The truth about Toyota

There is more hype than fact driving the recall panic. But that doesn't deter Canada's politicians.

Listening to the critics during Ottawa’s hearings into Toyota’s recall fiasco, you probably wouldn’t realize there have been no related fatalities in Canada. You certainly wouldn’t get the impression that Toyota complaints data compiled by federal government safety watchdogs are in line with those of other major auto manufacturers. “They had the full-on apology in the U.S.,” says outraged Canadian Transport Committee member Brian Masse, who argues the Japanese automaker is treating Canadians as second-class consumers. “They didn’t come here and officially apologize. I had to coax them into kind of an apology.”

While addressing the concerns of Canadian politicians, Toyota Canada chief executive Yoichi Tomihara admitted that his company has failed to effectively communicate recall facts to the public. He expressed regret over the related “anxiety and inconvenience” experienced by consumers. However, he also pointed out there is no need for concern in Canada, where Toyota recalled many vehicles simply to put consumers at ease over floor-mat issues in the United States. But Masse, a New Democrat MP who represents Windsor, a town heavily dependent on the Detroit Three automakers, still felt insulted that Toyota’s worldwide president Akio Toyoda didn’t show up to bow down before Canada — where there has been only one confirmed incident of sustained sudden unintended acceleration (SUA) out of 17 speed-related complaints filed with Transport Canada for the 2.3 million Toyotas on our roads between 2006 and last fall.

Simply put, Canadian critics are reacting to this recall as if it is a unique event. They also seem to think the Japanese automaker apologized elsewhere for putting millions of customers at serious risk. Both assumptions stretch the truth.

Toyota rocked the business world in recent months when it was forced to recall more than eight million vehicles globally, primarily to deal with ill-fitting aftermarket floor mats and some accelerators at risk of sticking in a partially depressed position, but only, the company says, in rare circumstances and after significant wear and tear. What the Japanese company insists it does not need to fix are its computerized throttle systems. But when it comes to the Toyota recall, the facts are having a hard time competing with speculative theories that claim programming errors or electromagnetic fields are turning Toyota control systems into Asian versions of HAL, the homicidal computer in Arthur C. Clarke’s Space Odyssey saga.

Over the past decade, there have been 52 deaths identified by American authorities involving allegations of SUA in Toyota vehicles. For the 2000 model year, the company accounted for about 8% of filed speed-related complaints in the U.S. In 2009, after surpassing General Motors to become the world’s largest automaker, Toyota made up more than a third of all claims. But this is misleading because the U.S. National Traffic Safety Administration (NHTSA) has logged more than 10,000 speed-related consumer complaints since 2000 and determined most to be bogus. In 1989, the safety watchdog took a broad look at the issue in response to rising SUA claims aimed at Audi sedans. It found driver error was typically at fault. In rare cases, however, vehicle-related problems have been found. In 2006, for example, Ford recalled about 800 Mustang Cobras in Canada to deal with “floor carpeting during heavy throttle application.”

Jeffrey Liker, an industrial engineering professor at the University of Michigan and author of The Toyota Way, can’t recall a single SUA incident that has ever been verified as an electronics issue. But under political pressure, NHTSA is now looking at the possible impact of electromagnetic radiation, software faults and cosmic rays on Toyota accelerators. NASA scientists have been asked to help. A separate National Academy of Sciences study is examining all possible causes for sudden acceleration on all makes of cars and trucks. “We haven’t been able to find anything wrong with the electronics, but I’ve made a commitment to Congress, Toyota and other car owners that we would find the very best experts we could to look into this,” U.S. Transportation Secretary Ray LaHood recently noted.

Exponent, a California-based engineering consulting firm commissioned by Toyota to investigate the matter, has also been unable to induce unintended acceleration in Toyota and Lexus vehicles through electrical disturbances.

Nevertheless, a string of speculative media reports have added fuel to Toyota’s reputational woes. The night before the start of American government hearings into the recall, ABC’s Brian Ross ran footage of himself driving a Toyota that suddenly accelerates on its own. The car had in fact been rewired to misbehave by David Gilbert, an Illinois professor, who appeared in the report. Ross’s story also included a staged shot of a tachometer surging. Toyota points out that ABC failed to disclose that Gilbert’s work was financed by trial lawyers involved in litigation against the company. Network officials insist the story was fair — while conceding it was an “editorial error” to use fabricated footage.

More recently, CNN reported that it had uncovered a Toyota service bulletin for V6 Camrys from 2002, which describes an unrelated electronic fix for “light throttle input” issues, that supposedly proves Toyota is trying to use floor mats and gas pedals to hide a more serious computer problem. The CNN report implied the so-called smoking gun service bulletin was hidden from the public, despite being available from NHTSA.

Then, amid the rising panic, came James Sikes, a 61-year-old San Diego resident who generated international headlines by calling police while claiming an out-of-control Prius had taken him hostage. His lawyer did not respond to requests for comment. But investigations by NHTSA and Toyota cast serious doubt on Sikes’s version of what happened with his car, which is equipped with a “smart accelerator” that cuts power when both the brakes and the accelerator are fully applied at the same time.

Sam Smith, a blogger for Gawker website Jalopnik, calls Sikes’s high-speed misadventure a hoax, and an example of what happens when misinformation and fear run wild. Smith says the rising volume of SUA reports facing Toyota probably have “more to do with mass psychology and opportunism than technical problems” because the U.S. media’s appetite for sensationalist stories has opened the door to any attention-seeking Toyota driver to claim their car could star in a remake of Stephen King’s Maximum Overdrive.

Over at Edmunds Inc., the California-based automotive data analytics firm, CEO Jeremy Anwyl says he has never seen anything like the Toyota recall fiasco. But that’s not because of the numbers involved. It is the extreme reaction to the company’s fall from grace that is making this relatively typical automotive product hiccup stand out.

Not everyone thinks Toyota is being taken for an unwarranted ride. Tim Howard, one of numerous class-action lawyers shopping around for a jurisdiction in which to launch consumer lawsuits, admits the automaker is taking an extra-strong “pounding.” But the Northeastern University law professor says that’s because Toyota tried to cover up its real, software-related problem. “This recall,” he says, “is making people aware that gas pedals are no longer connected to the motor. Cars are now rolling computers with millions of lines of code. Toyota didn’t program proper fail-safes, and when a glitch showed, they simply decided it can’t exist.” As a result, Howard argues, the company has violated the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO) by engaging in an enterprise to give false information to the American public.

Still, plenty of independent minds believe this recall is being blown way out of proportion. And these voices have been drowned out by the hype. As a result, some consumers are scared to drive safe cars. For example, after his truck was recalled late last year, Louisiana resident Mikel Velviva was so freaked out that he demanded a refund. When he didn’t get it, he crashed into his dealership, then claimed his vehicle accelerator malfunctioned.

But it is Canadian politicians who are going really crazy, says industry analyst Dennis DesRosiers. “If Toyota is guilty of something,” he says, “it’s promising to produce bulletproof vehicles when this is impossible. They are also guilty of producing vehicles that are not idiot-proof.”

Masse and other critics argue Toyota violated the Motor Vehicle Safety Act because it notified government safety officials about potential gas-pedal problems a few months after issuing the floor-mat recalls. This camp further says it is ridiculous for Toyota to claim electronic throttles are safe since it experienced a rise in American SUA complaints over the past decade (as it was gaining market share). And they want legislative changes that could force Toyota and other manufacturers to report product complaints to safety officials before determining whether a real problem exists.

According to Liker, the Japanese automaker began investigating pedal problems in October after receiving just three unconfirmed complaints. When dealing with a problem that occurs rarely, he points out, it’s extremely difficult to determine the underlying cause. That’s why it isn’t unreasonable for Toyota to take about three months to figure out that a pedal arm from one supplier contains a composite material that can wear down under certain conditions and potentially cause a problem. Even after recalling 2.3 million cars in January to address the issue, Liker notes, the company found only 15 cases where the suspect material actually posed a potential problem.

What about concerns over Toyota’s electronic systems? Liker and other experts say it is virtually impossible for electronic systems to fail and result in the sustained acceleration of a vehicle. In Canada, the only sustained sudden acceleration incident involved a car that does not have an electronic throttle. Furthermore, while critics insist Toyota has lost its way, the pedal entrapment incident that initiated the mat recall in the U.S. involved a floor product not designed for the car in question. Toyota started addressing mat issues last year about a month after a family of four died in a Lexus ES350 with a California Highway Patrol officer at the wheel. He lost control after slamming into an SUV as a haunting 911 call captured one victim telling the others to pray. Toyota is being sued by the victim’s family. Nevertheless, the vehicle was a loaner issued by a dealer with the wrong floor mats, which crash investigators found had jammed the vehicle’s accelerator.

Industry watchers say pretty much the entire U.S. mat recall has been a product modification program aimed at properly installing all-weather mats or making room for the addition of third-party products not sold with the vehicle. “When the [proper] Toyota mat is attached down correctly, there is plenty of clearance,” says Liker. “There is no problem at all.”

As Edmunds’s Anwyl notes, cars of all stripes have never been safer. “If you were new to this,” he says, “you’d probably think Toyotas are some of the most unreliable cars on the road.” But at Edmunds, one of the world’s most respected auto-industry watchers, nobody worries about Toyotas in the company fleet. Peter Steinlauf, the company chairman, still drives a Prius.

“There hasn’t been a discussion about the actual risk of driving one of Toyota’s recalled vehicles,” points out Carnegie Mellon University professor Paul Fischbeck, who insists that mobile phones pose a much bigger threat to company customers. “Walking a mile,” he says, “is 19 times, or 1,900%, more dangerous than driving a mile in a recalled Toyota.”

When U.S. transportation secretary Ray LaHood mistakenly warned Americans to stop driving Toyota cars in early February, he gave investors an unnecessary case of heart-rate acceleration. The next day, on the New York Stock Exchange, the automaker’s shares closed at US$71.78, down 22% from a 52-week high of US$91.78 on Jan. 19, reducing its market capitalization by US$30 billion. But by the time Washington was scolding Akio Toyoda for not showing enough remorse over fatalities allegedly linked to his company’s vehicles, Wall Street was restoring value to his family company’s stock.

Thanks to the most aggressive discounts in the company’s history, a growing number of consumers are also willing to believe Toyota’s safety concerns are now largely in the rear-view mirror. In the all-important U.S. market, company sales rose 40% in March on a year-over-year basis. There are long-term dangers with pushing sales with aggressive incentives, but the initial response suggests Toyota is rebounding from this crisis faster than Audi did after fighting hyped reports by 60 Minutes and other media outlets of unintended acceleration in its vehicles years ago.

Still, Toyota, which posted global revenues of about US$210 billion in its last fiscal year, could end up paying the industry’s largest ever product-liability-related bill. According to David Silver, an equities analyst with Wall Street Strategies, product fixes and brand repair will cost Toyota about US$4 billion, twice the company estimate. Class-action lawyers say consumer lawsuits over resale values could cost an equal amount. And that doesn’t count what Toyota will pay to deal with personal injury and death claims now blamed on vehicle defects instead of driver error.

To understand the stakes involved in that game, you simply have to recall the so-called Washington Square Massacre. On April 23, 1992, an out-of-control Oldsmobile Delta 88 plowed through a crowd in New York’s Greenwich Village. Five people were killed; 27 others were injured. Angry New Yorkers called for the driver’s head. But the woman in question — Stella Maychick, a short 74-year-old — insisted General Motors was at fault, and the company was eventually forced to pay out hundreds of millions of dollars to settle with the victims and their families.

In a recent Florida newspaper commentary on Toyota’s troubles, Diana Foote, Maychick’s daughter, implied that GM was fairly held accountable for the Washington Square accident. But not everyone sees it that way. Theodore Frank, head of the Center for Class Action Fairness, notes that faulty cars should affect all drivers equally, at least statistically, but SUA complaints past and present, including the ones currently denting Toyota’s image, tend to involve elderly drivers.

In the Washington Square case, Frank adds, GM decided it was better to settle despite evidence that Maychick simply pressed the wrong pedal. In fact, according to Frank, evidence of driver error was “so strong that plaintiffs’ lawyers admitted it.” But that didn’t stop them from arguing GM was liable “for a failure to warn about the dangers of pedal misapplication.”

Hitting the wrong pedal is also what authorities now say caused the latest high-profile New York incident of cars gone crazy. On March 9, a 56-year-old woman driving a 2005 Prius was injured when it tore out of her driveway, across a busy street and into a stone wall. News headlines in New York initially announced, erroneously, “Stuck accelerator sends Toyota Prius into a wall.”

The Toyota recall has picked up where swine flu panic left off, but the real epidemic is the fevered overreaction. Toyota — which now sells more Canadian-made cars in this country than any other automaker — obviously slipped a gear or two while driving to overtake GM. It might even have taken too long to recognize the need to address its current safety issues. In America, company executives certainly deserve criticism for insensitive memo writing (one executive boasted about saving US$100 million by limiting recalls). But automotive recalls and trying to avoid them are as North American as apple pie and beaver tails.

The Canadian government put up billions to support the restructurings of GM and Chrysler, which have both made dramatic cuts to Canadian operations. As DesRosiers notes, there are no public hearings into GM’s recent recall of cars at risk of losing power steering. Ford, meanwhile, is now seen as an industry poster boy. But according to a report by, it denied for half a decade that some vehicles were at risk of steering-column fires before launching a recall in the 1990s. And it still holds the sector recall record thanks to an ongoing recall of more than 14 million vehicles with cruise-control switches linked to car fires.

At times like these, the gap between perception and reality seems to widen. As Anwyl points out, in spite of all the negative publicity, Toyota received more segment awards than any other nameplate in the 2010 JD Power Reliability Study. In other words, there’s a reason why so many North Americans put their trust in the Toyota brand. Cars are safer than they have ever been, and Toyotas are among the safest.