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Corolla probe: Another blow to Toyota’s credibility

By The Associated Press
February 18, 2010

The Corolla on the production line

Toyota faces a new US probe into complaints of steering problems with the Corolla, the world’s best-selling car, in a fresh setback to the crisis-hit auto giant’s efforts to restore trust in its brand.

The Japanese maker, already pulling more than eight million cars worldwide over defects linked to more than 30 deaths, said Wednesday it was looking into the issue and would recall the Corolla if it found a dangerous flaw.

Another recall would deal a heavy blow to efforts by the world’s biggest automaker to bounce back from a string of safety issues and criticism that it was slow to recall potentially dangerous vehicles.

The iconic company, whose global expansion pushed it past General Motors in 2008 as world number one, is facing a litany of complaints ranging from unintended acceleration to brake failure and steering problems.

Now Washington has launched an investigation into the 2009 and 2010 model Corollas over the steering issues, a US Transportation Department official told AFP on condition of anonymity.

The National Highway Traffic Safety Administration was expected to officially announce the probe — involving up to 500,000 vehicles — as early as Thursday.

“It’s just one piece of bad news after another. We don’t know what will come next,” said Shigeru Matsumura, an auto analyst at SMBC Friend Research Center.

Investors fear Toyota “hasn’t hit the bottom of the crisis yet,” he said.

“The situation is so bad we can’t even forecast what sales and earnings will be in the next quarter,” warned Matsumura.

Toyota shares lost 0.59 percent to 3,360 yen Thursday. The stock has plunged about 20 percent since January 21 in response to the mass recalls, which have triggered fears for the brand image of the whole of corporate Japan.

US authorities on Tuesday demanded that Toyota hand over documents to prove it did not drag its feet in recalling the vehicles once it learnt about defects that can lead to unintended acceleration.

There have been more than 160 complaints to US authorities since 2009 about the steering of the Corolla, the world’s most popular car with global sales of more than 30 million since the first version was launched in the 1960s.

The 2009-2010 Corolla is among the models involved in Toyota’s earlier recalls to fix the accelerator problem.

The number of complaints alleging deaths related to unintended acceleration in Toyota vehicles has surged to at least 34 since the company announced on January 26 it was suspending sales of eight models in the United States.

President Barack Obama‘s Transportation Secretary Ray LaHood has vowed “to hold Toyota’s feet to the fire” to make sure its cars are safe.

The company faces dozens of lawsuits in the United States alleging Toyota was too slow to act on the problems. Experts say the legal action could potentially cost the company billions of dollars.

In a bid to prevent runaway car crashes, Toyota announced Wednesday that it would fit all new models with a system to cut engine power when the driver steps on the accelerator and brake pedals at the same time.

Toyota’s president Akio Toyoda is under pressure to face US lawmakers over the safety issues.

But the Toyota family scion, under fire for his handling of the crisis, signalled he would miss a grilling by US lawmakers next week on the mass recalls, sending one of his top North America executives instead.

“I am sure they are well equipped to respond well to the questions,” he told a news conference, his third this month on the safety issues that have tarnished the company’s once-enviable reputation.

However, Toyoda — who is notoriously publicity shy — added that he would consider appearing before Congress if formally invited to do so.

US lawmakers will hold three separate congressional hearings in the coming weeks on the Toyota recalls — on February 23 and 24 as well as on March 2.

Japanese newspapers on Thursday lambasted Toyota’s response to the problems.

“Toyota’s deepening wounds stemmed from standing on the side of producer logic and misreading reactions from the US authorities and consumers,” the Asahi Shimbun said.

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4 Responses to Corolla probe: Another blow to Toyota’s credibility

  1. woody188

    February 19, 2010 at 4:02 pm

    I’ve been having a hay day with this. All those jerks that used to make fun of me buying Chevy and Chrysler aren’t laughing anymore. Honda, you are next!

  2. b mcclellan

    February 19, 2010 at 8:47 pm

    Waahoo Woody, is it heyday or wahhoo?

    All kidding aside, 1999 Malibu 170,000.o miles no serious service bulletins. Waterpump at 160,000.o
    1967 Elcamino LT4 350 bullet, Richmond geared 4speed, 323 posi, and my neighbors tree fell on it or I would be driving it now.
    Allstate told me to kiss their ass. But that’s another lesson to learn in this suddenly foreign land of our fathers.

    I’m pretty sure the last survivor of Iwo Jima, be he Japanese or American would not fail to warn against trusting any these days when the Yen /Buck rear the ugly visage of corporate war.

  3. JeremiahJones

    February 18, 2010 at 7:46 am

    Note to headline writer: it’s spelled “Corolla.”

  4. Capitol Hill Blue

    February 18, 2010 at 7:57 am

    That’s what happens when we only have three cups of coffee. Need more caffeine.

    Thanks for the heads up.