Toyota gets intense new U.S. scrutiny
In an extraordinary challenge to Toyota Motor Corp., federal regulators Tuesday launched three far-reaching investigations into both the timeliness and the adequacy of the company’s recalls for problems that can cause sudden acceleration in its vehicles.
The National Highway Traffic Safety Administration demanded a massive volume of Toyota documents, including engineering reports, internal communications and customer complaints involving sudden acceleration. The agency also asked Toyota to identify employees with knowledge of unintended acceleration.
Regulators said they were examining whether Toyota acted promptly in ordering a string of safety recalls and whether the company fully considered other potential causes of sudden acceleration besides interference from floor mats and sticking gas pedals.
“We are seeking to determine whether Toyota viewed the underlying defects too narrowly . . . without fully considering the broader issue of sudden acceleration and any associated safety-related defects that warrant recalls,” said NHTSA in one of three letters to Toyota.
The action represents a significant shift in the agency’s approach to the automaker. NHTSA officials opened at least eight investigations into sudden acceleration in Toyota and Lexus vehicles in the last seven years, but closed six of them without any finding of a defect.
Now, with congressional investigators and others looking into both Toyota’s and NHTSA’s actions, the federal agency is turning up the heat.
“NHTSA is saying it wants to make sure it has all of the information. That is an unprecedented step for the agency,” said Ricardo Martinez, who served for six years as NHTSA administrator in the 1990s. “When I was administrator, Toyota was one of the better citizens, but the issues they are dealing with now are very disappointing. They are not acting like the Toyota that built the brand of trust.”
In the letters to Chris Tinto, vice president of Toyota Motor North America Inc., the agency asked why the company waited years to address a growing volume of complaints about sudden acceleration crashes in its vehicles.
One of the letters questions whether the unintended acceleration problem extends far beyond floor mats and sticking pedals, “and how Toyota assessed potential electromagnetic interference” as a potential cause.
After years of rising motorist complaints, Toyota began its recalls to address sudden acceleration in 2007, but that initial action was limited to two models comprising 55,000 cars. Since then, the company has incrementally expanded the list of vehicles and model years subject to recall and the reasons for the recalls, starting last September.
The growing size and breadth of the recalls have fueled questions about inconsistencies in the company’s position and whether it was fully disclosing everything it knew about the safety problems promptly.
“Only Toyota knows what they knew and when they knew it,” said Nicole Nason, former NHTSA chief at the time of the 2007 recall. “Manufacturers have to give NHTSA whatever safety defect information they have as soon as they have it. This seems to be a problem between NHTSA and Toyota.”
Toyota spokeswoman Cindy Knight said the company would cooperate with the probe.
“Toyota takes its responsibility to advance vehicle safety seriously and to alert government officials of any safety issue in a timely manner,” she said in a statement. “We are reviewing NHTSA’s request and will cooperate to provide all the information they have requested.”
The new investigation by NHTSA also extends the scope of the probe beyond the U.S., where NHTSA normally focuses its attentions.
“We expect that all manufacturers address automotive safety issues quickly and in a forthright manner,” said David Strickland, NHTSA’s administrator.
NHTSA has the power to subpoena information from automakers or punish them for compliance failures, but it rarely exercises it. The agency can fine an automaker as much as $16 million for infractions, but the largest fine it ever levied, against General Motors in 2004, was for $1 million. That fine was for delaying a recall of windshield wipers.
NHTSA said this month that it would consider civil fines against Toyota for its handling of the unintended acceleration issue and potentially dragging its feet on announcing the recalls.
The new investigation is almost certain to deepen Toyota’s image problem, which is already causing a steep slide in sales, a sharp drop in its share price and has even threatened its vaunted financial ratings.
Sudden acceleration in Toyota vehicles has been blamed for at least 34 fatalities, according to complaints filed with NHTSA. The safety agency has received more than 2,000 complaints from Toyota owners about their cars lurching and speeding unintentionally.
Rebecca Lindland, an analyst at consulting firm IHS Global Insight, said she didn’t remember a time when one automaker was involved in recalls of so many models involving so many issues.
Efraim Levy, a Standard & Poor’s equity analyst, recently downgraded the company’s stock to a “hold” from a “buy” because of the fallout from the recalls.
“Toyota has been blindsided by the explosion of developments in regard to the recall and quality issues,” he said.
The NHTSA letters request documents, lists of potentially affected vehicles and chronologies of Toyota’s understanding of the sudden acceleration issue, as well as a full accounting of complaints about the problem registered in the company’s internal databases.
“It’s a unique situation,” said Dale Kardos, who owns a Washington, D.C., consulting firm specializing in auto regulation. “These investigations are usually done very quietly. Usually nobody hears about it until there’s a recall.”
NHTSA’s action comes as Congress plans to hold three hearings that will examine not only Toyota’s but also NHTSA’s handling of the sudden acceleration issue. On Tuesday, Rep. Darrell Issa (R-Vista), the ranking minority member on the House Oversight and Government Reform Committee, which plans on a hearing next week, sent a letter to the Alliance of Automobile Manufacturers, a trade group to which Toyota belongs, seeking information about NHTSA.
Meanwhile, Toyota said Tuesday that it planned to briefly idle two U.S. auto factories to adjust to slowing sales caused by its massive recalls in recent months.
Toyota plans to shut a truck factory in San Antonio for the weeks of March 15 and April 12, Toyota spokesman Mike Goss said. It also will close a Kentucky plant that makes the Camry and Avalon models Feb. 26 and told workers that it might also not produce vehicles on as many as three more days in coming months.
“We are trying to keep a close eye on inventory and match it to meet sales demand,” said Rick Hesterberg, spokesman for Toyota Motor Manufacturing Kentucky.
The problems are hurting Toyota. Although most carmakers posted year-over-year gains in January, Toyota’s sales fell 16%, or 18,500 fewer vehicles.
Ford Motor Co. is now expected to replace the Japanese automaker as the second-biggest seller of autos in the U.S. this year, according to Edmunds.com.