Double Ding for Toyota

Toyota closes out 2010 by shelling out another $32.4 million to the government for tardiness. The two fines – for failing to recall its floor mats and defective relay rods within five days of determining a defect – were disclosed yesterday.

Three record fines in one year ain’t beanbag. In all three cases – the relay rods, the accelerator pedal and the floor mats – Toyota had recalled the affected vehicles overseas months before it got around to recalling those components here. It’s refreshing to see the agency enforce the law. But penalizing a manufacturer for failing to file a timely defect report only requires counting to five. The agency will greet 2011 with the much more complicated issue of unintended acceleration hanging in the balance. We’ll address that in a future post.

In the meantime, back to the fines. The details were MIA. NHTSA did not say when it thought Toyota had a duty to recall those components. Toyota didn’t admit it did anything wrong. Since the agency hasn’t made its case for the penalty to the public, the Safety Record Blog will do it for them.

Why Toyota Was Late in Recalling the Floor Mats

In March, Toyota submitted a detailed chronology of the events leading up to its first floor mat recall in September 2007, when Toyota shut down Engineering Analysis 07010, by launching a floor mat recall. The chronology contained scant detail, but it did yield several interesting points: Toyota claimed to have had practically no complaints about floor mat interference; it scrambled to take action beginning in March 2007 to avert a NHTSA investigation; and it initiated a floor mat “field action” in the European market sometime in July 2007, two months before the automaker announced a recall in the U.S.

Further, the chronology was at odds with information presented to the agency in PE-07016. The chronology did not explain these discrepancies.

For example, the chronology showed that prior to taking any action, Toyota had only two reports of floor-mat interference – a field technical report in February 2006 involving a 2005 Prius and September dealership report involving a 2007 Lexus 350ES, using multiple floor mats – before it decided to stop the sale of all of All Weather Floor Mats to implement changes. In its June 11, 2007 response to PE07-016, Toyota says it had no field reports related to pedal entrapment in MY2007 Lexus ES350s.  Further, according to the response Toyota filed in June 2007 to PE07-016, it had received 38 consumer complaints related to pedal entrapment in Lexus 350ES vehicles – eight involved crashes; five with injuries. The chronology does not mention any of these incidents as influencing their ensuing actions.

On March 27, 2007, the automaker says that added a hangtag to be removed by customers and put a product usage label on the packaging. A stop-sale would appear to be an extraordinary reaction, if there were only two incidents in seven months involving different makes, models and model years. However, it is more likely that Toyota’s decision to add these warnings was an effort to get out in front of a pending NHTSA investigation.

According to the Toyota chronology, the automaker learned on March 29, 2007 that NHTSA opened a Preliminary Evaluation on the floor mat issue. However, e-mails offered as exhibits in the multi-district litigation show that Toyota already knew that an Opening Resume on floor mat interference in the ES350 was soon in the offing. In the days leading up the official opening on an investigation, Toyota’s manager of government affairs, Christopher Tinto, informed his colleague Mitch Kato, about the state of negotiations with NHTSA, which clearly began before Toyota’s March 27 decision:

“I spoke to NHTSA management today (K. Demeter) about a potential compromise on the ES350 floor mat Issue. In lieu of a Part 573 safely recall, I offered the following:

Toyota will send a letter to all 2007MY ES350 owners reminding them not to install all weather mats on top of existing mats; In addition, we will enclose a caution label advising owners of the same, and ask owners to affix the label on the flat surface on the backside of the mat; We will also alert dealers of the issue, and remind them not to install mats on top of existing mats; If the owners want to have the dealer affix the label to the mat, Toyota will offer that they bring their vehicles to the dealer to ask them to do it, free of charge. However, we will NOT file a 573 (i.e. this is not a safety recall), because a) this is an ‘aftermarket’ install b) there is no design or manufacturing defect in the mat or vehicle, and c) the issue really boils down to improper installation of the mats by the owner or the dealer (but I noted that Toyota has no evidence that dealers are actually doing this.) Ms. Demeter said that there is precedent in NHTSA’s history for safety recalls in this area, but understood our idea she pledged that they would discuss it internally and get back to me with a response to our proposal in a few days. She also insured me that NHTSA would not open a formal PE until she gets back to me.”

Toyota also acknowledged that before it launched the first, limited floor mat recall in September 2007, it had initiated some sort of a floor mat campaign for its European customers in July. Little is publicly known about what Toyota calls a “field action.” Under the TREAD ACT, manufacturers must report an overseas safety recall or “other safety campaign in a foreign country on a motor vehicle or motor vehicle equipment that is identical or substantially similar to a motor vehicle or motor vehicle equipment offered for sale in the United States.”  There is no evidence in the public record that Toyota did reported this floor mat “field action” to NHTSA prior to disclosing it in TQ10-001.

In the ensuing two years, the cycle repeated itself. According to the chronology, Toyota reported having received only two more complaints. (SRS is aware of a January 2008 crash involving floor-mat entrapment in a Lexus ES350, which occurred on a Connecticut highway. This crash was reported to Toyota. It was noted on one of Toyota’s quarterly EWRs, but it is not one of the complaints mentioned in the chronology.)

After the Saylor crash spotlighted Toyota’s SUA problems, the automaker again ramped up a response. The very public loss of life, involving a California Highway Patrol officer caught Toyota’s attention in a way eight previous NHTSA investigations did not.

In a September 2009 e-mail from Toyota’s Koji Sakekibara to his colleagues underscored the delicate position in which the automaker found itself:

“In light of the information that two minutes before the crash, an occupant made a call to 911 telling that the accelerator pedal was stuck and the vehicle would not stop, I think that the Body Engineering Division should act proactively first, (investigate issues such as whether the accelerator assay is the cause, how to secure floor mats, the timing of introducing shape improvements.) Furthermore, taking into account the circumstances that in this event a police officer and his entire family TMS-PQSS Public Affairs Group thinks that the NHTSA and the USA public already hold very harsh opinions in regards to Toyota (As I think you know, in some cases in the USA killing a police officer means the death penalty.”)

This time, the internal assessment took other solutions into account: “Toyota conducted various analyses to evaluate the emergency shutdown method of Toyota vehicles and competitor vehicles, to evaluate the brake override system of competitor vehicles, to evaluate the accelerator pedal shape change to reduce the risk of pedal entrapment by floor mats, and to compare the shift levers of Toyota vehicles with competitor vehicle,” Toyota wrote in its chronology.  After initially advising owners to remove the All-Weather Floor Mats from their vehicles, Toyota issued a second-phase response, which included a brake-to-idle override for some models, and newly designed floor mats for all vehicles under the recall.

The chronology admitted to no virtually internal evidence of a problem over a four-year period. Was Toyota suggesting that consumer complaints, early warning reports and legal and warranty claims had no role in driving their recall decisions? Did Toyota expect the experienced ODI staff to accept the explanation that on the basis of two field reports, Toyota initiated a stop sale? Based on Toyota’s EWRs, NHTSA opened at least five Death and Injury inquiries on incidents in which floor mat entrapment was alleged. Toyota did not mention any on these incidents in its chronology.

The outline of events cast Toyota’s floor mat recall campaigns in September 2007 and October 2009 as rear-guard actions, driven by NHTSA or other externalities. While the agency investigation is in the preliminary evaluation stage, the automaker conducts pedal entrapment analyses in an Avalon and Prius in relation to pedal geometry and the All-Weather floor mat, and finds nothing wrong. Once NHTSA elevates the investigation to the engineering analysis stage, Toyota decides to conduct a floor mat recall in September 2007.

In conclusion: Toyota claimed to have practically no complaints about floor mat interference; it only acted in March 2007 to shut down ODI; it initiated a floor mat “field action” in the European market sometime in July 2007, two months before the automaker announced a recall in the U.S.


Why Toyota Was Late in Recalling Defective Relay Rods

The relay rod recall chronology was much less tortured. In October 2004, the automaker disclosed to NHTSA that it had recalled Hilux and Hilux Surf vehicles sold in Japan for defective relay rods – but not its U.S. counterparts, Toyota 4Runner, the Toyota Truck and Toyota T100. The rods had a tendency to snap, leaving the driver with no steering controls. But Toyota blamed it on driving conditions unique to the Japanese market:

“TMC has received field information from the Japanese market, but no similar information from the U.S. market has been received. In addition to the different steering linkage design between the right hand drive and the left hand drive vehicles, TMC believes that the unique operation conditions in Japan, such as frequent standing full lock turns, such as for narrow parking spaces and close quarters maneuvering, greatly affects the occurrence of this problem.”

The Hilux recall was a scandal in Japan; with police referring three Toyota executives for criminal prosecution. Top managers avoided jail time. Instead, the Japanese government publicly criticized Toyota and ordered the company to reform its recall practices.

Back in the U.S., Toyota told NHTSA that it had not received any reports of relay rod failures.

Here’s one of those complaints the automaker didn’t receive in 2004, as reported among its 2004 EWR data:

The driver, Zoe Chapman of Whitethorn, CA, was driving her T-100 truck at about 20 mph near Humboldt Redwoods State Park, when she lost steering. The truck climbed an embankment and rolled over. Chapman and her passengers were belted and escaped with minor injuries, but the truck was totaled. Immediately after the crash, Chapman and her passengers saw that the relay rod was severed at a line of rust. They happened to be professional and accomplished photographers who made an on-the-spot visual record of the evidence. Toyota looked at the same facts and decided that the relay rod broke as a result of the rollover and told Chapman to pound sand.

On September 6, 2005, Toyota finally recalled the defective steering relay rods on 977, 839 1989-1995 Toyota pick ups and 4Runners in the U.S. The repair rate was so low, Toyota took the unusual step of issuing an owner re-notification, but it came too late for 18-year-old Michael “Levi” Stewart of Idaho, who died in a September 2007, after the relay rod on his 1991 Toyota pickup fractured. The Stewart family received a recall notice two months later.

Attorney John Kristensen, who represents the Stewart family, did some digging and discovered that Toyota had actually received at least 44 reports in the U.S. since as early as 2000, including crashes involving rollovers and injuries, plus a bunch of warranty claims. In May, Kristensen called on NHTSA to open a Timeliness Query for the relay rod recall, which it did.

In conclusion: In 2004, Toyota recalls vehicles in Japan for broken relay rods, but not in the U.S.; Toyota lies to the agency and claims it has no reports of relay rod failures in the U.S.; Toyota recalls U.S. vehicles with broken relay rods one year later.

Ding! Ding!

In total, Toyota paid $48.8 million in timeliness fines – a slight wobble on their $2.2 billion bottom line. Individual drivers and passengers paid for that delay – in economic losses, and in some cases, with their lives.