Toyota finds a fix (e)
CTS, the parts supplier at the centre of the storm over Toyota Motor's
massive recall, says new gas pedals that won't stick are already on its
production lines. Vinod Khilnani, chairman and CEO of CTS, says his
company was working with Toyota to add new production lines and build
the new pedals as quickly as it can at three of its factories. The
faulty part was made at a CTS plant in Mississauga. CTS is also working
with Toyota on a quicker "field fix" to modify existing cars with the
faulty pedals. Repeatedly stressing that the pedals were made according
to Toyota's specifications, Khilnani said he doubted his company would
face legal liability or suffer major financial losses from the gas pedal
fallout. Not only did Toyota expand its pedal recall into Europe and
China, but Ford halted production of a commercial vehicle it builds as
part of a joint venture in China because it uses CTS gas pedals. (The
vehicle in question is not sold in Canada.) Asked about Ford, Khilnani
said the problem is strictly limited to Toyota. One issue the company
clearly wanted to stress yesterday was what Khilnani sees as the mixing
up in the media of two separate issues facing Toyota. The first, a
floor-mat recall, now involves more than five million vehicles. The
second, which arose last week and relates to 2.3 million vehicles in
North America, is due to a mechanical defect in the pedal produced by
CTS that causes it, in certain rare instances, to stick when exposed to
condensation. Khilnani said that, to his knowledge, there have been
fewer than 12 reported incidents involving the faulty pedal, and no
fatalities. Toyota, however, faces at least five lawsuits for deaths or
injuries allegedly related to sudden acceleration in its vehicles since
2002, including those pertaining to the floor-mat recall in November.
Toyota, for its part, has taken responsibility for the design flaws of
the CTS pedal, and said it has confidence in the parts supplier. David
Cole, chairman of the Center for Automotive Research, said he met with
Toyota officials last week and was told that they will also put an
override into the vehicle's computers whereby if both the gas pedal and
the brake are pushed at the same time, the engine will shut off
immediately. Toyota has two suppliers of gas pedals on affected
vehicles. No issue has been identified with the other supplier,
Denso.
No timeline has been set for when CTS and
Denso will be able to produce
enough pedals to begin fixing the recalled vehicles.
The storm battering Toyota is providing a rare opportunity for its
rivals to halt the relentless gains in market share earned by decades of
intense focus on quality. The recalls strike at the heart of the
reputation Toyota developed since it first started selling cars in North
America more than five decades ago and rode to global sales leadership:
that the vehicles it sells have the highest quality and are the most
reliable. Now, the recall fiasco opens up opportunities for competitors
to win back consumers worried that Toyota's commitment to quality and
safety was compromised by a rapid expansion into global sales
leadership. Asian auto makers for many years have gained market share at
the expense of North American auto makers, which have long struggled
with inferior quality ratings. Even though their quality has improved,
the perception among drivers that Detroit doesn't match up with Asian
companies persists. Auto makers are moving to take advantage of Toyota's
halt in the sale of its top-selling vehicles in the US and Canada. Ford
joined General Motors in offering US$1,000 in rebates to owners of
Toyota and Honda vehicles. Toyota is facing deepening problems with
class-action lawsuits in the US that linked last week's accelerator
pedal recall to a larger recall of Toyota vehicles in November that was
based on floor mats causing pedals to jam and cars to crash. The suits
said the acceleration problems are caused by defects in the vehicles'
electronic throttle-control system. The US Congress is also planning to
examine the issue. Members of the House of Representatives said they
intend to hold a hearing on Feb. 25 to review the complaints of sudden
acceleration. Still, some industry experts say Detroit will have a hard
time winning over Toyota's customer base. Consumers intent on buying
Toyota vehicles are more likely to be also looking at models from Honda,
Nissan and Hyundai, said Chris Travell, VP of automotive for Maritz
Canada.
Amid the uproar, Toyota executives got an ironic reminder yesterday of
the heights their firm has fallen from when it was named Japan's best
international brand for 2009. That the auto maker won the award for the
same year it posted its worst financial showing demonstrates the
strength the Toyota name has in Japan. In Toyota City, the centre of the
car maker's global empire, there was striking optimism as recently as
the summer that Toyota would pull through the bad times and start hiring
again soon. Recently laid-off workers interviewed at the time spoke
about the prospects for the Toyota Prius, and expressed confidence in
the company's new president, Akio Toyoda. Economists and government
officials in Tokyo were just as positive, saying Toyota was the engine
that would pull the rest of the economy out of the morass. Now, Toyota
is seen as an anchor that could drag the rest of the country - just
starting to emerge from a crippling recession - down with it. There are,
however, two significant positives working in Toyota's favour. The first
is that it is winning plaudits for moving so quickly to a total recall
after the seriousness of the pedal defect became apparent. The second is
the sheer size and importance of Toyota in Japan's economy. The same
officials who last year were looking to it to rescue the economy are now
faced with the possibility Toyota's woes could sideswipe Japan's still-
wobbly recovery. The entire country knows well its fortunes are tied to
how quickly Toyota can restore consumer confidence. Don't be surprised
if Japan's government and even domestic competitors rally around the
economy's ailing flagship.
(Globe and Mail, National Post 100129)
