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Editorial: Leaked Toyota Documents Raise Questions About Safety Regulators as Well

Toyota calls NHTSA limited recall a “win,” but did the federal auto "safety” agency actually abandon safety?

by on Feb.22, 2010

Newly leaked documents could be troublesome for Toyota CEO Akio Toyoda during this week's Capitol Hill hearings, but are U.S. safety regulators just as much to blame?

With Toyota slated to be the target of a high-profile hearing on Capitol Hill, tomorrow, Congressional insiders leaked a damaging internal document showing the automaker celebrating a “win” after convincing the National Highway Traffic Safety Administration to limit the size of a recall due to unintended acceleration problems.

But Toyota is not the only entity in trouble – if you take a more reasoned, non-sound bite look.

A classic Washington blame game is now emerging as the three major – and entirely self-interested – parties vie for advantage in the run-up to the well-publicized Congressional hearings.

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Toyota, NHTSA and politicians running for reelection (in the face of fierce voter resentment of incumbents, partisan politics and pay for play “public servants”) are under scrutiny. And what is emerging is a sordid tale involving all in our view.

You’ll find the full story after the break.

(There’s been a long-running battle between automakers and government regulators, as contributing editor Mike Davis, a one-time Ford PR executive recalls in this special report for Click Here for that story.)

(With Toyota officials now facing what could become a criminal investigation, could some company executives have a visit to “Club Fed” in their future? Click Here for the full story.)

First, there is the entirely predictable Congressional leak: An internal Toyota presentation, dated July 6, 2009, counts among the “Wins for Toyota Safety Group,” a decision by the National Highway Traffic Safety Administration to allow the automaker to recall just 55,000 Camry and Lexus ES sedans, a move that the memo boasts saved it $100 million.

Eventually, Toyota would recall more than 8 million vehicles – thus far – for a variety of unintended acceleration problems, including so-called “carpet entrapment,” as well as sticky accelerator pedals. The most recent recall alone expected to cost $2 billion according to Toyota.

The documents call into question a key assertion that Toyota has taken, in recent weeks. In an interview during the Chicago Auto Show, on February 10, Group Vice President Bob Carter emphasized that safety was Toyota’s primary concern, regardless of cost. To underscore that point, Carter insisted the company decided to halt sales of vehicles affected by the sticky accelerators, and temporary idle assembly lines, even before it knew what the cost of those moves would be.

But the 2009 presentation emphasized that by limiting the size of the recall, Toyota would save $100 million, suggesting that the company clearly considered the bottom line impact of any safety actions. No real surprise here, in our view.

The unintended acceleration issue cited in the document is not the first instance in which Toyota struggled to win concessions from federal regulators looking into safety-related problems. Nor is it unusual for automakers to discuss with NHTSA the scope of recalls or service actions.

Among other things, Toyota fought to block a recall meant to correct problems with the headlights on Toyota Prius hybrids. The high-tech High-Intensity Discharge, or HID, headlamps have had a tendency to fail due to problems with the control system rather than the bulbs.

But despite the extensive number of complaints received by the NHTSA – echoed by frustrated users sounding complaints on various Prius-based websites – the government ultimately agreed to allow Toyota to issue a service bulletin, rather than a recall.

The service bulletin approach – also in widespread use at other makers – had several advantages. For one thing, it would not get included in annual recall tallies comparing Toyota to its competitors. But it also saved the company a significant amount of money, as it would only have to repair vehicles owners brought in after having headlight problems. With a full recall, a significantly larger body of owners would likely have sought preventive repairs – even if they had not experienced HID problems.

The Prius headlight service bulletin also does not necessarily cover all costs, as Bob Stern, a suburban Chicago salesman, has discovered. In recent weeks, the right headlight of his 2008 Prius has been intermittently blinking out and then working again when he restarts his car. Two dealers near his home have offered to replace defective parts free, but since Stern’s ’08 hybrid is 4,000 miles out of warranty, they still want to charge about $150 for labor.

Stern is currently talking to a corporate office hoping to get the labor covered, as well.

Such matters will be problematic when Toyota CEO Akio Toyoda appears before the House Energy and Commerce Committee, this week.

But it is also a severe competence issue for federal safety regulators at NHTSA, which is part of the Department of Transportation, headed by Republican Ray LaHood.  In recent weeks, it has become apparent that the government was aware of mounting safety issues, even receiving insurance company reports indicating problems with Toyota accelerators.

No one has been more aggressive than LaHood, who has been outspoken in his criticism of a Toyota he declared “safety deaf,” during a budget meeting with journalists. LaHood went so far as warning owners not to drive vehicles equipped with the potentially faulty accelerators, before backing down a few hours later.

So to us it is also now clear why LaHood has been unusually aggressive in his public statements excoriating Toyota for its lack of actions on safety matters. He is diverting attention from NHTSA’s failure to act in numerous Toyota safety matters, which in the case of unintended acceleration is now allegedly responsible for at least 34 deaths.

Toyota has been trying to strike a balance as it addresses mounting public concerns about the safety of its vehicles; it has issued a number of apologies, all the while insisting that safety is its top concern.

“Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong,” the Toyota said, in a statement.

However, we now question whether this is a matter of a single leaked document or a case of a corporate culture at Toyota, which promotes safety in its advertising and public statements, but internally puts the emphasis on costs and image above all else.

-          Paul Eisenstein and Ken Zino

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