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04 March 2024

Toyota details safety fix as damage claims mount

By Reuters
Toyota Motor Corp detailed plans on Monday to fix nearly 4.5 million vehicles equipped with faulty accelerators in North America and Europe as lawsuits landed claiming the world's largest automaker had endangered drivers by ignoring signs of trouble.

Toyota, scrambling to contain the fallout from the sweeping recall on its finances and reputation, said it would restart production of eight models on February 8 after a planned one-week shutdown at six plants in the United States and Canada.

 The automaker also began shipping a new part to its U.S. dealers that can be used to repair accelerator pedals at risk of staying stuck when depressed.

 The first round of repairs is expected to cost Toyota at least $250 million in warranty fees in the United States alone. Some Toyota dealerships said they would stay open around the clock to speed customer repairs and stem the damage from a crisis that has sent the automaker's January sales tumbling.

"We know what's causing the sticking accelerator pedals, and we know what we have to do to fix it," said Jim Lentz, president of Toyota's U.S. sales subsidiary.

"We deeply regret the concern that our recalls have caused for our customers, and we are doing everything we can -- as fast as we can -- to make things right."

But criticism is mounting that Toyota moved too slowly to address cases of unintended and dangerous acceleration.

The claims have tarnished Toyota's bullet-proof reputation for quality, one of the factors behind Toyota's rise to overtake General Motors Co as the world's largest automaker.

A growing number of lawsuits claim that Toyota should have acted earlier about the problems that last week shut down sales of its most popular models, including the top-selling Camry.

"Toyota has long known about the defect with their throttle control, and has done too little, too late to correct it," said Robert Hilliard, a Texas lawyer who has filed a proposed class-action lawsuit in Texas.

"Much like their cars, this problem is speeding out of control and Toyota is having a hard time slamming on the brakes," he said.

Hilliard represents Albert Pena, who says he crashed his 2008 Toyota Avalon last month when the car unexpectedly accelerated through a stop sign.

A Canadian lawsuit against Toyota announced on Monday also named the automaker's supplier CTS Corp.

The lawsuits were among the first in a wave of litigation expected to be announced now that Toyota has detailed the flaw in its accelerator and the fix it is rushing out to customers in North America and Europe.

CTS says it built the pedals to Toyota's specifications and has said it does not expect any liability from the recall.

In Canada, Toyota said it would begin notifying owners of 270,000 vehicles with the faulty accelerator pedal to begin coming in for the repair, expected to take less than an hour.

Toyota also said it would begin shipping the needed replacement part to fix an estimated 1.8 million vehicles in Europe this week.


The CTS-supplied accelerator pedal -- a $15 part -- now stands at the center of a global crisis that has cost Toyota billions of dollars of market value.

Lentz said it was too early to estimate how much the safety problem and related issues. "I don't have any numbers on exactly how many dollars it is going to take," he told Reuters Insider in an interview.

In addition to its warranty costs for the recall, Toyota faces lost sales at dealerships and at least a week of lost production. Major automakers including Toyota are due to report January sales results on Tuesday.

Edmunds.com, an online automotive research site, expects Toyota's US sales in January to fall 12 per cent, giving it a market share of 14.7 percent, near a four-year low and down 3.2 percentage points from a year earlier.

Other analysts expect Toyota to post a deeper drop in sales in weeks ahead as rivals led by GM, Ford Motor Co and Hyundai Motor Co attempt to profit from the automaker's missteps with discounts targeting Toyota customers.

The National Highway Traffic Safety Administration said Toyota drivers who have their pedals repaired with the "shim" or "spacer" that the automaker is shipping this week could opt to have the whole part replaced once replacement parts are available.

NHTSA said it was not aware of any deaths or injuries linked to the sticky accelerator problem.

In a separate and larger recall involving 3.8 million vehicles in the United States, the safety agency said Toyota would fix accelerator pedals at risk of being trapped by floor mats and make replacement pedals available starting in April.

In addition, Toyota will install a new brake system on models affected by that recall, including the Prius hybrid, that will stop the vehicle if the accelerator and the brake are both engaged.

Five people in two separate accidents have died in the United States because of Toyota accelerator pedals becoming stuck on floor mats, NHTSA said.

Including recalls in China and Europe, 8 million Toyota vehicles are up for repair globally.

On Sunday, Toyota, which reports third-quarter results on Thursday, kicked off a media blitz with full-page ads in major U.S. newspapers alerting consumers to the recall.

The recall also covers 1.9 million Toyota vehicles in Europe and China that use accelerator pedals supplied by CTS.

PSA Peugeot Citroen said it was recalling 97,000 vehicles that had been made at a joint Toyota-PSA factory in the Czech Republic.

Toyota shares were up 4.4 per cent at $80.36 on the New York Stock Exchange on Monday afternoon, the stock's first gain in seven trading sessions.

Fears of a heavy and protracted blow to Toyota's sales and bottom line have knocked about $20 billion from its market value in the past week.


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