Toyota tried to cut costs on recalls


Toyota Motor Corp. officials took credit for saving hundreds of millions of dollars by persuading federal regulators to limit or avoid safety recalls and rules, a company document released Sunday shows.

The document, an internal company presentation, depicts an automaker focused on getting what it termed “favorable recall outcomes” from regulators, with a goal of saving money even as the death toll climbed from accidents in which Toyota vehicles accelerated uncontrollably.

The presentation by executives in the company’s Washington, D.C., office was addressed to Yoshimi Inaba, Toyota’s top U.S. executive, and dated July 6, 2009 -- months before the sudden-acceleration problem was widely known outside Toyota and the federal highway regulatory agency.

The document, released by congressional investigators, describes the automaker’s regulatory agenda and highlights a wide-ranging string of “wins for Toyota.”

Among the accomplishments cited in the document:

* Saving more than $100 million as it “negotiated” a limited recall in 2007 of 55,000 floor mats in Camry and Lexus ES sedans that had been the subject of a sudden-acceleration investigation. By agreeing to the recall, Toyota avoided a deeper investigation into the problem.

* Delaying the implementation of a federal safety rule requiring side-impact air bags, which saved the company $124 million and the cost of 50,000 hours of labor.

* Stalling or mitigating safety regulations governing roof crush standards, electric shocks from hybrid- and electric-vehicle batteries, and sliding doors on vehicles, which saved Toyota $11 million on its Sienna van.

* Avoiding a government probe of rust problems in the Tacoma pickup -- even though Toyota had issued an internal buyback program because of that issue. It also passed, unscathed, an investigation into the rear hatch on the Sienna, which numerous consumers had complained could fall without warning and cause injury.

In the document, officials also indicated that “sudden acceleration” was one of the “key safety issues” in models including the Lexus ES, Lexus LS, Camry and Tacoma, showing that it was concerned about the problem months before its first major recall.

The document was released by the House Oversight and Government Reform Committee on Sunday, two days before Congress is set to launch a series of public hearings into the automaker’s handling of safety issues. It sheds new light on how much, and for how long, the company knew about the problem of unintended acceleration.

Toyota, scrambling to contain its growing safety crisis, insisted the presentation did not betray a cost-based approach to vehicle security.

“Our first priority is the safety of our customers, and to conclude otherwise on the basis of one internal presentation is wrong,” Toyota spokeswoman Martha Voss said in a statement. “Our values have always been to put the customer first and ensure the highest levels of safety and quality.”

Because the document implies that Toyota was able to steer federal defect investigations and safety rule-making, it also raises questions about the effectiveness of regulators. But Department of Transportation spokeswoman Olivia Alair defended her agency.

“It’s not just the federal government’s job to catch safety defects. It’s the responsibility of automakers to come forward when there is a problem,” Alair said. “Unfortunately, this document is very telling.”

In the last decade, sudden acceleration in Toyota and Lexus vehicles has been blamed in 34 deaths, far more than in any other automaker’s vehicles, federal records show. And consumers have lodged more than 2,000 complaints to the National Highway Traffic Safety Administration about the issue. That agency has mounted eight investigations into sudden acceleration in Toyota vehicles since 2003.

Since late September, Toyota has issued nearly 10 million recall notices worldwide for problems that can cause runaway acceleration, with about 2 million cars and trucks affected by more than one recall. The automaker has blamed the phenomena on just two issues -- sticking pedals and floor mat interference -- but government officials are now investigating whether problems with Toyota’s electronic throttle systems play a role.

On Wednesday, the House Oversight committee will hold a hearing on Toyota’s safety issues. Inaba and Toyota’s worldwide chief executive, Akio Toyoda, are scheduled to appear, along with Transportation Secretary Ray LaHood and NHTSA administrator David Strickland.

“There are significant questions regarding the interactions between Toyota Japan, Toyota North America and government regulators,” said Kurt Bardella, spokesman for Rep. Darrell Issa (R-Vista), the ranking minority member on the committee. “But there are also questions involving what happened in between and whether Toyota was lobbying for less rigid actions from regulators to protect their bottom line.”

Two other congressional hearings on Toyota are also scheduled, one in the House Energy and Commerce Committee and the other before the Senate Commerce Committee. Through the course of the multiple NHTSA investigations, Toyota insisted that complaints of runaway acceleration did not demonstrate a safety trend and that in most instances the problem seemed related to driver error. In response to requests for data from investigators, Toyota declined to provide hundreds of complaints because, it claimed, they were not relevant.

On Aug. 28, less than two months after the Toyota presentation in Washington, a 2009 Lexus ES accelerated to speeds in excess of 100 mph before crashing outside San Diego, taking the lives of a California Highway Patrol officer and three family members.

A month later, Toyota announced a recall of 3.8 million cars and trucks to replace floor mats that it said could interfere with the gas pedal. The automaker denied any defect, prompting a rebuke from NHTSA, which indicated that the design was defective. That recall has since expanded to 5.4 million vehicles.

In January, Toyota recalled an additional 4.1 million autos in the U.S. and Europe to fix accelerator pedals it says can stick and cause sudden acceleration, and stopped sales and production of eight models, representing nearly 60% of its sales volume. This month it recalled nearly 500,000 hybrids, including the 2010 Prius, for a problem with the software controlling its brakes.

Toyota has contended that its problems with sudden acceleration will be resolved by the recalls. In December, it hired an engineering firm, Exponent Inc., to test the electronic throttle system in its vehicles and on Monday plans a media presentation to explain the operation of that technology.

But the automaker’s credibility on safety issues is bound to face increasing skepticism.

“Toyota has long been seen as a company that puts consumers before profits, and unfortunately this document indicates otherwise,” said Rebecca Lindland, auto industry analyst at IHS Global Insight. “This is almost like a worst-case scenario.”