Toyota Issues Dramatic Shutdown, With Striking Parallels to J&J Tylenol Recall

(MoneyWatch)  In the end, Toyota probably made the right decision in addressing its escalating "sudden acceleration" problem by shutting down production for eight models, representing 57 percent of its production. What people will remember, ultimately, is that Toyota "did the right thing"--even if it was somewhat belated.

There's a striking parallel between Toyota's current predicament and the 1982 Johnson & Johnson Tylenol recall. J&J recalled 31 million bottles of the drug (and offered free replacements) because of a cyanide-poisoning epidemic that left seven people dead. The recall cost more than $100 million, but a year later the company's share of the analgesic market was (after sinking rapidly) back to pre-crisis levels. And J&J continued to cite it as an example of its responsibility culture at work.

There are differences, of course. No one actually blamed J&J for poisoning the Tylenol capsules. But recalls were very rare in 1982, so it's the company's fast action that sticks in the mind, "Tylenol made a hero of Johnson & Johnson," reported the New York Times.

This action is necessary until a remedy is finalized," said Toyota Vice President Bob Carter. "We're making every effort to address this situation for our customers as quickly as possible." Toyota's stock dropped more than seven percent in pre-market trading Wednesday.

One reason Toyota is taking such a drastic step is that it can't fix the problem with quick recalls. It has blamed its growing dossier of sudden acceleration cases on two separate things: first, "pedal entrapment" caused by the floor mats, then sticky pedal assemblies. And addressing the second one defies a quick solution.

Toyota spokesman John Hanson said this morning, "We have isolated the problem, and are working on the remedies. It's a specific pedal assembly from a specific supplier [reportedly CTS Corp. of Elkhart, Indiana, with the actual part being made in Canada]. We're working on ways to redesign it, and ways to remedy the problem in the field. We're working at a very fast rate--this is a 'stop sale' situation, and we don't want it to last."

But Toyota can't say how long it will keep the models (RAV-4, Corolla, Matrix, Avalon, Camry, Highlander, Tundra, Sequoia) off the market. Lexus and Scion models are not affected, nor is the Prius or Camry hybrid. The production suspension begins the week of February 1.

Toyota Highlander photo Flickr/DetBuzzSaw