Another Smoking Gun in the Toyota Saga

Yet another damaging revelation has undercut Toyota's (TM) reputation for disclosing safety issues and the fixing potentially dangerous problems with its cars. The latest twist has a new angle: Toyota apparently bargained with U.S. regulators to limit the scope and cost of a recall. The recent discovery may do as much harm to the National Highway Traffic Safety Administration as it does to the Japanese car company.Several media sources report that an internal Toyota document from July 2009 entitled, "Wins for Toyota Safety Group," says the firm saved $100 million by convincing the NHTSA to limit an accelerator recall to 55,000 Lexus and Camry models. The Wall Street Journal reports that, "The Toyota document, by linking safety issues to corporate profits, could prompt difficult questions for company executives, including President Akio Toyoda, who is scheduled to testify Wednesday before the Oversight Panel."

The weight of this disclosure will be added to the 8 million cars Toyota has recalled for acceleration problems, the recall of Prius hybrids of brake problems, smaller recalls including one for the Tacoma pickup, and a potential 500,000-unit recall of the Camry.

Collateral Damage

The obvious side effect of the memo's discovery is that it raises questions about Toyota's aggressive efforts to save money rather than recall cars that may have defects. The news will make both the U.S. government and consumers even more skeptical and will further damage the Toyota brand and sales of its cars in the U.S. and abroad.

The collateral damage from Toyota's apparent repeated efforts to dodge recalls or delay them, jeopardizing customer safety, will hit the company's dealers, who are already suffering from falling sales. Factory workers in the U.S. and Japan will also be affected. And the problems have already extended to Europe, where Toyota will close plants in the U.K. for two weeks.

A few more documents like "Wins for Toyota Safety Group" will lengthen the company's grillings in Washington and probably increase the number of lawyers Toyota will need to fight liability and class actions.
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