use a semi-ironic musical accompaniment. As the network headed to commercial, the host said, “Finally some answers in the case of those runaway Toyotas, but we may be very surprised to hear the cause of the problem….” The music accompanying the tease, ” Fast Car ” by Tracy Chapman. If you haven’t heard the song, it’s incredibly depressing. WATCH the Fox Business segment below:

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Owen Thomas: Tesla Motors CEO Can’t Handle the Truth

July 9, 2010

Elon Musk, the CEO of electric-car startup Tesla Motors and rocket-launcher SpaceX, should be applauded for the mighty challenges he’s taken on and the powers of persuasion he has deployed to build his companies. But along the way, he discovered that he could stretch the truth, casually and frequently, as a shortcut to getting things done. Clad in a sheen of bubbly optimism, his mendacity nonetheless has consequences. Through Tesla’s IPO, he has now taken hundreds of millions of dollars from taxpayers and public investors who expect not just a return but square dealing from the man who is managing their company for them. So where has Musk spun the facts? Critical reporting Well, let’s go with the most recent one: He’s lied about me, and VentureBeat, apparently in retaliation for our aggressive and accurate reporting. In an article published by the Huffington Post , he calls me “Silicon Valley’s Jayson Blair .” He accused me of making errors, but never once specified them. Here’s the truth: I cited Musk’s own words from court filings, which we had paid a freelance reporter to find and copy, legally, from a courthouse in Van Nuys, Calif. I also interviewed a host of other sources. I emailed Musk questions and called his lawyer repeatedly before publishing. We went to extra lengths to nail down the facts: Before publishing, VentureBeat editor-in-chief Matt Marshall called Musk and had interviews with at least three Tesla board members. We make no apologies for seeking the truth about Tesla Motors and Elon Musk, a vital company and an iconic entrepreneur of Silicon Valley. Our reporting (here’s one example of our series) helped investors get a more truthful picture of a company that was going public and the man behind it. Musk also accused me of “collaborating” with the lawyer representing Justine Musk, his ex-wife, in their divorce case. Also false: I picked up the phone and called her lawyer, and he had the courtesy to answer my questions. Now, we should all be used to Musk insulting journalists who don’t report what they’re told to. But calling someone a “Jayson Blair” is a troubling assertion to anyone who prefers his insults to have a factual basis. When I ran fact-checking at Business 2.0 magazine, here’s what I would have asked the writer to prove before I’d let him get away with that kind of factual assertion: So, you want to compare this Owen Thomas person to one of journalism’s most infamous miscreants . Is Owen Thomas a drug addict? Is Owen Thomas mentally unstable? Has Owen Thomas plagiarized or invented facts? The answer to all of those, in case you were curious, is no. And so out comes the chief of reporters’ red pen. The one specific claim Musk made about my reputation was that I had written that he was broke. Not true. If you review the story I reported on his personal finances and their impact on Tesla , you’ll see I merely quoted Musk’s own words from his divorce filing, in which he said that he “ran out of cash.” When VentureBeat first started raising questions about Musk’s personal finances, his expensive divorce case, and the impact they might have on Tesla’s IPO, a Tesla spokesman initially said that the company had no plans to update its IPO prospectus to reflect our reporting. However, in the end, Tesla updated its SEC filings to acknowledge substantially all of the concerns we raised as potential risk factors investors should consider. That is the ultimate correction of the record, and it stands today. Musk’s personal spending There are other whoppers in Musk’s piece, such as the suggestion that of the $200,000 per month he’s spending, a mere $30,000 a month is going to his own personal household expenses, with the rest going to legal fees in his divorce case. Actually, the figure he told a court is $98,023 a month, according to filings in that case , including $50,000 a month in rent. The founding of Tesla Motors An aside to Musk: Making false statements is something the law frowns on. Oh, but wait, Musk should already know that. He and I met in San Francisco in 2008 for drinks , and over the course of the evening, he made several disparaging remarks about Tesla Motors cofounder Martin Eberhard’s management of the company before Musk had ousted him as CEO — specifically, Musk alleged, for misrepresenting the cost of making the Tesla Roadster. In 2009, Eberhard sued Musk for defamation , citing the comments Musk had made to me, among others. Musk filed a scathing response to the lawsuit, repeating many of his negative claims about Eberhard. Then it headed to mediation, and the case was settled. Eberhard’s lawyer declared himself “very pleased” with the result , and Tesla issued a press release in which Musk said that Eberhard had been “indispensable” to the company in its early days. The safety of customers’ deposits When Tesla’s finances were at their most perilous, in the winter of 2008 and spring of 2009, the company was dependent on advance reservation payments from customers for cash flow. The company’s cash balance had run down to $9 million, and the company was struggling to raise $40 million in convertible debt. (He announced that that round had closed in November 2008, while in fact, according to Tesla’s SEC filings, it did not close until March 2009.) To raise funds in the meantime, Tesla began taking deposits on the Model S sedan, even though that car was far from production, and continued taking deposits on Roadsters. Musk first told customers that he would personally guarantee the deposits they were placing, “even in the worst case of an Armageddon scenario.” Then he said that their deposits were completely at risk and they could lose all their money. One of those statements had to be false. Musk’s history as an entrepreneur In persuading other investors to back Tesla Motors, Musk has frequently traded on his past success as an entrepreneur at companies like Zip2 and PayPal. But Zip2 was so troubled that one of its venture capitalists, Derek Proudian, had to step in as acting CEO , a move rarely seen at venture-backed companies. And Musk was ousted as CEO of PayPal by his own management team. To this day, Musk tells a version of PayPal’s history that few who were there at the time agree with. Tesla’s investors Most dangerously, Musk has repeatedly made misrepresentations about Tesla’s finances. In February 2009, he sent a letter to customers saying that Tesla would start getting funds from a Department of Energy loan in four to five months. In fact, it had not received the loan at that point and there was no certainty it would get it, a point a Tesla spokeswoman had to clarify. (Tricky, that, saying your CEO had misrepresented the facts without calling him a liar .) He also said Tesla would turn profitable in 2009. Of course, it didn’t, as the company’s published financials later revealed. (Musk later claimed, using questionable accounting whose details have never been revealed, that the company had been profitable for one month of the year .) In an interview for the May 2009 issue of Car and Driver, he told that magazine’s readers that General Electric had become an investor . It hadn’t, and it never did, according to Andy Katell, a GE spokesman who spoke with me at the time. The Toyota deal After unveiling an agreement to buy the NUMMI plant in Fremont, Calif., from the Toyota-backed joint venture which owned it, Musk claimed that Tesla and Toyota planned to jointly develop several models of cars and build them at NUMMI . It’s true that he got Toyota CEO Akio Toyoda to stand next to him and make grand promises. But in fact, as the company later revealed in its SEC filings, Tesla and Toyota had no agreement to develop any cars, and there was no guarantee that they ever would. The pity of it all is this: I don’t believe Musk twists the truth out of malice. Rather, at this point, it may well be out of habit. He’s so used to getting his way that future possibilities just seem like present realities to him. And pragmatically, it’s worked. Whenever Tesla has been in a bind, Musk has spun his way out of trouble. It’s a character trait of which elements are found among many successful entrepreneurs: the compelling presentation of an alternate reality in the hopes that so many people will sign on to the vision that it comes true. Apple CEO Steve Jobs, for example, is so masterful at this that people speak of his reality distortion field. But Musk may have taken distortion to extremes. The question now is whether Musk’s past habits will serve him well as the CEO of a publicly traded company. Already, it seems the investors who have entrusted Musk with hundreds of millions of dollars are having doubts. With shares of Tesla having already fallen by nearly half since their post-IPO pop, perhaps Musk’s bubble is finally deflating. But those who are still sticking with the company should ask themselves this: Has Tesla adequately disclosed to investors the risk of its CEO’s curious relationship with the truth? Originally posted at VentureBeat .

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Toyota Lexus Recall: Engine Problems Were Known By Car Company For Two Years

July 6, 2010

TOKYO — Toyota knew two years ago about the engine problem behind its latest Lexus recall, even changing the spring part to correct it, but did not think a recall was warranted until recently, a company official said Tuesday. Toyota Motor Corp. started Monday a global recall over engine defects in its Lexus luxury models sold around the world, as well as the Crown sold in Japan, moving to repair some 270,000 vehicles to replace valve springs – crucial engine components that are flawed and could cause vehicles to stall. In August 2008, Toyota changed that spring part, making it thicker, to prevent the problem, spokesman Hideaki Homma told The Associated Press. That is why the latest recall does not affect vehicles produced after August 2008. Toyota, the world’s top automaker, previously thought the problem was caused by a foreign substance entering during manufacturing of the valve springs, and beefed up checks so that wouldn’t happen. But the company had thought the issue was an isolated problem that didn’t require a recall. “We changed the part in August because then the problem won’t happen at all, even if tiny particles enter during manufacturing,” Homma said. “We are talking about microscopic particles here.” But the complaints started climbing, and Toyota decided recently they weren’t isolated problems after all, but a design defect, and decided to issue the recall, Homma said. Toyota has promised to recall problem cars more quickly to salvage a once pristine reputation now in tatters after recalls ballooned to more than 8.5 million vehicles around the world since October. Toyota executives have repeatedly vowed to put customers first. But it has been criticized as lagging in its response to quality lapses, and was slapped with a record $16.4 million in the United States for responding too slowly when the recall crisis erupted. Auto analyst Koji Endo at Advanced Research Japan Co. said automakers routinely improve parts and technology when a product is remodeled, and the facts don’t necessarily point to an intentional cover-up. But he said that recall after recall at Toyota was devastating for its image, underlining how it had not properly paid attention to quality during its booming expansion years. “They are paying for that now,” he said. “Demand had been surging and so it was difficult to balance that with maintaining quality.” Endo said the popularity of the Lexus was likely to drop in the U.S., giving a chance for growth to luxury rivals BMW and Mercedes-Benz amid a gradually recovering market. Affected in the latest recall were Lexus models GS350, GS450h, GS460, IS350, LS460, LS600h, LS600hL and Crown models, including about 138,000 vehicles in the U.S., nearly 92,000 in Japan, 15,000 in Europe, 10,000 in the Middle East, 6,000 in China, 4,000 in Canada, and 8,000 elsewhere. Toyota has received about 200 complaints, but no accidents due to the defects have been reported. The latest woes come on top of a recall last week for 17,000 Lexus hybrids after testing showed fuel can spill during a rear-end crash. Toyota faces more than 200 lawsuits in the U.S. tied to accidents involving defective automobiles, the lower resale value of Toyota vehicles, and a drop in its stock value.

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Toyota Recall 2010: Beleaguered To Recall 270,00 Cars Globally

July 2, 2010

TOKYO — Toyota Motor Corp. will recall 270,000 Lexus and other vehicles worldwide to fix faulty engines in the latest quality lapse at the world’s No. 1 automaker. Flaws in valve springs, a crucial engine component, could make the vehicle stall while it’s moving, Toyota spokesman Hideaki Homma said Friday in announcing the recall. Lexus General Manager Mark Templin said contaminated materials had been used for valve springs during manufacturing. Toyota has received about 200 complaints over faulty engines in Japan but no accidents were reported there or abroad, Homma said. Some drivers told Toyota that engines made a strange noise. The global recall that starts Monday affects seven luxury Lexus sedan models as well as the popular Crown, Toyota spokesman Paul Nolasco said. Of the 270,000 recalled cars, some 180,000 were sold overseas, including the United States, and 90,000 in Japan. The automaker was already scrambling to repair its reputation after 8.5 million vehicles were recalled beginning in October because of problems with sticking accelerator pedals and other issues. Toyota was slapped with a record $16.4 million fine in the United States for acting too slowly to recall vehicles with defects. Japan’s major daily Asahi said Friday the latest recall of 270,000 vehicles could cost Toyota around 20 billion yen ($227 million). Toyota could not confirm the report, which gave no sources. Toyota will inform Japan’s transport ministry of a recall of 90,000 vehicles on Monday. Nolasco said it was unclear how many vehicles would be recalled in the United States, and Toyota will take action for overseas markets as soon as next week. Lexus said Thursday about 137,000 vehicles could be affected by the engine problem in the U.S. Ryoichi Saito, an auto analyst from Mizuho Investors Securities Co. Ltd., said the latest recall was unlikely to hurt Toyota. “It is clear that Toyota has learned a lesson from the recall disaster. The company has acted very swiftly to deal with problems,” Saito said. Toyota dealers have repaired millions of vehicles following the massive global recalls, but the automaker still faces more than 200 lawsuits tied to accidents, the lower resale value of Toyota vehicles, and the drop in the company’s stock. Toyota said last week it will recall 17,000 Lexus luxury hybrids after testing showed that fuel can spill during a rear-end crash. U.S. regulators were working with scientists from NASA to investigate what caused some of Toyota’s vehicles to suddenly accelerate. That review is expected to be completed by late August. Officials were also investigating whether Toyota waited nearly a year in 2005 to recall trucks and SUVs in the U.S. with defective steering rods, a case that could lead to additional fines. ___ Associated Press writer Ken Thomas in Washington contributed to this report.

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Toyota Recall: Engines Bad In 270,000 Vehicles, Including Seven Lexus Models

July 1, 2010

TOKYO — Toyota Motor Corp. said Thursday about 270,000 cars sold worldwide – including luxury Lexus sedans – have potentially faulty engines, the latest quality lapse to hit the automaker following massive global recalls of top-selling models. Japan’s top-selling daily Yomiuri said in its evening edition that Toyota will inform the transport ministry of a recall on Monday. The paper cited no sources. Toyota spokesman Hideaki Homma said the company was evaluating measures to deal with the problem of defective engines that can stall while the vehicle is moving. He would not confirm a recall was being considered. The automaker has been working to patch up its reputation after recalling more than 8 million vehicles worldwide because of unintended acceleration and other defects. Of the 270,000 vehicles with engine problems, some 180,000 were sold overseas and the rest in Japan. They include the popular Crown and seven models of luxury Lexus sedans. Toyota said it has received around 200 complaints in Japan over faulty engines. Some drivers told Toyota that the engines made a strange noise. Homma said there have been no reports of accidents linked to the faulty engines. The automaker’s shares dropped 2.3 percent to close at 3,010 yen in Tokyo on Thursday. U.S. authorities recently slapped Toyota with a record $16.4 million fine for acting too slowly to recall vehicles with defects. Toyota dealers have repaired millions of vehicles, but the automaker still faces more than 200 lawsuits tied to accidents, the lower resale value of Toyota vehicles and the drop in the company’s stock. In the aftermath of the recalls, Congress is considering an upgrade to auto safety laws to toughen potential penalties against automakers, give the U.S. government more powers to demand a recall and push car companies to meet new safety standards. Toyota said last week it will recall 17,000 Lexus luxury hybrids after testing showed that fuel can spill during a rear-end crash.

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Tesla To Raise $185 Million IPO, Toyota deal

June 15, 2010

NEW YORK — Electric car maker Tesla Motors Inc. set terms for its highly anticipated IPO Tuesday, saying it now hopes to raise about $185 million by selling shares to the public and to Toyota Motors Corp. Tesla and its stockholders will sell 11.1 million shares for $14 to $16 each in an initial public offering, according to a regulatory filing. Toyota will invest another $50 million in the company. The Toyota deal was announced in May. Tesla on Tuesday raised its expected proceeds from the $100 million it listed in its initial stock-registration filing with the Securities and Exchange Commission on Jan. 29. The Palo Alto, Calif. company currently makes just one vehicle, the high-end Roadster sports car. It is working on a mass-market sedan with Toyota that is expected to start selling in 2012 for less than $50,000. That price would include a federal tax credit of $7,500. Until the sedan – the Model S – hits the market, Tesla expects continuing quarterly losses. It has lost $290.2 million since the company was founded in 2003. Its net loss deepened in the first quarter to $29.5 million from $16 million in the same period last year. Tesla’s total revenue since 2003 has been just $147.6 million, generated by sales of 1,063 Roadsters as of March 31. But the company said it can use a long-term $465 million loan from the Department of Energy to finance manufacturing of the Model S.

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Steve Parker: Indy 500 weekend brings out special radio show guests

May 28, 2010

Very special guests this weekend on www.TalkRadioOne.com! Join us Saturday at 11am Pacific /2pm Eastern for THE CAR NUT SHOW and Sunday at 5pm Pacific/8pm Eastern for WORLD RACING ROUNDUP on www.TalkRadioOne.com! It’s just us and it’s all LIVE! Steve Parker’s The Car Nut Show Saturday starting at 5pm Pacific It’s an all-LA Times weekend for www.TalkRadioOne.com listeners! Special guest: Ken Bensinger, staff writer for the LA Times, who, months ago, broke the original story on Toyota’s unintended acceleration and other problems throughout the Toyota and Lexus line. Ken joins us for an exclusive one-on-one with YOU and all Car Nut Show listeners! Please join in! The call-in number is: 213-291-9410. Lexus ES300 sedans from 2002 to 2006 are the latest problem childs from Toyota Steve Parker’s World Racing Roundup Sunday starting at 5pm Sunday, Sunday, Sunday! World’s best-known race – The Indianapolis 500 at 10am (PST) on ABC! Sprint Cup Coca-Cola 600 at Charlotte, NASCAR’s home town, starting at noon (PST). The day before, Saturday, the Nationwide Series at Charlotte, the Tech-Net Auto Service 300 starting at 11am PST on ABC! Very special guest Jim Peltz, motorsports writer for the Los Angeles Times, joins us LIVE from the Indianapolis Motor Speedway! Join us! The call-in number is: 213-291-9410. Join in! Podcasts of the shows are available one-hour-or-so after the live programs’ conclusion. That’s this Saturday at 11am Pacific and 2pm Eastern and Sunday at 5pm Pacific/8pm Eastern on www.TalkRadioOne.com! Mario Andretti wins the 1969 Indy 500 and gets the kiss-heard-round-the-world from STP’s Andy Granatelli Follow Steve Parker on Twitter: www.twitter.com/autojourno

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Toyota Ordered to Give Plaintiffs Sudden-Acceleration Records in 30 Days

May 28, 2010

By Bill Callahan and Margaret Cronin Fisk May 28 (Bloomberg) — Toyota Motor Corp. was ordered to give lawyers suing over sudden acceleration claims most of the documents it previously produced for Congress. U.S. District Judge James V. Selna in Santa Ana, California, denied Toyota’s request for a delay in turning over the records and told the company to produce them within 30 days. Toyota lawyers had argued the documents are too numerous, many are in Japanese rather than English, and some are protected by legal privileges. The judge, who is handling all the sudden acceleration suits against the carmaker, allowed Toyota more time to produce Japanese items and filter out any that are inadmissible in federal lawsuits. He also ordered plaintiffs’ lawyers to submit a consolidated complaint 30 days after they get the material. The orders “will get the ball rolling,” Selna said at a hearing today. He turned down a request by the plaintiffs’ attorneys to have the company provide all safety complaints it ever received from owners of Toyota vehicles. Toyota, the world’s largest automaker , faces at least 228 federal and 99 state lawsuits including proposed class actions over economic losses and claims of personal injuries or deaths caused by sudden-acceleration incidents. The federal lawsuits were combined last month in a multidistrict litigation, or MDL, before Selna. Consolidated Complaint The 30-day deadline to produce admissible documents will allow the plaintiffs lawyers to file a consolidated complaint within 60 days, Selna said. Selna said today that Congress has the power to subpoena documents that might be privileged. “We need that material in order to prepare a proper complaint that makes sense,” said Steve Berman , who was appointed as one of the lead attorneys representing car owners. “We think they can pull the privileged documents out by then.” The company, based in Toyota City, Japan, has recalled more than 8 million vehicles for fixes related to sudden, unintended acceleration. In September the automaker announced a recall of 3.8 million Toyota and Lexus vehicles because of a defect that may cause floor mats to jam accelerator pedals. The company later recalled vehicles over defects involving the pedals themselves. Vehicle Recalls All the class actions and most of the individual lawsuits were filed after September. Toyota attorney Vincent Galvin Jr. told Selna today that the complexity of the documents and the fact that many are in Japanese makes understanding what’s in them difficult. “It’s clear from the questions that were asked by Congress that they did not know what they got,” he said. Toyota’s lawyer also objected to Selena’s timetable for filing a consolidated complaint, saying the complexity of the litigation demanded more time to prepare a defense. Selena said Toyota shouldn’t be surprised by what it’s facing. “The issues raised by the complaints already have been out there for a long time,” he said. The cases are combined as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, 8:10-ml-02151, U.S. District Court, Central District of California (Santa Ana). To contact the reporters on this story: Bill Callahan in San Diego at callahan@san.rr.com ; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net .

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Steve Parker: Breaking – Toyota halts sales of 2009, 2010 Lexus LS

May 25, 2010

In another potential PR nightmare for Toyota, the company has announced that a steering problem has halted sales of their 2009 and 2010 luxury flagships, the LS 460 and the gas/electric hybrid LS 600h. On Friday, Toyota recalled 11,500 of the cars, including nearly 4,000 in the US. Today, Lexus stopped selling both models. Toyota, through their Lexus luxury channel, say they have no solution to the problem, an admitted electronics problem that can cause steering wheels to fall out of alignment for a few seconds at a time. Owners of the two models have been told to park their cars until the company develops a fix, which Toyota says should happen sometime in late June. According to the Los Angeles Times, which broke the initial unintended acceleration story, owners of the cars — which have a starting price of about $65,000 for the LS 460 and $108,000 for the hybrid LS 600h — will be receiving official notice of the recall in the mail next month. Lexus’ LS 400h hybrid sedan starts at $108,000. The sales stoppage and recall cover cars equipped with the company’s variable gear ratio steering system that’s an option on the LS 460 and standard on the LS 600h. Sales stoppages over safety concerns are rare in the auto industry, but in January Toyota ordered dealers to stop selling eight of its best-selling models after reports of unintended acceleration. That sales halt, called because the company had no remedy for the problem, lasted about two weeks. The Lexus sales stoppage is expected to last longer. Toyota does not have a solution to the Lexus problem, which can cause the steering wheel to get stuck in a turned orientation even though the car is going straight. The steering wheel, however, can still be used to steer the car. How should Toyota handle this one? They have absolutely blown it so far with their alleged cover-up of the unintended acceleration (UA) problems. The company eventually stopped sales of eight models and recalled some six million cars worldwide for what Toyota said was a sticky throttle cable. Many still insist that the UA trouble stems from an electronics glitch in the company’s “drive by wire” system, and several US government agencies and contracted firms are involved in finding an electronics problem. Now, with an admitted so-far-unfixable steering dilemma which is purely electronic, we say there will, and should, be more pressure on Toyota to stop worrying about their image and focus on finding and fixing these problems. Are we right? Is Toyota spending more time ducking the truth and not working on unintended acceleration and other problems?

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Toyota Isn’t Ready for Credit Rating Upgrade This Year, Moody’s Usui Says

May 24, 2010

By Yuki Hagiwara and Takako Iwatani May 25 (Bloomberg) — Toyota Motor Corp. , the world’s largest carmaker, will have insufficient profit to warrant an upgrade of its credit rating this fiscal year, Moody’s Investors Service said. Toyota, which Moody’s rates the highest among global carmakers at Aa2, needs an annual operating profit of 1 trillion yen ($11 billion), more than triple its outlook for this year, before it can be considered for a higher rating, Tadashi Usui , senior analyst at the credit rating company , said in an interview in Tokyo. It also needs an operating margin of 5 percent, he said. Moody’s and Standard & Poor’s began cutting Toyota’s rating last year after the carmaker posted the first of three straight quarterly losses. Usui said recalls of more than 8 million Toyota vehicles worldwide in the past year have damaged the company’s reputation, threatening to slow an earnings rebound. “I cannot say confidently that Toyota’s operating profit will recover smoothly,” Usui said. Toyota fell 1.9 percent to 3,300 yen as of the 12:50 p.m. trading break in Tokyo, while the benchmark Nikkei 225 index fell 3.1 percent. The automaker has declined 15 percent so far this year. Profit Outlook Operating profit may increase 90 percent this fiscal year to 280 billion yen, from 147.5 billion yen in the 12 months ended March 31, the carmaker said May 11. The forecast is almost 90 percent smaller than the record 2.27 trillion yen Toyota posted in the year that ended in March 2008. Moody’s downgraded Toyota’s credit rating last month to Aa2, its third highest level, with a negative outlook, from Aa1. The automaker lost its top Aaa rating in February 2009. Toyota has about 5 trillion yen of debt maturing by the end of 2012, with 1.09 trillion yen due in 2010, according to data compiled by Bloomberg. Standard & Poor’s, which also rates Toyota’s debt at its third-highest grade, AA, removed the company from its “Credit Watch” list on May 14. The outlook may be raised to “stable ” from “negative” in the next one or two years, should Toyota’s recovery in profitability become clearer, Chizuko Satsukawa , a Tokyo-based analyst at S&P said today. ‘Gradual Recovery’ Fitch Ratings has Toyota on “rating watch negative,” according to Senior Director Jeong Min Pak . “We believe the company will still show gradual recovery, especially with our expectation of modest recovery in U.S. auto demand this year,” Pak said. “However, the scope of the recovery and profitability is expected to lag behind other Japanese makers.” Toyota’s earnings recovery may also be slowed by the introduction of better cars by rivals Hyundai Motor Co. and Ford Motor Co. in the U.S., traditionally the most profitable market for Japanese automakers, Usui said. Toyota also has excess capacity in the U.S., he said. Moody’s raised Ford’s credit rating to B1 from B2 on May 18. Toyota also faces at least 180 consumer and shareholder lawsuits in the U.S. stemming from vehicle recalls for defects linked to unintended acceleration. The National Highway Traffic Safety Administration fined Toyota a record $16.4 million last month for not promptly notifying it of the pedal defect. ‘Good Lesson’ Toyota President Akio Toyoda said May 22 that scrutiny from inside and outside the company has been a “good lesson” for Toyota, and he expects the carmaker to emerge stronger after the recalls. The difference in yield on Toyota’s 1.772 percent notes due June 2019 and government bonds of similar maturity narrowed to 20 basis points yesterday, matching the lowest since the automaker issued the debt, according to Japan Securities Dealers Association prices on Bloomberg. A basis point is 0.01 percentage point. Credit-default swaps tied to Toyota debt due in 5 years declined 3 basis points to 87 basis points yesterday, according to CMA DataVision prices in New York. The contracts, which reflect market perceptions of creditworthiness, traded at 50.5 basis points on April 16, this year’s lowest. Credit default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. Competitors Honda Motor Co. and Nissan Motor Co., Toyota’s largest Japanese competitors, must also increase profitability before Moody’s will consider raising their credit ratings, Usui said. For Honda, Japan’s second-largest automaker, an operating margin of 7 percent is necessary before Moody’s will consider raising its A1 rating, while a margin of less than 5 percent may trigger a downgrade. At Nissan, the nation’s third-biggest carmaker, an operating margin higher than 5 percent is the minimum necessary for Moody’s to consider raising the current Baa2 rating, Usui said. Rising raw-material prices and a strengthening yen also pose risks for Japanese carmaker earnings, he said. To contact the reporter on this story: Yukiko Hagiwara in Tokyo at Yhagiwara1@bloomberg.net

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Steve Parker: Three automotive stories you want to know

May 24, 2010

Tesla to Downey, CA – Drop dead! If you’re driving through Downey, CA, I wouldn’t recommend driving a Tesla. A dream of Downey leaders to re-open an old Space Shuttle facility in their city, just south of Los Angeles, where Tesla told the city they wanted to build the cars, has fallen through. And Downey is pissed. Tesla buys cars from Lotus and ships them to the US where they are retro-fitted with electric motors and batteries for their all-electric sporty car. They have another, larger car planned for next year. Tesla EV Roadster Downey was once at the center, like much of Southern California, of American aerospace manufacturing. The city boomed from the ’50s through the early ’90s when the country’s space program lost much of its funding and seemed to lose its own dreams for the future. So when Tesla and Downey made the announcement recently that an old Space Shuttle plant would be re-opened for Tesla to build their EVs, a lot of people thought it a good idea. More than 1,000 Downey-area people could be hired in an area which has been hard-hit by the recession. Downey and Tesla were to sign their agreement last Friday, May 21st, and city leaders were looking forward to the ceremony as an early Christmas – and a sure way to guarantee their re-elections. Last Thursday, 24 hours or so before the agreement was to be signed, Tesla made a stunning announcement – Toyota was going to infuse some $50 million into the EV-maker, and Teslas are going to be built at a plant in Fremont, CA (just south of San Francisco), which was shared by Toyota and GM and was recently shuttered, putting some 5,000 mostly-union workers out of their jobs. The plant, called New United Motor Manufacturing Inc. (NUMMI) was a joint venture between the two auto giants, with Toyota running the plant and making Corollas and GM building Pontiac Vibes there, too. Toyota gets some good press from their investment and plant re-opening (1,000 people may be hired initially) and will learn more about EV technology and maybe share some of their knowledge with Tesla. PayPal co-founder Elon Musk, Chairman, Product Architect and CEO of Tesla, is now on the big map as far as mass-produced EVs are concerned and so is California. The only loser here is Downey and the people there who thought they might be getting new gigs in the green economy. Was it bad faith negotiating on Tesla’s part? Or just business? What do you think? When will the first lawsuit from Downey be filed? Things were a lot simpler when Downey was mostly known as the home of Karen and Richard Carpenter. Los Angeles Times – Toyota does it again In yesterday’s Sunday edition, the lead story on the LA Times’ front page was yet another expose’ by writer Ken Bensinger about Toyota failing to notify the public about a serious problem. Bensinger has broken much of the big news about the Toyota scandal and we predict a Pulitzer for him and the paper this year. The piece says Toyota, through their Lexus division, never publicly acknowledged or reported to the government about a serious problem with the automatic transmissions in their 2002 through 2006 Lexus ES300 sedans. 2002 ES300 Apparently, according to the article, Toyota/Lexus issued what’s known as a “secret recall” and possibly a Technical Service Bulletin (TSD) to their dealers. What this essentially means is that if an ES300 owner came into the dealer and complained specifically about the transmission problem, the dealer could then fix or replace the transmission and get paid by Toyota for the service. But if an owner never said anything, the car wouldn’t be fixed by a dealer. The transmission problems reportedly included hard shifts, surging and unintended acceleration. Is Toyota playing business as usual? Or had their arrogance grown so great that they felt they had no responsibility to report potential serious safety problems to the public at all? What do you think? Where will this all end? Car dealers exempt from proposed consumer agency One of the more consumer-friendly parts of the proposed laws surrounding the world of money in this country is the creation of a new watchdog agency to oversee companies which make consumer loans. But don’t expect car dealers which make loans to buyers to have to report to the agency. Automotive News reports today that dealer groups prevailed in a U.S. Senate vote on whether to exempt dealers from oversight by a proposed consumer finance agency. The Senate voted to recommend to its leaders that they agree to the exemption in a conference committee with House leaders. The non-binding vote today was 60-30. Senate and House leaders will meet in weeks ahead to reconcile differences in the financial regulation bills that passed the two chambers. The House measure included a regulatory exemption for dealers who are arranging consumer loans. The Senate bill did not contain such an exemption. What can you say about something which appears so blatantly to profit and protect dealers and not give car-buyers use of an agency whose jobs it is to oversee consumer loans? What do you think?

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Toyota Chief Says Recall Crisis `Good Lesson,’ Carmaker to Emerge Stronger

May 22, 2010

By Alan Ohnsman and Makiko Kitamura May 22 (Bloomberg) — Toyota Motor Corp. President Akio Toyoda said scrutiny from inside and outside the company has been a “good lesson” and he expects the carmaker to emerge stronger after recalling millions of vehicles worldwide. “There is a Japanese proverb: After the rain, the ground hardens,” Toyoda said in an interview in Palo Alto, California, this week. “I am very confident we will look back and say the company has become more focused on our customers and safety because we went through this period.” The company, based in Toyota City, Japan, is working to rebuild its reputation after recalling more than 8 million vehicles for defects linked to unintended acceleration. Toyoda, 54, who replaced Katsuaki Watanabe as president almost a year ago, has said the problems may be connected to Toyota’s rapid expansion as it grew to become the world’s largest carmaker. “This was a very difficult start,” Toyoda, grandson of the company’s founder, said about the timing of his promotion. “But I’ve also become reacquainted with Toyota’s strengths, including our loyal customers, suppliers and dealers.” Toyota was fined after recalling gas pedals in Europe months before doing so in the U.S. The automaker’s recalls for pedals and floor mats that may trap accelerators triggered four U.S. Congressional hearings, including one in February attended by Toyoda and other top executives, and the latest on May 20. Toyota’s American depositary receipts, each representing two ordinary shares, rose $1.59, or 2.1 percent, to $75.59 yesterday in New York Stock Exchange composite trading. Toyota fell 1.9 percent in Tokyo yesterday to 3,355 yen. Investigation The U.S. Transportation Department continues to investigate Toyota’s handling of past recalls. The National Highway Traffic Safety Administration fined Toyota a record $16.4 million last month for failing to promptly notify it of the pedal defect and this month began investigating a 2005 recall for faulty truck steering-relay rods. “Customer safety is a concern we share with NHTSA and we will continue to cooperate fully,” Toyoda said. Toyota has formed a global quality committee, headed by Toyoda, which held its first meeting on March 30. It’s also establishing new technology centers globally to gather local information on suspected quality problems and quicken decision- making on recalls. Lost sales due to the recalls for the fiscal year ended in March amounted to about 50,000 vehicles, down from an earlier estimate of 100,000, Toyota Senior Managing Director Takahiko Ijichi said on May 12. Toyota’s U.S. sales rose 24 percent in April after the automaker added discounts across its lineup. Rising Competition The company must fend off increasing competition in the U.S. from Ford Motor Co. and Hyundai Motor Co. ’s new models, said Jessica Caldwell , senior analyst at Edmunds.com., an auto industry researcher in Santa Monica, California. Sales of Hyundai’s revamped Sonata sedan, introduced in the U.S. in February, soared 57 percent in April. The model competes with Toyota’s Camry, sales of which gained 10 percent last month. Ford’s April sales rose 25 percent. Separately, Toyota announced that it will acquire a $50 million stake in electric-car maker Tesla Motors Inc., maker of the $109,000 Roadster. Tesla Chief Executive Officer Elon Musk said his company will buy a Toyota joint-venture factory in California to build its Model S and other vehicles. The companies will cooperate in developing electric cars, parts, production systems and engineering support, they said in a joint statement. The tie-up brings Toyota, the world’s biggest seller of hybrid autos, together with Tesla, the only company now selling U.S. highway-legal battery-powered cars. ‘Infinite Possibility’ “I’ve felt an infinite possibility about Tesla’s technology,” Toyoda said. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.” The deal may help Toyota compete with Nissan Motor Co. and General Motors Co. in selling electric cars in the U.S., where regulations are pushing them to offer low-emission vehicles. It may also boost Toyota’s image by reviving the New United Motor Manufacturing Inc. joint-venture plant, closed in April, in Fremont, California. The reopening of Nummi, for 25 years a joint venture between Toyota and the former General Motors Corp., may eventually create 10,000 jobs, Musk said. “We were able to reach this conclusion in just a month,” Toyoda said. “This is something we can be proud of.” To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

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Toyota’s President Says Carmaker Will Become Stronger After `Good Lesson’

May 21, 2010

By Alan Ohnsman and Makiko Kitamura May 21 (Bloomberg) — Toyota Motor Corp. President Akio Toyoda said scrutiny from inside and outside the company has been a “good lesson” and expects the carmaker to emerge stronger after recalling millions of vehicles worldwide. “There is a Japanese proverb: After the rain, the ground hardens,” Toyoda said in an interview in Paul Alto, California, yesterday. “I am very confident we will look back and say the company has become more focused on our customers and safety because we went through this period.” The Toyota City, Japan-based carmaker is working to rebuild its reputation after recalling more than 8 million vehicles worldwide for defects linked to unintended acceleration. Toyoda, 54, who replaced Katsuaki Watanabe as president almost a year ago, has said the problems may have been connected to the company’s rapid expansion in recent years, as it ascended to the top of the industry. “This was a very difficult start,” Toyoda, grandson of the company’s founder said, referring to the timing of his promotion. “But I’ve also become reacquainted with Toyota’s strengths, including our loyal customers, suppliers and dealers.” Toyota was fined after it fixed gas pedals in Europe months before the same change was offered for cars in the U.S. The automaker’s recalls for pedals and floor mats that held down accelerators triggered four U.S. Congressional hearings, including one in February attended by Toyoda and other top executives, and the latest on May 20. Investigation The U.S. Transportation Department continues to investigate Toyota’s handling of past recalls. The National Highway Traffic Safety Administration, which fined Toyota the maximum $16.4 million last month for failing to promptly notify the agency about defects tied to unintended acceleration, earlier this month opened an investigation into a 2005 recall for faulty truck steering-relay rods. “Customer safety is a concern we share with NHTSA and we will continue to cooperate fully,” Toyoda said. The company has formed a global quality committee, headed by Toyoda, which held its first meeting on March 30. It is also establishing new technology centers globally to gather local information on suspected quality problems and quicken decision- making on recalls. Lost sales due to the recalls for the fiscal year ended in March amounted to about 50,000 vehicles, compared with an earlier estimate of 100,000, Toyota Senior Managing Director Takahiko Ijichi said on May 12. Toyota’s U.S. sales rose 24 percent in April after the automaker added discounts across its lineup. Rising Competition Still, the Japanese carmaker must fend off increasing competition in the U.S. from Ford Motor Co. and Hyundai Motor Co. ’s new models, said Jessica Caldwell , senior analyst at Edmunds.com., an auto industry researcher in Santa Monica, California. Sales of Hyundai’s revamped Sonata sedan, which was introduced in the U.S. in February, soared 57 percent in April. The model competes with Toyota’s Camry, sales of which gained 10 percent last month. Ford’s April sales rose 25 percent. Separately, Toyota announced that it will acquire a $50 million stake in electric-car maker Tesla Motors Inc., maker of the $109,000 Roadster. Tesla will buy a Toyota joint-venture factory in California to build its Model S and other vehicles, Tesla Chief Executive Officer Elon Musk said yesterday. The companies will cooperate in developing electric cars, parts, production systems and engineering support, they said in a joint statement. The tie-up brings Toyota, the world’s biggest seller of hybrid autos, together with Tesla, the only company now selling U.S. highway-legal battery-powered cars. ‘Infinite Possibility’ “I’ve felt an infinite possibility about Tesla’s technology,” Toyoda said. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.” The deal may help Toyota compete with Nissan Motor Co. and General Motors Co. in selling electric cars in the U.S., where regulations are pushing them to offer low-emission vehicles. It may also boost Toyota’s image by reviving the New United Motor Manufacturing Inc. joint-venture plant, closed in April, in Fremont, California. The reopening of NUMMI, for 25 years a joint venture between Toyota and the former General Motors Co., may eventually create 10,000 jobs, Musk said. “We were able to reach this conclusion in just a month,” Toyoda said. “This is something we can be proud of.” To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

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Toyota Study Finds No Evidence Electronics Caused Acceleration, Lentz Says

May 19, 2010

By Jeff Plungis May 19 (Bloomberg) — Toyota Motor Corp. hasn’t found any electronics flaws to explain sudden, unintended acceleration after examining more than 2,000 vehicles, the company’s U.S. sales chief will tell a House panel tomorrow. Toyota conducted 600 on-site inspections and more than 1,400 at its dealerships, James Lentz , president of Toyota Motor Sales USA Inc., said in remarks prepared for a House Energy and Commerce Committee hearing and released today. “Significantly, none of these investigations have found that our Electronic Throttle Control System with intelligence was the cause,” Lentz said. Toyota, the world’s largest automaker, has been the subject of a series of congressional hearings since February for its handling of sudden-acceleration cases. The Toyota City, Japan- based automaker has recalled more than 8 million vehicles worldwide to fix sticky pedals and misshapen floor mats linked to the flaw. Some complaints about acceleration came from customers who double- or triple-stacked floor mats, Lentz said in the prepared remarks. The company needs to tell customers that higher engine speeds are normal when vehicles are being started in the cold or when air conditioning kicks in, he said. Some customers had concerns about differences in how cars drive after software updates, while others have complained about how repaired accelerator pedals feel, Lentz said. Toyota has completed more than 3.5 million recall repairs, Lentz said. With a new quality-assurance chief based in North America, its design, manufacturing and after-market support will be more effective, he said. In cases where company examinations haven’t turned up any evidence of a problem, Toyota will closely monitor the customer’s complaints for further investigation, Lentz said. To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net .

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Bob King, UAW Leader: Workers Should Share In Profits If Automakers Recover

May 11, 2010

DETROIT — The man expected to become the next president of the United Auto Workers says workers should share in the profits if the auto industry recovers. But he also wants to make sure Detroit automakers stay competitive. UAW Vice President Bob King said Tuesday that unionized workers each gave up $7,000 to $30,000 per year in concessions to General Motors Co., Ford Motor Co. and Chrysler Group LLC as the companies ran into financial problems last year and in 2008. The union, he said, made tremendous sacrifices that helped all three automakers through a crisis, working with company management to make the automakers competitive. But often after a crisis passes, management forgets about the sacrifices, King told an auto industry conference at the Detroit branch of the Federal Reserve Bank of Chicago. If U.S. auto sales return to pre-recession levels of around 16 million per year, King said all three will see “astronomical” profits. “Equality of sacrifice, there’s got to be equality of gain,” he told the group. “It’s our responsibility to make sure that in that turnaround, our members are treated fairly.” King would not talk about the possibility of further concessions to the companies when contract talks take place next year. He said much of what will be discussed depends on the economy at the time and will be decided by the membership. The UAW, though, faces a challenge of making sure the automakers’ fixed costs are competitive globally, he said. Ford borrowed billions to stay afloat, while GM and Chrysler were forced to take billions in government aid and go through bankruptcy protection last year. Ford already is profitable, while Chrysler reported a first-quarter operating profit and GM is expected to show a profit when it reports earnings next week. Union workers will not have job security, King said, if companies don’t have enough money to invest in new products, innovation and quality. King also called for congressional hearings on monetary and trade policies and their impact on manufacturing. He said the Obama administration, while better on the issue than other recent administrations, still doesn’t have a full policy on manufacturing. He said the government should not allow companies to move jobs out of the country, including Toyota Motor Corp., which King said is sending much of its manufacturing footprint back to Japan. In 2000, the automaker made 57 percent of the cars sold in the U.S. in the United States, but that is now headed below 40 percent. “No other country in the world would allow Toyota to do what they’re doing in moving their manufacturing footprint out of the United States,” he said. Toyota denied that figure. Spokeswoman Mira Sleilati said that last month, 68.2 percent of the Toyota vehicles sold in the U.S. were produced in North America, which includes facilities in Canada and Mexico. That was up from 60 percent last April, she said. Sleilati didn’t immediately have U.S. manufacturing figures available. Last month Toyota closed the New United Motor Manufacturing Inc. plant in Fremont, Calif., costing 4,700 UAW workers their jobs. The plant was a joint venture with GM, which pulled out last year after filing for bankruptcy protection. Toyota’s remaining U.S. factories are nonunion. Toyota made the Corolla sedan and Tacoma pickup at the plant but said in August that without GM, it could not sustain the factory. Sleilati said the company is ramping up production in Texas and Canada to make up for the closure of the California plant. Some Corolla production has gone back to Japan, but only temporarily, she said. King was nominated in December by UAW leaders to replace President Ron Gettelfinger, who is retiring next month. An election will be held in June at the union’s convention in Detroit.

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Toyota Delayed Steering Recall By Almost A Year In U.S.

May 10, 2010

MIAMI — Toyota waited nearly a year in 2005 to recall trucks and SUVs in the United States with defective steering rods, despite issuing a similar recall in Japan and receiving dozens of reports from American motorists about rods that snapped without warning, an Associated Press investigation has found. The lengthy gap between the Japanese and U.S. recalls – strikingly similar to Toyota’s handling of the recent recall for sudden acceleration problems – triggered a new investigation Monday by the National Highway Traffic Safety Administration, which could fine the automaker up to $16.4 million. That was also the amount Toyota paid last month in the acceleration case. “Our team is working to obtain documents and information from Toyota to find out whether the manufacturer notified NHTSA within five business days of discovering a safety defect in U.S. vehicles,” NHTSA Administrator David Strickland said in a statement. Federal regulators “are taking this seriously and reviewing the facts to determine whether a timeliness investigation is warranted,” NHTSA spokeswoman Karen Aldana told the AP in response to questions about the 2005 recall. An automaker is required to notify NHTSA about a defect within five days of determining one exists. NHTSA has now linked 16 crashes, three deaths and seven injuries to the steering rod defect. When a steering rod snaps, the driver cannot control the vehicle because the front wheels will not turn. The AP reviewed hundred of pages of court documents, including many of Toyota’s internal communications from the period when the steering problems first emerged. The AP also analyzed government files and complaints from drivers who experienced trouble behind the wheel. After the 2004 Japanese recall, Toyota claimed initially that it had scant evidence of a steering rod problem among U.S. trucks and SUVs. But the AP found that the automaker had received at least 52 reports from U.S. drivers about the defect before vehicles were recalled in Japan. Toyota told the AP that it has now confirmed seven total cases in the U.S. of steering problems in the T100 small pickup and no reports of accidents or injuries. Company spokesman Brian Lyons said Monday that the automaker received an information request from NHTSA and intended to cooperate with the agency’s inquiry. Toyota claimed in a 2004 letter to NHTSA obtained by the AP that driving conditions in Japan were so different from those on U.S. roads that a recall was not necessary for 4Runner SUVs and T100 pickup trucks, known in Japan as the Hilux and Hilux Surf. That was despite the vehicles having nearly identical steering components, according to company documents filed with NHTSA. In the October 2004 letter, the company told the agency there were differences between left- and right-hand drive vehicles and that Toyota “believes that the unique operating conditions in Japan, such as frequent standing full lock turns, such as for narrow parking spaces and close quarters maneuvering, greatly affects the occurrence of this problem.” In addition, Toyota insisted to U.S. regulators the company had only scattered reports by 2004 from U.S. drivers about the steering problems. However, company documents that surfaced in a 2009 lawsuit show Toyota received 35 complaints through its customer service department – four formal complaints to its legal department and 13 warranty claims through dealers before the 2004 recall. The company later acknowledged in court documents that it received at least some letters from U.S. customers whose steering rods had broken. Yet it was not until September 2005 – 11 months after the Japanese recall began – that Toyota issued a recall in the U.S. for nearly 1 million 4Runners and Toyota trucks from model years 1989 to 1995, and T100s from model years 1993 to 1998, to repair steering rods. Last month, Toyota agreed to pay a $16.4 million fine for delaying its recalls of millions of vehicles to replace floor mats that can trap accelerator pedals and accelerator pedals that can stick. The attorney for an Idaho family suing Toyota over the steering issue now says there are strong parallels between the 2005 steering recall and the accelerator situation. On Monday, California attorney John Kristensen said Toyota failed to meet its obligation to promptly notify the agency about a vehicle defect. Kristensen represents the family of 18-year-old Michael “Levi” Stewart, who was killed in a 2007 accident. “They clearly had evidence. They clearly had problems in the U.S.,” Kristensen said. “They’ve got to be held responsible for misleading the U.S. government about why they weren’t doing a recall in the United States.” NHTSA is also reviewing whether Toyota improperly delayed for six weeks the January recall of the 2009-2010 Venza in the United States to address floor mats that could trap accelerator pedals. The company had made a similar recall in Canada six weeks earlier. Earlier Monday, Transportation Secretary Ray LaHood met with top Toyota executives in Japan and said the company could face additional fines for safety-related issues. LaHood said investigators are going through some 500,000 Toyota documents. A determination on new fines probably will not be made for months. In Stewart’s death, Toyota acknowledged in a 2009 filing that the company was contacted by two U.S. drivers complaining of broken steering rods in 2002 and 2003 but emphasized “the fact that a steering rod broke is not in and of itself evidence of the recall condition.” The reports uncovered in the Stewart lawsuit tell a different story. One motorist who wrote in 2002 to Toyota urged the company to do something after the steering rod broke on his 1997 T100 pickup. “I bring this evidence to your attention because of the obvious safety hazard,” wrote Yigal Schacht of Flushing, N.Y. “Had this fracture in the center link occurred even 10 minutes later, I would have been traveling on the Long Island Expressway, and without steering, surely a horrific tragedy would have ensued.” The Toyota steering recall in Japan began after a highly publicized accident in which five people were injured after a steering rod snapped, leading to a criminal investigation there of Toyota executives involving the timing of the recall. Ultimately, Japanese prosecutors decided not to file professional negligence charges against the executives. The Stewart case is one of four lawsuits that were filed in state courts after the U.S. steering recall and the only one drawing close to trial, which is set for November in Los Angeles. In addition to the defective vehicle, the Stewart family is claiming Toyota’s 2005 recall was faulty because it repaired only about a third of the vehicles – far below the 70 percent level that is the typical goal under NHTSA guidelines. NHTSA officials cautioned, however, that repair levels for older vehicles are often lower because many of them are not in use any more. Stewart was killed Sept. 15, 2007, while driving friends home in his 1991 Toyota pickup near Fairfield, Idaho. Toyota has said in court documents that the steering rod may have broken on impact rather than before the crash and has suggested the crash may have been alcohol related. Stewart’s blood-alcohol level was 0.03, within Idaho’s legal limits. “Stewart was under the influence and speeding” before the accident, Toyota said in one filing. Kristensen said Stewart drank “half a beer” that night and was the group’s designated driver. If the recall had been performed sooner and more efficiently, “it could have saved Levi Stewart’s life,” the attorney said. Similar claims are being made today in hundreds of lawsuits against Toyota over the sudden unwanted acceleration problem, which NHTSA has linked to 52 deaths in the U.S. ___ Associated Press Writer Ken Thomas in Washington contributed to this report.

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Toyota Extends U.S. Discounts; Nissan Leads Asian Automakers’ Sales Gains

May 3, 2010

By Alan Ohnsman May 4 (Bloomberg) — Toyota Motor Corp. is extending U.S. discounts that triggered its back-to-back sales increases, and Nissan Motor Co. led the largest Asia-based automakers’ gains for a second straight month in April. Deliveries for Nissan rose 35 percent from a year earlier, while Toyota yesterday reported a 24 percent advance after continuing no-interest loans and discount leases on most of its namesake brand’s models in April. Honda Motor Co. posted a 13 percent increase and Hyundai Motor Co. ’s were up 30 percent. “Toyota’s incentives pretty much set the pace,” said James Bell , executive market analyst for Kelley Blue Book in Irvine, California. “Everybody being up a little bit is tied to the Toyota program — it’s raising the tide for the industry.” Recalls by Toyota of more than 8 million autos globally for flaws linked to unintended acceleration and congressional hearings that tainted its image led the world’s largest automaker in March to introduce discounts across its lineup. For now, that strategy will remain in place. “Our brand has taken some bruises over the past couple of months,” Bob Carter , U.S. vice president of Toyota sales, said in a conference call yesterday. “I don’t see us changing our incentives in the short term.” Industrywide sales in April rose 20 percent to 982,131 cars and light trucks, according to Autodata Corp., a research firm based in Woodcliff Lake, New Jersey. The Asia-based brands boosted their combined U.S. market share to 46.5 percent, a 1 percentage point gain from a year earlier, Autodata said. General Motors Co., Ford Motor Co. and Chrysler Group LLC, the U.S.-based automakers, held 45 percent, a 1 point drop. Sales rose 6.4 percent for GM and 25 percent each for Ford and Chrysler. Toyota Discounts Toyota sold 157,439 Toyota, Lexus and Scion vehicles last month, rising from 126,540 a year earlier. The Toyota City, Japan-based company said the increases were led Corolla small cars, Prius hybrids, Avalon sedans, Highlander and RAV4 sport- utility vehicles and Sienna minivans. The automaker, which last month recalled Lexus GX 460 SUVs to adjust stability controls, is expanding production of most models in North America because of rising demand, Carter said. The incentives being extended through May include no- interest loans on seven models, discounted leases on 10 others and two years of no-cost maintenance for all new vehicles, Carter said. “It’s largely in the same direction” as April, with some regional variation, particularly for Camry sedans, he said. Toyota averaged $2,498 per vehicle on incentives in April, up from $1,634 a year earlier, according to Edmunds.com, a Santa Monica, California-based provider of industry data. Toyota’s market share for the month rose to 16 percent, from 15.4 percent in April 2009, according to Autodata. Honda, Nissan Honda, Japan’s second-largest automaker, sold 113,697 Honda and Acura vehicles, compared with 101,029 a year earlier. The Tokyo-based company benefited from demand for Accord sedans, CR-V, Pilot and Acura MDX SUVs and Ridgeline pickup trucks. Honda’s market share for the month was 11.6 percent, a drop of 0.9 point, according to Autodata. Nissan reported sales of 63,769 Nissan and Infiniti vehicles, an increase from 47,190. The Yokohama, Japan-based company had the biggest volume increase among Japanese and South Korean automakers in the U.S. this year through April. Small cars such as the Versa and Sentra posted percentage gains of more than 38 percent, while sales of light trucks including Frontier and Titan pickups and Murano, Rogue, Pathfinder and Armada SUVs were “surprisingly strong,” said Al Castignetti , Nissan’s vice president of U.S. sales. SUV Opportunity “The exit of a lot of domestic production of SUVs has opened that segment up,” he said in a telephone interview yesterday. Nissan is considering boosting light-truck production, “but we need to also see what happens with fuel prices,” Castignetti said. Nissan’s market share rose to 6.5 percent in April from 5.8 percent a year earlier, Autodata said. Hyundai, South Korea’s largest automaker, boosted sales to 44,023 vehicles, from 33,952 a year earlier. The Seoul-based company’s gains were led by the revamped Sonata sedan, with a 57 percent surge to 18,536 units. Hyundai’s U.S. market share last month climbed 0.4 point to 4.5 percent, according to Autodata. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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GM, Ford, Toyota U.S. Car Sales Lag Estimates in `Ebb and Flow’ of Rebound

May 3, 2010

By Katie Merx May 3 (Bloomberg) — General Motors Co., Ford Motor Co. and Toyota Motor Corp.’s April U.S. sales increases missed analysts estimates amid the “ebb and flow” of the economic recovery. Only Chrysler Group LLC among the six largest automakers exceeded projections, as the company posted a 25 percent monthly gain that was its biggest since July 2005. GM today reported a 6.4 percent increase from a year earlier, Ford sales rose 25 percent and Toyota’s were up 24 percent. Those results come as U.S. unemployment is holding at 9.7 percent, where it has been since January. The auto industry continues to recover, with the annualized sales rate achieving a sixth straight increase from a year earlier to 11.2 million light vehicles, from 9.2 million in April 2009, according to researcher Autodata Corp. “We’re seeing the ebb and flow of the market recovery,” said Joseph Phillippi , president of AutoTrends Consulting Inc. in Short Hills, New Jersey. “We’re still working our way off the bottom. A rising tide lifts all boats, but some are lighter than others.” The April sales rate was lower than the 11.4 million average of 8 analyst estimates compiled by Bloomberg. That outlook was based on sales in the month’s first 20 days, said Al Castignetti , vice president of sales at Nissan’s U.S. unit. “The final 10 days of the month were a bit slower than we experienced earlier on,” he said. Industry deliveries rose 20 percent to 982,131 from 819,685 a year earlier, said Autodata, which is based in Woodcliff Lake, New Jersey. The advance on that basis was the sixth in a row. Chrysler’s Gain Chrysler sales climbed to 95,703 from 76,682 a year earlier, according to a statement from the automaker. The average of 6 analyst estimates was for a 15 percent increase. The Auburn Hills, Michigan-based company filed for bankruptcy at the end of April 2009 and emerged with government aid in June under the control of Fiat SpA. Chrysler in April “spent the most on incentives among any major automaker and relies the most on fleet sales,” said Jesse Toprak , an analyst at TrueCar.com. The Santa Monica, California- based data provider estimated that Chrysler last month averaged $3,537 a vehicle, compared with $2,798 for the industry. “We’re really not expecting a whole lot from Chrysler until the Fiats start rolling in 2011,” Toprak said. GM, Ford GM sales rose to 183,997, from 173,007 a year earlier, according to a statement from the largest U.S. automaker. The percentage increase lagged behind the 7.2 percent average of 6 analyst estimates. The Detroit-based company is trimming half of its eight U.S. vehicle brands under a plan to return to profit after emerging from its government-backed bankruptcy. GM said sales for the four brands it’s keeping rose 20 percent to 183,091, including gains of 36 percent each for Buick and Cadillac. Ford, second biggest in the U.S., reported an increase to 167,543 vehicles sold, from 134,401. The gain was less than the 28 percent average of 6 analyst estimates. Sales excluding the Volvo brand that it’s selling also rose 25 percent, the Dearborn, Michigan-based automaker said in a statement. Toyota, the largest Japanese automaker, reported 157,439 U.S. sales in April, rising from 126,540. The Toyota City, Japan-based automaker was expected to post a 34 percent increase, the average of 5 analyst estimates. ‘Waning’ Incentives The company began offering increased incentives on March 2 after worldwide recalls of more than 8 million vehicles to fix defects linked to unintended acceleration and to adjust brakes. Toyota probably spent a per-vehicle average of $2,416 on incentives in April, according to TrueCar.com. “Incentives are just not doing the job that they were before,” said Michelle Krebs , an analyst at research firm Edmunds.com in Santa Monica, California. “By the end of the month, their effectiveness was waning. If the industry is going to rely on incentives, they’ve got to find new tricks for May.” Toyota will continue loan and lease offers this month, Bob Carter , U.S. general manager for the brand, said on a conference call today. Honda Motor Co., the second-largest Japanese automaker, sold 113,697 cars and light trucks, rising from 101,029, Chris Martin , a spokesman for the Tokyo-based company, said in a telephone interview. The 13 percent gain trailed the 15 percent average of 4 analyst estimates compiled by Bloomberg. Nissan, Hyundai Nissan, Japan’s No. 3 automaker, said in a statement that its sales climbed 35 percent to 63,769 from 47,190. The average of 4 analyst estimates for the Yokohama, Japan-based automaker was for a 57 percent surge. Hyundai Motor Co., South Korea’s largest automaker, said in a statement that it sold 44,023 vehicles, a 30 percent increase from 33,952 a year earlier. That was less that the estimate of a 35 percent gain from Edmunds.com. The industrywide sales rate for April was down from 11.8 million in March, when Toyota started offering its biggest incentives to counter global recalls, spurring competitors to offer their own discounts. Manufacturers, dealers and investors use the annualized rate to compare monthly totals by taking into account seasonal buying patterns. Industry sales increases still underscore the market’s contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009’s tally of 10.4 million was the fewest in 27 years, according to Autodata. Consumers remain wary of big-ticket purchases, said Krebs, the Edmunds.com analyst. “People are remembering and reining in their spending, she said. “We see the recovery as being very fragile. It’s going to be bumping along like this for a while.” To contact the reporter on this story: Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net

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Chrysler May Boost U.S. Vehicle Sales With Biggest Monthly Gain Since 2005

April 30, 2010

By Katie Merx April 30 (Bloomberg) — U.S. auto sales strengthened a year after bankruptcies began to batter the auto industry, with Chrysler Group LLC forecast to post its biggest monthly gain since 2005. Industrywide deliveries in April may have risen to an annualized rate of 11.4 million light vehicles, the average of 8 analysts’ estimates compiled by Bloomberg. Chrysler, which entered Chapter 11 a year ago today before emerging controlled by Turin, Italy-based Fiat SpA , may have climbed 15 percent, 6 projections show. The yearly rate of domestic sales in April may be less than the 11.8 million seasonally adjusted annualized pace in March, when Toyota Motor Corp. offered its biggest incentives to counter global recalls, spurring competitors to add discounts. “The automotive industry is in full-blown recovery,” said Jesse Toprak , vice president of industry trends and insight for TrueCar.com in Santa Monica, California. “Toyota’s generous incentives in April continue to bring consumers back into dealerships; however, the impact of its incentive programs in the marketplace appears to have diminished slightly in April.” General Motors Co. , which entered bankruptcy on June 1, and emerged in July, may post a 7.2 percent increase when industry sales are announced on May 3, while Dearborn, Michigan-based Ford Motor Co. may report a jump of 28 percent. Chrysler’s last double-digit increase was 27 percent in July 2005 when the Auburn Hills, Michigan-based carmaker was part of DaimlerChrysler AG. Zero-Percent Financing Asia-based automakers also benefited from incentives. Toyota sales may have risen 34 percent, the average of 5 analysts. The Toyota City, Japan-based automaker extended the no-interest loans and discount leases it offered in April, and competitors followed. Honda Motor Co. , Japan’s second-largest automaker after Toyota, may say sales rose 15 percent, the average of 4 analysts, while No. 3 Nissan Motor Co. may have a 57 percent gain. Seoul-based Hyundai Motor Co. may increase 35 percent, according to Santa Monica, California-based Edmunds.com. “Honda sales in April got a boost from the uncharacteristically large offers it made available to prospective buyers, including zero-percent financing,” said Brian Johnson , a Barclays Capital analyst in Chicago. Manufacturers, dealers and investors use the annualized rate to account for seasonal buying patterns when comparing monthly totals. The average estimate for an industry sales pace of 11.4 million vehicles would be a 23 percent increase from the 9.3 million of a year earlier, according to Autodata Corp. Consumer Confidence Climbs Automakers were buoyed by consumer confidence that rose in April to its highest since September 2008, as measured by the Conference Board’s monthly index. “U.S. industry sales of light vehicles appear to have slowed down in April from the 11.8 million level achieved last month, as the initial boost from the large incentives offered since March by manufacturers across the board tapered off, and as automakers likely sold fewer cars to fleet customers,” Johnson said in an April 28 note to investors. Ford fell 42 cents, or 3.1 percent, to $13.16 at 12:42 p.m. in New York Stock Exchange composite trading . Toyota’s American depositary receipts , each worth 2 ordinary shares, dropped 81 cents, or 1 percent, to $77.30. Ford has gained 32 percent in 2010, and Toyota’s ADRs have declined 8.2 percent. ‘Feeling Better’ Toyota began offering incentives on March 2 such as subsidized leases after worldwide recalls of more than 8 million vehicles to fix defects linked to unintended acceleration and to adjust brakes. The company probably spent an average $2,416 on incentives on each vehicle this month, according to forecaster TrueCar.com. The industry average is about $2,798, TrueCar.com said. Incentives are down 4 percent from March 2009, when Detroit- based GM and Chrysler boosted spending ahead of their bankruptcy filings. John McEleney , who has a Toyota and a Buick, GMC and Cadillac dealership in Clinton, Iowa, said sales were up 30 percent at his Toyota store and increased about 20 percent among his GM brands. “Sales were really pretty good, but not quite as good as March,” McEleney said, adding that sales may keep gaining this year. “We’re seeing a lot more showroom traffic and a lot more Internet activity. People are feeling better about their jobs, too.” The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from March 2009. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of vehicles. April had 26 selling days, the same as a year earlier. To contact the reporters on this story: Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net ;

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Philip G. Baker: Toyota Still Covering Up

April 24, 2010

This past week we brought our 2009 Toyota Highlander Hybrid to our local Toyota dealer for an unexpected recall. Just a few weeks earlier we were assured that the car was not on the recall list. Now, we were told, our floor mats needed replacing and the accelerator pedal needed modifying. Toyota couldn’t explain the sudden change which, by itself, doesn’t inspire a lot of confidence that it knows what it’s doing. Even though it was impossible for the mats to interfere, Toyota insisted on replacing them, saying it would make our car safer. It seems like the company has taken a page from TSA, trying to make us feel better without addressing the real issues. In an earlier post I noted that it seemed to me that Toyota was covering up and not acting in the best interests of their customers by coming forward with what it knew. But, as I noted, that was a gut instinct, knowing what engineers know, and observing Toyota’s strange behavior. But now there’s irrefutable evidence that Toyota has been covering up. Contradicting earlier testimony about when it learned of the acceleration problem, documents turned over to NHTSA revealed that a group VP Irving Miller wrote to another staff member in January about accelerator pedal defects, saying “The time to hide on this one is over. We need to come clean.” And today Toyota agreed to pay a $16.4 million fine for not notifying NHTSA of pedal problems within the five days of learning of them, even though they were already making repairs for the same problem on cars in Europe. Earlier this month NHTSA announced they will have a group of NASA scientists and engineers conduct its own investigation to determine if the problems of sudden acceleration could be related to the electronics or software, as some experts believe, and as Toyota denies is the cause. That’s a positive step, because NHTSA doesn’t yet have the in-house expertise, and chose not to rely solely on Toyota’s statements. It’s unfortunate that they have to do this, because within Toyota there’s surely a group of engineers that already have those answers. With this problem festering for years, there had to be internal studies, extensive testing and detailed reports; Japanese technology companies and engineers are smart, very thorough and detail-oriented. So another year will go by, more accidents will occur, and more deaths will likely result, all because Toyota is unwilling to disclose everything it knows. This doesn’t surprise those who have dealt with Toyota. An investigation conducted by the Associated Press and appearing in the Los Angeles Times and Japan Times this past week, notes that “Toyota has routinely engaged in questionable, evasive and deceptive legal tactics when sued, frequently claiming it does not have information it is required to turn over and sometimes even ignoring court orders to produce key documents.” But what do mechanics think, those that work on these cars every day? I asked three experienced auto mechanics, including the owner, with a large independent foreign and domestic auto repair facility in Encinitas, CA. The facility has 14 bays and 11 technicians, specializing in the repairs of Japanese, German and American automobiles, and equipped with much of the same equipment that dealers use for their service and diagnosis. They’ve come across one car with unintended acceleration, a 2008 Toyota Rav4, but were unable to get it to reoccur. But all three believe the problems being reported by consumers to be very real. From their experiences, customers are reluctant to bring in their cars to correct a problem unless it’s real. They believe that among the many that have complained about this issue, most have likely experienced it. But they noted that often these problems are elusive to find. In spite of this, the shop’s owner thinks Toyota makes some of the most reliable cars. He owns several as part of his auto rental business, and plans to replace them with Toyotas. He thinks Toyota should modify the software so that applying the brakes will automatically disable the accelerator. That would provide a fail-safe feature that would allow drivers to easily recover if unintended acceleration did occur. This is a feature found on many German cars, including Mercedes, BMW and Audi, but few of the other makes. All three believe there’s a real possibility that there can be a software or electronic glitch that Toyota has either failed to acknowledge or hasn’t discovered. Because it occurs so infrequently, they don’t think it’s likely to be reproduced in the few hours of analyses Toyota has been conducting following some of the recent incidents. The only way it can be reproduced is to take cars that have failed and subject them to hundreds of thousands of miles of testing, including doing it under extreme conditions. For now we’ll just have to wait and watch as the lawsuits and investigations go forward. My bet is the real story behind unintended acceleration has yet to be fully revealed. But in spite of Toyota’s years of efforts to suppress it, the truth will come out.

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US orders Toyota to pay $16.4m fine

April 19, 2010

US orders Toyota to pay $16.4m fine

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Toyota Said to Agree to Pay Record $16.4 Million U.S. Fine on Auto Recalls

April 18, 2010

By Angela Greiling Keane and Alan Ohnsman April 19 (Bloomberg) — Toyota Motor Corp. , the world’s biggest carmaker, will agree today to pay a record $16.4 million fine levied by the U.S. Transportation Department, according to an official at the agency. The company, which has recalled more than 8 million vehicles worldwide for defects that may cause unintended acceleration, was fined by the U.S. auto safety regulator for failing to alert the government about circumstances in which gas pedals may stick. The department official asked not to be identified ahead of the announcement. The fine, which amounts to less than 2 percent of Toyota’s projected net income for the year ended March 31, may bolster the case for plaintiffs seeking compensation from the Japanese carmaker. At least 180 consumer and shareholder lawsuits are seeking class-action status and at least 57 individual suits are claiming injuries or deaths caused by sudden acceleration incidents in Toyota vehicles. Paul Nolasco , a Toyota spokesman in Tokyo, declined to comment. The carmaker could have contested the fine, which is the maximum amount the National Highway Traffic Safety Administration can levy. Toyota has 30 days to pay the fine, imposed April 5 by NHTSA. It may be followed by additional penalties because the pedals supplied to Toyota by CTS Corp . “had two separate defects that may require two separate remedies,” the agency told the carmaker in a letter the day it announced the civil penalty. Four-Month Delay Toyota shares fell 2 percent to 3,620 yen as of 1:03 p.m. in Tokyo trading. A recall in January of 2.3 million vehicles involved pedals from CTS, based in Elkhart, Indiana, that were slow to return after being depressed as well as pedals on various vehicles that could become stuck. Manufacturers have five days to report safety defects to NHTSA. The regulator said Toyota waited at least four months before notifying authorities about the defects. The carmaker, based in Toyota City, Japan, failed to share defect information adequately among regional units, company President Akio Toyoda has said. His grandfather founded the company. The U.S. fine might have been as much as $13.8 billion were it not for a statute limiting NHTSA to a civil fine to $16.4 million, the agency said in its letter. That’s based on each of the 2.3 million vehicles involved in the U.S. recall qualifying for a fine of as much as $6,000 each. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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US safety watchdog may impose second fine against Toyota

April 11, 2010

US safety watchdog may impose second fine against Toyota

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Toyota May Face Second U.S. Fine for Failing to Disclose Sticky Gas Pedals

April 9, 2010

By Angela Greiling Keane and Alan Ohnsman April 10 (Bloomberg) — Toyota Motor Corp. may be fined a second time for failing to alert federal regulators that gas pedals might stick and cause unintended acceleration, the U.S. auto-safety regulator said. The National Highway Traffic Safety Administration announced a record $16.4 million civil penalty against Toyota on April 5 for failing to disclose the defect. The agency told Toyota, the world’s largest automaker, in a letter the same day that it may levy an additional fine on the same pedals. Pedals supplied to Toyota by CTS Corp. of Elkhart, Indiana, “had two separate defects that may require two separate remedies,” NHTSA said in the letter obtained yesterday, which cited documents submitted by Toyota. A recall in January of 2.3 million vehicles involved pedals that were slow to return after being depressed as well as pedals on various vehicles that could become stuck. Toyota, based in Toyota City, Japan, has recalled more than 8 million cars and trucks worldwide for two defects that may cause unintended acceleration and to adjust brakes. President Akio Toyoda has said the company his grandfather founded failed to share defect information adequately among regional units. Martha Voss , a Washington-based spokeswoman for Toyota, didn’t immediately respond to a telephone call seeking comment. In the letter, NHTSA Chief Counsel O. Kevin Vincent said Toyota didn’t meet with the regulator until Jan. 19, two days before beginning its U.S. recall of sticky pedals. Toyota knew about defects with sticky pedals in July 2006, according to a timeline dated March 24 that it submitted to NHTSA. Statute’s Limits Were it not for a statute limiting the civil fine announced this week to $16.4 million, Toyota could have faced a potential penalty of as much as $13.8 billion, NHTSA said in the letter. That’s based on each of the 2.3 million vehicles involved in the recall qualifying for a fine of as much as $6,000 each. U.S. Transportation Secretary Ray LaHood said in a statement this week that Toyota “knowingly hid a dangerous defect” by waiting four months to alert regulators to problems involving unintended acceleration and braking. In the April 5 letter to Toyota, NHTSA said an official from the Japanese parent company who wasn’t identified “inexplicably” told the carmaker’s North American engineering unit on Oct. 21, 2009, not to make the same design change to CTS pedals for U.S. vehicles that was already under way for those in Europe. Toyota has yet to provide a detailed response to NHTSA’s assessment and LaHood’s comments. The company has until April 19 to tell regulators whether it will accept or contest the $16.4 million fine. The Detroit Free Press reported the NHTSA letter earlier yesterday. Toyota’s American depositary receipts, each equal to two ordinary shares, rose 44 cents to $79.92 yesterday in New York Stock Exchange composite trading. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Toyota Sudden-Acceleration Lawsuits Combined in California Federal Court

April 9, 2010

By Margaret Cronin Fisk April 9 (Bloomberg) — Lawsuits against Toyota Motor Corp. related to sudden acceleration will be consolidated in a federal court in Santa Ana, California, a panel of judges said. Toyota, the world’s largest automaker, is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 57 individual suits claiming personal injuries or deaths caused by sudden acceleration incidents. All the class actions and most of the individual suits were filed after September, when Toyota began the first of several recalls related to inadvertent acceleration. Toyota and lawyers for consumers asked in court filings and a March 25 hearing that the federal suits be combined in a multidistrict litigation, or MDL, in which one judge overseeing the litigation would decide issues such as evidence-gathering and allowable legal arguments. The lawsuits will be combined in federal court near Toyota’s U.S. sales headquarters in Torrance, California, to be handled by U.S. District Judge James V. Selna . Selna will oversee class actions and personal injury cases filed in federal court, the judges said in a ruling posted on the panel’s Web site today. Centralization “will eliminate duplicative discovery; prevent inconsistent pretrial rulings, including with respect to class certification; and conserve the resources of the parties, their counsel, and the judiciary,” the panel said. The central district of California “is the most appropriate choice” because of its proximity to Toyota headquarters, the panel said. Vehicle Recalls The Toyota City, Japan-based company has recalled more than 8 million vehicles for fixes related to sudden, unintended acceleration. The automaker announced in September that it was recalling 3.8 million Toyota and Lexus vehicles because of a defect that may cause floor mats to jam accelerator pedals. The company later recalled vehicles over defects involving the pedals themselves. The incidents, which have been linked to at least 51 deaths, spurred congressional hearings and an announcement last week by U.S. Transportation Secretary Ray LaHood that Toyota’s accelerator flaws and electronic vehicle controls will be examined by engineers from NASA. About half of the lawsuits claim the mats and pedals don’t explain all the sudden- acceleration incidents and may be linked instead to electronic throttle controls. “We are pleased with the outcome, including the location,” said Brian Lyons , a spokesman for Toyota’s U.S. sales unit. Lawyers’ Organization The decision “allows the plaintiffs’ lawyers to organize as a group,” with the best attorneys taking leadership positions in the combined cases, said Ken Seeger of Seeger Salvas in San Francisco, who isn’t involved in the litigation. “Toyota won’t be able to pick off the weakest or least experienced of the trial lawyers,” he said. Toyota may have won one advantage by the assignment to Santa Ana rather than Los Angeles, Seeger said. Prospective jurors would be drawn from Orange County, a more conservative pool than Los Angeles, he said. “Plaintiffs would have rather been in Los Angeles.” “That’s not much of a concern,” plaintiffs’ attorney Hunter Shkolnik , whose firm has class actions and personal injury suits, said today in an interview. “Judge Selna is highly qualified. We got a good assignment and now we can move forward.” Since November, at least 171 class actions have been filed against Toyota by consumers alleging the company withheld information about the risk of sudden acceleration, driving down the value of the vehicles. The lawsuits are seeking damages that range from a loss of car value to a return of Toyota profits. Blue Book Drop By February, Kelley Blue Book, the used-auto pricing service used as a guide in private-party sales, reported that Toyota values had dropped by as much as 4.5 percent, according to a complaint filed in federal court in California last week. Toyota is also facing at least five class actions by investors claiming the company inflated its shares by failing to disclose information about safety issues. A separate lawsuit seeking class-action status for Toyota dealers claiming losses because of recalls has been filed in federal court in Jefferson City, Missouri. At least 57 lawsuits claiming injuries or deaths caused by sudden-acceleration incidents have been filed in federal and state courts, with plaintiffs’ lawyers reporting plans to file dozens more. The lawsuits filed so far include claims of at least 26 deaths caused by such incidents. Injury Cases Plaintiffs’ lawyers disagreed at the March 25 hearing in federal court in San Diego whether the personal injury cases should be brought into the MDL or handled by the same judge overseeing the class actions. Both types of lawsuits should be combined before Selna, the judicial panel said in the ruling posted today. “The liability discovery in all the cases will certainly overlap.” Most of the plaintiffs’ lawyers were seeking to have the lawsuits consolidated before one judge, disagreeing over exactly which court. Lawyers suggested about a dozen different jurisdictions, including federal courts in California, Louisiana and Kentucky. Toyota and many of the plaintiffs’ lawyers at the San Diego hearing supported combining the lawsuits in California. More than one-quarter of the class actions have been filed in the central district of California, according to data compiled by Bloomberg News. “Relevant documents and witnesses are likely located there,” the panel said in its ruling. “Far more actions are pending there than in any other district.” The lawsuits will be combined as In Re: Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation, MDL 2151, U.S. District Court, Central District of California (Santa Ana). To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net .

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Toyota Lawsuits: LA Court Chosen By US Panel For Toyota Lawsuits

April 9, 2010

MIAMI — A federal judge in Southern California was chosen Friday to preside over more than 200 lawsuits filed against Toyota in the aftermath of the automaker’s sudden acceleration problems, which could potentially mushroom into one of the nation’s biggest product liability cases. A judicial panel consolidated the ever-growing list of cases before U.S. District Judge James V. Selna, 65, a 2003 appointee of former President George W. Bush. Selna’s court is in Orange County, Calif., near Los Angeles and close to Toyota’s U.S. headquarters. “This is a big milestone in what will be a very historic case,” said Tim Howard, a Northeastern University law professor who leads a group of attorneys in 26 states who are suing Toyota. Attorneys estimate that if Toyota were to settle the cases for even a modest payout to affected motorists, it could cost the company at least $3 billion and possibly much more. In comparison, drugmaker Merck & Co. has paid more than $4.8 billion into a settlement fund for tens of thousands of claims from people who used its withdrawn painkiller Vioxx. Selna, one of six federal judges in Orange County, will hear important pretrial motions for all cases, eventually leading to trial, settlement or dismissal of the lawsuits. Selna declined comment through a spokeswoman. Attorney Mark Robinson Jr., who practices in Orange County and is representing Toyota owners in some of the cases, said Selna has broad experience with more than 28 years as a practicing lawyer before his appointment to the federal bench. “He’s a very skilled judge. He will do everything appropriately,” said Robinson, who is best known for negotiating a $128 million settlement in a case involving exploding fuel tanks on the Ford Pinto. Toyota, in a statement, said it is “pleased with the decision and the location” of the consolidation of lawsuits. More than 130 lawsuits are potential class-action cases filed by Toyota owners who claim their vehicles plummeted in value after the recalls. A key early decision in those cases is whether to establish millions of similar Toyota owners as a single class, meaning all would be affected by a potential damages award or settlement. At least 100 other lawsuits seek damages from Toyota for injuries or deaths attributed to sudden acceleration, which the U.S. Judicial Panel on Multidistrict Litigation determined should also be part of the centralized case. “The liability discovery in all the cases will certainly overlap,” the panel said in its ruling. The lawsuits began appearing last fall as Toyota initiated the first of a series of recalls eventually involving about 8 million vehicles – including about 6 million in the U.S. – over acceleration problems in several models and brake issues with the popular Prius hybrid. The National Highway Traffic Safety Administration, which has linked 52 deaths to acceleration problems, this week imposed a record $16.4 million fine on the Japanese automaker for failing to disclose its safety problems to the government in a timely manner. NHTSA said in a letter to Toyota released Friday that it is considering a second civil penalty against the automaker because the accelerator pedals at issue “exhibit two separate defects that may require two separate remedies,” NHTSA chief counsel O. Kevin Vincent wrote. Many of the lawsuits blame the acceleration problems on glitches in Toyota’s electronic throttle controls, which the company has repeatedly denied. The company traces the issue to sometimes-sticky acceleration pedals and accelerators that can become jammed in floor mats. “The result of these decisions by Toyota was to expose millions of American drivers, passengers and pedestrians to the dangers of driving with a sticking accelerator pedal,” Vincent wrote. Toyota has until April 19 to accept or contest the original $16.4 million fine. Selna, the judge chosen to preside over the consolidated lawsuits, was previously a partner at a Los Angeles law firm that focused on antitrust litigation. In one of his better-known cases, last May Selna ruled that a public high school history teacher violated the First Amendment when he called creationism “superstitious nonsense” during a classroom lecture. The lawsuit was filed by a student in 2007 who claimed teacher James Corbett violated the amendment’s establishment clause by making repeated comments in class that were hostile to Christian beliefs. Toyota favored Los Angeles as the location for consolidation of the lawsuits, near its U.S. headquarters in Torrance, Calif., and a relatively easy trip from Japan. Other attorneys suing Toyota pushed for Kentucky – where Toyota has a large plant and engineering facility – as well as Louisiana, New Jersey, Ohio, South Carolina, New York and elsewhere. Howard, the plaintiffs’ attorney and Northeastern University law professor, said the California location makes sense and also presents some obstacles. “There are a lot of efficiencies because the corporate headquarters is there. It’s easy to get flights to Japan,” Howard said. “But there are some challenges, because a lot of the evidence is nationwide and the cases are nationwide.” _____ Associated Press writers Ken Thomas in Washington and Greg Risling in Los Angeles contributed to this story.

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Toyota Lawsuits: LA Court Chosen By US Panel For Toyota Lawsuits

April 9, 2010

MIAMI — A federal judge in Southern California was chosen Friday to preside over more than 200 lawsuits filed against Toyota in the aftermath of the automaker’s sudden acceleration problems, which could potentially mushroom into one of the nation’s biggest product liability cases. A judicial panel consolidated the ever-growing list of cases before U.S. District Judge James V. Selna, 65, a 2003 appointee of former President George W. Bush. Selna’s court is in Orange County, Calif., near Los Angeles and close to Toyota’s U.S. headquarters. “This is a big milestone in what will be a very historic case,” said Tim Howard, a Northeastern University law professor who leads a group of attorneys in 26 states who are suing Toyota. Attorneys estimate that if Toyota were to settle the cases for even a modest payout to affected motorists, it could cost the company at least $3 billion and possibly much more. In comparison, drugmaker Merck & Co. has paid more than $4.8 billion into a settlement fund for tens of thousands of claims from people who used its withdrawn painkiller Vioxx. Selna, one of six federal judges in Orange County, will hear important pretrial motions for all cases, eventually leading to trial, settlement or dismissal of the lawsuits. Selna declined comment through a spokeswoman. Attorney Mark Robinson Jr., who practices in Orange County and is representing Toyota owners in some of the cases, said Selna has broad experience with more than 28 years as a practicing lawyer before his appointment to the federal bench. “He’s a very skilled judge. He will do everything appropriately,” said Robinson, who is best known for negotiating a $128 million settlement in a case involving exploding fuel tanks on the Ford Pinto. Toyota, in a statement, said it is “pleased with the decision and the location” of the consolidation of lawsuits. More than 130 lawsuits are potential class-action cases filed by Toyota owners who claim their vehicles plummeted in value after the recalls. A key early decision in those cases is whether to establish millions of similar Toyota owners as a single class, meaning all would be affected by a potential damages award or settlement. At least 100 other lawsuits seek damages from Toyota for injuries or deaths attributed to sudden acceleration, which the U.S. Judicial Panel on Multidistrict Litigation determined should also be part of the centralized case. “The liability discovery in all the cases will certainly overlap,” the panel said in its ruling. The lawsuits began appearing last fall as Toyota initiated the first of a series of recalls eventually involving about 8 million vehicles – including about 6 million in the U.S. – over acceleration problems in several models and brake issues with the popular Prius hybrid. The National Highway Traffic Safety Administration, which has linked 52 deaths to acceleration problems, this week imposed a record $16.4 million fine on the Japanese automaker for failing to disclose its safety problems to the government in a timely manner. NHTSA said in a letter to Toyota released Friday that it is considering a second civil penalty against the automaker because the accelerator pedals at issue “exhibit two separate defects that may require two separate remedies,” NHTSA chief counsel O. Kevin Vincent wrote. Many of the lawsuits blame the acceleration problems on glitches in Toyota’s electronic throttle controls, which the company has repeatedly denied. The company traces the issue to sometimes-sticky acceleration pedals and accelerators that can become jammed in floor mats. “The result of these decisions by Toyota was to expose millions of American drivers, passengers and pedestrians to the dangers of driving with a sticking accelerator pedal,” Vincent wrote. Toyota has until April 19 to accept or contest the original $16.4 million fine. Selna, the judge chosen to preside over the consolidated lawsuits, was previously a partner at a Los Angeles law firm that focused on antitrust litigation. In one of his better-known cases, last May Selna ruled that a public high school history teacher violated the First Amendment when he called creationism “superstitious nonsense” during a classroom lecture. The lawsuit was filed by a student in 2007 who claimed teacher James Corbett violated the amendment’s establishment clause by making repeated comments in class that were hostile to Christian beliefs. Toyota favored Los Angeles as the location for consolidation of the lawsuits, near its U.S. headquarters in Torrance, Calif., and a relatively easy trip from Japan. Other attorneys suing Toyota pushed for Kentucky – where Toyota has a large plant and engineering facility – as well as Louisiana, New Jersey, Ohio, South Carolina, New York and elsewhere. Howard, the plaintiffs’ attorney and Northeastern University law professor, said the California location makes sense and also presents some obstacles. “There are a lot of efficiencies because the corporate headquarters is there. It’s easy to get flights to Japan,” Howard said. “But there are some challenges, because a lot of the evidence is nationwide and the cases are nationwide.” _____ Associated Press writers Ken Thomas in Washington and Greg Risling in Los Angeles contributed to this story.

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Toyota Lengthens Free Maintenance, Extends No-Interest Offer After Recalls

April 6, 2010

By Alan Ohnsman April 6 (Bloomberg) — Toyota Motor Corp. is extending no- interest loans and discount leases for another month on some U.S. models and expanding an offer of two years of free maintenance to hold onto sales gains after record recalls. The incentives include zero-percent financing for as long as five years on 2010 Camry, Avalon, Corolla and Matrix cars; Highlander and RAV4 sport-utility vehicles; and Tundra pickups. All consumers are now eligible for the service plan, not just repeat customers. The deals run until May 3. “We’re extending the two-year complimentary maintenance program, that proved to be very popular with existing Toyota owners in March, to all buyers in April,” Bob Carter , group vice president and general manager of Toyota brand sales, said today in a statement. Toyota is trying to build on momentum in U.S. sales in March, when discount loans and leases helped the world’s biggest automaker boost deliveries 41 percent after two monthly declines. The company has recalled more than 8 million vehicles to adjust brakes and fix flaws linked to sudden acceleration. U.S. Transportation Secretary Ray LaHood said yesterday the National Highway Traffic Safety Administration will seek to fine Toyota a record civil penalty of $16.4 million, the maximum allowed. The Toyota City, Japan-based automaker “knowingly hid a dangerous defect” related to accelerator pedals that can stick, LaHood said. All standard service will be covered for two years under the new maintenance plan, Sona Iliffe-Moon , a spokeswoman, said in an e-mail. Customers also can choose a $3,000 rebate on Avalon rather than the loan, according to Toyota’s Web site . Toyota initially announced incentives on March 2, and those offers expired yesterday. Toyota’s U.S. sales unit is based in Torrance, California. The company’s American depositary receipts rose 4 cents to $81.30 at 12:03 p.m. in New York Stock Exchange composite trading. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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LaHood Says Toyota `Knowingly Hid’ Pedal Defect in Violation of U.S. Law

April 5, 2010

By Angela Greiling Keane and Alan Ohnsman April 6 (Bloomberg) — Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world’s largest automaker of breaking the law. Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended yesterday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals. The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the Toyota City, Japan- based company may be recovering from recalls of more than 8 million vehicles worldwide. The Transportation Department’s action showed “safety matters and they’re going to be tough as nails,” Joan Claybrook , a former head of the National Highway Traffic Safety Administration , said in an interview. “That’s very appropriate. They caught Toyota red-handed.” The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement yesterday. Companies have five business days to report safety defects, the agency said. Toyota fell 45 yen, or 1.2 percent, to 3,770 yen at 10:36 a.m. in Tokyo Stock Exchange trading. The shares have declined 2.8 percent this year. ‘We Now Have Proof’ “We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” Toyota hadn’t received NHTSA’s letter on the fine, according to an e-mailed statement yesterday from the company’s North American sales unit. “We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine. ‘They Screwed Up’ LaHood has increasingly faulted Toyota’s response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they’re supposed to do.” Toyota in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals. The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group. NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29, the day it told distributors in 31 European countries and Canada to make repairs to resolve sticky-pedal complaints. “NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum , an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won’t contest the fine, “since they’ve essentially said they screwed up.” ‘Firepower to Attorneys’ At a February congressional hearing, Toyota’s U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals. Toyota has two weeks to accept or contest the proposed fine, Olivia Alair , a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn’t reached, “it would go to court,” she said. “One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim , an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.” NHTSA’s largest civil penalty was $1 million against General Motors Corp. in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles. ‘Free Publicity’ “Both industry and government failed the test of putting the safety of America’s drivers first” in the Toyota recalls, Representative Darrell Issa , the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement yesterday. The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier , who has filed class-action and individual lawsuits related to the claims. “Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn’t be introduced in court because “it’s not like a criminal finding in that there was due process,” he said. Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net .

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Toyota `Knowingly Hid’ Pedal Defect in Violation of U.S. Law, LaHood Says

April 5, 2010

By Angela Greiling Keane and Alan Ohnsman April 6 (Bloomberg) — Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world’s largest automaker of breaking the law. Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended yesterday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals. The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the Toyota City, Japan- based company may be recovering from recalls of more than 8 million vehicles worldwide. The Transportation Department’s action showed “safety matters and they’re going to be tough as nails,” Joan Claybrook , a former head of the National Highway Traffic Safety Administration , said in an interview. “That’s very appropriate. They caught Toyota red-handed.” The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement yesterday. Companies have five business days to report safety defects, the agency said. Toyota fell 45 yen, or 1.2 percent, to 3,770 yen at 10:36 a.m. in Tokyo Stock Exchange trading. The shares have declined 2.8 percent this year. ‘We Now Have Proof’ “We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” Toyota hadn’t received NHTSA’s letter on the fine, according to an e-mailed statement yesterday from the company’s North American sales unit. “We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine. ‘They Screwed Up’ LaHood has increasingly faulted Toyota’s response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they’re supposed to do.” Toyota in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals. The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group. NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29, the day it told distributors in 31 European countries and Canada to make repairs to resolve sticky-pedal complaints. “NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum , an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won’t contest the fine, “since they’ve essentially said they screwed up.” ‘Firepower to Attorneys’ At a February congressional hearing, Toyota’s U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals. Toyota has two weeks to accept or contest the proposed fine, Olivia Alair , a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn’t reached, “it would go to court,” she said. “One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim , an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.” NHTSA’s largest civil penalty was $1 million against General Motors Corp. in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles. ‘Free Publicity’ “Both industry and government failed the test of putting the safety of America’s drivers first” in the Toyota recalls, Representative Darrell Issa , the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement yesterday. The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier , who has filed class-action and individual lawsuits related to the claims. “Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn’t be introduced in court because “it’s not like a criminal finding in that there was due process,” he said. Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net .

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Toyota Hid Pedal Defect, Broke U.S. Law, LaHood Says

April 5, 2010

By Angela Greiling Keane and Alan Ohnsman April 6 (Bloomberg) — Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world’s largest automaker of breaking the law. Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended yesterday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals. The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of more than 8 million vehicles worldwide. The Transportation Department’s action showed “safety matters and they’re going to be tough as nails,” Joan Claybrook , a former head of the National Highway Traffic Safety Administration , said in an interview. “That’s very appropriate. They caught Toyota red-handed.” The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement yesterday. Companies have five business days to report safety defects, the agency said. “We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” Multiple Fines Possible The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group. Toyota hadn’t received NHTSA’s letter on the fine, according to an e-mailed statement yesterday from the company’s North American sales unit. “We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine. LaHood has increasingly faulted Toyota’s response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they’re supposed to do.” Toyota, based in Toyota City, Japan, in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals. NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29, the day it told distributors in 31 European countries and Canada to make repairs to resolve sticky-pedal complaints. ‘They Screwed Up’ “NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum , an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won’t contest the fine, “since they’ve essentially said they screwed up.” At a February congressional hearing, Toyota’s U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals. Toyota has two weeks to accept or contest the proposed fine, Olivia Alair , a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn’t reached, “it would go to court,” she said. ‘Firepower to Attorneys’ “One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim , an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.” NHTSA’s largest civil penalty was $1 million against General Motors Corp. in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles. “Both industry and government failed the test of putting the safety of America’s drivers first” in the Toyota recalls, Representative Darrell Issa , the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement yesterday. The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier , who has filed class-action and individual lawsuits related to the claims. ‘Free Publicity’ “Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn’t be introduced in court because “it’s not like a criminal finding in that there was due process,” he said. Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said. Toyota’s American depositary receipts, each equal to two ordinary shares, rose 77 cents to $81.26 at 4:15 p.m. yesterday in New York Stock Exchange composite trading. They have lost 3.4 percent this year before today compared with the benchmark NYSE Composite Index, which has increased 5.8 percent. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net .

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Toyota Could Be Fined $16 Million For Slow Action On Recall: Transportation Department

April 5, 2010

WASHINGTON — The government accused Toyota of hiding a “dangerous defect” and proposed a record $16.4 million fine on Monday for failing to quickly alert regulators to safety problems in gas pedals on popular models such as the Camry and Corolla. The proposed fine, announced Monday by Transportation Secretary Ray LaHood, is the most the government could levy for the sticking gas pedals that have led Toyota to recall millions of vehicles. There could be further penalties under continuing federal investigations. The Japanese automaker faces private lawsuits seeking many millions more. Toyota Motor Corp. has recalled more than 6 million vehicles in the U.S., and more than 8 million worldwide, because of acceleration problems in multiple models and braking issues in the Prius hybrid. Documents obtained from the automaker show that Toyota knew of the problem with the sticking gas pedals in late September but did not issue a recall until late January, LaHood said. The sticking pedals involved 2.3 million vehicles. “We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in a statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” For those reasons, LaHood said, the government is seeking a fine of $16.375 million, the maximum penalty possible. That dwarfs the previous record: In 2004, General Motors paid a $1 million fine for responding too slowly on a recall of nearly 600,000 vehicles over windshield wiper failure. How Toyota decides to respond to the fines could pose a dilemma for the automaker. The company faces 138 potential class-action lawsuits over falling vehicle values and nearly 100 personal injury and wrongful death cases in federal courts nationwide. If Toyota pays the fines, the admission could hurt it in courtrooms. But battling the government over the penalties could undermine the automaker’s attempts to move on from the recalls. “It may be easier to pay it than to let this keep dragging on and drawing more attention to themselves,” said Jessica Caldwell, a senior analyst with auto research site Edmunds.com. Toyota did not say whether it would pay the fine. The automaker has two weeks to accept or contest the penalty. “While we have not yet received their letter, we understand that NHTSA has taken a position on this recall,” the company said in a statement, a reference to the National Highway Transportation Safety Administration. “We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance.” The company noted that it has appointed a new chief quality officer for North America and has given its North American office a greater role in making safety-related decisions. Under federal law, automakers must notify NHTSA within five days of determining that a safety defect exists and promptly conduct a recall. The Transportation Department said the fine it is seeking is specifically tied to the sticking pedal defect and Toyota could face additional penalties if warranted by investigations. The government has linked 52 deaths to crashes allegedly caused by accelerator problems in Toyotas. The recalls have led to congressional hearings, a criminal investigation by federal prosecutors, dozens of lawsuits and an intense review by the Transportation Department. Toyota has attributed the problem to sticking gas pedals and accelerators that can become jammed in floor mats. Dealers have fixed 1.7 million vehicles under recall so far. The sticky accelerator pedal recall involves the 2007-2010 Camry, 2009-10 Corolla, 2009-10 Matrix, 2005-10 Avalon, the 2010 Highlander and 2007-10 Tundra. Consumer groups have suggested electronics could be the culprit, and dozens of Toyota owners who had their cars fixed in the recall have complained of more problems with their vehicles surging forward unexpectedly. Toyota says it has found no evidence of an electrical problem. Reviews of some recent high-profile crashes in San Diego and suburban New York have failed to find either mechanical or electronic problems. In the New York case, a police investigation found that the driver, not the car, was to blame. Following the recalls, the Transportation Department demanded in February that Toyota turn over documents detailing when and how it learned of the problems with sticking accelerators and with floor mats trapping gas pedals. NHTSA said documents provided by Toyota showed the automaker had known about the sticky pedal defect since at least Sept. 29, 2009, when it issued repair procedures to distributors in 31 European countries and Canada to address complaints of sticking pedals, sudden increases in engine RPM and sudden vehicle acceleration. The government said the documents also show that Toyota knew that owners in the United States had experienced the same problems. Toyota has provided NHTSA with more than 70,000 pages of documents during the investigation.

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