Docs.: Toyota Boasted of Skirting Recalls

(CBS/ AP)  Toyota officials claimed they saved the company $100 million by successfully negotiating with the government on a limited recall of floor mats in some Toyota and Lexus vehicles, according to new documents shared with congressional investigators.

Toyota, in an internal presentation in July 2009 at its Washington office, said it saved $100 million or more by negotiating an "equipment recall" of floor mats involving 55,000 Toyota Camry and Lexus ES350 vehicles in September 2007.

The savings are listed under the title, "Wins for Toyota - Safety Group." The document cites millions of dollars in other savings by delaying safety regulations, avoiding defect investigations and slowing down other industry requirements.

The documents could set off alarms in Congress over whether Toyota put profits ahead of customer safety and pushed regulators to narrow the scope of recalls. Two House committees are holding hearings this week on the Japanese automaker's recall of 8.5 million vehicles in recent months to deal with safety problems involving gas pedals, floor mats and brakes.

Toyota said Monday it received a subpoena from a federal grand jury requesting documents related to unintended acceleration of its vehicles and the braking system of its Prius hybrid.

The Japanese automaker also said it received a request for documents related to its disclosure policies and unintended acceleration from the Securities and Exchange Commission.

Toyota said it received the grand jury request from the Southern District of New York on Feb. 8. It disclosed the requests in a filing with the SEC on Monday and says it intends to comply with the requests.

"Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong. Our values have always been to put the customer first and ensure the highest levels of safety and quality," the automaker said in a statement Monday.

The U.S. government has received more than 2,000 complaints of sudden acceleration in Toyota vehicles - including 34 deaths - since 2000. Toyota estimates its recent recall will cost $2 billion, which coincides with a 16 percent dip in sales in January, reports CBS News correspondent Nancy Cordes.

The world's largest automaker has been criticized for responding too slowly to complaints of sudden acceleration in its vehicles, threatening to undermine its reputation for quality and safety.

The documents were turned over to the House Oversight and Government Reform Committee and obtained by The Associated Press on Sunday. The presentation was first reported by The Detroit News.

A Toyota spokeswoman did not immediately comment.

Kurt Bardella, a spokesman for Rep. Darrell Issa, R-Calif., the top Republican on the Oversight Committee, said the documents raise questions on "whether Toyota was lobbying for less rigid actions from regulators to protect their bottom line."

The new documents show the financial benefit of delay. In the presentation, Toyota said a phase-in to new safety regulations for side air bags saved the company $124 million and 50,000 man hours. Delaying a rule for tougher door locks saved $11 million.

On defect regulations, the document boasts that Toyota "avoided investigation" on rusting Tacoma pickup trucks. The National Highway Traffic Safety Administration investigated the case in 2008 but closed it without finding a safety defect. Toyota agreed to buy back certain rusty pickups, inspect other and extend warranties.

The document lists seven "Wins for Toyota & Industry," including "favorable recall outcomes," "secured safety rulemaking favorable to Toyota" and "vehicles not in climate legislation." Another page lists "key safety issues," including "Sudden acceleration on ES/Camry, Tacoma, LS etc."

In one passage, the document says Toyota "negotiated 'equipment' recall on Camry/ES re SA; saved $100M+, w/ no defect found."

NHTSA had launched an investigation in March 2007 over allegations that floor mats were interfering with accelerator pedals. Toyota told the government a month later that there was "no possibility of the pedal interference with the all-weather floor mat if it's placed properly and secured."

By that August, the government had connected the problem to a dozen deaths and a survey of 600 Lexus owners discovered 10 percent reported sudden or unexpected acceleration. But the recall in September 2007 was limited to 55,000 Camry and ES350 vehicles to replace the floor mats.

The 10-page internal presentation was dated July 6, 2009, less than two months before a high-speed crash near San Diego killed a California highway patrol officer and his family and reignited concerns over sudden acceleration in Toyotas.

In October 2009, Toyota issued its largest-ever U.S. recall, involving about 4 million vehicles, over concerns of pedals getting stuck in floor mats.

The presentation lists Yoshi Inaba, Toyota's chief executive in North America, on its cover. Inaba is scheduled to testify before the House Energy and Commerce Committee on Wednesday, along with Toyota president Akio Toyoda and Jim Lentz, president of Toyota Motor Sales USA.

Separately, the government said Sunday it was already investigating reports of sudden acceleration in Toyota vehicles when the nation's largest auto insurer shared complaints about the issue.

The Transportation Department released documents showing that in December 2003 it began investigating 39 complaints of sudden acceleration involving 2002-03 Toyota Camry sedans. That was about three months before State Farm shared with NHTSA complaints of sudden acceleration in 2003-04 Lexus ES300s and 2002-04 Camrys.

The document released by Transportation Secretary Ray LaHood said the department had received allegations of 26 crashes and 4 injuries involving drivers complaining of their vehicles surging when backing up, pulling in and out of parking spaces and shifting gears.

[bjdky]

I guess they just don't care about Americans safety!



http://www.funeral-planning-guide.com/

[inventagod]

Just wondering if the true bad guys in this case are Japanese officials or the scumbuckets right here in Toyota Motor Sales USA?
I get the feeling that Toyota will regret building their products in the States...

[boatdocster]

"Toyota officials claimed that while they saved the company $100 million by successfully negotiating with the government on a limited recall of floor mats in some Toyota and Lexus vehicles, the total cost to Toyota is now estimated at over $2 billion, which coincides with a 16 percent dip in sales in January."

The Poor Man Pays Twice!

"I'm LOVING it - Toyota", as your Prius slams in to another car at over 60 MPH, because according to Toyota, you had only a small "Momentary Brake System Failure"...

[rdepontb]

Hey---show us any auto company, or any company at all, that does not try to postpone or "narrow down" such a recall. The Big 3 are likely in the same boat, postponing seat-belt laws, ABS laws, and other safety regulation enforcement, as well as who knows what else. This does not excuse Toyota, but they are far from engaging in aberrant behavior in that industry.

Even food and drug companies want to limit their recall requirements to the items within a strict set of manufacturing/preparation boundaries---who would more gross recall action serve, otherwise?

[mahdeealoo]

I'll still buy Toyota over any other car in their many price ranges. Turn the ignition off if your gas pedal sticks. Toyota is not the only car brand that has seen this problem. The American Auto Makers must be on an anti foreign car kick because they can't match Toyota's functional integrity under the hood.

[afmcalax]

To those wonderful Republicans and their Tea Party lackies .. try not to think to hard so that you hurt what little brain cells you still having firing, but which adminsistartion was in power between 2000 and 2008 when Toyota boasts of manipulating the regulators for profit? Another case where industry self-regulation results in death to consumers; but bigger bonuses to Republican corporate patrons. It should not be surpirise that most foreign car manufacturers locate in the South where wasges and benefits are low; environmental laws not enforced, and southern politicians always put corporations before the people they are supposed to represent.

[formrusmcsgt]

by jwesel1 February 22, 2010 7:36 AM EST
Executives are paid bonuses based on the money they saved in the previous quarter. They don't care what happens down the road.
---
All too true. Short term profit takes precedence over long term benefit in most corporate environments.

[afmcalax]

Unfortunately Toyota execs became infected with the same immoral, corrupt, greedy sickness that their American brethren have. American execs gamed the system and built corporate profits and empires using Ponzi schemes. The only way for other honest executives to keep their jobs and corporate profits was to get into the sleeze with their American counterparts. Since this greed was sanctioned by the American government they had no choice but to join. Just like the American Ponzi schemes destroyed the banking industry; the underlying corruption of American corporations also caught well run foreign firms in their wake also.

[formrusmcsgt]

Toyota became a success because of good design and engineering teams AND Detroit's complacency.

How ironic that Toyota didn't learn that complacency doesn't keep you on top.....

[formrusmcsgt]

That 100 mil Toyota's bragging about saving by cutting safety corners will pale in comparison to the lawsuit settlements and image damage they bought with it.....

[jwesel1]

Executives are paid bonuses based on the money they saved in the previous quarter. They don't care what happens down the road.

[jsf14]

Would the Conservative Wing of the Republican Party like to disband the regulators who eventually forced the recall? Do Tea Partiers say that the Market would have gotten the problems fixed faster?

[book_of_wally]

You see back the in the good old days people didnt need such things as fancy recalls. If your smith made you a bad piece of metalwork he would fix it so he wouldnt have a bad name in the town.