toyota

March Car Sales: Sweet Deals Make For A Buyer’s Market For Auto Shoppers

April 2, 2010

DETROIT — It’s a buyer’s market for car shoppers, with good deals expected to last at least another month as automakers continue to match Toyota discounts that lured thousands of buyers in March. Seeking to repair the damage from a series of safety recalls, Toyota Motor Corp. offered unprecedented incentives last month, including low-interest financing and free maintenance for returning customers. The deals worked so well that Toyota’s U.S. sales jumped 41 percent and the automaker sold just 1,683 fewer cars than General Motors Co., the closest it has ever come to overtaking GM in monthly sales, according to auto research site Edmunds.com. GM and other automakers matched the deals, boosting the industry’s sales by 24 percent compared to the same month a year earlier, according to figures released Thursday and compiled by AutoData Corp. Incentives were the main factor for Jason Lopez, 26, a Toys R Us manager from Brooklyn, N.Y., who bought a 2010 Camry last month after his mother told him about the deals. Lopez spent about an hour researching which cars were affected by the recalls but he trusted Toyota’s reputation. “I know it’s safe,” he said. Lopez paid $20,800 for the car, which was listed at $23,115. Industry incentives averaged $2,742 per vehicle last month, according to Edmunds.com. That was down $423 from record-high levels a year earlier, when the economy was faltering and automakers saw one of the worst sales months in nearly 30 years. Incentives this March rose $100 from February. The big change last month was Toyota, which normally limits sales promotions but resorted to them after recalls of more than 8 million vehicles worldwide for problems involving brakes and accelerator pedals. Toyota’s incentives hit $2,256 per vehicle, their highest level ever, up nearly $700 from the year before. Toyota’s incentives averaged $1,700 before the crisis began last fall, said Jesse Toprak of auto pricing site TrueCar.com. Toyota is offering current owners interest-free financing for 60 months on the popular Camry sedan. On a base model with automatic transmission that costs $21,395, the financing would save a buyer $3,722 compared with the average new-car interest rate of 6.5 percent. Leasing may be April’s incentive battleground. Honda recently added a $250 per month lease on an Accord with nothing down. Toyota is offering $169 per month on Camrys for three years with $1,999 down. Toprak said the sweet lease deals are likely to continue for many months because automakers have access to inexpensive money. High demand for used cars also has driven up resale values, so automakers can afford better deals. Toyota’s incentives are scheduled to run through Monday, but Don Esmond, senior vice president of automotive operations at Toyota Motor Sales USA, said that some are likely to extend beyond that date. Toyota executives will evaluate market conditions over the weekend and decide. “We needed a little bit of a kickstart to get the market in our direction,” he said. “We’re not going to walk away from our customers.” Toyota also continues to face lingering questions about its safety record. This week, the federal government announced an investigation to see whether electronics caused sudden acceleration problems in Toyotas and other cars. Honda Motor Co. has already matched Toyota’s incentives through May 3, so automakers will be forced to compete through April. And new deals are in the works. Ford Motor Co. plans to announce a new program next week that will offer cash to switch to a Ford. Eventually, however, incentives will drop because automakers are limiting production more than they used to so they don’t have large inventories to get rid of, according to Jessica Caldwell, an industry analyst for Edmunds.com. That could lead to lower sales because consumers have been trained to wait for deals. The flurry of incentives has made it tough for automakers to gauge the strength of the industry’s recovery. Sales rose 15.5 percent in the first three months of this year, but some of that was due to heavy fleet sales, which are less profitable for automakers. Ford’s chief economist, Ellen Hughes-Cromwick, said the industry is on track for sales of 11.5 million new vehicles this year, one million more than 2009, but far below the 17 million sold five years ago. Toyota’s recovery is tenuous, too. James Bell, an analyst with auto pricing company Kelley Blue Book, said Toyota can successfully attract bargain-hunters and loyalists. But other buyers who might have considered Toyota are now looking at a variety of brands. “The elephant in the room for Toyota is what happens after this incentive ends,” he said. GM reported 21 percent jump in new vehicles sales for the month. Without the four brands GM is shedding – Pontiac, Saab, Hummer and Saturn – Toyota would have beaten GM for the month. Ford’s sales climbed nearly 40 percent on strong demand for the Fusion and Taurus sedans, while Honda’s rose 23 percent. GM, however, recaptured the top spot from Ford, which outsold GM in February. Sales at Subaru shot up 46 percent, while Nissan Motor Co.’s sales rose 43 percent. Hyundai Motor Co.’s sales rose 15 percent. Chrysler Group LLC, which has few new products, continued to struggle, with sales down 8 percent. ___ AP Auto Writer Tom Krisher in Detroit and Business Writer Emily Fredrix in Queens, N.Y., contributed to this report.

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Toyota U.S. Sales Rebound on Discounts; Asia Carmakers Win 49% of Market

April 1, 2010

By Alan Ohnsman April 2 (Bloomberg) — Toyota Motor Corp. ’s incentive push after record recalls helped the automaker post a March U.S. sales increase following two months of declines, while Nissan Motor Co. led gains among the largest Asia-based brands. Sales surged 41 percent from a year earlier for Toyota, which offered no-interest loans and discount leases on most of its namesake brand’s models, and 43 percent for Yokohama, Japan- based Nissan. Honda Motor Co. reported a 22 percent increase and Hyundai Motor Co. said it had a 15 percent gain. “Toyota’s numbers this month show that consumers do respond to incentives, especially if they perceive them as unusual,” said Jesse Toprak , vice president of industry trends at forecaster TrueCar.com in Santa Monica, California. “The problem for Toyota is how long can they keep these up and how will consumers respond in April?” The effort by the world’s largest automaker spurred an industrywide incentive surge, which along with improving consumer confidence, brought buyers back to showrooms. Toyota added its discounts, valued by Edmunds.com at $2,256 a vehicle in March, to counter global recalls of more than 8 million vehicles. Japanese and South Korean automakers boosted combined sales 29 percent to 522,775, according to Autodata Corp. Their market share rose to 49 percent from 47.1 percent a year earlier, the Woodcliff Lake, New Jersey-based research firm said. March “will be the highest ever for average combined incentive spending for Japanese automakers, including a record- high month for Toyota,” said Jessica Caldwell , director of industry analysis for Edmunds.com. Incentive Spending Spending industrywide rose to an average of $2,742 a vehicle, from $2,642 in February, according to Santa Monica- based Edmunds.com. Japanese automakers averaged $2,058, up $224 from a month earlier. Industrywide March sales rose 24 percent to 1.07 million, Autodata said. Ford Motor Co. led U.S.-based automakers with a 40 percent jump, while General Motors Co.’s sales increased 21 percent and Chrysler Group LLC’s fell 8.3 percent. Toyota on March 2 began offering incentives such as subsidized leases after the Toyota City, Japan-based automaker’s recalls to fix defects linked to unintended acceleration and to adjust brakes. “Our marketing programs clearly had an impact,” Don Esmond , Toyota’s U.S. senior vice president, said in a conference call yesterday. If customers were concerned about the safety of its vehicles, incentives “wouldn’t matter,” he said. Sales jumped 41 percent for the Toyota brand and 42 percent for the Lexus luxury division. The March gains helped the automaker overcome sales declines the previous two months and post a 7.2 percent increase for the first quarter. Toyota’s market share for March was 17.5 percent, up 2 percentage points from a year earlier, according to Autodata. Honda Leases Honda said it sold 108,262 vehicles in March, rising from 88,379. The Tokyo-based company last month for the first time offered discount leases on all Honda-brand vehicles. John Mendel , Honda’s U.S. executive vice president, said in an interview yesterday at the New York International Auto Show that the lease offer, with no down payment, deposit or payment due for a month, wasn’t more expensive than a typical promotion. “It’s just a math problem,” he said. “Instead of charging $199 a month on an Accord, for example, we forgo the down payment and charge $250 a month. It pretty much works out the same.” Honda’s U.S. market share last month was 10.2 percent, a drop of 0.1 point from a year earlier, according to Autodata. Outselling Chrysler Nissan outsold Chrysler for the second time this year, with an increase to 95,468 vehicles from 66,634. The gains were led by the Altima sedan, Sentra small car and Rogue crossover. “We didn’t fundamentally didn’t change our incentives,” Brian Carolin , senior vice president of the company’s U.S. operations, said in an interview in New York. “We didn’t react to the ‘Toyota lift.’” Nissan’s March market share climbed to 9 percent, from 7.8 percent, according to Autodata. Hyundai reported a sales increase to 47,002 vehicles from 40,721 a year earlier. The Seoul-based company yesterday in New York showed off the U.S. version of its Equus luxury sedan that will cost as much as $60,000. “Hyundai didn’t have as big a percentage increase as some of its competitors as a result of what it did last year,” said Toprak. “It was growing while the market was shrinking.” The company’s market share fell 0.3 point to 4.9 percent in March as its sales rose slower than the industry’s. Kia Motors Corp., Hyundai’s affiliate, said sales rose 23 percent. Fuji Heavy Industries Ltd.’s Subaru, a Toyota affiliate, reported a 46 percent increase for the month. Among other Asia-based brands, Mazda Motor Corp.’s sales grew 5.5 percent and Mitsubishi Motors Corp. reported an 18 percent increase from a year ago. Japan’s Suzuki Motor Corp.’s sales fell 8.3 percent. Automakers were buoyed in March by rising consumer confidence and spring weather after February blizzards in the U.S. Northeast. The Conference Board’s confidence index rose to 52.5 from 46.4 a month earlier as gloom over job prospects began to lift. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Toyota U.S. Sales Rebound on Discounts; Asia Carmakers Win 49% of Market

April 1, 2010

By Alan Ohnsman April 2 (Bloomberg) — Toyota Motor Corp. ’s incentive push after record recalls helped the automaker post a March U.S. sales increase following two months of declines, while Nissan Motor Co. led gains among the largest Asia-based brands. Sales surged 41 percent from a year earlier for Toyota, which offered no-interest loans and discount leases on most of its namesake brand’s models, and 43 percent for Yokohama, Japan- based Nissan. Honda Motor Co. reported a 22 percent increase and Hyundai Motor Co. said it had a 15 percent gain. “Toyota’s numbers this month show that consumers do respond to incentives, especially if they perceive them as unusual,” said Jesse Toprak , vice president of industry trends at forecaster TrueCar.com in Santa Monica, California. “The problem for Toyota is how long can they keep these up and how will consumers respond in April?” The effort by the world’s largest automaker spurred an industrywide incentive surge, which along with improving consumer confidence, brought buyers back to showrooms. Toyota added its discounts, valued by Edmunds.com at $2,256 a vehicle in March, to counter global recalls of more than 8 million vehicles. Japanese and South Korean automakers boosted combined sales 29 percent to 522,775, according to Autodata Corp. Their market share rose to 49 percent from 47.1 percent a year earlier, the Woodcliff Lake, New Jersey-based research firm said. March “will be the highest ever for average combined incentive spending for Japanese automakers, including a record- high month for Toyota,” said Jessica Caldwell , director of industry analysis for Edmunds.com. Incentive Spending Spending industrywide rose to an average of $2,742 a vehicle, from $2,642 in February, according to Santa Monica- based Edmunds.com. Japanese automakers averaged $2,058, up $224 from a month earlier. Industrywide March sales rose 24 percent to 1.07 million, Autodata said. Ford Motor Co. led U.S.-based automakers with a 40 percent jump, while General Motors Co.’s sales increased 21 percent and Chrysler Group LLC’s fell 8.3 percent. Toyota on March 2 began offering incentives such as subsidized leases after the Toyota City, Japan-based automaker’s recalls to fix defects linked to unintended acceleration and to adjust brakes. “Our marketing programs clearly had an impact,” Don Esmond , Toyota’s U.S. senior vice president, said in a conference call yesterday. If customers were concerned about the safety of its vehicles, incentives “wouldn’t matter,” he said. Sales jumped 41 percent for the Toyota brand and 42 percent for the Lexus luxury division. The March gains helped the automaker overcome sales declines the previous two months and post a 7.2 percent increase for the first quarter. Toyota’s market share for March was 17.5 percent, up 2 percentage points from a year earlier, according to Autodata. Honda Leases Honda said it sold 108,262 vehicles in March, rising from 88,379. The Tokyo-based company last month for the first time offered discount leases on all Honda-brand vehicles. John Mendel , Honda’s U.S. executive vice president, said in an interview yesterday at the New York International Auto Show that the lease offer, with no down payment, deposit or payment due for a month, wasn’t more expensive than a typical promotion. “It’s just a math problem,” he said. “Instead of charging $199 a month on an Accord, for example, we forgo the down payment and charge $250 a month. It pretty much works out the same.” Honda’s U.S. market share last month was 10.2 percent, a drop of 0.1 point from a year earlier, according to Autodata. Outselling Chrysler Nissan outsold Chrysler for the second time this year, with an increase to 95,468 vehicles from 66,634. The gains were led by the Altima sedan, Sentra small car and Rogue crossover. “We didn’t fundamentally didn’t change our incentives,” Brian Carolin , senior vice president of the company’s U.S. operations, said in an interview in New York. “We didn’t react to the ‘Toyota lift.’” Nissan’s March market share climbed to 9 percent, from 7.8 percent, according to Autodata. Hyundai reported a sales increase to 47,002 vehicles from 40,721 a year earlier. The Seoul-based company yesterday in New York showed off the U.S. version of its Equus luxury sedan that will cost as much as $60,000. “Hyundai didn’t have as big a percentage increase as some of its competitors as a result of what it did last year,” said Toprak. “It was growing while the market was shrinking.” The company’s market share fell 0.3 point to 4.9 percent in March as its sales rose slower than the industry’s. Kia Motors Corp., Hyundai’s affiliate, said sales rose 23 percent. Fuji Heavy Industries Ltd.’s Subaru, a Toyota affiliate, reported a 46 percent increase for the month. Among other Asia-based brands, Mazda Motor Corp.’s sales grew 5.5 percent and Mitsubishi Motors Corp. reported an 18 percent increase from a year ago. Japan’s Suzuki Motor Corp.’s sales fell 8.3 percent. Automakers were buoyed in March by rising consumer confidence and spring weather after February blizzards in the U.S. Northeast. The Conference Board’s confidence index rose to 52.5 from 46.4 a month earlier as gloom over job prospects began to lift. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Fremont Plant Closes: California’s Last Auto Plant Shuts Its Doors

April 1, 2010

FREMONT, Calif. — California’s sole auto plant shut down Thursday as the last car rolled off the assembly line and thousands of now unemployed workers walked out the doors, some crying. A red Toyota Corolla was the last of nearly 8 million vehicles that have moved through production at New United Motor Manufacturing Inc., known as Nummi, and a throng of workers accompanied it on the final leg of the line. “I saw a whole lotta men crying in there when things started going quiet and we said our goodbyes. It made me choke up,” said David Guerra, who has worked at Nummi for 25 years – as long as the plant’s been open. He also worked at the site for 14 1/2 years before that, when it was a General Motors Co. plant. The Nummi plant, established in 1984 as a joint venture between GM and Toyota Motors Corp., employed 4,700 workers. GM made the Pontiac Vibe there but decided to withdraw from the alliance last year after filing for bankruptcy protection; the Detroit automaker is now liquidating its stake in the factory. Toyota made the Corolla sedan and Tacoma pickup at the plant but said in August that without GM, it could not sustain the factory and would halt production April 1. Tooling used to make Tacomas will go to the automaker’s plant in San Antonio, Texas. There have been no announcements of what will become of the sprawling property that covers more than half a square mile near the southern tip of San Francisco Bay. A statement from Nummi said some employees will continue working at the site over the next few months to sell off equipment, clean up and provide security. The plant also will try to find a buyer and working with city and state officials to identify the best new use for the site. Many of the employees were members of the United Auto Workers, and most are due to receive a minimum payout of $21,175 each, adjusted for years of service and other factors. The UAW represents the Nummi workers because of its history with GM. The union doesn’t represent any other Toyota workers in the U.S. For the past several weeks, state and local officials have appealed to Toyota to keep the factory open – both in an effort to save jobs and as a way to raise the Japanese automaker’s standing following a string of massive safety recalls. The pleas didn’t stop, even as workers trickled out of the factory and into job centers across the street. A group of clergy from CLUE – Clergy and Laity United for Economic Justice – held a service outside the plant Thursday. The Rev. Carol Been said the group was sending a letter to Toyota asking the carmaker to reopen the plant. “We want to bring the moral authority of religious leaders to call them back to their way, a better way, the Toyota way,” she said. “We think the closure is penny-wise and pound foolish.” Job centers were set up nearby to provide counseling. Workers also filled out forms to collect benefits. State officials also were pursuing federal grants to help those impacted by the closure. A recent report prepared for a commission set up by State Treasurer Bill Lockyer to study the issue said about 25,000 people, including parts suppliers, could lose their jobs as a result of the plant closing. Vonda Jones, 44, of Brentwood, who worked on the Tacomas that stopped rolling off the assembly line last week, said adjusting to her new reality has been difficult. “My alarm went off last Monday and I didn’t know what to do. It was like, ‘Wow, it’s really over,’” she said.

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NASA to join investigations in Toyota’s recall

March 30, 2010

NASA to join investigations in Toyota’s recall

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Toyota Recall: NASA To Investigate Acceleration Problems

March 29, 2010

WASHINGTON — NASA and the National Academy of Sciences are joining the government’s effort to figure out what caused the sudden acceleration problems that led to Toyota’s massive recalls. NASA scientists with expertise in electronics will help the National Highway Traffic Safety Administration study potential electronic ties to unintended acceleration in Toyotas. NASA’s knowledge of electronics, computer hardware and software and hazard analysis will ensure a comprehensive review, Transportation Secretary Ray LaHood said Monday. In a separate study, the National Academy of Sciences will examine unwanted acceleration and electronic vehicle controls in cars from around the auto industry, LaHood said. The National Academy is an independent organization chartered by Congress. The academy study, expected to take 15 months, will review acceleration problems and recommend how the government can ensure the safety of vehicle electronic control systems. “We believe their outside expertise, fresh eyes and fresh research perhaps can tell us if electronics have played a role in these accelerations,” LaHood said. Toyota has recalled more than 8 million vehicles worldwide, including 6 million in the United States. Toyota said in a statement it was “confident in our vehicles and in our electronics” and would cooperate with the government review. “These studies are just the kind of science-based examination we have been calling for. Bringing some sunshine to this subject is bound to separate fact from fiction, which will be good for Toyota, the industry and the motoring public,” the company said. LaHood has told Congress the department will dig deeply into what has caused hundreds of complaints of unwanted acceleration in Toyotas. LaHood said he has asked the Transportation Department inspector general to review whether NHTSA’s Office of Defects Investigation has what it needs to identify and address safety defects. Some lawmakers have criticized NHTSA for failing to investigate Toyota complaints earlier and more thoroughly. “Carmakers have entered the electronics era, but NHTSA seems stuck in a mechanical mindset,” House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., said last month. “We need to make sure the federal safety agency has the tools and resources it needs to ensure the safety of the electronic controls and on-board computers that run today’s automobiles.” Toyota has attributed the problem to sticking gas pedals and accelerators that can become jammed in floor mats, and has cited no evidence of an electrical problem. The company has noted that other manufacturers also have had reports of cars surging forward. Consumer groups contend 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. Regulators have linked 52 deaths in Toyotas to crashes allegedly caused by accelerator problems. Reviews of some recent high-profile crashes have failed to find a mechanical or electronic problem. A police investigation of a March 9 accident in suburban New York involving a 2005 Prius found that the driver, not the car, was to blame. Tests following a March 8 incident in San Diego in which a driver reported the gas pedal on his 2008 Prius got stuck, leading to a 94 mph ride on a freeway, found that the hybrid’s gas pedal, backup safety system and electronics were working fine. NHTSA’s review of Toyota’s electronic throttle control systems is expected to be completed by late summer. The safety agency, with NASA’s help, is looking at electronic systems used in Toyotas and whether they have flaws that would warrant a defect investigation. The National Academy of Sciences’ National Research Council will review industry and government efforts to identify possible sources of unintended acceleration, including electronic vehicle controls, human error, mechanical failure and interference with accelerator systems. The experts will look at software, computer hardware design, electromagnetic compatibility and electromagnetic interference. They will make recommendations to NHTSA in mid-2011 on how the government agency’s rulemaking, research and defect investigations could help ensure the safety of vehicle electronic control systems. The two studies together will cost about $3 million, including the expense of buying cars that have allegedly had unintended acceleration. Both studies will be peer reviewed by scientific experts, the Transportation Department said. ____ National Highway Traffic Safety Administration: http://www.nhtsa.dot.gov/ National Academy of Sciences: http://www.nas.edu/

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Video: Toyota, Lawsuit Lawyers Ask Judges for Consolidation: Video

March 25, 2010

March 26 (Bloomberg) — Bloomberg’s Lizzie O’Leary reports on requests from Toyota Motor Corp. and lawyers handling consumer and personal injury lawsuits against the company related to sudden acceleration for a panel of judges to consolidate all federal claims in one court. Bloomberg’s Alan Ohnsman reports on Toyota’s appointment of the head of its largest North American plant as its first vehicle-quality chief for the region. Bloomberg’s Susan Li also speaks. (Source: Bloomberg)

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Toyota Crash Warning Was Sent To Dealers In 2007

March 25, 2010

DETROIT (Reuters) – When Toyota Motor Corp concluded that seemingly harmless floormats posed a danger in all of its cars and trucks, the automaker sent a stark warning intended to prevent crashes.

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Toyota Asks ABC News to Retract `Irresponsible’ Sudden-Acceleration Report

March 18, 2010

By Alan Ohnsman and Jeff Plungis March 19 (Bloomberg) — Toyota Motor Corp. asked U.S. broadcaster ABC News to retract and apologize for an “irresponsible” report it aired last month suggesting electronics as the cause of sudden acceleration in its cars. The world’s largest automaker is working to repair its reputation after recalling 8 million vehicles worldwide to fix defects linked to bursts of speed. The National Highway Traffic Safety Administration said yesterday that evidence from a Toyota Prius involved in a Harrison, New York, crash tied to unintended acceleration found no sign the car’s brakes had been applied. Toyota has said accelerators that stick or snag on floor mats are at fault in sudden acceleration, with no evidence of failures in the electronic-control systems of its cars and trucks. An ABC News report on Feb. 22 challenged that assumption, and the network in a response to Toyota defended its right to air the report. The network owned by Walt Disney Co. “relentlessly promoted” a view that electronics in Toyota and Lexus models were a cause of sudden-acceleration complaints, without providing “credible scientific evidence,” Christopher Reynolds , Toyota’s U.S. general counsel, said in a March 11 letter to ABC News President David Westin . “Toyota deserves a public retraction and formal apology from ABC News for your irresponsible broadcast,” Reynolds said in the four-page letter, reported yesterday by the Web site gawker.com. ‘Legitimate, Newsworthy’ ABC News’s report on the design of Toyota electronic throttle controls was “legitimate and newsworthy,” John Zucker , ABC Inc. senior vice president of law & regulation, said yesterday in a three-page letter to Reynolds. Toyota was contacted on Feb. 22, before the broadcast for a response to be included in the report, and didn’t respond, Zucker said. ABC News had included a fabricated video image of a car tachometer in the broadcast “to create the false and misleading impression with viewers of a dangerous and uncontrolled acceleration,” Reynolds wrote. The original video image was deemed difficult for viewers to observe because of the car’s motion, Zucker responded. Using a different shot was an “editorial error,” and a re-edited video has been posted to the abcnews.com Web site, he said. “The larger point, however, is that the use of the video shot was not intended to, and did not, materially mislead the public,” Zucker said. “ABC News intends to continue to cover the issues surrounding reports of unintended acceleration by Toyota vehicles.” Harrison Accident Toyota City, Japan-based Toyota faces more than 100 class- action and individual lawsuits from customers related to vehicle defects. Toyota’s American depositary receipts, each equal to two ordinary shares, fell 49 cents to $78.81 yesterday in New York Stock Exchange composite trading. The shares have lost $25.2 billion in market value since Toyota announced a recall on Jan. 21. In the suburban New York crash on March 9, a 2005 Prius sped out of control before hitting a stone wall. The Prius’s diagnostic recorder indicated the car’s accelerator was engaged, NHTSA said in the e-mailed statement. “Information retrieved from the vehicle’s onboard computer systems indicated there was no application of the brakes and the throttle was fully open,” the Washington-based auto safety agency said in the statement. “Any release of information regarding an investigation that’s not complete or without consulting local investigating authorities is irresponsible,” said Captain Anthony Marraccini, head of the Harrison police department. Gilbert’s Test The information mentioned by NHTSA is “just one snapshot,” Marraccini said. Harrison police are still meeting with Toyota to analyze the data and is using the Rockville, Maryland, office of RTI International, a forensic engineering company, to help assess the crash, he said. Toyota told reporters March 8 that Southern Illinois University professor David Gilbert ’s test, featured in the ABC broadcast, altered a circuit in a way that couldn’t occur in everyday driving, so it couldn’t be used as evidence of sudden acceleration. Toyota Motor Sales vice president of corporate communications, Mike Michels , said at the time that the company wasn’t planning legal action against ABC. Reynolds couldn’t be immediately reached for comment yesterday. The automaker “reserves the right to take any and every appropriate step to protect and defend the reputation of our company and its products from irresponsible and inaccurate claims,” Reynolds wrote in the letter, which was copied to Disney Chief Executive Officer Robert Iger . Gilbert testified before a U.S. House of Representatives hearing on Feb. 23 that he had isolated weaknesses in Toyota’s electronic throttle system not found in units from other automakers. Toyota engineers and those from the firm it hired to assess its electronics, Exponent Inc., used Gilbert’s technique to induce engine-revving in vehicles from General Motors Co., Daimler AG and Chrysler Group LLC at the March 8 demonstration. To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net ; Jeff Plungis in Washington at jplungis@bloomberg.net

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Toyota Says It’s Upgrading Software That Records Data Following Accidents

March 12, 2010

By Jeff Plungis March 13 (Bloomberg) — Toyota Motor Corp. said it is upgrading software that helps read information from devices used to record vehicle crash data, according to a statement on the automaker’s Web site. Toyota, the world’s biggest automaker, has recalled about 8 million vehicles to repair defects that may cause unintended acceleration. Its handling of the recalls, and the government’s response, have been the subject of hearings by three committees in Congress. Media reports have “mischaracterized how Toyota uses and discloses information” from recorders in its Toyota and Lexus vehicles, the company said in the statement . Toyota has always made all data recorded available to the National Highway Traffic Safety Administration, law enforcement officials and courts “when requested or ordered to do so,” the automaker said. The software for the data recorders will be upgraded to be compatible with all vehicles, Toyota said in the statement. The Toyota City, Japan-based company delivered a specialized computer used to read crash data to U.S. regulators on March 3, and three more will be delivered in April, the company said. Toyota will also provide 150 computers to read the “event data recorders” throughout North America by the end of April, the statement said. “Once the additional read-out units are available and appropriate procedures are in place, Toyota will provide vehicle owners with access to EDR data from their vehicles upon request,” Toyota said. To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net .

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Steve Parker: Did W’s NHTSA ignore Toyota problems? On-air this weekend!

March 12, 2010

Saturday March 13 LIVE at 11am Pacific / 2pm Eastern www.TalkRadioOne.com Steve Parker’s The Car Nut Show Not only has Toyota become the butt of millions of jokes while buyers avoid their sales lots, but local news seems obsessed with reporting on any Toyota involved in any accident. Is this fair? The Orange County (CA) District Attorney has filed suit against Toyota for knowingly endangering the public with defective products. Where will it all end? Does Toyota stand a chance of ever recovering their market share and, most especially, their reputation? And Congress is taking a hard luck at the Bush Administration’s version of NHTSA … like Wall Street and the SEC, did W’s NHTSA look the other way as evidence against Toyota mounted? This plus the latest on Hummer, Saab, Ford and all the rest, plus your calls at 213-291-9410. Join in the conversation! Sunday March 14 LIVE at 5pm Pacific / 8pm Eastern www.TalkRadioOne.com Steve Parker’s World Racing Roundup NASCAR has been underway for what seems like months now, but this is a truly big racing weekend … IndyCar and Formula 1 both launch their 2010 seasons, F1 in Bahrain and the US open-wheelers on a new street course in Sao Paulo, Brazil. F1 still rakes in billions, while IndyCar continues their losing association with Versus cable, a 10-year deal which guarantees continued low viewership for the series (four races, including the Indy 500, will be on ABC-TV this year). Plenty to talk about so you join in, too! 213-291-9410.

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Video: Matsumoto Says Regulators Must Step Up Car Safety Rules

March 12, 2010

March 12 (Bloomberg) — Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co., talks about Toyota Motor Corp.’s recall and the need for regulators to increase scrutiny of the car industry. Matsumoto also discusses Toyota’s plan to increase its market share in the U.S. this year. He speaks with Bloomberg’s Mark Barton from Tokyo.

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Robert F. Brands: Innovation Gone Too Far? — The Toyota Recall

March 5, 2010

By Robert F. Brands with Jeff Zbar Once upon a time, to start your Toyota Camry, you placed a key in the ignition and turned until the electrical connection was made and the engine started. To accelerate, you pressed the gas pedal, which pulled a cable attached to a mechanical throttle. Assuming the shift had been manually placed into gear — the car moved. Today, electronics and computers have replaced many of the mechanical parts that once made cars move. To start many cars or place them in gear, buttons are pushed. To accelerate, the gas pedal is connected not to a cable, but to a computer — via electronic circuitry. In light of Toyota’s massive recall of 10 million Camry, Tercel, Prius hybrid and luxury Lexus models (and that’s a shortened list), one has to wonder: At what point does innovation encourage failure? In other words, has Toyota gone too far? In the interest of fairness, these issues potentially affect any modern automobile. Already, GM is facing recalls related to steering. The costs — in terms of finances and consumer confidence — can be great. As Toyota mechanics are correcting millions of cars and consumer confidence lags, rival automakers have reported double-digit sales growth. But the question of innovation for innovation’s sake — or for the sake of “technological evolution” — begs to be asked. Sure, innovation of the vehicle and the way it’s manufactured cuts costs, including labor and benefits. We continually innovate to cost reduce. But now, cars don’t just turn on with the turn of a key. And when they don’t roar to life as expected, the corner mechanic must be trained not only in auto repair, but in computers technology (assuming he or she owns the equipment). This reminds me of a story. It was the 1970s. Two adventurers once were traveling by pick-up truck in northern Mexico when their vehicle broke down. The local mechanic took a look under the hood, grabbed a coffee can of old parts, and fashioned a fix. How does this all relate to the innovation imperatives? In Robert’s Rules of Innovation , it mentions two key imperatives that seem to have gone awry here. First, Toyota sought the imperative of value creation in pursuit of innovation. Yet any value created through their innovation-gone-awry is more than lost through the recall and labor costs and lost sales and good will. Second, who has been held accountable? After first declining to do so, Toyota President Akio Toyoda made a very public appearance on Capitol Hill. He apologized and promised to “do everything in my power” to ensure the malfunctions and tragedies don’t happen again. Do Americans buy it? Can Toyota afford to wait and wonder? To that end, the complexity of the conundrum facing Toyota at one point was belied by the simplicity of their first apparent fix. After spending days in conference over how to remedy the stuck throttle, high-paid engineers came up with a simple solution: Shorten the gas pedal. To be sure, in the end, the issues facing the automaker were far more complex than nipping an inch off a too-long pedal. But could the issues have been remedied in the designer’s or accountant’s office years ago — when the company believed innovation would save money? We — and Toyota — may never know. But we’ve learned that innovation poorly planned can have the greatest expectations, but the worst outcomes. © 2010 Robert F. Brands with Jeff Zbar. Robert F. Brands is the author of Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival

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Toyota Recalls Spark Divergence in Swaps, Bond-Yield Spread: Chart of Day

March 4, 2010

By Takashi Ueno March 4 (Bloomberg) — Toyota Motor Corp.’s recall of about 8 million cars has elicited divergent responses from foreign and Japanese investors, with the cost of protecting the company’s bonds against default rising while the yield spread to sovereign debt has varied little this year. The CHART OF THE DAY shows credit-default swaps on Toyota’s five-year bonds and, in the lower panel, the yield spread to similar-maturity government notes. The price on five-year swaps linked to Toyota’s debt widened by about 40 basis points between Jan. 15 and Feb. 9, as the world’s biggest automaker expanded its recall in the U.S., according to data compiled by CMA DataVision. By contrast, the spread between yields on Toyota’s five- year bonds maturing in June 2014 and counterpart government notes has been little changed, trading close to 22 basis points since the start of this year, Japan Securities Dealers Association’s data show. A basis point is 0.01 percent. One reason for the different reactions is that foreign investors are active in Japan’s CDS market, while Toyota’s bondholders are mainly Japanese, said Hisayoshi Nogawa , a strategist at BNP Paribas Securities Japan Ltd. “Foreign investors are cautious about Toyota’s creditworthiness, whereas Japanese don’t expect the recalls to break the automaker’s back,” he said. Toyota’s credit ratings probably won’t be lowered to the extent that a debt sell-off or default could be triggered, Nogawa said. The automaker is currently rated Aa1 by Moody’s Corp., AA by Standard & Poor’s, and AAA by Japan’s Rating and Investment Information Inc. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. (To save a copy of the chart, click here.) To contact the reporter on this story: Takashi Ueno in Tokyo at tueno@bloomberg.net

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Toyota Owners Filing Complaints After Recall Fixes Being Contacted by U.S.

March 3, 2010

By Angela Greiling Keane March 3 (Bloomberg) — U.S. regulators are contacting Toyota Motor Corp. vehicle owners who reported unintended acceleration after their cars were repaired under the automaker’s recalls. The National Highway Traffic Safety Administration is seeking to “get to the bottom of the problem” in complaints posted yesterday on the agency’s Web site, NHTSA Administrator David Strickland said today in an e-mailed statement. “If Toyota owners are still experiencing sudden acceleration incidents after taking their cars to the dealership, we want to know about it,” Strickland said in the statement. Toyota has recalled more than 8 million vehicles globally to modify floor mats and accelerator pedals blamed for incidents of unintended acceleration. The reports posted yesterday involved a 2007 and 2010 Camry, 2009 Matrix and a 2008 Avalon that owners said had been repaired at dealerships. A Transportation Department spokeswoman, Olivia Alair , said the agency hasn’t confirmed the complaints’ validity. It started contacting customers yesterday and has already interviewed “a couple” people, she said today in an e-mail. NHTSA is part of the Transportation Department. NHTSA is investigating whether electronic systems contributed to the incidents, while Toyota has said there is no evidence of a connection. “We will continue to thoroughly investigate any complaints involving unintended acceleration,” Brian Lyons , a Toyota spokesman said yesterday. NHTSA said yesterday that Toyota crashes linked to reports of unintended acceleration have caused 43 fatal crashes with 52 deaths and 38 injuries. About two-thirds of the incidents have been reported since Toyota started recalling vehicles last year for unintended acceleration. Reported Complaints The owner of the 2010 Camry wrote in the complaint that the car was repaired Feb. 12 and accelerated unexpectedly for five to six seconds as the driver entered a parking lot on Feb. 17. The owners of the Avalon and 2007 Camry said their vehicles were at the dealership for review after having repeat accelerations incidents that were supposed to have been repaired earlier. The Matrix owner said the recall work was completed Feb. 10 and on Feb. 26 the car moved forward with the driver’s foot on the brake in a parking lot. “I put my other foot on the brake as well,” the unidentified woman wrote in the complaint. “My son said ‘It’s doing it again Mom!’ I put it in neutral, and we both heard the engine wind out like I had pushed the gas pedal to the floor. This obviously means the recall ‘fix’ isn’t working!” Toyota’s American depositary receipts, each equal to two ordinary shares, rose $2.60, or 3.5 percent, to $77.02 in New York Stock Exchange composite trading. The shares have lost about $30 billion in value since Toyota announced a recall on Jan. 21. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ;

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Toyota Gains as U.S. February Sales Fall Less Than Estimated Amid Recalls

March 2, 2010

By Alan Ohnsman March 3 (Bloomberg) — Toyota Motor Corp. ’s February U.S. sales fell less than analysts had estimated amid congressional scrutiny of the automaker, while Nissan Motor Co. led gains among the biggest Asia-based brands. Toyota sold 8.7 percent fewer vehicles than a year earlier, compared with increases of 29 percent for Nissan, 13 percent for Honda Motor Co. and 11 percent for Hyundai Motor Co. Toyota was expect to drop at least 10 percent by industry data provider Edmunds.com and 27 percent by pricing service TrueCar.com. “I thought Toyota would be off by double digits,” said Jack Nerad , executive market analyst at Kelley Blue Book, an auto pricing and data service in Irvine, California. “It seems to indicate there’s still a lot of residual support for the company.” The second consecutive monthly decline for Toyota, the world’s largest automaker, comes as it works to repair more than 8 million vehicles worldwide to correct defects linked to unintended acceleration. Toyota announced incentives in the U.S. yesterday to win back customers, including no-interest loans and discounted leases on top-selling models. Industrywide sales rose 13 percent in February, led by Ford Motor Co.’s 43 percent surge and a 12 percent increase for General Motors Co. Those gains and an increase of less than 1 percent for Chrysler Group LLC gave U.S.-based automakers a combined 46.6 percent market share for the month, more than the 44.8 percent for Asian competitors, according to Autodata Corp. Toyota Toyota said it sold 100,027 Toyota, Lexus and Scion vehicles last month, down from 109,583 a year earlier. The company on Jan. 26 had suspended sales of eight of its best- selling models, including the Camry sedan, to fix accelerator pedals at risk of sticking because of a flawed component. “The ‘stop-sale’ we had at the beginning of the month and continued coverage by the media on the recalls had an impact,” said Bob Carter , group vice president of the Toyota City, Japan- based company’s U.S. sales unit, in a conference call yesterday. Carter said that Toyota has repaired at least 1 million vehicles and doesn’t see a “major outflow” of its customers to competitors. Toyota is starting incentive campaign this month that is “unprecedented” for the company, after focusing on “taking care of customers” in February, he said. Toyota fell behind Ford and GM in market share last month at 12.8 percent, dropping from 15.9 percent a year earlier, said Woodcliff Lake, New Jersey-based Autodata, a provider of industry statistics. Honda Honda said it raised sales of its namesake and Acura vehicles to 80,671, from 71,575. The increase for Toyota’s closest Japanese rival was aided by a 25 percent jump in sales of midsize Accord cars, traditionally the main competitor to Toyota’s Camry. “Honda was certainly a beneficiary” of Toyota’s problems in February, said Nerad, the Kelley Blue Book analyst. “But so were Ford, GM and Hyundai.” Tokyo-based Honda, the second-largest Japanese automaker, also boosted sales of Civic small cars, Odyssey minivans and Acura MDX sport-utility vehicles. Even with its sales gain, Honda’s market share for the month slipped 0.1 point to 10.3 percent, according to Autodata. Nissan Nissan’s February sales rose to 70,189 Nissan and Infiniti vehicles, from 54,249 a year earlier. The Yokohama, Japan-based company benefited from increases for Cube wagons, Sentra and Versa small cars, Maxima sedans and Frontier pickups, said Al Castignetti , U.S. vice president of Nissan-brand sales. Toyota’s recall is having some effect on the market, Castignetti said in an interview yesterday. “I can’t really quantify the impact on us, but dealers are telling us that what’s happening to Toyota is affecting the entire industry,” he said. “In terms of customers moving from Toyota to Nissan, we’re actually seeing very little of that, though there have been some.” Nissan’s market share grew to 9 percent in February from 7.9 percent a year earlier Autodata said. Hyundai, South Korea’s largest automaker, raised sales to 34,004, from 30,621. The Seoul-based company benefited from a full month of sales of its revamped Tucson SUV and the start of sales of a redesigned Sonata sedan. Kia Motors Corp., a Hyundai affiliate, reported that February sales rose 9 percent 24,052 vehicles. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Toyoda Visits China to Apologize for Recalls, Skipping Auto Show in Geneva

March 2, 2010

By Laurence Frost and Makiko Kitamura March 2 (Bloomberg) — Toyota Motor Corp. President Akio Toyoda traveled to China from the U.S. to apologize for vehicle defects, while skipping the Geneva auto show , underscoring the company’s priority to expand in the world’s biggest car market. The world’s biggest carmaker sent Vice Chairman Kazuo Okamoto to Europe’s only annual automotive industry gathering even though the Japanese company has recalled 1.8 million cars in the region, compared with 75,552 sport-utility vehicles in China. Toyoda met with Commerce Minister Chen Deming as part of his trip to Beijing. Toyoda is prioritizing China, where passenger-car sales surged 53 percent last year, as European vehicle sales decline. Industrywide auto sales in Germany, the region’s largest car market, may shrink by 1 million units this year after governments ended incentive programs, Didier Leroy, Toyota’s head of Europe sales, said at a press conference in Geneva. “China’s market is very important,” Toyoda, 53, told reporters in Beijing yesterday. “I hope that China customers can be reassured to a certain degree after I speak to them personally.” The Toyota City, Japan-based carmaker has recalled about 8 million vehicles worldwide to fix problems including cases of unintended acceleration in vehicles. Last week, Toyoda visited the U.S. to testify before Congress and apologize for the defects. Global Recall In Beijing, Toyoda again apologized for the recalls and pledged to cooperate with any investigation in the country. He reiterated a goal of boosting China sales by 13 percent this year to 800,000 vehicles. In Europe, Toyota has predicted that its vehicle sales will fall 5 percent to 840,000. Toyoda also said all Toyota models assembled in China from now will be equipped with brake override systems that prevent unintended acceleration. GM, the biggest foreign automaker in China, aims to sell about 2 million vehicles in the country this year, Kevin Wale , the Detroit-based company’s China chief, said Jan. 23. Wolfsburg, Germany-based Volkswagen sold a record 1.4 million vehicles in China last year, an increase of 37 percent. China “is a key market that cannot be ignored,” said John Zeng , a Shanghai-based analyst at IHS Global Insight. “If Toyota doesn’t choose the right time to clear up the recall issues, it will affect new model launches.” No Discounts Toyota has been criticized for delaying recalls. The carmaker fixed gas pedals in Europe in August, months before the same change was made for U.S. cars. An initial recall of cars in the U.S. on Sept. 29 cited a defect that may cause floor mats to jam down the accelerator pedal. The company has so far fixed 200,000 vehicles in Europe for sticky accelerator pedals, Leroy said. He ruled out offering discounts to win customers back. “We cannot expect to convince customers about the quality of the products with this kind of message,” he said. A plan to set up quality committees in each region with “more of our people going to the customers and listening to complaints” could result in an increase in recalls, Okamoto told journalists in Geneva, calling the possibility “hypothetical.” The program’s aim is to reduce the need to bring vehicles back for repairs in the future, he said. Shares Fall Even though Toyota’s president doesn’t attend the Geneva show every year, Katsuaki Watanabe, for example, used the event in 2006 to promote its Lexus range in Europe. Toyota has lost about $34 billion in market value since Jan. 21, when it announced plans for a U.S. recall of about 2.3 million vehicles to fix accelerator pedals. The stock gained 0.6 percent to 3,315 yen in Tokyo trading today. Toyota’s Chinese sales jumped 21 percent to 709,000 vehicles in 2009, trailing a 46 percent increase in the market. Nissan boosted China sales 39 percent to pass Toyota as the biggest Japanese carmaker in the country. Nationwide Chinese vehicle sales rose to 13.6 million, surpassing the U.S. for the first time. Toyota, which makes vehicles in the country with China FAW Group Corp. and Guangzhou Automobile Group Co. , boosted February sales about 30 percent from a year earlier to 45,500. Its first car plant in China opened in December 2000 in Chengdu, Sichuan province. The company entered the local market in 1997 with an engine-making factory in Tianjin. The carmaker plans to increase capacity at a joint-venture plant with FAW in Chengdu to 30,000 units from 13,000 units by June 2010, according to company spokeswoman Ririko Takeuchi . The plant builds the Coaster and Land Cruiser Prado models. Toyota also plans to build a second plant in Changchun, Jilin province, where it may make Corolla compact cars. The company hasn’t decided when the factory will open or how much capacity it will have. — Yidi Zhao . With assistance from Stephanie Wong in Shanghai and Emily Chan in Hong Kong. Editors: Neil Denslow , Tom Lavell To contact the Bloomberg News staff on this story: Laurence Frost in Geneva via lfrost4@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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Video: Toyota’s President to Meet Press in China Amid Recalls: Video

February 28, 2010

March 1 (Bloomberg) — Bloomberg’s Stephen Engle reports on Toyota Motor Corp. President Akio Toyoda’s plan to hold a press conference today in China, the world’s biggest car market. Toyota is struggling to salvage its reputation amid global recalls of more than 8 million vehicles. (Source: Bloomberg)

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LA Times: At least 56 people have died in Toyota accidents

February 28, 2010

LA Times: At least 56 people have died in Toyota accidents

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Sarah O’Leary: Bad News Couldn’t Come at a Better Time for Toyota

February 26, 2010

If you’re an automotive company dealing with a massive recall, pray for a bad economy and look to maximize your opportunities. If bad was going to happen to Toyota, their timing couldn’t be better. It’s public knowledge that there aren’t many people entering into the new car market these days. Like other automotives, Toyota isn’t missing out on much. If the economy was healthy, the PR nightmare of such an enormous recall could potentially be devastating. In a poor economy, however, people are much more apt to hold onto their cars for longer, looking to repair rather than buy. This buys Toyota much needed time. The average ownership in a good economy is several years, and even longer when things go south. Current Toyota owners affected by the recall purchased their cars in recent years, so it’s fair to estimate they’ll be holding onto them for several years to come even if the economy improves. This gives time for memories to soften, and gives Toyota a real opportunity – yes, I said opportunity – to grow a loyal following in the process. True, dealerships have been faced with repairs in the tens of thousands. But many Toyota owners probably last saw their dealership when they purchased or when the warranty was running out, choosing instead to get servicing done for potentially less money elsewhere. And this, if it can think on its feet, spells opportunity for Toyota. Typically the most profitable area at a car dealership is its service department. Toyota has a chance to win owners back (and drum up some business in the process) with strategic interpersonal intervention. In order to succeed, the owners who come in for recall repairs need to feel appreciated. Dealerships can do this in a number of ways, with the hopes of turning a negative into a positive experience that can continue for the life of the car ownership. When owners arrive, offer a free car wash. Their time is valuable, and most dealerships have car washes. Provide beverages and snacks while they wait. Have the head of sales or other dealership big wig offer them Toyota’s sincere apology. To get them back for service within 6 months, a move they probably wouldn’t make on their own, give owners a free basic inspection certificate. (Coupons don’t work as effectively as certificates or gift cards, especially with men). The bounce back effort will allow the service department the opportunity to have a positive interaction with the owner, and give the dealership an opportunity to sell additional products and services. It also probably wouldn’t hurt dealerships to announce that, because of hard economic times, they’ve lowered their service department pricing for loyal Toyota consumers. Every bit of good news will help improve consumer perception. After an owner returns home with his/her repaired car, send a letter co-signed by the dealership owner and head of the service department. Any actions that make them feel that their initial purchase decision was not in error will help them reconcile their feelings about the brand. Next to a home it’s the biggest purchase decision most consumers make, and they don’t want to feel they made a huge mistake. Toyota corporate let dealerships and owners down. If it acts quickly, however, it has a chance to make things right. Sarah O’Leary is a marketing industry veteran and owner of Logic Marketing for Sales. Toyota and all others looking for advisement can reach the agency at info@thelogicagency.com.

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Toyota Prius Keeps Consumer Reports’ Environmental Title Following Recall

February 23, 2010

By Jeff Plungis Feb. 23 (Bloomberg) — Toyota Motor Corp. ’s Prius retained its title as Consumer Reports magazine’s top pick for environmentally friendly vehicles two weeks after the automaker recalled 437,000 hybrids to fix a brake software flaw. The carmaker’s $76,572 Lexus LS460L was named best overall vehicle among more than 280 autos tested, the publication said at a news conference in Washington today. The Prius was ranked best “green” car for the seventh straight year. The Consumer Reports rankings, used by U.S. car buyers, may help Toyota weather recalls now totaling more than 8 million vehicles worldwide and widening probes into its handling of the faults. A federal grand jury has asked for documents related to unintended acceleration and braking in the Prius, and three congressional panels are planning hearings, starting with a House Energy and Commerce subcommittee today. Consumer Reports also named General Motors Co.’s Chevrolet Traverse as the best sport-utility vehicle and GM’s Silverado as the top pickup. Nissan Motor Co. also had two recommended models, the Altima sedan and Infiniti G37 sports car. Other favored vehicles included the Mazda Motor Corp. Mazda5, Fuji Heavy Industries Ltd.’s Subaru Forester, Volkswagen AG’s GTI and Hyundai Motor Co.’s Elantra SE. Suspended Sales Toyota’s Highlander and RAV4 SUVs were dropped from the magazine’s top-pick list because the company has suspended sales of the models as part of the recalls, said David Champion , deputy technical director at the magazine’s automotive test center. The magazine will reevaluate the decision when sales resume, he said. In a separate ranking of best values, Consumer Reports again singled out the Prius and the Honda Motor Co. Ltd.’s Fit small cars as the top two scoring models among more than 280 tested. In response to the Toyota recalls, Consumers Union, the Yonkers, New York-based publisher of Consumer Reports , said today that U.S. regulators should require simpler controls that allow drivers to turn off car engines in an emergency. Technical experts at Consumer Reports found that in panic situations vehicle controls such as ignition shut-offs may not operate the way drivers expect, Champion said in an interview. The push-button ignition found on Toyota models such as the Prius was particularly difficult, Champion said. Drivers have to hold down the button for three seconds to turn the ignition off, he said. The vehicles should be redesigned so that pushing it multiple times turns the car off, Champion said. “Even most of us on the test track didn’t realize you had to hold the button,” Champion said. Policy Recommendations Evaluation of the recalled cars showed some issues that should have standardized fixes, Champion said. Automakers should be required to design accelerator pedals to clear floor mats with expected normal usage, he said. Consumer Reports hasn’t seen any unintended acceleration in its test cars, Champion said. In a set of policy recommendations, Consumer Reports said the government should lift the current $16.4 million cap on civil penalties for failure to recall vehicles as required by law. The relatively low amounts may be considered a “cost of doing business,” and not a deterrent, the magazine said. In addition to the 437,000 hybrids being recalled for brakes flaws, Toyota is recalling about 8 million vehicles on five continents to repair accelerator pedals and pedals that can be trapped by floor mats. Toyota “all but ignored pleas from consumers” to examine complaints of sudden unintended acceleration, Representative Bart Stupak , chairman of the Energy and Commerce Oversight and Investigations Subcommittee, said at today’s hearing. The company “misled the American public” by saying they thoroughly examined electronics as a possible cause, said Stupak, a Michigan Democrat. To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net .

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Japan urges Toyota to regain its confidence

February 23, 2010

Japan urges Toyota to regain its confidence

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Toyota Case Shows Law Spurred by Firestone Deaths Not Working, Critics Say

February 23, 2010

By Jeff Plungis and Angela Greiling Keane Feb. 23 (Bloomberg) — Toyota Motor Corp. ’s recalls of millions of vehicles show that a law passed after fatal crashes of Ford Explorers with Firestone tires a decade ago isn’t working, former U.S. officials and consumer advocates said. Lawmakers begin hearings today in the biggest review of auto defects by Congress since faulty tires were linked to rollovers of Ford Motor Co. sport-utility vehicles that caused more than 200 deaths. A law passed in November 2000 created a database to track manufacturer complaints, warranty claims and fatalities in order to catch defects more quickly. Toyota, the world’s largest automaker, has recalled more than 8 million vehicles for defects worldwide, starting with 3.8 million announced in September. Thirteen months earlier, U.S. regulators turned down a consumer petition for an investigation, saying evidence of a flaw was “quite limited.” “Some of the same problems that were present in 2000 and 2001 after Firestone still exist today,” said Ken Mead , a special counsel at Baker Botts LLP in Washington who was the Transportation Department’s inspector general from 1997 to 2006. “Given the passage of the law, given the creation of this multimillion-dollar system, why did we miss this?” Sudden acceleration of Toyota cars and trucks has been linked to 34 deaths in complaints filed by consumers with the Transportation Department’s National Highway Traffic Safety Administration, the federal agency supervising the recalls. NHTSA has too little money and too few investigators to handle safety probes, said Allan Kam, a former official. ‘Understaffed, Overworked’ “The office, in my view, has been significantly understaffed and overworked,” Kam, who was a NHTSA senior enforcement attorney until he retired in 2000, said in an interview. NHTSA has an $873 million budget this year, with more than 71 percent passed through to states as highway-safety grants. The agency is spending $18 million, about 2 percent of its funds, for enforcing recalls and compliance with safety rules. That includes $9.8 million for its Office of Defects Investigation, according to NHTSA and administration budget documents. President Barack Obama ’s budget for next year, proposed on Feb. 1, would leave the office’s funding unchanged. “There’s only $18 million spent at NHTSA on overseeing auto manufacturers,” Representative Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, said in a Feb. 17 interview with Bloomberg Television. “There’s almost $100 billion spent by auto manufacturers around the world on R&D.” Early Signs Issa said his panel, which is holding a hearing on Toyota’s recalls tomorrow, will examine how NHTSA responded to early signs of danger and whether the agency has enough information about safety problems occurring in other countries. “This is a bureaucracy that has simply been allowed not to get the job done right,” Issa said. The House Energy and Commerce Committee will hold a hearing today. Toyota saved $100 million through a “negotiated” recall with NHTSA of floor mats that the automaker said could snag on accelerator pedals, the company said in an internal document from July 6, 2009, that was obtained by the oversight committee. The Toyota City, Japan-based company employed two former NHTSA officials who negotiated with the agency to end at least four inquiries into unintended acceleration, court documents show. NHTSA’s defects investigations office had a goal of employing 64 people in 2002, including authorization for 24 investigators, according to a report by the inspector general’s office when Mead held the post. Today, there are 57 people on the staff, with 21 investigators, according to Transportation Department spokeswoman Olivia Alair . 30,000 Complaints The highway traffic safety administration opens about 100 vehicle-defect investigations a year, and its process ensures the most serious risks are identified and handled urgently, Alair said in an e-mailed statement. The regulator demanded a recall of Toyota floor mats in 2007 after only five consumer complaints because three of those involved injury-producing crashes, she said. “NHTSA reviews more than 30,000 consumer complaints every year and analyzes them along with comprehensive data obtained from auto manufacturers and other sources to identify potential safety issues quickly,” Alair said. Alair said she couldn’t provide information regarding year- to-year funding and staffing at the Office of Defects Investigation. Nor could Calvin Scovel , who took over the inspector general’s office in October 2006, according to spokesman David Wonnenberg. A request to interview Kathy DeMeter, chief of the defects office, was declined. Not Keeping Pace The office’s funding hasn’t kept pace with inflation or the number of cars on the road, said Clarence Ditlow , executive director of the Center for Auto Safety, based in Washington and founded by consumer activist Ralph Nader . The defects office had a budget of $7.6 million in fiscal 2001, before the legislation prompted by the Firestone recalls. There were 248 million motor vehicles registered in the U.S. in 2008, compared with 156 million in 1980, according to the U.S. Federal Highway Administration. “I look at the amount of money they have in enforcement per vehicle on the road, and the real dollar value keeps going down,” Ditlow said. The congressional hearings this week on Toyota’s recalls echo the Firestone inquiries in September 2000. NHTSA was criticized over reports that Ford Explorer SUVs were rolling over after their Firestone tires lost treads. Bridgestone Corp. of Tokyo, which had acquired the Firestone brand, recalled 6.5 million tires that Aug. 9. ‘Déjà vu’ On Nov. 1, 2000, President Bill Clinton signed the legislation that enabled NHTSA to hire more investigators and create a database, called the Early Warning System, that would compile quarterly reports from auto manufacturers, tiremakers and parts suppliers incorporating warranty repairs, customer complaints, deaths and injuries. The measure provided for an extra, one-time appropriation of $9.1 million to set up the new system and speed recall investigations. In a follow-up examination in September 2004, Mead, the inspector general, found NHTSA established a database to track the early warning data while failing to develop the ability to establish a relationship between deaths and alleged defects. “It’s obvious to me that either the system that was supposed to be a pointer system didn’t work or it didn’t work on time” in the Toyota recalls, Mead said in an interview. “It’s very déjà vu,” he said. To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net ; Angela Greiling Keane in Washington at agreilingkea@bloomberg.net .

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Ford Jobless Recovery Means No New U.S. Hiring as Mulally Overhauls Plants

February 22, 2010

By Keith Naughton Feb. 22 (Bloomberg) — Ford Motor Co. ’s $1.6 billion U.S. investment plan will retool plants to build fuel-efficient autos to compete with Toyota Motor Corp. models. Hiring workers paid on par with Toyota’s will have to wait. After cutting 47 percent of its North American workforce since 2006, Ford isn’t ready to resume adding employees even as it upgrades factories and grabs a larger share of U.S. sales, Chief Financial Officer Lewis Booth said in an interview. One analyst estimates Ford may not hire for two years. Ford’s jobless recovery shows the constraints on the only U.S. automaker to avoid bankruptcy in 2009. With fewer employees taking buyouts and auto demand about a third less than in 2007, Ford doesn’t have openings for a new class of lower-paid union workers who would help cut labor costs. “It’s probably just a little premature to talk about hiring,” Booth said. “The first thing to do is to take our existing employees and make sure they’re fully occupied. That’s very important for us and very important for them.” Toyota, the world’s largest automaker, was the benchmark for labor costs when General Motors Co., Chrysler Group LLC and Dearborn, Michigan-based Ford reached their current accords in 2007. The U.S. companies won the right to give fewer benefits to new hires and pay them about $14 an hour, half what current employees make. Compensation for U.S. workers including wages and benefits averages about $55 an hour at Ford, compared with $50 at Toyota, according to Booth. First in Line Because laid-off union employees are first in line for any vacancies before new, low-wage hires can be made, Ford can’t yet take advantage of low-wage hiring. Ford said it has about 600 hourly employees still on indefinite layoff from a U.S. union workforce of about 41,000. On Feb. 16, Ford said it will cut a shift of 900 workers from its Michigan Mustang factory in July. Ford probably won’t begin hiring for two years, which means it wouldn’t match Toyota’s labor rates until 2014 or 2015, said Sean McAlinden , chief economist at the Center for Automotive Research in Ann Arbor, Michigan. “The market sucks and it needs to recover by 30 percent to 40 percent before Ford can hire,” McAlinden said in an e-mail. “They have too many hourly workers now.” Ford’s average hourly labor cost would fall to $50 once new hires make up 20 percent of the workforce, Booth said on a Jan. 28 conference call. “But we haven’t got near-term hiring plans that will get us up to that,” he said. Cost Disadvantage By 2012, Ford will be at a labor-cost disadvantage to Detroit-based GM and Chrysler because its UAW members voted in November to reject concessions freezing new hires’ wages until 2015, McAlinden said. GM and Chrysler, based in Auburn Hills, Michigan, won those givebacks as the automakers slid toward bankruptcy last year, and will reach U.S. labor-cost parity with Toyota and Honda Motor Co. by 2012, he said. “Investors should be careful not to count on labor cost savings in North America from Ford,” said Brian Johnson , a Barclays Capital analyst in Chicago. “To the extent that they should look for a rebound in earnings, it’s going to come from a growing market and a fine new product line.” Johnson has a neutral rating on the shares, which surged more than fourfold last year. Ford fell 9 cents to $11.29 on Feb. 19 in New York Stock Exchange composite trading, leaving its gain for the year at 13 percent. Shrinking Expenses The lack of a tailwind from low-wage hires underscores the urgency for Chief Executive Officer Alan Mulally to keep shrinking costs and sell more-profitable autos after reporting net income of $2.7 billion in 2009 to end Ford’s streak of three annual losses. Ford is investing $1.15 billion to retool factories in Michigan, Kentucky and Illinois to make more fuel-efficient autos this year, along with spending $450 million to build hybrid models in Michigan starting in 2012. Capital spending will rise by $1 billion this year, Booth said in the interview. Factory upgrades, a 25 percent jump in U.S. sales in January and Ford’s first annual U.S. market-share gain since 1995 haven’t brought an end to the company’s retrenchment, with pullbacks such as the shift reduction at the Mustang plant. Ford said employees are being offered transfers to factories in Wayne, Michigan, and Chicago. “We’re going to redeploy almost all the workers,” Executive Chairman Bill Ford told reporters on Feb. 16. Buyout Offers Ford’s relative prosperity compared with GM and Chrysler has shrunk the acceptance rates for buyouts, McAlinden said. About 300 workers, or fewer than 1 percent of Ford’s UAW employees, accepted a buyout last month. About 6,800 hourly workers accepted buyouts in 2008, roughly 13 percent of a U.S. workforce that numbered 54,000 at the start of that year. Workers are reluctant to leave as Ford’s prospects improve, according to Mark Truby , a spokesman. Auto researcher Edmunds.com has predicted that Ford may vault past Toyota and reclaim the No. 2 spot in U.S. sales this year as the Japanese company’s recalls chase off some buyers. Booth said Ford won’t be in a position to hire until the U.S. auto market rebounds from 2009’s 10.4 million vehicle sales, the lowest since 1982. Ford predicts U.S. car and light- truck sales will range from 11.3 million to 12.3 million this year. The annual average from 2000 to 2007 was 16.8 million. “The most important thing is to see the economy grow,” Booth said. “It’s important to see that happen and that we see it is sustainable. That will get our employees back to work.” To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net .

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Toyota Saved $100 Million in `Favorable’ 2007 U.S. Recall, Document Shows

February 21, 2010

By Jeff Green and Jeff Plungis Feb. 22 (Bloomberg) — Toyota Motor Corp. saved $100 million through a “negotiated” equipment recall on Toyota Camry and Lexus ES models and closed several additional U.S. defect investigations with “favorable” outcomes, according to document sent to a U.S. congressional committee. In other accomplishments described as “Wins for Toyota” the carmaker said it reduced or delayed the effect of proposed rules to require more rollover-resistant roofs, better door locks and stronger protection in side-impact crashes, according to the document that was turned over to the House Committee on Oversight and Government Reform and obtained yesterday. Delaying the rules was credited with saving about $135 million. The document, dated July 6, 2009, may add to questions for President Akio Toyoda as congressional committees open hearings this week into how Toyota and U.S. regulators handled evidence of unintended acceleration that has led to recalls of more than 8 million vehicles worldwide since September. Toyota has said the recalls may cost about $2 billion in lost sales and warranty repairs. Floor Mats The $100 million in savings referred to a 2007 investigation in which Toyota recalled 55,000 vehicles, citing the potential for floor mats to trap accelerator pedals, after an investigation by the National Highway Traffic Safety Administration. “Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong,” the company said in an e-mail. “Our values have always been to put the customer first and ensure the highest levels of safety and quality.” The Detroit News reported the Toyota document earlier. Toyota shares rose 2.7 percent to 3,390 yen as of 10:17 a.m. in Tokyo. The internal Toyota document, which highlights accomplishments of the Washington office of the world’s largest automaker, also said the company was able to avoid investigations of the Tacoma pickup for rust as well as resolve a labeling recall without civil penalties and saving $20 million in buybacks. Delays Toyota saved thousands of hours of labor by delaying NHTSA’s revamped consumer ratings, the New Car Assessment Program, according to the document. The program grades new models on a five-star scale based on how well they fare in crash tests. “Unfortunately, this document is very telling,” said Olivia Alair , a U.S. Transportation Department spokeswoman. “We’re going to hold Toyota’s feet to the fire and make sure they do what’s necessary to make their cars safe for the driving public.” Toyota has said that President Toyoda will testify at the Feb. 24 Oversight Committee hearing. That’s important because “he’s the only person that can speak for a global enterprise” about “getting those problems addressed quickly,” Representative Darrell Issa , the senior Republican on the House oversight panel said on Bloomberg Television. Toyota’s “pattern of hiding” will be examined by the committee at a Feb. 24 hearing, Issa said Feb. 19 in a Bloomberg Television interview. ‘Accept Criticism’ “I will willingly accept criticism of our handling” of the recalls, Toyoda told reporters in Japan on Feb. 19. “I would like to promote understanding of our feelings toward customers and toward the U.S.” The automaker also faces hearings by congressional panels tomorrow and March 2 into its series of recalls. Last week, U.S. regulators said they’re investigating the Toyota City, Japan- based company’s Corolla sedan, the world’s top-selling car, for a possible steering flaw. “Did regulators do their due diligence once problems were brought to their attention?”  Kurt Bardella , a spokesman for Issa, wrote in an e-mail. “If anything but the safety of America’s drivers influenced the decision-making process, the entire purpose of NHTSA will be undermined.” Toyota vehicles experiencing sudden unintended acceleration have been linked to 34 deaths, according to consumer complaints filed with NHTSA. To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net ; Jeff Plungis in Washington at jplungis@bloomberg.net .

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Toyoda Will Appear Before House Panel as U.S. Probes Automaker’s Recalls

February 18, 2010

By Jeff Plungis and Alan Ohnsman Feb. 19 (Bloomberg) — Toyota Motor Corp. said President Akio Toyoda will testify at a Feb. 24 congressional hearing into the automaker’s record recalls, reversing the company’s earlier decision to have another executive handle the questioning. The announcement came after Representative Edolphus Towns , a New York Democrat, sent a formal invitation yesterday. North American President Yoshimi Inaba had been scheduled to testify. “I have received Congressman Towns’s invitation to testify before the House Committee on Oversight and Government Reform on Feb. 24 and I accept,” Toyoda said in an e-mailed statement. “I look forward to speaking directly with Congress and the American people.” Toyoda had said this week he didn’t plan to testify before Congress about the company’s recalls, potentially heightening criticism of his handling of the carmaker’s crisis. Toyota has recalled more than 8 million vehicles worldwide for defects that may cause unintended acceleration, and faces an investigation on a possible steering flaw on its Corolla sedan. “This is a PR mess on a scale Toyota has never had in its history, and certainly the more you have the person at the top responding, the better,” said Ed Kim , an industry analyst at AutoPacific Inc. in Tustin, California. “A lot of the moves Toyota has made up to now seem erratic and confused because they’ve never had to deal with anything like this before.” Toyota City, Japan-based Toyota, the world’s largest automaker, has lost more than $31 billion in market value since announcing fixes for accelerator-pedal defects on Jan. 21. It announced a recall of 437,000 hybrids, including the Prius, on Feb. 9. ‘First Step’ “He’s doing what he should have done from the beginning,” said Jon Harmon , a Chicago-based corporate crisis consultant and former spokesman for Ford Motor Co. and Navistar International, and author of “Feeding Frenzy: Inside the Ford-Firestone Crisis.” “It’s a necessary first step for him to come to Washington, but there are a lot of questions to be answered,” Harmon said. Towns, the oversight committee’s chairman, and Representative Darrell Issa , the panel’s senior Republican, said in a statement they are “pleased Mr. Toyoda accepted the invitation to testify before the Committee. We believe his testimony will be helpful in understanding the actions Toyota is taking to ensure the safety of American drivers.” Toyota’s U.S. sales unit president Jim Lentz is scheduled to appear at the first House of Representatives hearing next week on the Japanese automaker’s recalls, a Feb. 23 meeting of the House Energy and Commerce Committee. To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net ; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Akio Toyota To Testify: Toyota President Will Go Before Congress To Talk About Recalls

February 18, 2010

WASHINGTON — Toyota president Akio Toyoda said Thursday he will testify at a congressional hearing next week about the automaker’s massive recalls in the United States, meeting face to face with lawmakers after enduring criticism that he responded too slowly to the company’s safety crisis. Toyoda, the grandson of the Japanese automaker’s founder, said in a statement he looks “forward to speaking directly with Congress and the American people.” The auto executive accepted the invitation from the chairman of the House Oversight and Government Reform Committee as the government opened a fresh investigation into Corolla compacts over potential steering problems. Toyota has faced a burgeoning safety crisis over the past four months with the recall of roughly 8.5 million vehicles over questions involving gas pedals, accelerators getting jammed in floor mats and brakes on various vehicles. Rep. Edolphus Towns, D-N.Y., told Toyoda in his invitation that motorists were “unsure as to what exactly the problem is, whether it is safe to drive their cars, or what they should do about it.” Towns and the committee’s top Republican, Rep. Darrell Issa of California, said later that Toyoda’s testimony “will be helpful in understanding the actions Toyota is taking to ensure the safety of American drivers.” Towns said late Thursday that Toyoda would be joined by Yoshimi Inaba, chairman and chief executive of Toyota Motor North America, and Jim Lentz, president of Toyota Motor Sales USA. Toyoda had said previously that he did not plan to attend a series of hearings scheduled to start on Capitol Hill next week. But he had told reporters in Japan earlier that he would consider appearing if invited. The decision to testify came as the Transportation Department formally opened a preliminary investigation into 487,000 Toyota Corolla and Corolla Matrix compacts from the 2009-2010 model years over concerns about steering problems at highway speeds. The government has received 168 complaints and reports of 11 injuries and eight crashes on the Corolla and Matrix compacts with electric power steering. The Corolla investigation was expected after Toyota said it was looking into complaints of power steering difficulties with the vehicle and considering a recall as one option. Reports of deaths in the U.S. connected to sudden acceleration in Toyota vehicles have surged in recent weeks, with the toll of deaths allegedly attributed to the problem reaching 34 since 2000, according to new consumer data gathered by the government. Toyoda is the latest embattled auto executive to testify before Congress, more than a year after the leaders of General Motors, Chrysler and Ford sought support for the U.S. auto industry and were scolded for traveling to the hearings in private jets. About a decade ago, the leaders of Ford and tire maker Bridgestone/Firestone were grilled by Congress after crashes involving exploding tires led to more than 250 traffic deaths. By issuing the invitation, the committee had essentially forced Toyoda to testify or face a subpoena. Issa had urged Toyoda to meet with lawmakers and said if necessary, the committee should compel the executive’s testimony. Bill George, professor of management practice at Harvard Business School and a former chairman and chief executive of Medtronic, said Toyoda was “bowing to the pressure” by testifying and had made a “grievous error in ducking public acknowledgment of the mistakes.” George said Toyoda needed to offer “a sincere apology and a concrete set of corrective actions, not ducking and weaving and saying this is not a problem.” In Japan and in the United States, Toyota Motor Corp. has been criticized for a tepid response to the recalls and the company’s top executive has been accused of being largely invisible as the recalls escalated. But he has held three news conferences in recent weeks, apologized repeatedly for the recalls and promised reforms. Toyota has said it will create an outside review of company operations, do a better job of responding to customer complaints and improve communication with federal officials. Toyoda has said he plans to travel to the U.S. soon to meet with workers and dealers but the company has not yet released his schedule. Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management, said Toyoda’s testimony would give the company a prime opportunity to take responsibility for the problems. “He has to be extremely well-prepared to take responsibility. He should take the full force of the most hostile criticisms he gets and welcome them,” Sonnenfeld said. Congressional investigators and the Transportation Department have demanded documents related to the Toyota recalls, seeking information on how long the automaker knew of safety defects before taking action. Toyota has provided about 50,000 pages of documents to congressional investigators and continuing to answer questions from staff members, said Josephine Cooper, Toyota’s group vice president for public policy and government and industry affairs. Cooper said technicians from a Toyota training center in Maryland have been demonstrating to House aides the company’s fix for floor mat entrapment and sticky accelerator pedals. In a separate move, the Oversight Committee subpoenaed Toyota documents from Dimitrios Biller, a former counsel for Toyota’s U.S. operations from 2003-2007. The committee said it was seeking documents related to motor vehicle safety, the company’s handling of defects and related litigation. Toyota faces questions from three committees in Congress. The House Energy and Commerce Committee moved its scheduled hearing up to Feb. 23, one day ahead of the Oversight Committee meeting. The energy panel has invited Lentz and David Strickland, the head of the National Highway Traffic Safety Administration, to testify. A Senate hearing, chaired by West Virginia Sen. Jay Rockefeller, is planned for March 2.

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Toyota Said to Face U.S. Probe After Corolla Power Steering Complaints

February 17, 2010

By Jeff Plungis Feb. 17 (Bloomberg) — Toyota Motor Corp. faces a defect investigation after complaints over power steering in the 2009 and 2010 Corolla sedan, a person familiar with the matter said. The probe will cover about 500,000 vehicles, said the person, who asked not to be identified because Toyota hasn’t been formally notified. The Associated Press reported the inquiry earlier today. To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

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Bill Ford Says `Name on Building’ Means Feeling Akio Toyoda’s Recall Pain

February 16, 2010

By Keith Naughton Feb. 17 (Bloomberg) — Ford Motor Co. Executive Chairman Bill Ford , great-grandson of the company’s founder, said he is certain that fellow scion Akio Toyoda is taking Toyota Motor Corp. ’s recall crisis personally. “Any time anything happens to Ford, it’s personal, good and bad, and I’m sure he feels the same way,” Bill Ford said yesterday. “Other people can resign and go home and do other things. But when your name is on the building and you have the history and the passion, you’re in for the long haul.” Bill Ford said he hasn’t offered advice to Toyoda, who is the grandson of Toyota’s founder and became president last year. Bill Ford, 52, said he and Toyoda, 53, have come to know each other during the Toyota executive’s visits to the U.S. The two share the same birthday, May 3. “The last thing he needs is me calling him right now,” Bill Ford said after a speech to the Livonia Chamber of Commerce in suburban Detroit. “I admire him and I think he’s a good executive. I’d like just to catch up when things settle down a little bit.” Toyoda is scheduled to hold a press conference in Tokyo today to speak on quality and the progress of the recall of the Prius hybrid, the company said Feb. 15. He has met twice with reporters in Japan to apologize for the recall of 8.5 million vehicles worldwide. ‘Deeply Disappointed’ “I take personal responsibility,” Toyoda wrote in a Washington Post column on Feb. 9. He wrote that he was “deeply disappointed” by defects suspected to lead to unintended acceleration. Mike Michels , a U.S. spokesman for Toyota City, Japan-based Toyota, said Toyoda was unavailable for comment. When Akio Toyoda’s grandfather, Kiichiro, branched out into autos in 1937 from the family’s Toyoda Automatic Loom Works, he coined the word “Toyota.” He changed “da,” the character for “field” in Japanese, to “ta” in part to play down the perceived rural sound of the family name. Ford Motor struggled to win back buyers’ trust when Firestone tires on Explorer sport-utility vehicles shredded a decade ago, leading to rollovers and deaths. Bill Ford cast himself in TV commercials in 2002 to help the Dearborn, Michigan-based automaker recover. “When we had our Firestone event, I thought it was important then to communicate forcefully and frequently,” Bill Ford said. The TV spots included historical footage of company founder Henry Ford . Ford Motor rose 20 cents, or 1.8 percent, to $11.32 yesterday in New York Stock Exchange composite trading. The shares have advanced 13 percent this year, compared with a 13 percent decline for Toyota in Tokyo. ‘No Joy’ Bill Ford said that while Ford Motor takes “no joy” in Toyota’s troubles, the U.S. automaker is beginning to win new customers. Ford Motor’s U.S. sales rose 25 percent last month. Ford Motor, which had net income of $2.7 billion last year, has said it will earn money this year on a pretax basis and be “solidly profitable” in 2011. The company posted losses of $30 billion from 2006 through 2008 as sales collapsed for the SUVs on which it depended upon for profits. “Over the last 10 years, we’ve had a lot of really, really difficult moments as a company and I have had personally,” Bill Ford said. “You feel it personally. It’s not a job. It’s your whole life.” To contact the reporter on this story: Keith Naughton in Livonia, Michigan, at Knaughton3@bloomberg.net ;

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Toyota Recall: 2 U.S. Plants To Be Shut Down Temporarily, SEE Which Factories Will Be Affected

February 16, 2010

WASHINGTON — The Transportation Department demanded documents related to Toyota’s massive recalls in the United States on Tuesday to find out if the automaker acted swiftly enough. Toyota, meanwhile, said it will idle production temporarily at Texas and Kentucky plants over concerns the recalls could lead to big stockpiles of unsold vehicles. The legal documents demand that Toyota tell the government when and how the company learned of the safety defects in millions of vehicles over the entrapment of gas pedals by floor mats and sticky accelerators. The documents were delivered to Toyota on Tuesday and the company must respond within 30-to-60 days or face fines. The intensifying government investigation of Toyota and production halts at its assembly plants represented another sign of the ripple effect the recall of 8.5 million vehicles has had on the world’s No. 1 automaker. Toyota faces separate probes by the Obama administration and Congress as it struggles to maintain its loyal customer base and its reputation for safety and quality. Toyota said it was halting production temporarily in San Antonio, Texas, and Georgetown, Ky., to address concerns that too many unsold vehicles may be building up at dealerships because of the large recalls. Company spokesman Mike Goss said the Texas plant, which builds the Tundra pickup truck, would take production breaks for the weeks of March 15 and April 12. The Kentucky plant, which makes the Camry, Avalon and Venza vehicles, plans to take a non-production day on Feb. 26 and may not build vehicles on three more days in March and April. Toyota employs 1,850 workers at the San Antonio plant and about 6,850 at the Georgetown facility. In late January, Toyota halted production of recalled brands throughout the United States for about a week. The information requests from the government, similar to a subpoena, follows criticism from consumer groups that the Transportation Department was too soft on automakers and failed to fine the companies or seek detailed information from them through subpoena powers. Transportation Secretary Ray LaHood has defended his department’s handling of the Toyota investigation, calling the Japanese automaker “a little safety deaf” about the safety problems. LaHood said the government urged Toyota to issue recalls and sent federal safety officials to Japan to warn company officials of the seriousness of the problems. Under federal law, automakers must notify the DOT’s National Highway Traffic Safety Administration within five days of determining that a safety defect exists and promptly conduct a recall. Government investigators are looking into whether Toyota discovered the problems during preproduction or post-production of the affected vehicles, whether their recalls covered all affected vehicles and whether the company learned of the problems through consumer complaints or internal tests. Federal officials are focusing on the two major issues behind the recalls – gas pedals that can become lodged on floor mats and pedal systems that are “sticky,” making it harder for drivers to press on the pedal or ease up on the gas. The information requests seek detailed timelines on when Toyota first became aware of the problems, how they handled complaints, how much they have paid out in warranty claims over pedal problems, internal communications about pedals and company officials involved in making decisions about the issue. NHTSA also wants to know how seriously Toyota considered the possibility that electronics of the gas pedal system may play a role. The company has said tests show that the electronics were not to blame. But federal safety officials want to know how Toyota dealt with complaints that might not be related to floor mats or sticking pedals. Kathleen DeMeter, the director of NHTSA’s Office of Defects Investigation Enforcement, wrote that the agency was “seeking to determine whether Toyota viewed the underlying defects too narrowly…without fully considering the broader issue of unintended acceleration and any associated safety-related defects that warrant recalls.” Congress is also investigating. The House Oversight and Government Reform Committee is holding a hearing on the Toyota recalls on Feb. 24 and the House Energy and Commerce Committee has scheduled a Feb. 25 hearing. Toyota Motor North America chief executive Yoshi Inaba, LaHood and NHTSA Administrator David Strickland are expected to testify at both meetings. The Senate Commerce, Science and Transportation Committee has scheduled a March 2 hearing but has not yet announced its witness list. Toyota has stepped up its lobbying ahead of the hearings by highlighting its workers and U.S. production. It flew production workers into Washington a day before a blizzard last week to highlight the company’s commitment to quality and safety. The company also received help from the governors of four states with Toyota plants – including Kentucky Gov. Steve Beshear – who called on Congress to be fair to the automaker. Toyota has been fixing vehicles under recall. Toyota Vice President Bob Carter told reporters at the National Automobile Dealers Association convention in Orlando, Fla., on Monday that the company had repaired about 500,000 of the 2.3 million vehicles recalled over a potentially sticky gas pedal. Toyota president Akio Toyoda is expected to answer questions in Japan Wednesday about the company’s recalls.

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Bob Franken: The Corporate Shell Game

February 16, 2010

“Cut costs at all costs”. If there is any holy gospel in the corporate world, that’s it. The god of profits is worshiped by the high priests, and highly paid by the way, who endlessly chant “Cut costs at all costs”, or words to that effect. Their salvation through destruction is camouflaged in expressions like “Efficiencies” and “Synergies” and “Workforce Reductions” and “Belt Tightening” and “Outsourcing” and “Consolidations” and a big one, “Mergers”, where companies get larger and smaller at the same time. They exact a terrible human price for their greed every time they toss millions into the rubble with one layoff after another. In the process, their once-successful businesses are ground into failure as their product and reputation earned over decades are frittered away leaving empt shells. . The shell game is hardly unique to the US. It’s played all over the world. The latest case in point is Toyota. It’s still unclear when the auto manufacturer’s legendary quality became a myth…a fiction that persisted as the reality of deterioration was obscured in the haze of image management. Bigger Bigger Bigger” became the Toyota plan instead of “Better Better Better”. The company kept spreading out and spreading thin, until it reached the breaking point. “Breaking Point” means being found out, inevitably getting caught when shoddiness and deception can no longer be hidden and come crashing down on the carefully cultivated “brand” As for the consumers, so many companies in effect tell them to “Like it or lump it”. Their claims of support for customers are bogus. The usual reply from executives is that they are acting on behalf of the stockholders. But as we so painfully learn, the stockholders get hosed too, sooner or later, usually sooner. While “Cut Costs at All Costs” is the article of faith, it’s not an absolute. There’s no cost-cutting for those at the top, who stay there even as their operations crumble beneath them. And they continue to receive their millions in salary from the money they’ve squeezed out by choking the companies. . In the process they have done serious damage to them, as well as the millions who depended on them for employment and the security of knowing they could pay for food and medical care and a roof over their heads. Where no expense is spared is what it takes to keep Washington at bay. Spreading a few bucks around to all the willing politicians works wonders at keeping the United States from reordering corporate policy and regulation. As for the shells of those one-proud businesses, it’s on to new mergers, new cutbacks new layoffs. Finally, there’s nothing left. It doesn’t matter how big a hulk is when it’s empty. It’s like the expression “Cut at all Costs” when there’s nothing left to cut.

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Video: Regulators Hired by Toyota Helped Halt Investigations: Video

February 12, 2010

Feb. 12 (Bloomberg) — Two former U.S. regulators hired by Toyota Motor Corp. helped end at least four U.S. investigations of unintended acceleration by Toyota vehicles in the last decade, warding off possible recalls, court and government records show. Bloomberg’s Lizzie O’Leary reports. (Source: Bloomberg)

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Toyota Recall: Two Toyota Employees, Former NHTSA Regulators, Got US To Stop Accelerator Probes

February 11, 2010

Feb. 12 (Bloomberg) — Former regulators hired by Toyota Motor Corp. helped end at least four U.S. investigations of unintended acceleration by company vehicles in the last decade, warding off possible recalls, court and government records show. Christopher Tinto, vice president of regulatory affairs in Toyota’s Washington office, and Christopher Santucci, who works for Tinto, helped persuade the National Highway Traffic Safety Administration

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Toyota Shares Lure Fortis, Huntington Asset, Ichiyoshi After Recall Slump

February 11, 2010

By Jonathan Burgos and Satoshi Kawano Feb. 11 (Bloomberg) — Toyota Motor Corp. ’s biggest vehicle recall has erased $30 billion from its stock, luring Fortis Investments, Huntington Asset Advisors and Ichiyoshi Investment Management Co. Gentoku Kiyokawa , who works for Fortis in Tokyo, bought Toyota shares on Feb. 4 when the stock traded for 1.03 times the company’s net worth, the cheapest valuation since April, according to data compiled by Bloomberg. Peter Sorrentino , a fund manager at Cincinnati-based Huntington, said he may buy shares of the world’s largest automaker. Toyota has slumped 19 percent since it began a recall of millions of vehicles to repair problems linked to unintended acceleration on Jan. 21. The growing crisis prompted Toyota President Akio Toyoda to apologize on Feb. 5. The company on Feb. 4 predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The company raised its forecast for global vehicle sales in the fiscal year ending March 31 to 7.18 million compared with an earlier prediction of 7.03 million. “Toyota is clearly more attractive now although the worst is probably not over for the company,” said Sorrentino , whose firm holds $12.8 billion including Toyota shares. “We’re not averse to adding to our position. We like their long-term prospects. We think a Toyota stock bought this year is going to pay us in years to come.” Top-Selling Vehicle The company announced Feb. 9 it will recall another 437,000 hybrid vehicles including the Prius, the top-selling vehicle in Japan, due to brake-system defects. On the same day, U.S. safety officials said they were reviewing Toyota’s Corolla, the world’s best-selling car, after complaints about how it steered. Toyota is already making adjustments and improvements for the Prius braking system, Japan’s Economy Minister Masayuki Naoshima said Feb. 3 after meeting with Toyota Executive Vice President Shinichi Sasaki , according to comments broadcast on broadcaster NHK. Toyota, based in Toyota City, Japan, has begun sending metal plates to dealerships to repair the pedal defect on the recalled autos. The company’s full-year net income forecast of 80 billion yen excludes the impact of recalls linked to brake problems for hybrid cars including Prius. Lawsuits faced by the Japanese carmaker could push the cost of recalls above $2 billion, according to estimates by lawyers of customers suing Toyota. The company’s current corporate net worth, or the value of assets minus liabilities, of 1.07 times compares with the average of 1.74 since 1998, according to Bloomberg data. Toyota’s present book value is also less than half the average of 2.35 times for 50 global automakers tracked by Bloomberg. Honda, Hyundai The company could lose market share to competitors like Ford Motor Co. and Hyundai Motor Co. , Vivek Vaidya , automotive and transportation director at market researcher Frost & Sullivan, told Bloomberg Television yesterday. Seoul-based Hyundai shares have gained 7.3 percent since Toyota announced it is widening recalls on Jan. 21, while shares of Honda Motor Co. slumped 9.1 percent. The Tokyo-based company, Toyota’s biggest rival in Japan, said on Feb. 9 it will recall 437,763 vehicles to fix faulty air bags. Ford, based in Dearborn, Michigan, has lost 2.2 percent. Toyota’s “stock might be looking attractive, but only tactically,” said Diane Lin , a Sydney-based fund manager who follows Japanese equities for Pengana Capital Ltd., which oversees $1 billion. She doesn’t hold Toyota shares. “Fundamentally, I don’t think it’s time to buy. There are too many uncertainties.” Customer Trust Toyota recalled 1.36 million cars in markets including Japan and the U.S. in January 2009 to fix defects such as faulty seat belts and exhaust system. Toyoda, who took over as Toyota president in June, said on Feb. 5 this year the company aims to regain customer trust and that the company should “admit mistakes where they were made.” “Sales will probably slump for a few months, but that doesn’t mean Toyota-made cars totally disappear from the earth,” said Mitsushige Akino , who oversees the equivalent of $450 million at Tokyo-based Ichiyoshi Investment and has been adding to his holdings. “This is just one of the many recalls we often see from manufacturers.” Fortis’s Kiyokawa bought Toyota shares at 3,200 yen on Feb. 4, lower than the stock’s book value per share of 3,208 yen that day, he said. The stock closed yesterday at 3,390 yen. Japan’s stock market is closed today for a holiday. “Toyota doesn’t deserve to be treated like a bankrupt business,” said Kiyokawa, whose firm oversees the equivalent of about $234 billion globally. “The stock price below book value is clearly overdone.” To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net ; Satoshi Kawano in Tokyo skawano1@bloomberg.net .

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Honda to Recall 437,763 Vehicles Globally to Fix Air Bags After Injuries

February 10, 2010

By Alan Ohnsman and Tetsuya Komatsu Feb. 10 (Bloomberg) — Honda Motor Co ., Japan’s second- largest automaker, will recall 437,763 vehicles globally to repair air bags that can deploy with too much pressure, adding to previous U.S. recalls for the same defect. The expansion covers 378,758 vehicles in the U.S., Honda said in a statement late yesterday. The Tokyo-based carmaker will recall about 4,000 cars and minivans in Japan, it said in a filing to the nation’s Transport Ministry today. The recall expansion heightens safety scrutiny of Japan’s largest automakers. Honda’s biggest competitor, Toyota Motor Corp. , is working to reassure customers after recalling more than 8 million vehicles worldwide to fix problems linked to unintended acceleration and brake failures. “Because of the Toyota recalls, Honda’s action is getting a lot of attention, but it’s not fundamentally a big deal,” said Mamoru Kato , an analyst at Tokai Tokyo Research Center in Nagoya, Japan. “Recalls are kind of an everyday thing.” Honda fell 0.2 percent to 3,055 yen as of the 11 a.m. trading break in Tokyo. The company knows of one death and 12 incidents related to the air-bag defect, John Mendel , Honda’s U.S. executive vice president, said in a conference call. “The air bag produces excessive internal pressure, and there’s a risk of some metal shards coming through. That could cause injury.” Takata Corp. U.S. vehicles to be repaired include some 2001 and 2002 Accord and Civic cars, Odyssey minivans, CR-V sport-utility vehicles and 2002 Acura TL cars. An initial U.S. recall in November 2008 included 4,600 Accords and Civics, and another 440,000 of those cars and some Acura TLs were added in July. In Japan, Honda is recalling Inspire and Saber cars and Lagreat minivans, the carmaker said in today’s filing. Mendel said some vehicles in Canada and other markets would also be affected by the action, without elaborating. The air bags were made by Tokyo-based Takata Corp. , according to Honda. Takata shares fell 1.6 percent to 1,890 yen. Honda’s U.S. operations are based in Torrance, California. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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James Meigs: Target Toyota: Why The Recall Backlash Is Overblown

February 9, 2010

To judge by press accounts and statements from government officials, those innocuous looking Toyota sedans and SUVs in millions of American driveways are somehow kin to the homicidal ’58 Plymouth Fury in the Stephen King novel “Christine”–haunted by technological poltergeists and prone to fits of mechanical mayhem. In the midst of three major recalls, Toyota has been hammered by daily newspaper and TV pieces suggesting it has been slow to address safety problems. US transportation secretary Ray LaHood announced that anyone who owns one of the recalled vehicles should “stop driving it.” (He quickly backpedaled on that pronouncement, but warned, “We’re not finished with Toyota.”) Displaying a previously undisclosed concern for the safety of American owners of foreign-badged automobiles, the UAW quickly piled on. And now, Toyota’s North American president Yoshi Inaba must submit to ritual humiliation at the hands of the US Congress in a hearing on Wednesday. Does Toyota–or any car company–deserve this? Well, if they are knowingly selling an unsafe car, yes. But is that what’s going on here? Not so fast. There’s no question that unintended acceleration is a serious problem that needs to be fixed. But a little perspective is in order. As Popular Mechanics automotive editor Larry Webster has pointed out, every major carmaker receives occasional reports of sudden unintended acceleration (SUA). In the last decade, the National Highway Transportation Safety Agency logged some 24,000 SUA complaints. Less than 50 of these red flags were investigated. Why so few? The main reason is the nebulous nature of SUA. Often the problem occurs once, never to happen again. It’s tough to fix a defect that can’t be replicated. And then there’s the driver variable. As awful as this is to think about, it’s been shown that sometimes drivers simply mix up which pedal they’re pushing. In the late 1980s, the Audi 500 was the target of a barrage of SUA allegations, lawsuits and press reports (including a notorious “60 Minutes” episode that was later discredited). Then, as now, there were accusations that mysterious electronic gremlins somehow took over the car. In the end, NHTSA concluded that driver error was the only likely explanation for the incidents. But many safety concerns do have validity, and every carmaker has conducted numerous recalls involving critical safety features of their vehicles–brakes, steering, airbags, seat belts, and more. Still, the fact that some safety problems don’t emerge until cars have been on the road for months or years is not a sign that automakers are criminally cavalier about safety. Quite the opposite. The safety issues that lead to recalls generally occur in very small numbers, often barely rising above statistical noise. Toyota’s unintended acceleration problem, for instance, involved a handful of cases in literally billions of miles of driving. As those cases come to light, it is necessary for carmakers to take action, and it is natural for consumers to be concerned. But the intensity of the backlash against Toyota is almost unprecedented. Here’s what is being missed in most of the coverage of the issue: All cars are inherently dangerous. They propel their fragile human cargo at high speeds over unpredictable terrain. They combine thousands of parts that need to interact flawlessly–in environments ranging from Death Valley heat to Fairbanks cold–in order to maintain safe operation. Their radiators contain scalding fluids; their batteries are full of toxic acid; and their gas tanks hold explosive power equivalent to more than 100 sticks of TNT. And, by all accounts, Americans drive those cars faster than ever, on increasingly congested roadways. Nonetheless, driving gets safer every year. Fatalities per mile driven have fallen more than 25 percent since 1994, in part because cars themselves are safer. Compared to those of 20 years ago, the typical vehicle today has better brakes, better steering and more (not to mention smarter) airbags. Electronic stability-control systems have helped prevent countless accidents. Still, even the best cars are far from perfect. And much of the outrage over Toyota’s troubles seems based on the unrealistic expectation that cars should be infallible. That’s an unattainable goal; even well-designed components can wear out and fail in unexpected ways. Recalls are not a sign that carmakers are indifferent to the safety of their customers. On the contrary, recalls are part of the process by which automakers address safety or reliability issues that are often fairly subtle. So why did Toyota’s safety issues become front-page news when similar recalls by other automakers barely made the business pages? One is the scary nature of unintended acceleration itself, which taps into our almost instinctual fear that our machines will suddenly turn on us (HAL, anyone?). Another was the horrific 911 call from the passenger of a Lexus that crashed in Santee, Calif., in August of last year. And then there was timing. Toyota responded first to the problem of shifting floor mats (the likely culprit in the Santee crash), and only later to the much more subtle issue of accelerator pedals that are slow to return to idle . Those are two unrelated problems that needed to be addressed separately. Perhaps in a different climate, Toyota could have convinced the public that the accelerator pedal recall was an example of extreme diligence in pursuit of safety. Instead, the second recall struck the public as an admission of culpability–just another shoe dropping in a much larger scandal. By the time conversation got around to disconcerting glitches in the antilock brake system on Toyota’s high-tech Prius hybrid, there was no containing the outrage. (The fact is, most hybrids exhibit slightly twitchy braking as they try to manage the switchover from the electrical braking that recharges the batteries to the hydraulic braking needed for more aggressive stops. Conditions that engage the antilock braking system only complicate that challenge.) Without the previous incidents, news that Toyota was making a small change in its Prius braking software would have been a non-story. Instead, it completed the trifecta of bad news that has made this Toyota’s annus horribilis. Crisis managers will no doubt study Toyota’s handling of this issue, looking for lessons in avoiding that company’s predicament. After all, it took years for Audi’s sales to rebound after that company’s trip through the SUA gauntlet. Still, some good did come of Audi’s experience: Today all cars have interlock systems that make it impossible for drivers to move the shift lever out of park unless their foot is on the brake (thus preventing them from shifting into gear while accidentally flooring the accelerator). One likely outcome of the Toyota episode will be a requirement for a similar interlock that automatically disengages the throttle whenever the driver steps on the brake. And that would help make all cars just one, tiny increment safer than before. RELATED STORIES • PLUS: Toyota Halts Production to Tackle Sticky Gas Pedals • DRIVE SAFE: How to Stop Sudden Unintended Acceleration • COMPARISON TEST: 2010 Toyota Prius vs. 2010 Honda Insight • EARLIER: 2010 Toyota Prius Hybrid Electric Tech Exposed • TEST DRIVE: VW Jetta Diesel vs. Prius Fuel-Economy Marathon

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Bob Dowling: Rethinking Toyota

February 9, 2010

Toyota’s pummeling is long overdue. With some 8 million cars on recall, repair costs exceeding $2 billion and the Prius suffering brake problems, the easy days for its legendary arrogant American dealers are at least temporarily over. How arrogant? “Do you wish to order one” was the response I got when I asked to test a Prius at the Westport Ct. dealer in 2007. “I’d like to drive one first.” “That would be a month from now at 9.30 am. If you’re late you’ll miss the opportunity.” I bought a Subaru. This December. I went to Gettel Toyota in Sarasota, Fl about buying a Prius. Chris Crews, the young salesman got out a model after a 80 minute wait, then was sharply elbowed aside by his boss Sean as soon as I asked about an on the road price. “I’m going to put you in a Prius today,” said Sean. “You won’t be able to say no.” To get a price, you have to agree to buy. I walked out. Two sales managers followed me to my car. “Ninety percent of customers don’t return,” said Tom. “We have to pressure you.” Or thought they did. On Thursday I drove a Prius I bought privately to the John Pierson Toyota dealership in Stuart, Fl the day after the Prius brake problem was announced. The place was jammed with seniors eating free Subway sandwiches and wondering about their Priuses, Corollas and Camrys. The south lot was jammed with new Toyota’s waiting for the accelerator repair part to arrive. With little to sell, salesmen had hours to banter. Then suddenly out of the blue came a fresh idea. Remember the customer! “I’d like to see the company take a big chunk of the marketing, budget and give the money to our loyal customers,” said Kevin Peterson, a service manager. “Offer them say 10% of the value of their car. That would probably cover any resale loss and be offset by millions of dollars in goodwill and free PR. We don’t have to be at the Superbowl to sell cars. We have a massive marketing budget. This is time to show our customers we’re on their side.” According to valuations announced today Feb 8 by Edmonds.com a number of Toyota models have in fact lost 10% of their value since the recall. Ideas like this seldom make it up the ranks in larger corporations but the simplicity of the thing makes it revolutionary. How many businesses want to really take care of loyal customers? You can count them on one hand — Apple, Best Buy, Mercedes, BMW, Lexus, Honda, people who chose to or need to run the business on reputation and service. Most of the rest of sales is aimed at transaction marketing pioneered by Wall Street banks in the 1970s. Hook ‘em in — cram the teaser deposit rate, the cheap car, the iffy cable service, the unreliable flat screen or the hidden fee mutual fund down their throat. Then screw ‘em when they complain. And make sure they can’t complain to you. If you’ve wound up in a call center in India or the Philippines where the robotic help, through no fault of their own, has no way to make a decision, you know the drill. Bad offshore service was a key reason for the downfall of Dell, Circuit City and dozens of other companies who blew off once loyal customers. Toyota floated above the pack because the reputation of its vehicles for value and reliability and — with the Prius — hybrid innovation made buyers put up with its arrogant American dealers. Now that those days are over, Toyota needs a big rethink. Its Japanese dealers could never bash customers like they do in America because Toyota Japan lives off repeat buyers, same as the every 2 year trade in U.S car makers enjoyed in the 1950s? That kind of loyalty won’t come back and doesn’t need to for any carmaker, Detroit or foreign. But for Toyota, the choice it’s facing is to come up rebuilding plan that sticks or slide into the pack with everyone else. In the Stuart dealer’s showroom hangs a huge red banner that says 80% of Toyotas that are 20 years old are still on the road. Maybe those owners are a good place to start…

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Toyota Extends Recalls to Hybrids to Repair Brake Defects

February 9, 2010

By Yuki Hagiwara and Makiko Kitamura Feb. 9 (Bloomberg) — Toyota Motor Corp. will recall 437,000 hybrid vehicles globally to fix faulty braking systems on its four models, including the Prius, adding to almost 8 million vehicles the company is repairing for separate defects. The world’s biggest carmaker will halt sales of SAI, HS250h and Prius plug-in hybrids, said President Akio Toyoda , speaking at a Tokyo press conference. The action threatens to further tarnish Toyota’s reputation in its home market , where the Prius was last year’s top-selling vehicle, as the company grapples with its worst recall crisis. Toyota has lost about $31 billion in market value since Jan. 21, when it began recalling millions of vehicles for defects linked to unintended acceleration. “So far Toyota’s recalls have been overseas, but this time it’s in its home market,” said Tatsuya Mizuno , director of Mizuno Credit Advisory in Tokyo. “The Prius has been a rising star for the company, and Toyota won’t be able to avoid a worsening image. Toyota raised its full-year earnings forecast the other day, but it’s far too optimistic.” The vehicles to be repaired include 199,666 2010 Prius hybrids, 10,820 SAIs, 12,423 Lexus HS250h cars and 159 Prius plug-in hybrids, according to the filing to the ministry. U.S. Recall Toyota also intends to recall the 2010 Prius in the U.S., according to a person familiar with the plans, who declined to be identified as the information isn’t yet public. The carmaker will brief the press about measures it will take regarding the Prius in Japan and overseas at 3:30 p.m. in Tokyo, company spokeswoman Ririko Takeuchi said by phone. Toyoda, 53, will meet with Japan’s Transport Minister Seiji Maehara at 5:30 p.m., according to the ministry. Toyota rose 2.9 percent to 3,375 yen at the close of trading in Tokyo. The stock has declined 19 percent since Jan. 21. “Toyota is finally taking measures,” said Mamoru Kato , an analyst at Tokai Tokyo Research Center in Nagoya, Japan. “This is fueling optimism that Toyota is moving in a clear direction to avoid further consumer anxiety.” The U.S. Transportation Department is also investigating reports of Prius brake failures. The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document. Europe Toyota plans to recall a total of at least 270,000 Prius cars in Japan and the U.S., according to the person familiar with the plan. Juergen Stolze , a Toyota spokesman in Cologne, Germany, said yesterday the carmaker will decide whether to recall Prius cars in Europe by Feb. 10. The Toyota City, Japan-based carmaker said last week it modified braking software on newly built Priuses in late January. The latest Prius model is built in Japan. The model, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak , is the world’s best-selling hybrid car. Toyota has sold 197,000 units of the latest version in Japan and 103,200 in the U.S., according to the company. Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied, because of the anti-lock brake system. The carmaker has said it received complaints about Prius brakes through dealers starting in the last few months of 2009. Unintended Acceleration Toyota said today it stopped shipments of the Lexus HS250h and SAI hybrids from a factory in southern Japan to inspect their braking systems. The vehicles included in today’s recall are Prius hybrids built between April 20, 2009 and Jan. 27, plug-in Prius hybrids built between Nov. 25, 2009 and Feb. 5, SAI hybrids built between Oct. 2, 2009 and Feb. 8, and Lexus HS250h hybrids built between June 10, 2009 and Feb. 8. The brake problems aren’t related to incidents of sudden acceleration in the U.S., according Toyota’s Takeuchi. Toyota has recalled almost 8 million vehicles on five continents to repair defects that have been linked to unintended acceleration. Those recalls may cut demand for the company’s vehicles by 100,000 units, Toyota said last week. The company on Feb. 4 predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time. Toyota faces at least 34 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of car value to a return of profits. It also faces at least 12 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration. Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman , the U.S. House of Representatives’ Energy and Commerce Committee chairman. To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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Toyota Extends Global Recalls to 437,000 Hybrids to Repair Faulty Brakes

February 9, 2010

By Yuki Hagiwara and Makiko Kitamura Feb. 9 (Bloomberg) — Toyota Motor Corp. will recall 437,000 hybrid vehicles globally to fix faulty braking systems on its four models, including the Prius, adding to almost 8 million vehicles the company is repairing for separate defects. The world’s biggest carmaker will halt sales of SAI, HS250h and Prius plug-in hybrids, said President Akio Toyoda , speaking at a Tokyo press conference. The action threatens to further tarnish Toyota’s reputation in its home market , where the Prius was last year’s top-selling vehicle, as the company grapples with its worst recall crisis. Toyota has lost about $31 billion in market value since Jan. 21, when it began recalling millions of vehicles for defects linked to unintended acceleration. “So far Toyota’s recalls have been overseas, but this time it’s in its home market,” said Tatsuya Mizuno , director of Mizuno Credit Advisory in Tokyo. “The Prius has been a rising star for the company, and Toyota won’t be able to avoid a worsening image. Toyota raised its full-year earnings forecast the other day, but it’s far too optimistic.” The vehicles to be repaired include 199,666 2010 Prius hybrids, 10,820 SAIs, 12,423 Lexus HS250h cars and 159 Prius plug-in hybrids, according to the filing to the ministry. U.S. Recall Toyota also intends to recall the 2010 Prius in the U.S., according to a person familiar with the plans, who declined to be identified as the information isn’t yet public. The carmaker will brief the press about measures it will take regarding the Prius in Japan and overseas at 3:30 p.m. in Tokyo, company spokeswoman Ririko Takeuchi said by phone. Toyoda, 53, will meet with Japan’s Transport Minister Seiji Maehara at 5:30 p.m., according to the ministry. Toyota rose 2.9 percent to 3,375 yen at the close of trading in Tokyo. The stock has declined 19 percent since Jan. 21. “Toyota is finally taking measures,” said Mamoru Kato , an analyst at Tokai Tokyo Research Center in Nagoya, Japan. “This is fueling optimism that Toyota is moving in a clear direction to avoid further consumer anxiety.” The U.S. Transportation Department is also investigating reports of Prius brake failures. The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document. Europe Toyota plans to recall a total of at least 270,000 Prius cars in Japan and the U.S., according to the person familiar with the plan. Juergen Stolze , a Toyota spokesman in Cologne, Germany, said yesterday the carmaker will decide whether to recall Prius cars in Europe by Feb. 10. The Toyota City, Japan-based carmaker said last week it modified braking software on newly built Priuses in late January. The latest Prius model is built in Japan. The model, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak , is the world’s best-selling hybrid car. Toyota has sold 197,000 units of the latest version in Japan and 103,200 in the U.S., according to the company. Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied, because of the anti-lock brake system. The carmaker has said it received complaints about Prius brakes through dealers starting in the last few months of 2009. Unintended Acceleration Toyota said today it stopped shipments of the Lexus HS250h and SAI hybrids from a factory in southern Japan to inspect their braking systems. The vehicles included in today’s recall are Prius hybrids built between April 20, 2009 and Jan. 27, plug-in Prius hybrids built between Nov. 25, 2009 and Feb. 5, SAI hybrids built between Oct. 2, 2009 and Feb. 8, and Lexus HS250h hybrids built between June 10, 2009 and Feb. 8. The brake problems aren’t related to incidents of sudden acceleration in the U.S., according Toyota’s Takeuchi. Toyota has recalled almost 8 million vehicles on five continents to repair defects that have been linked to unintended acceleration. Those recalls may cut demand for the company’s vehicles by 100,000 units, Toyota said last week. The company on Feb. 4 predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time. Toyota faces at least 34 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of car value to a return of profits. It also faces at least 12 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration. Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman , the U.S. House of Representatives’ Energy and Commerce Committee chairman. To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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Toyota Halts Lexus, SAI Hybrid Shipments on Same Brake Problems as Prius

February 8, 2010

By Makiko Kitamura and Tetsuya Komatsu Feb. 9 (Bloomberg) — Toyota Motor Corp. stopped shipments of its Lexus HS250h and SAI hybrids from a factory in southern Japan due to possible brake problems with the models, which use the same system as Prius hybrid cars. Shipments from the factory in Kyushu were stopped yesterday to inspect the models, Norifumi Wakikawa , a spokesman at Toyota Motor Kyushu, said by phone today. Toyota, the world’s biggest carmaker, is expected to recall the 2010 version of the Prius in Japan this week to repair a problem with the braking system. Scrutiny of the vehicles may further tarnish Toyota’s reputation after the Toyota City, Japan-based company recalled almost 8 million cars globally to repair separate defects linked to unintended acceleration. Those recalls have yet to include any cars in Japan, where the Prius was last year’s top-selling model. Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied because of the anti-lock brake system. The company plans to recall at least 270,000 Priuses in Japan and the U.S., a person familiar with the matter said, declining to be identified as the information isn’t yet public. Japan, U.S. Recalls Ririko Takeuchi , a Toyota spokeswoman in Tokyo, declined to say whether the company will recall the Prius. The carmaker may notify Japan’s Transport Ministry of plans to recall the model as early as today, followed by a similar action in the U.S., Nikkei English News said, without citing anyone. Juergen Stolze , a Toyota spokesman in Cologne, Germany, said yesterday the carmaker will decide by Feb. 10 whether to recall Prius cars in Europe. Toyota rose 1.8 percent to 3,340 yen as of 9:57 a.m. on the Tokyo Stock Exchange. The company has lost about $33 billion in market value since Jan. 21, when it announced a recall of 2.3 million U.S. vehicles for defects linked to unintended acceleration. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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Toyota Said to Recall Prius Cars to Fix Brake Flaw Wozniak Calls `Scary’

February 8, 2010

By Tetsuya Komatsu and Yuki Hagiwara Feb. 8 (Bloomberg) — Toyota Motor Corp. will recall its 2010 model Prius hybrid car in Japan this week to repair a problem with the vehicle’s braking system, two people familiar with the matter said, adding to global recalls of almost 8 million autos for separate defects. The world’s largest automaker plans to recall at least 270,000 of the gasoline-electric hatchbacks in Japan and the U.S., one person said, declining to be identified as the information isn’t yet public. Juergen Stolze , a Toyota spokesman in Germany, said the carmaker will decide whether to recall Prius cars in Europe by Feb. 10. A Prius recall may further tarnish Toyota’s reputation after the Toyota City, Japan-based company lost about $33 billion in market value amid expanding global recalls of other models to repair defects linked to unintended acceleration. Those recalls have yet to include any vehicles in Japan , where the Prius was last year’s top-selling model. “It’s really shocking,” said Koichi Ogawa , chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo. “The damage to Toyota will be big.” Ririko Takeuchi , a spokeswoman for Toyota in Tokyo, said the company hasn’t decided whether to recall the Prius. Stolze, speaking by phone from Cologne, Germany, declined to say what the carmaker’s decision will be regarding recalls in Europe. There haven’t been any proven cases of brake failures in the Prius in Europe, he said. ‘Kind of Scary’ Japan’s government ordered Toyota to investigate the Prius after receiving complaints from drivers. The company has been looking into reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied, because of the anti-lock brake system. “It sounds kind of scary,” said Steve Wozniak , co-founder of Apple Inc., who drives a 2010 Prius. “You sure don’t want your car to continue on, on an icy road, when it’s supposed to be stopping.” The New York Times reported that Toyota will recall at least 311,000 Priuses. Toyota has sold at least 332,000 units of the 2010 Prius, including 197,000 in Japan and 103,200 in the U.S., spokesman Takanori Yokoi said. The model is built in Japan. Sai, Lexus Toyota also plans to recall Lexus HS250h and Sai hybrid models in Japan this month, one of the people said. The company is considering steps dealers can take for current Prius owners, including exchanging some parts, the person said. Toyota fell 1.1 percent to close at 3,280 yen in Tokyo trading today. The stock has declined 22 percent since Jan. 21, when the carmaker began recalling vehicles to fix gas pedals linked to unintended acceleration. Wozniak, 59, who said earlier this month he had also experienced incidents of unintended acceleration in his Prius, said he would probably take the car to a dealer to have the brake system checked, “but not right away.” He said the reports that have led to recalls of Toyota vehicles aren’t statistically significant and that he remains a fan of the Prius because of its environmental benefits. “All these problems should get fixed, but they shouldn’t stop people from buying the Prius,” Wozniak said in a phone interview. “There are bugs in every product.” U.S. Investigation Toyota said last week it had received complaints about Prius brakes through dealers starting in the last few months of 2009. Toyota changed the design of the brake software at the end of January, the company said. The U.S. Transportation Department is also investigating reports of Prius brake failures. The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document. Toyota told U.S. dealers to expect an update early this week on steps the company plans to take to address the complaints, according to John Hanson , a spokesman for the carmaker’s sales unit in the country. The brake complaints aren’t related to the reports of unintended acceleration, according to Toyota’s Takeuchi. Toyota has recalled at least 7.8 million vehicles on five continents to repair defects that have been linked to unintended acceleration. Those recalls may cut demand for the company’s vehicles by 100,000 units, Toyota has said. Return to Profit The company last week predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time. Toyota faces at least 29 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of car value to a return of profits. It also faces at least 10 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration. Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman , the U.S. House of Representatives’ Energy and Commerce Committee chairman. To contact the reporters on this story: Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net ; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

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Toyota Said to Plan Recall of Prius Hybrids in Japan This Week

February 8, 2010

By Tetsuya Komatsu and Yuki Hagiwara Feb. 8 (Bloomberg) — Toyota Motor Corp. will recall its 2010 model Prius hybrid car in Japan this week to repair a problem with the vehicle’s braking system, two people familiar with the matter said, adding to global recalls of almost 8 million autos for separate defects. The world’s largest automaker plans to recall at least 270,000 of the gasoline-electric hatchbacks in Japan and the U.S., one person said, declining to be identified as the information isn’t yet public. Juergen Stolze , a Toyota spokesman in Germany, said the carmaker will decide whether to recall Prius cars in Europe by Feb. 10. A Prius recall may further tarnish Toyota’s reputation after the Toyota City, Japan-based company lost about $33 billion in market value amid expanding global recalls of other models to repair defects linked to unintended acceleration. Those recalls have yet to include any vehicles in Japan , where the Prius was last year’s top-selling model. “It’s really shocking,” said Koichi Ogawa , chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo. “The damage to Toyota will be big.” Ririko Takeuchi , a spokeswoman for Toyota in Tokyo, said the company hasn’t decided whether to recall the Prius. Stolze, speaking by phone from Cologne, Germany, declined to say what the carmaker’s decision will be regarding recalls in Europe. There haven’t been any proven cases of brake failures in the Prius in Europe, he said. ‘Kind of Scary’ Japan’s government ordered Toyota to investigate the Prius after receiving complaints from drivers. The company has been looking into reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied, because of the anti-lock brake system. “It sounds kind of scary,” said Steve Wozniak , co-founder of Apple Inc., who drives a 2010 Prius. “You sure don’t want your car to continue on, on an icy road, when it’s supposed to be stopping.” The New York Times reported that Toyota will recall at least 311,000 Priuses. Toyota has sold at least 332,000 units of the 2010 Prius, including 197,000 in Japan and 103,200 in the U.S., spokesman Takanori Yokoi said. The model is built in Japan. Sai, Lexus Toyota also plans to recall Lexus HS250h and Sai hybrid models in Japan this month, one of the people said. The company is considering steps dealers can take for current Prius owners, including exchanging some parts, the person said. Toyota fell 1.1 percent to close at 3,280 yen in Tokyo trading today. The stock has declined 22 percent since Jan. 21, when the carmaker began recalling vehicles to fix gas pedals linked to unintended acceleration. Wozniak, 59, who said earlier this month he had also experienced incidents of unintended acceleration in his Prius, said he would probably take the car to a dealer to have the brake system checked, “but not right away.” He said the reports that have led to recalls of Toyota vehicles aren’t statistically significant and that he remains a fan of the Prius because of its environmental benefits. “All these problems should get fixed, but they shouldn’t stop people from buying the Prius,” Wozniak said in a phone interview. “There are bugs in every product.” U.S. Investigation Toyota said last week it had received complaints about Prius brakes through dealers starting in the last few months of 2009. Toyota changed the design of the brake software at the end of January, the company said. The U.S. Transportation Department is also investigating reports of Prius brake failures. The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document. Toyota told U.S. dealers to expect an update early this week on steps the company plans to take to address the complaints, according to John Hanson , a spokesman for the carmaker’s sales unit in the country. The brake complaints aren’t related to the reports of unintended acceleration, according to Toyota’s Takeuchi. Toyota has recalled at least 7.8 million vehicles on five continents to repair defects that have been linked to unintended acceleration. Those recalls may cut demand for the company’s vehicles by 100,000 units, Toyota has said. Return to Profit The company last week predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time. Toyota faces at least 29 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of car value to a return of profits. It also faces at least 10 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration. Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman , the U.S. House of Representatives’ Energy and Commerce Committee chairman. To contact the reporters on this story: Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net ; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

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Toyota Tells U.S. Dealers to Expect Update Next Week on Prius Brake Plan

February 6, 2010

By Alan Ohnsman Feb. 6 (Bloomberg) — Toyota Motor Corp. , grappling with record U.S. recalls, said it told U.S. dealers to expect an update early next week on steps the company plans to take to address complaints over brakes on the 2010 model Prius hybrid. “We notified dealers in a short letter yesterday that we believe we’ll have more specific information on our plans for Prius next week,” said John Hanson , a spokesman for Toyota’s U.S. sales unit. “We know dealers have customers coming to them who are concerned and we’re trying to give them as much information as we can, as fast as we can.” Toyota, the world’s largest automaker, didn’t tell dealers it will make a formal “announcement” on a fix for Prius and hasn’t yet determined whether a recall is necessary, he said. Should the Toyota City, Japan-based company recall the latest version of Prius, the world’s best-selling hybrid car, it would add to the perception of quality problems at Toyota. The company has already recalled 5.6 million cars and light trucks in the U.S. since November to correct flaws linked to unintended acceleration, an issue Toyota says isn’t connected to Prius brakes. Japan’s Nikkei newswire reported last week that Toyota would recall 270,000 Priuses in Japan and the U.S. to correct software in the braking system. Toyota hasn’t confirmed that report. Complaints in U.S. The National Highway Traffic Safety Administration said it has 124 complaints from U.S. drivers about Prius brakes. Toyota has said it’s investigating reports that Prius owners driving at low speeds on bumpy or icy roads have experienced moments in which the car continues to coast for about a second after the brakes are applied because of the anti-lock brake system. NHTSA isn’t aware of a plan by Toyota to announce a fix for brakes on Prius hybrids next week, Olivia Alair , a spokeswoman for the agency, said in an e-mailed message. The company said this week it altered software on Priuses built in Japan last month to correct the issue. A class action suit against the automaker was filed in Canada yesterday over alleged defects in the Prius braking system. Toyota’s U.S. sales unit is based in Torrance, California. To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Toyoda Apologizes for Recalls, Says Carmaker Still Weighing Prius Measures

February 5, 2010

By Makiko Kitamura Feb. 5 (Bloomberg) — Toyota Motor Corp. President Akio Toyoda apologized for the company’s growing recall crisis in his first public appearance since the carmaker halted U.S. sales and production of its best-selling models last month. The company will set up a committee on quality control after recalls related to unintended acceleration have swollen to almost 8 million vehicles worldwide, Toyoda, the 53-year-old grandson of the company’s founder, said in Nagoya, Japan. Toyota, the world’s largest automaker , has lost almost $34 billion in market value in the past two weeks and today had its “AA” debt rating put under review by Standard & Poor’s as the recalls erode its brand image. The company, a global benchmark for manufacturing, will hire outside experts for its quality committee, said Executive Vice President Shinichi Sasaki . “We aim to regain customer trust,” Toyoda told reporters. “We should admit mistakes where they were made.” Separately, Japan’s government has ordered Toyota to investigate complaints from customers about brake failures in the latest version of its Prius hybrid car, the nation’s best- selling vehicle last year. The company is still considering measures related to the Prius, Toyoda said. “The company lacks crisis management,” said Koji Endo , managing director of Advanced Research Japan. “We are left with the impression, ‘too late, too little,’” he said. U.S. Probe The U.S. Transportation Department is also investigating reports of brake failures in the Prius . The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document. Toyota, based in Toyota City, Japan, said this week it began using modified braking software on Priuses built since January. The newest Prius model is built exclusively in Japan. “If the company recalls the Prius, they really have a serious problem,” Endo said. Toyota’s announcements today could have been made three months ago, the analyst said. The Prius, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak , is the world’s best-selling hybrid vehicle. Toyota has sold 1.615 million of the latest version worldwide, including 572,800 in Japan and 833,200 in North America, according to the company. Prius Complaints Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied because of the anti-lock brake system. The carmaker said yesterday it had received complaints about Prius brakes through dealers starting in the last few months of 2009. Toyota changed the design of the brake software at the end of January, the company said. Toyota is also examining HS250h and Sai hybrid models and considering steps dealers can take for current Prius owners, including exchanging some parts. The brake complaints aren’t related to incidents of sudden acceleration in the U.S., company spokeswoman Ririko Takeuchi said. The recalls related to acceleration may cut demand for the company’s vehicles by 100,000 units, Toyota said yesterday. Profit Forecast The company yesterday predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time. Toyota faces at least 29 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of cars’ value to a return of profits. It also faces at least 10 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration. Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman , the U.S. House of Representatives’ Energy and Commerce Committee chairman. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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Video: Possible Prius Recall May Stir Interest in Other Hybrids: Video

February 5, 2010

Feb. 5 (Bloomberg) — Bloomberg’s Gigi Stone reports on the outlook for Toyota Motor Corp.’s Prius hybrid car, which is under investigation by the U.S. Transportation Department for reports of defective brakes in its 2010 model. (Source: Bloomberg)

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LaHood’s `On the Fly’ Toyota Statements Accelerate Confusion Over Crisis

February 4, 2010

By John Hughes Feb. 4 (Bloomberg) — U.S. Transportation Secretary Ray LaHood , charged with getting to the bottom of Toyota Motor Corp. ’s vehicle-safety crisis, served up more confusion than clarity yesterday. At about 9:30 a.m., LaHood told reporters that drivers of recalled Toyota cars and trucks should “exercise caution” until repairs can be made. Then he told a House panel that owners should “stop driving” them. Then he told reporters his stop-driving comment was “obviously a misstatement.” Toyota’s American depositary receipts, each representing two ordinary shares, gyrated on his remarks. They fell as much as 8 percent to a 10-month intraday low of $71.90 in New York Stock Exchange composite trading after he said owners shouldn’t drive, and then climbed to close at $73.49 following the retraction. For the 64-year-old LaHood, barely a year into the job as the only registered Republican member in President Barack Obama ’s cabinet, the day may have reinforced a principal of behavior in the nation’s capital, said Robert Johnson , former Transportation Department chief of staff under President George W. Bush . “You can’t open your mouth whenever you feel like it and expect to get away with it, especially in Washington,” Johnson said in an interview. Toyota’s Crisis “The secretary has been consistent over the last week,” said his spokeswoman, Olivia Alair. “He’s consistently said Toyota needed to be pushed, but they’re doing the right thing now.” The context for LaHood’s remarks was the biggest crisis to hit Toyota, the world’s largest automaker. Some of its vehicles unexpectedly accelerate, sometimes causing drivers to lose control. Henry Waxman , a California Democrat who heads a House committee that plans hearings on the matter, this week linked the accelerations to 19 deaths in the U.S. Toyota began shipping steel plates to U.S. dealers on Feb. 1 as a fix for sticky gas pedals that the company says have caused the recall of about 2.57 million vehicles in the U.S. and Canada. In addition to tarnishing Toyota’s reputation for quality, the turn of events has wiped out $29.5 billion in Toyota market value since the current recall began on Jan. 21. “It just points out that no one is ever really ready for the intensity of a crisis like this,” Jon Harmon , a Chicago communications consultant, said of LaHood’s don’t-drive comments. “He should not be making policy pronouncements on the fly,” said Harmon, who wrote “Feeding Frenzy: Inside the Ford- Firestone Crisis,” a book about fatal accidents linked to Ford Explorers equipped with Firestone tires that led to recalls about a decade ago. ‘Extremely Confused’ For LaHood to say that Toyota owners should stop driving the cars was “very significant,” said Michelle Krebs , senior analyst at auto research firm Edmunds.com, based in Santa Monica, California. “People are extremely confused about whether their Toyotas are safe to drive,” Krebs said. “We have struggled with what we should say, and we aren’t the top safety person in the country.” LaHood has appeared to change course at other times when discussing the Toyota recalls. He told WGN Radio in Chicago Jan. 27 that the reason Toyota decided on the recall was “because we asked them to.” The following day, when asked by a reporter whether Toyota did the recall at the government’s request, LaHood said the company acted because it was following the law. “I have no criticism of Toyota on this,” LaHood said. “They did what they’re supposed to do.” On Feb. 2, he told the Associated Press that Toyota was “a little safety deaf” and federal officials had to “wake them up” to the seriousness of safety issues. Unfamiliar Role Asked yesterday why his comments changed from the previous week, LaHood said, “because I talked to our people, and I did a more complete review.” At the time of his earlier comments, he felt that Toyota had done all it should have done, he said. LaHood was forced into the leadership role on the Toyota recall because the National Highway Traffic Safety Administration , which is part of his agency, didn’t have a confirmed chief until last month, said Joan Claybrook , a former NHTSA chief. “The secretary of Transportation rarely gets involved in these kinds of recalls,” Claybrook said. “He’s probably not used to the kind of intense scrutiny over these kinds of enforcement actions.” Still, LaHood has pushed Toyota to be responsive, she said. “He has no problem dealing with controversy,” said Claybrook, former head of the Washington-based advocacy group Public Citizen. “He certainly has been tough dealing with Toyota.” Obama, Emanuel Ties Before becoming secretary in January 2009 LaHood served seven terms in the U.S. House of Representatives for a district that includes Peoria, in Obama’s home state of Illinois. He has known Obama for more than a decade and is close to Rahm Emanuel , the White House chief of staff who also was an Illinois congressman. Bob Michel , a former Illinois representative who was the top Republican in the House when LaHood worked as his aide, said LaHood’s comments yesterday won’t blemish his record as secretary. “He’s a very resilient individual,” Michel said. “There’s no sinister move on his part other than just wanting to be sure of safety.” Asked yesterday whether the president still has confidence in LaHood, White House deputy press secretary Bill Burton replied, “You bet.” As for Toyota, the automaker said in a statement: “We appreciate Secretary LaHood’s clarification.” To contact the reporters on this story: John Hughes in Washington at jhughes5@bloomberg.net ;

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GM, Toyota sales in China surge last month

February 4, 2010

GM, Toyota sales in China surge last month

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Toyota: Prius Brakes Have Design Problems

February 4, 2010

TOKYO (Associated Press) – Toyota admitted design problems with the brakes in its prized Prius, adding to the catalog of woes for the world’s No. 1 automaker still reeling from a massive U.S. recall involving faulty gas pedals. Toyota Motor Corp. spokeswoman Ririko Takeuchi said Thursday that Toyota discovered there were design problems with the antilock brake system and corrected them for Prius models sold since late January, including those being shipped overseas. But the company said it was still investigating how to inform people who had bought the gas-electric hybrid cars. Nothing was decided on that front for Prius cars sold overseas, according to Toyota. Complaints about braking problems in the third-generation Prius have been reported in both the U.S. and Japan, combining to some 180, and come amid a global recall of nearly 4.5 million other top-selling vehicles for faulty gas pedals. “We are investigating whether there are defects in the Prius,” Toyota executive Hiroyuki Yokoyama told reporters at Toyota’s Tokyo. The company gave few details of the brake flaw. A major Toyota dealership in Tokyo said the automaker had informed dealers that Prius brakes can sometimes fail to work for less than a second but it had not told owners. “It is disappointing because the Prius was receiving such rave reviews,” said Hiroyuki Naito, a manager at the dealership. The latest model Prius hit showrooms last May. The problem with the Prius — the best-selling hybrid in the world and Toyota’s flagship model — is a big embarrassment for the automaker in its home turf Japan and another blow in the U.S., its biggest market. In recent weeks, the automaker had answered questions about its overseas recalls for gas pedals with assurances that problems didn’t extend to Japanese vehicles, implying that it was doing a better job with quality control in Japan. The transport minister is ordering an investigation and said a recall for the Prius should be considered. U.S. authorities are also investigating. Earlier in Washington, U.S. Transportation Secretary Ray LaHood startled the public with a comment, which he later retracted, that Americans should park their recalled Toyotas unless driving to dealers for accelerator repairs. The popular gas-electric Prius was not part of the most recent recall over sticking gas pedals in eight top-selling models including the Camry that spanned the U.S., Europe and China. Toyota senior managing director Takahiro Ijichi defended the automaker’s quality standards. “We have not sacrificed the quality for the sake of saving costs,” he said. “Quality is our lifeline. We want our customers to feel safe and regain their trust as soon as possible.” Toyota for the first time gave an estimate of the costs of the U.S. recall at up to $2 billion with $1.1 billion for the costs for the repairs and $770 million to $880 million in lost sales. The Prius, the world’s best-selling hybrid, has been extremely popular in Japan because of government incentives that made hybrids tax-free. More than 170,000 the new remodeled Prius cars were sold in Japan and about 103,000 have been sold in the U.S. since May. Despite snowballing problems with quality, Toyota said Thursday it returned to profit in the October-December quarter because of healthy sales of its green models including the Prius, and raised its forecast for the fiscal year through March. Net profit for October-December was about $1.7 billion. It forecast a $880 million annual profit compared with its previous forecast for a $2.2 billion loss. Toyota also raised its full year sales outlook to 7.18 million units from 7.03 million. The revised forecast remains lower than the 7.57 million vehicles it sold last fiscal year. And it is unclear how well Toyota sales and profits will hold up in coming months.

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Toyota Owners Ditch Recalled Vehicles for Loaners, If They Can Get Them

February 3, 2010

By Mike Ramsey and Tom Moroney Feb. 4 (Bloomberg) — Rudi Barth stopped driving his 2007 Toyota Avalon sedan without waiting to hear from U.S. Transportation Secretary Ray LaHood. As LaHood issued and then retracted a call for drivers to stop using recalled Toyota Motor Corp. autos until they are repaired, Barth said his wife had left their car at a dealership in Norwood, Massachusetts, a few days earlier. “If you’re nervous about it, you shouldn’t be driving,” said Barth, 81. Until his car is fixed, the dealer loaned him one. “I wouldn’t say I’m happy about it.” Toyota owners face a barrage of news about the risk of unintended acceleration in their vehicles. LaHood’s reversal highlighted a week of uncertainty about the safety of the 2.3 million U.S. vehicles most recently recalled by Toyota. The eight models covered by the safety action, including the popular Camry and Corolla sedans, are temporarily off the market. “This flip-flop is not helping concerned motorists who are being presented with confusing and contradictory information about the Toyota recall at every turn,” Jeremy Anwyl , chief executive officer of auto research Web site Edmunds.com, based in Santa Monica, California, said in a statement. Toyota, the world’s largest automaker, has recalled a total 7.6 million vehicles worldwide for two different flaws that could lead to unintended acceleration. One fix deals with slipping floor mats that could entrap the accelerator pedal. The other aims to prevent those pedals from sticking or returning slowly after being depressed. Kits Shipped Travis Hall, 31, can’t choose to stop driving his 2007 Toyota Tundra pickup until his pedal is repaired. “It makes perfect sense, but I don’t have that option,” said Hall, taking a break from baking bagels in Greensboro, North Carolina. He drives his truck about 14 miles (23 kilometers) round trip to his job at the Bruegger’s bagel chain. “I have to work.” Hall’s wife is at home with their 4-year-old son, and he prefers to be the one driving the vehicle that might take off uncontrollably. “I can’t risk it tearing up on them,” he said. He’s had no sticking of the accelerator pedal on the Tundra, which he’s owned for 1 1/2 years. He drives it only for work and uses the family’s Hyundai Motor Co. Santa Fe sport- utility vehicle elsewhere, he said. Toyota ‘Confident’ “Our message to Toyota owners is this — if you experience any issues with your accelerator pedal, please contact your dealer without delay,” Toyota said in a statement yesterday. “If you are not experiencing any issues with your pedal, we are confident that your vehicle is safe to drive.” A Transportation Department official said Feb. 2 the government is investigating whether an electronic throttle system is the cause, as at least 17 lawsuits allege. Toyota said this week it would fix the sticky-pedal defect by having dealers install a steel plate to reduce friction that can develop with wear and condensation. Repair kits have begun to be shipped to dealers around the country. The U.S. recall for pedals that stick applies to three SUVs from these model years, the 2009-2010 RAV4, 2010 Highlander and 2008-2010 Sequoia. Also covered by the safety action are the 2009-2010 Corolla and 2005-2010 Avalon sedans, some 2007-2010 Camry sedans, 2009-2010 Matrix hatchbacks, and 2007-2010 Tundra. Toyota also has recalled and plans to fix about 5.6 million Toyota- and Lexus -brand cars and trucks in the U.S. and Canada because of floor mats that might trap gas pedals and cause vehicles to speed out of control. It includes the 2007-2010 Lexus ES350, 2006-2010 Lexus IS250 and 2006-2010 Lexus IS350. About 2.1 million Toyotas are covered by both recalls. ‘Unofficial Spokesperson’ Mike Stevens, 47, calls himself “the unofficial spokesperson for the Camry” after leasing 4 of the sedans in the last 12 years. LaHood’s comments urging Toyota owners to stop driving went too far, Stevens said, and he was happy for the retraction. “Someone probably gave him a smack on the side of the head,” said Stevens, of Northborough, Massachusetts, 30 miles west of Boston. A regional account representative for Sun Trust Mortgage Inc. , he spends part of most workdays driving a Camry. “They realized how many people might be driving to Toyota dealerships, and how inundated they might be.” ‘I’m Terrified’ Scott McLeigh, 42, doesn’t think it’s an overreaction. The Ormond Beach, Florida, man doesn’t want to drive his 2007 Tundra, and is dubious that either recall fixes the issue. “I’m terrified to even drive to the grocery store,” said McLeigh, who is married with two children, 4 and 6. “I definitely wouldn’t put the kids in it.” McLeigh’s concern about whether the recalls will prevent unintended acceleration also worries Susan Baker, 42, a Los Angeles resident with a 2005 Prius , which is covered by the floor-mat recall. “We’ve taken out the floor mat and we’ve practiced the method for shutting off the car — well, at least mentally — but still it does not leave us with very much confidence,” Baker said. “What makes us the most nervous is that when we first heard about this it didn’t make sense to us that this would cause the problem,” she said. “I just have a hard time believing that this is — the floor mat is — the issue.” To contact the reporters on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net ; Tom Moroney in Boston at tmorrone@bloomberg.net .

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Toyota Pressured by U.S. to Fix Recalled Vehicles; LaHood Retracts Remark

February 3, 2010

By Angela Greiling Keane Feb. 3 (Bloomberg) — Owners of recalled Toyota Motor Corp. vehicles should stop driving them until the company fixes a defect that is causing sudden acceleration, U.S. Transportation Secretary Ray LaHood said. “Stop driving it and take it to a Toyota dealer,” LaHood said today at a House Appropriations panel hearing in Washington. The comment deepens the crisis faced by the world’s largest automaker, which has lost 19 percent in market value since the recalls began and seen its reputation for quality damaged. Toyota said this week it would fix the defect by having dealers install shims in accelerators. A Transportation Department official said yesterday the government is investigating to see whether an electronic throttle system is the cause, as at least seven lawsuits allege. “Up until the last couple days that we had all expected the consumer hit wouldn’t be as serious as the media hit they were taking,” said Wes Brown , an analyst with market research firm Iceology in Los Angeles. “Now things may start to shift that image hit to the consumer side that had been steadfastly loyal. They are really starting to run the risk of escalating things tremendously.” Toyota spokesman Brian Lyons declined to comment immediately on LaHood’s statement. Shares Decline Toyota’s American depositary receipts, each representing two ordinary shares, fell $5.50, or 7 percent, to $72.68 at 11:16 a.m. in New York Stock Exchange composite trading. The ADRs tumbled to a 10-month intraday low, touching $71.90. Before his testimony, LaHood told reporters in Washington he will phone Toyota President Akio Toyoda to be certain his agency “pushed them over the line” so that Toyota is doing all it can to resolve defects. Separately, the Toyota City, Japan-based carmaker has been ordered by Japan’s government to investigate brake-related problems with the latest version of its Prius hybrid car, the nation’s transportation ministry said today. The ministry said it has received 14 complaints related to Prius brakes. It has also asked other carmakers to look into similar reports. Such requests are “routine,” said Masaya Ota , an official in the ministry’s recall division. Toyota began shipping steel plates to U.S. dealers on Feb. 1 as a fix for sticky gas pedals that have caused the carmaker to recall about 2.57 million vehicles in the U.S. and Canada. “We know what the problem is,” Jim Lentz , Toyota’s president of U.S. sales, said in an interview on Bloomberg Television on Feb. 1. “We have the fix.” Recalled Models The U.S. recall for pedals that stick applies to model years 2009-2010 RAV4, 2010 Highlander and 2008-2010 Sequoia sport-utility vehicles, 2009-2010 Corolla and 2005-2010 Avalon sedans, some 2007-2010 Camry sedans, 2009-2010 Matrix hatchbacks, and 2007-2010 Tundra pickups, according to Toyota. Toyota also has recalled and plans to fix about 5.6 million Toyota- and Lexus-brand cars and trucks in the U.S. and Canada because of floor mats that might trap gas pedals and cause vehicles to speed out of control. Some Toyota brand vehicles are affected by both types of recalls. The investigation of the Prius in Japan could undermine sales in Toyota’s home market , where it hasn’t recalled any vehicles due to the sudden-acceleration issue. The model was Japan’s best-selling vehicle in 2009. “The Prius is Toyota’s flagship model, it’s key to the future,” said Ashvin Chotai , managing director of London-based Intelligence Automotive Asia Ltd., a consulting company. “If that model gets tainted, that would suggest Toyota’s crisis has moved on to the next level.” Lawsuit Allegations In the U.S., the National Highway Traffic Safety Administration, part of the Transportation Department, hadn’t found evidence as of Feb. 1 that anything other than sticky or trapped accelerators caused unintended acceleration, the Transportation Department official said. At least 15 lawsuits seeking class action status have been filed against Toyota on the acceleration issue, and seven of them claim an electronic throttle system called ETCS-i is at fault instead of the pedals. In cars with the ETCS-i system, the engine’s throttle is controlled by electronic signals, which are sent from a sensor that detects how far the gas pedal is depressed. The signals are transmitted to a computer module that controls how much the throttle opens. Lawyers claiming an electronic defect contend that floor mats or stuck pedals don’t explain the sudden-acceleration incidents that triggered their lawsuits. ‘Sitting Dead Still’ Edgar Heiskell , an attorney from Charleston, West Virginia, who represents the family of a Michigan woman who died when her 2005 Toyota Camry hit a tree at almost 80 miles an hour (129 kilometers per hour), said her car didn’t have a floor mat. She stood on the brake, attempting to stop the car after it accelerated from a speed of 25 miles per hour, he said. The suit was filed in November. Heiskell also has filed a West Virginia suit against Toyota seeking class-action status. In a Texas lawsuit filed on Jan. 29, plaintiff Alfred Pena said his 2008 Toyota Avalon unexpectedly accelerated at a stop sign on Jan. 14, causing a collision. He wasn’t injured, said Robert Hilliard , an attorney representing Pena. Pena’s wife, Sylvia, had a previous episode of unintended acceleration that didn’t result in an accident, Hilliard said. Sylvia Pena “was sitting dead still,” and the car accelerated as she released the brake before she touched the gas pedal, Hilliard, of Corpus Christi, Texas, said in an interview. “My belief is that fixed Toyotas with new pedals will still inadvertently accelerate,” Hilliard said. NHTSA tested throttle electronics last year in response to a petition from a 2007 Lexus ES 350 owner who had experienced sudden acceleration of his vehicle. The agency denied the petition in October after subjecting the same model of car to “multiple electrical signals” and “magnetic fields.” ‘Exhaustive Testing’ Toyota said at the time that the October decision marked the fifth in which the agency had rejected similar requests to investigate company vehicles for defects including electronics related to unintended acceleration. “In terms of electronics of the vehicle, we’ve done exhaustive testing and we’ve found no issues with the electronics,” Toyota’s Lentz said on a conference call with reporters Feb. 1. Toyota, as required by law, stopped selling eight vehicles recalled in the U.S. last week. The company said it will begin fixing accelerator pedals, which were supplied by Elkhart, Indiana-based CTS Corp. , this week, with some dealerships preparing to do repairs around the clock. The Transportation Department and its auto safety agency have been called to testify at two congressional hearings on the handling of the Toyota recalls. “While Toyota is taking responsible action now, it unfortunately took an enormous effort to get to this point,” LaHood said yesterday in an e-mailed statement. The department is “continuing to review possible defects.” House Hearings A House Oversight and Government Reform Committee panel will hold a hearing on the recalls on Feb. 10, followed by the House Energy and Commerce Committee on Feb. 25. Representative Bart Stupak , a Michigan Democrat who serves on both committees scheduled to question Toyota, said in a letter to Lentz that his public statements on Feb. 1 were “different than the representations” Toyota officials made to the Energy and Commerce Committee’s staff last week. Asked whether Toyota “could be certain that floor mat entrapment and sticking accelerator pedals fully explained” the causes of unintended acceleration, company officials said the “causes of unintended acceleration are ‘very, very hard’ to identify,” Stupak said in a letter today to Lentz. Toyota executives at the meeting also said sticking pedals are “unlikely to be responsible” for reports of drivers losing control as cars accelerated past 60 miles per hour, Stupak said in the letter. He asked Lentz to “clarify” the differing accounts. To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net ; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net .

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