Toyota Recall Study Finds Adversarial Relationship with NHTSA

As a result of the controversy, Toyota sales have been damaged along with its reputation.

Toyota Motor Corporation was its own worst enemy in correcting deadly safety defects, according to a report from its North American Quality Advisory Panel, led by former Transportation Secretary Rodney Slater.

The panel was formed by Toyota more than year ago after U.S. Congressional hearings revealed years of delays in dealing with quality and safety defects because North American Toyota executives had neither the authority, nor apparently the inclination to take action about the growing numbers of complaints about stuck gas pedals. Toyota recall authority still resides in Japan, but Toyota has now increased the level of local input.

The unintended acceleration and stuck gas pedal recalls on millions of Lexus and Toyota vehicles were only undertaken by Toyota after years of neglect and stonewalling when U.S. Department of Transportation officials flew to Japan and insisted on the safety recalls. Japaneses executives were oblivious to the complaints.

Toyota’s U.S. executives were only responsible for sales matters and were powerless to address the issue. Subsequently, DOT imposed record fines on Toyota for delays in addressing the deadly problems. Congressional hearings about Toyota’s conduct were deeply embarrassing for the Japanese company, as well as DOT’s safety branch, the National Highway Traffic Safety Administration. (See Toyota Motor Fined Another $32.425 Million for Safety Defects)

DOT has a huge $79 billion annual budget, but little of the money is allocated to auto safety. Motor vehicles are responsible for 95% of the nation’s transportation deaths but only 1% of the Transportation budget. Worse the enforcement arm of NHTSA has a budget of less than $20 million.

Between July 2003 and April 2009, NHTSA opened eight separate investigations of Toyota and Lexus models for possible unintended acceleration defects. Seventeen of those investigations were caused by consumers or patterns of consumer complaints. In most of those investigations, NHTSA never determined a cause and closed them without recommending any recalls. Worse, in revolving door Washington, former Toyota employees were part of the NHTSA investigation process that lead nowhere.

NHTSA still appears particularly weak in the area of electronic controls and systems – almost half of the value of new vehicles – as automakers continue to rapidly expand their use in all vehicles. And the widely publicized Motor Vehicle Safety Act of 2010, the result of the egregious problems on view during Toyota Congressional hearings, died when a Republican blocked its consideration during the waning days of the 111th Congress last December.

The Toyota Quality Report, since it was paid for by Toyota, has already come under attack for bias from organizations linked to product liability lawyers with their own agendas. Nonetheless, the Report describes Toyota’s attitude toward federal safety regulators as “adversarial.” Unintended acceleration or stuck gas pedal problems are implicated in thousands of incidents and more than 90 alleged deaths.

The Report did not look into the contentious issue of root causes, including potential electronic problems, which could cause a small, perhaps minuscule number of the unintended acceleration problems. Here product liability concerns inhibit – if not prohibit – an honest discussion of Toyota’s product development practices and weaknesses. (See DOT Releases Long Delayed Toyota Unintended Acceleration Report, Exonerates Self, Claiming It Was Right All Along)

As a result of the controversy, Toyota sales have been damaged along with its reputation.

Consolidated vehicle sales for the fiscal year totaled 7.308 million units, an increase of 71,000 compared to the previous fiscal year, lagging industry growth in gradually recovering markets. Toyota sales declined in North America, Europe and Japan.

During the fourth quarter (January – March 2011) Toyota’s profit dropped to 25.4 billion yen (~ $314 million) from 112.2 billion yen a year earlier. During Q4 Toyota sold 1.79 million vehicles globally, which means it is in third place behind General Motors at 2.22 million vehicles and Volkswagen Group at 1.99 million. Before the gas pedal controversy, Toyota was solidly in first place. In April in the U.S. Toyota Sales were flat as the auto industry expanded 18%. (See Toyota April U.S. Sales Remain Flat as Auto Industry Grows 18%)

Responding to the public release of the deeply embarrassing report about a company once noted for its quality, TMC President Akio Toyoda said, “We appreciate the Panel’s efforts to help us further strengthen our processes, and we thank this distinguished group for their recommendations.”

The Panel also said in its report that, “extensive testing and analysis by the National Aeronautics and Space Administration (NASA) and the U.S. National Highway Traffic Safety Administration (NHTSA) have revealed no electronic problems or software errors that could have resulted in unintended acceleration in Toyota vehicles.”

Toyota says it has taken several steps in line with the panel’s recommendations prior to receiving their formal report. These include:

• Giving North American operations greater autonomy to make proactive recall decisions
• Strengthening supplier quality controls
• Extending product development time to incorporate more safety testing
• Appointing a Chief Safety Technology Officer
• Launching a Collaborative Safety Research Center focused on protecting the most vulnerable traffic populations including children, teens and seniors, and
• Making its advanced THUMS crash test software available for university research at a nominal cost

(See also Toyota Starts a Sweeping Reorganization – “Global Vision”)