Northwest Arkansas Democrat-Gazette
Auto recalls speed up as scrutiny increases
After two of the world’s largest carmakers — Toyota Motor Corp. and General Motors Co. — were criticized for dragging their feet before calling back defective models, automakers are now accelerating safety recalls.
Recall counts have hit record levels in Japan and China, while in the United States, the 2014 recall pace is well ahead of last year’s, when the tally rose to the highest since 2004.
Toyota, roiled by a crisis over unintended acceleration in 2009 and 2010, on Wednesday issued its second-biggest recall announcement ever at a time when GM is facing condemnation for its handling of faulty ignition switches tied to at least 13 deaths. U.S. regulators are investigating GM over the way it dealt with flaws it first saw as far back as 2001, a sign of intensifying scrutiny of safety practices in the auto industry.
“Since the Toyota fiasco in 2009 and 2010, there’s already been a tendency for automakers to be more cautious,” said Ashvin Chotai, managing director of Intelligence Automotive Asia. “They are recalling when they previously wouldn’t have — that’s already occurring.”
Regulators have drawn parallels between GM’s longdelayed actions and Toyota’s recall of 10 million vehicles for unintended acceleration more than four years ago. The Toyota City, Japan-based company admitted last month as part of a settlement with the U.S. Justice Department that it had concealed information about those defects.
Toyota, the world’s largest automaker, recalled more than 6 million vehicles Wednesday for five potential safety hazards. The problems involved almost 30 models and included cables that could prevent airbags from deploying and windshield-wiper motors that may break down.
“We sincerely apologize to our customers for the inconvenience and concern brought by this recall announcement,” the company said in an emailed statement. “Toyota has reded-
icated itself to strengthening its commitment to safety and quality. In part, that means refocusing on putting customers and people first, by listening better and taking appropriate action.”
Some of the 6.39 million vehicles Toyota recalled are being called back for more than one fault, pushing the tally to 6.76 million. Several of Toyota’s top sellers — such as its Camry and Corolla sedans and RAV4 sport-utility vehicles — were included in the recalls.
Total recalls in the U.S. so far this year have already exceeded 12 million vehicles — more than half of last year’s 22 million — according to the U.S. National Highway Traffic Safety Administration data.
Toyota surpassed 1 million recalled vehicles in the United States this year even before the latest announcement, as had Nissan Motor Co. Honda Motor Co. has about 900,000, and Chrysler Group LLC, after an April 2 recall of sport-utility vehicles, has about 738,000, according to the data.
Last year’s U.S. recall tally was the most since 2004’s 30.8 million, according to the safety administration. In that year, GM recalled 10.7 million vehicles, including 3.66 million pickups for faulty tailgate support cables, according to the Center for Auto Safety.
This year, GM has already recalled more vehicles — 6.07 million — than any other automaker did in the United States in all of 2012 or 2013. Toyota recalled the most U.S. vehicles in each of the last two years — 5.29 million in 2013 and 5.33 million in 2012.
“It’s always better to err on the side of caution,” Jessica Caldwell, an analyst with carshopping site Edmunds.com, said in an emailed statement. “Given the sensitivity around auto safety in the last five years, it should be no surprise that we see as many recalls as we do today.”
The most recent Toyota recall is smaller than the 7.43 million vehicles it called back in October 2012 to fix powerwindow switches. Ford Motor Co. called back more than 14 million vehicles in 2009 for a faulty cruise-control switch that could cause a fire, according to the U.S. Transportation Department’s website.
Automakers often take years to recall vehicles. Toyota said it first identified one of the five problems in the most recent recall back in 2007, while the most recent problem emerged last year, it said.
Toyota last month admitted wrongdoing and agreed to an independent monitor who will assess its safety reporting practices as part of a $1.2 billion settlement related to its handling of unintendedacceleration problems. Attorney General Eric Holder said it was the largest criminal penalty ever imposed in the U.S. on an automaker.
For Akio Toyoda, president of the company and grandson of its founder, persistent recalls are a setback to his efforts to restore the company’s oncesterling reputation for quality. He’s pledged to improve and speed up the company’s processes, forming a global quality group that he chairs. The automaker said previous decision-making related to safety was too dependent on executives in Japan and that it has given regional operations more autonomy to make fixes.
In early April, lawmakers brought up Toyota’s shortcomings during its unintended-acceleration crisis as they pressed GM Chief Executive Officer Mary Barra on the company’s handling of flawed ignition switches. The largest U.S. automaker is being fined $7,000 a day for failing to fully answer the safety administration’s questions about the flawed part in cars including the Chevrolet Cobalt.
Toyota and GM aren’t alone in facing challenges with cars in need of fixes. A surge in new models, increasingly complex technology and heightened regulatory scrutiny are behind the increase, according to a study released last month by financial advisory firm Stout Risius Ross Inc.
Automakers’ issues extend beyond the U.S. market. In Japan, auto recalls reached a record of almost 8 million vehicles in the fiscal year that ended in March, the nation’s Transport Ministry said. They climbed to a record in China after the country introduced recall laws.
The increasing use of standardized parts across vehicle lineups also raises the risk of larger recalls. Automakers including Toyota also are pressing suppliers to make common components that they can put into various models.
Denso Corp., Japan’s largest parts maker, for example, has developed air-conditioner units that it says go into small compacts and larger luxury cars. Volkswagen AG, Europe’s biggest automaker, uses standardized components such as electronic systems and axles as part of its plan to base Audi, Skoda and Seat vehicles on a common platform it calls MQB.
“The scale of one component has become much larger, and that means one incident could result in huge impact,” said Masahiro Akita, an analyst with Credit Suisse Group AG in Tokyo. “There is some conflict because the more scale you have, the more difficult it is to control the quality.”
Toyoda, 57, has instituted a three-year freeze on new car plants to tilt the company’s priorities to quality and efficiency after its 2009-2010 recalls.
Still, Wednesday’s recall was the second major safetyrelated campaign by Toyota this year. A global recall of 1.9 million Prius hybrids in February covered more than half of the models sold since it debuted 17 years ago. The company said it would update software to fix glitches that could cause the cars to lose power or shut down and stop.
Recalls have done little damage to Toyota’s earnings. The company has forecast that profit for the year ending March 31 will surge to a record $18.6 billion. Toyota also has set a target of selling an unprecedented 10.32 million vehicles in 2014 after leading GM and Volkswagen AG in global auto deliveries for a second straight year in 2013.
“The carmakers have set the bar much lower to announce recalls,” Credit Suisse’s Akita said. “Rather than hiding it and creating problems later on, it’s much better to announce at an earlier stage and deal with it properly. Compared to 20 to 30 years ago, they are getting more and more serious.”