Image: Toyota Prius sedans
David Zalubowski  /  AP
Unsold Prius sedans sit at a Toyota dealership in Frederick, Colo. The carmaker’s latest recall puts another dent in its reputation for building safe and highly reliable products, and it could force the automaker to ramp up sales incentives, analysts warn.
Image: Paul A. Eisenstein, contributor
By contributor
updated 2/24/2011 3:40:15 PM ET 2011-02-24T20:40:15

You know how you feel when it rains just after you’ve finished polishing your car?

That must be how Toyota feels now.

Just weeks after winning a seeming reprieve from federal safety regulators, the world’s largest automaker may have delivered itself a serious, self-inflicted wound by ordering the recall of another 2.17 million vehicles to repair problems associated with so-called unintended acceleration.

Thursday’s news brings to 14 million the number of vehicles Toyota has recalled since late 2009 due to an unprecedented series of safety-related issues involving matters as diverse as faulty brakes and excessive corrosion. But no issue has been more extensive — nor generated as much concern among the public, media and regulators — as the issue of runaway Toyota products.

The new recall, industry observers warn, could raise anew concerns about a company that has traditionally had a reputation for building bulletproof, safe and highly reliable products, and it could force Toyota to ramp up the already hefty incentives it has had to offer to counter a rare slide in sales.

The first big Toyota recall, in October 2009, involved millions of vehicles in which loose carpets or floor mats might jam the accelerator pedal and make it difficult to slow down. (A second recall, in January 2010, involved sticky accelerator assemblies.)

The newest safety action is similar in nature to the first of those recalls and involves a wide range of models sold through the Toyota and up-market Lexus brands, including 761,000 Toyota RAV4 crossover vehicles, and 372,000 Lexus RX sport-utility models.

The automaker says it has had no report of accidents or injuries related to the problem. That fits with what senior Toyota executive Bob Carter recently described as a new, more proactive corporate policy towards safety issues.

“If we’re ever even slightly on the edge” when it comes to deciding how to respond to a possible problem, “we’ll announce a recall,” the executive suggested earlier this month at the Chicago auto show.

That conversation came shortly after Toyota was cleared in an investigation by the National Highway Traffic Safety Administration, a division of the U.S. Department of Transportation, and conducted in cooperation with space agency NASA.

Story: Toyota recalling 2.17 million vehicles in U.S.
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Researchers said there was no evidence that unexplained gremlins in Toyota’s electronic engine control systems might unexpectedly be leading to incidents of runaway products. If anything, researchers had pointed to driver error where, for example, a motorist might reach for the brake and hit the gas pedal, instead.

Following that announcement, which came in early February, a visibly relieved Carter said he had “a spring in my step,” as the carmaker set out to rebuild its tarnished reputation. Indeed, the Transportation Department said Thursday that Toyota’s additional recall of 2.17 million vehicles was sufficient for the agency to close its investigation.

But while the road ahead may have looked clear for Toyota, Thursday’s recall could “snatch defeat from the jaws of victory,” warned analyst Dan Gorrell, of California-based AutoStratagem.

“They were beginning to repair the damage and regain trust, but this strikes at the core emotional concerns people have” about the safety of their vehicles, Gorrell said.

Considering the potential damage, some are asking why Toyota might have expanded upon the original “pedal entrapment” recall. The answer, according to Gorrell, is that the carmaker is “between a rock and a hard place.” The alternative would have been to risk another fight with government regulators and the possibility of a huge fine for failing to act with reasonable haste on a known safety issue.

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Similar corporate delays resulted in a series of record fines last year totaling a collective $48.8 million. Indeed, today’s announcement comes exactly a year to the day after Jim Lentz, Toyota’s top-ranking American executive, apologized for the company’s slow response to the runaway car issue during a testy hearing on Capitol Hill.

Nonetheless, Toyota risks losing the momentum it claims it had regained in recent months. According to Carter, internal data show the automaker was largely overcoming the doubts of not only loyal owners but also potential buyers.

That was the biggest risk to the brand, said AutoTrends analyst Joe Phillippi, since Toyota’s growth, over the years, has largely been fueled by “conquesting” customers from competitors, especially Detroit’s “Big Three” automakers — GM, Ford and Chrysler.

But the Japanese giant’s problems have coincided with a nascent revival by the domestic carmakers, especially Ford, which is now routinely besting Toyota in key quality studies from the likes of J.D. Power and Associates, and even Consumer Reports magazine.

The Ford Focus, for example, has been widely hailed as the best new entry into the compact passenger car market, a segment where the Toyota Corolla long dominated. But Corolla also faces tough new entries in the form of Chevrolet’s new Cruze, and also from Korean maker Hyundai, which has just launched an all-new Elantra.

Toyota suffered a rare but significant hit in the marketplace — it was the only major carmaker to suffer a sales decline during the final three months of 2010. The Japanese carmaker’s sales rebounded in January, but only after bumping up its incentives to record levels.

Toyota’s recent slump has been worsened by a shortage of new product for the 2011 model-year, but Carter said he is confident the situation will reverse itself in the months to come with the launch of 2012 models, including an expanded line-up of hybrids sharing the well-known Prius name.

But the newest unintended acceleration-related recall casts a shadow of concern over Toyota, made worse by other recent safety-related actions, including a recall of 245,000 sedans in the U.S. for the potentially faulty installation of fuel pressure sensors. That, analysts like Gorrell warn, could make it much more difficult for Toyota to stage its comeback.

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Video: New troubles surface for Toyota

  1. Closed captioning of: New troubles surface for Toyota

    >>> as mentioned, new trouble for toyota , recalling 2.1 million toyota and lexus vehicles in the u.s. to fix accelerator pedals that could get trapped in the floor mat or carpeting. fi phil lebeau, is it the same that resulted in the massive recalls we saw in 2009 ?

    >> reporter: it's an extension of that one, tamron. remember recalls in late 2009 involved millions of toyota models where the concern was the floor mat could become dislodges and trap the accelerator pedal . nhtsa has reviewed 400,000 documents from toyota and has come back to toyota and said this may be a design flaw with another several million models from toyota and lexus. they've talked with toyota , come to this agreement that toyota will recall 2.17 million vehicles, some toyota models like the 4-runner, rav 4 runner , and that closes the investigation from the federal government . if there's any good news in this at all from toyota 's perspective, the recall is not prompts by accidents or reports of injuries involving pedal entrapment. it's more of a design case where the federal government has looks at these cars and said we think you've got the same problem with these models that you have with the previously recalled models. so it's still a black eye for toyota , one that they continue to try to get past this recall issue and, yet it continues to haunt them.

    >> phil, thank you for the information on this latest recall.

Vote: Vote: Would you still consider buying a Toyota?

Explainer: Ten leaps forward in car technology

  • Image: Three-point seatbelt
    Volvo’s Nils Bohlin invented the three-point seatbelt in 1959.

    English physicist, mathematician and astronomer Sir Isaac Newton once famously wrote — with perhaps a touch of false modesty — that “If I have seen a little further it is by standing on the shoulders of giants.”

    Thus has the car industry incrementally improved from its primordial horseless carriage beginnings to the magic carpet ride of today’s almost incomprehensibly complex machines with their raft of safety, environmental and convenience devices adding to the basic transportation function.

    Here are 10 of the car industry’s most important technological changes.

  • 1886 Benz

    Daimler AG

    It all began with Karl Benz and his construction of a self-propelled, three-wheel vehicle powered by a single-cylinder 0.75-horsepower engine using a leather belt and two bicycle chains to transmit power to the rear wheels.

    However modest this beginning, with its exposed engine parts and whirling bits menacing anyone who examines it too closely, the 1886 Benz launched the industry and was the foundation of today esteemed Mercedes-Benz brand. (Maybe the leather upholstery was an early clue to the company’s luxury intent?)

  • 1912 Cadillac with electric starter


    The electric starter — invented by Charles Kettering at his Dayton Engineering Laboratories Co. (Delco) in 1911 — became standard equipment on Cadillacs in 1912, paving the way for all cars to feature electric starters. This accelerated the industry standardization of gasoline internal combustion engines over steam and electric designs. It also put more women behind the wheels of cars because prior to the electric starter they tended to avoid using difficult-to-start, hand-cranked cars.

  • 1914 Ford Model T

    Ford  /  Wieck

    Introduced in 1908, the Model T was just another low-end car from the multitude of regional manufacturers in this country. In 1914 Ford separated itself from its rivals and became (for a while) the world’s largest industrial concern as the result of the Model T’s assembly switching from small teams of craftsmen assembling each car to a moving assembly line of unskilled workers each contributing the same small bit to every car on the line. Construction time to build each car plunged from 12 hours and 30 minutes to 93 minutes, and the car’s price fell from $690 to $360, while annual sales mushroomed almost ten-fold and Ford doubled workers’ salaries to $5 a day.

  • 1930 Motorola car radio


    Next time a boom car rattles your windows at a stop light, think back to the days before Paul and Joseph Galvin developed the first commercially available car radio in 1930.

    The Motorola car radio overcame a host of challenges, including electrical interference, finding space in the car for the bulky radio components and making the radio durable enough to survive the pounding of primitive roads. The popular 5T71 radio debuted at the Radio Manufacturers Association convention in Atlantic City, N.J., following a demonstration drive from Chicago to prove its durability.

  • 1940 Oldsmobile Hydra-Matic transmission


    Today few new cars are sold in the U.S. with a manual transmission and a dwindling portion of the population even knows how to use one. We can credit this dismal state of affairs to the invention of the automatic transmission and its debut in the 1940 Oldsmobile.

    The original Hydra-Matic automatic transmission offered benefits in terms of efficiency that surpassed subsequent designs, but that approach was abandoned in pursuit of smoother gear changes, which were more important to drivers. The company touted the ability to navigate stop and go traffic and to park without stalling the engine as the automatic’s primary benefits, and those features continue to drive the technology’s appeal today.

  • 1946 Michelin radial tire


    Until Michelin developed the radial, tire design had evolved little from the dawn of the car industry. The radial moniker refers to the direction of the reinforcing belts, which are turned perpendicular rather than running parallel to the direction of travel as in bias-ply designs.

    The benefits include a more stable footprint, reduced fuel consumption, longer tread life and better handling. The near-absence of any kind of maintenance or attention required led the government to mandate tire pressure monitors in cars because drivers had long since stopped checking the condition of their tires.

  • 1959 Volvo three-point seat belt


    Volvo engineer Nils Bohlin invented the three-point seatbelt in 1959. The belt appeared in the automaker’s cars that year, and within a decade the belts were mandatory equipment in all cars sold in the United States.

    Bohlin’s background was in aviation, where he developed ejection seats, so he understood the necessity of securing the torso and not just the pelvis as the lap belt had done. The elegant simplicity of his solution is confirmed by the inability of newer seat belt designs to displace the three-point seatbelt 50 years on.

  • 1972 General Motors air bag


    While air bags didn’t become commonplace in cars until the 1990s, GM conducted a large field test of 1,000 1972 Chevrolet Impalas equipped with experimental air bags. Between 1974 and 1976, the company offered the world’s first production air bags in its cars, with the first appearing in a 1974 Oldsmobile Toronado. Though the company was prepared to build 100,000 air bag-equipped cars a year, only 10,321 were sold over three years despite a reasonable price of between $180 and $300 for the option.

    The Insurance Institute for Highway Safety confirmed the robust construction of the early system by testing two of the old cars in the 1990s. Neither car ran and even the radio and clock didn’t work in one, but the air bags still deployed perfectly in the institute’s crash lab.

    “What’s important to remember at this point is that the air bags GM put into those early cars worked fine,” wrote IIHS president Brian O’Neill in a 1993 letter to the New York Times.

  • 1995 BMW and Mercedes-Benz electronic stability control

    Mercedes-Benz USA

    These premium carmakers battled to be the first to introduce an electronic stability control system that automatically stabilizes a car in the event of a slide. Though these expensive V-12 models were the first to feature stability control, they quickly verified the technology’s value with significant reductions in crashes. Subsequent studies showed that stability control-equipped cars are about one-third less likely to suffer a fatal crash, a result that encouraged the U.S. government to mandate stability control for all cars starting in model year 2012. The real safety advantage of stability control is that in contrast to seat belts and air bags, which mitigate the damage that occurs in a crash, stability control prevents many crashes from happening in the first place.

  • 1996 OnStar telematics

    GM  /  Wieck

    In our increasingly connected wireless world, the notion that the car should connect to a network over which it can share information may seem like an obvious development. But it was less obvious in 1996 when GM’s OnStar division was launched, using analog cellular telephone technology to send information to drivers and to automatically report crashes.

    Today other carmakers have their own telematics services and each month OnStar is now responding to 2,300 crashes, 10,000 requests for emergency assistance and nearly 30,000 requests for roadside assistance.

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