Toyota stands accused of misleading US public, hiding critical defects

By Branko Brkic 23 February 2010

Toyota’s in big trouble in the US, and its 17% share of the country’s car market is under grave and long-term threat. Its affairs are being looked into by a federal grand jury, the Securities and Exchange Commission, and the nation’s energy and commerce authorities, who think its problems go way deeper than sticky floor mats and faulty gas pedals.

But most damaging is that Congressional investigators say Toyota made misleading public statements about the causes of faulty acceleration in its cars. They also took a swipe at US federal safety regulators for conducting perfunctory and ineffective checks. Lawmakers will eventually also have to take a long hard look at themselves, because the crippling inefficiencies they claim plague the federal transportation department’s national highway traffic safety administration (NHTSA) is redolent of their own omissions.

US lawmakers have begun the biggest review of vehicle defects since faulty Firestone tyres were linked to more than 200 deaths in Ford Explorers. House representatives deal with a $14 trillion economy, so the paltry $873 million NHTSA budget – most of which is given to states as highway-safety grants – is really not much. The body spends a miniscule $18 million on enforcing recalls and compliance for the 250 million vehicles on US roads. Compare that with the annual $100 billion or so spent by global car manufacturers on research and development and the failings of House representatives become all too apparent.

The NHTSA says it demanded a recall of Toyotas with sticky floor mats in 2007 after three accidents caused injuries. But it dismissed consumer-prompted alarm bells long before faulty gas pedals and steering problems became world news. Congress is right to wallop the NHTSA, but something far more serious is being laid at the door of the world’s largest car manufacturer. A former top lawyer for Toyota says the company hid evidence of safety defects, fostering a culture of “hypocrisy and deceit”. That’s bound to make Toyota president Akio Toyoda squirm mightily when he faces the House oversight and government reform committee tomorrow.

And then there’s the news that Toyota saved $100 million after it negotiated with US regulators over recalls of its 2007 Toyota Camry and Lexus ES models. This will add to the tensions between Congress, the Japanese company and the NHTSA. Toyota now stands to lose many billions of dollars on more than 8 million recalls worldwide, and many billions more on lost sales. But the biggest loss will be to Toyota’s reputation, and while it won’t be quantifiable for many years to come, it is likely to be gargantuan.

By Mark Allix

Read more: The Washington Post, Bloomberg, UPI, ABC News, Los Angeles Times, CBS News


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