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Archive for February, 2010

After D.C. Hearings, Now What for Toyota?

Reluctant CEOs appearance not enough to begin brand’s turnaround from the damages of an ongoing safety scandal.

by on Feb.25, 2010

Toyota CEO Toyoda was cool under fire, but may not have doused the flames of the safety scandal.

Throughout a blistering afternoon that could have broken a weaker man, Akio Toyoda, often described as the “reluctant” President and CEO of embattled Toyota Motor Co., retained a sense of cool as he stared down the members of a Congressional committee investigating problems that have not only resulted in the recall of millions of Toyota products but tattered a reputation the maker has spent decades cultivating.

It was a critical moment for both Toyota and Toyoda, the executive initially declining to come to Washington, then reversing that stand in the wake of furious headlines.  But with a relatively weak grip on English, and the likelihood that the members of the House Oversight and Government Reform Committee would engage as much in a sort of Kabuki theater as a real inquiry, many observers wondered whether the 53-year grandson of Toyota’s founder could salvage both the automaker’s reputation – and his own.

Sticking close to the script, Toyoda wouldn’t give much ground, despite the toughest questions.  But neither would he yield many details – leaving that up to his subordinates.  And there may lie the real future of Toyota, for in two days of testimony before a pair of Capitol Hill committees, the company that has long stressed safety and quality as its hallmarks suddenly seems both more interested in the bottom line and less able to build safe, reliable cars.

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Toyoda’s appearance before the Oversight Committee began on a reasonably congenial note.  After swearing in, the Toyota chief executive read from a prepared statement in a heavily accented but understandable English.  And, as he has done during three news conferences, back in Japan, in recent weeks, Toyoda began with an apology for the problems his company has caused.

“My name is on every car. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers,” said the man often referred to as “The Prince,” back in Japan.  In turn, the assembled Congress men and women offered polite thanks for Toyoda’s decision to come to Washington.  But the friendly tone didn’t last very long, and the executive switched to working in Japanese, through a translator.

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FBI Raids Three Key Japanese Auto Suppliers

Potential antitrust violations under investigation.

by on Feb.24, 2010

Denso was one of three Japanese auto electronics suppliers to be raided by the FBI.

Concerns about potential antitrust violations led the FBI to raid the U.S. offices of three major Japanese suppliers, though it is unclear if still other manufacturers are involved in the investigation.

Among the company’s targeted were Denso Corporation,  one of the world’s largest producers of automotive components and a member of the Toyota Motor keiretsu, a closely-linked network of cross-held companies that characterizes the way the auto industry operates in Japan.  Also raided were Yazaki North America and Tokai Rika.

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A spokeswoman for the U.S. Justice Department confirmed that the government is looking into possible antitrust action by automotive electronics suppliers.

“The antitrust division is investigating the possibility of anti-competitive cartel conduct,” said the department’s Gina Talamona, in a prepared statement. “We are coordinating with the European Commission and other foreign competition authorities.”   (more…)

Cummins Fined $2.1 Million for Dirty Diesel Engines

Diesel engines without pollution controls violate emissions law.

by on Feb.24, 2010

Catlytic converters and particulate filters were missing.

Cummins Inc., a diesel engine company based in Columbus, Indiana, with$14 billion in annual sales will pay a $2.1 million penalty and recall 405 engines under a settlement agreement resolving violations of the Clean Air Act.

The U.S. Environmental Protection Agency and the Justice Department made the announcement, as the automotive world’s attention was fixated on Toyota safety matters.

The Cummins settlement, recorded in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period.

According to a complaint filed simultaneously with the settlement in the federal court, between 1998 and 2006, Cummins shipped more than 570,000 heavy-duty diesel engines to vehicle equipment manufacturers nationwide without pollution control equipment included. This is a clear violation of the Clean Air Act.

ATDs include catalytic converters and diesel particulate filters.

“Reliable and effective pollution control systems are essential to protect human health and the environment from harmful engine emissions,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance.

“These requirements are a critical part of EPA’s program to reduce air pollution and secure clean air so that all Americans can breathe easier.”

Engine makers must prove through testing that their engine designs meet EPA’s emissions standards and seek certificates of conformity.

According to the complaint, Cummins tested the engines with the ATDs to meet the standards, but failed to include the ATDs with the engines when Cummins shipped the engines to the vehicle manufacturers.   (more…)

Hummer Sale Falls Through

Chinese buyer may consider alternatives to save deal.

by on Feb.24, 2010

Barring a last-minute reprieve, the Hummer brand may have traversed its last trail.

The proposed sale of General Motors’ Hummer division to a Chinese heavy equipment manufacturer has apparently collapsed, though the proposed buyer, Sichuan Tengzhong Heavy Industrial Machinery Corp., is reportedly looking at alternatives that could overcome the apparent opposition of Beijing regulators.

Barring some unexpected reprieve, however, GM said that it is ready to start an orderly shutdown of the once-popular Hummer operation, one of four brands the company decided to close as sell as part of last year’s bankruptcy reorganization.

“GM will now work closely with HUMMER employees, dealers and suppliers to wind down the business in an orderly and responsible manner,” said John Smith, the U.S. maker’s director of corporate planning and alliances.

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GM and Tengzhong reached a preliminary agreement for the sale of Hummer last June.  The proposed deal came as a surprise for a number of reasons.  Some analysts had wondered whether any buyer would surface considering the sharp slump in sales of the brand’s products following the record run-up in oil prices the previous year.

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Toyota Promises Nationwide Valet Service for Recalled Toyota and Lexus Vehicles

Language issues arise during Japanese executive testimony.

by on Feb.24, 2010

Toyota's top U.S. executive, Yoshimi Inaba sees an opportunity in the recall of 3.8 million vehicles due to sticking accelerator pedals.

"We must communicate faster, better and more effectively with our customers and our regulators."

Yoshimi Inaba, President And COO, Toyota Motor North America (TMA) and chairman and CEO of Toyota Motor Sales in the U.S. appeared to promise that owner concessions announced by the New York State attorney general this morning would be extended nationwide.

The affirmation came as Akio Toyoda, the grandson of the company’s founder,  sat beside him as both were testifying to a Congressional Committee on Oversight and Government Reform this afternoon.

Andrew Cuomo, the attorney general in New York announced this morning that Toyota and Lexus owners in New York covered by current recalls covering sticking accelerator pedals, floor mat pedal “entrapment,” anti-lock brake system software updates, and Tacoma front drive shaft inspections will be offered the following:

  • Expediting scheduling of the repair(s).
  • Pick up and return of the vehicle by a dealership representative.
  • Driving the customer to the dealership or to his or her place of work
  • Where necessary, providing other alternate transportation for the customer, such as a rental car, loaner vehicle, or taxi reimbursement for the reasonable period that the customer is unable or unwilling to use his or her car.

These services will be provided by Toyota through the dealers at no cost to either the owners of affected vehicles or the dealer.

New York Attorney General Gets Valet Service for Recalled Toyota and Lexus Owners

Pick up and return of the recalled vehicles by dealerships is required, among other costly concessions.

by on Feb.24, 2010

"It is unacceptable that New York consumers should face additional burdens when dealing with a safety problem that is Toyota’s responsibility.”

Andrew Cuomo, attorney general of  New York State, has just announced that Toyota has agreed to provide additional services for New York Toyota and Lexus customers who are affected by Toyota’s recent recalls.

“It is unacceptable that New York consumers should face additional burdens when dealing with a safety problem that is Toyota’s responsibility,” Cuomo said in a statement.

“The agreement we have obtained from Toyota will help ease the fears of Toyota owners and protect their families at no cost to them.”

The recalls at issue affect more than 500,000 Toyota and Lexis vehicles in New York.

The concessions will clearly put pressure on other attorneys general to institute similar procedures.

It appears likely in my view that Akio Toyoda will announce a national program along similar lines during his testimony this afternoon in front of a House Oversight Committee.

How could he do otherwise?

Toyota and Lexus owners in New York covered by current recalls covering sticking accelerator pedals, floor mat pedal “entrapment,” anti-lock brake system software updates, and Tacoma front drive shaft inspections are offered the following:

  • Expediting scheduling of the repair.
  • Pick up and return of the vehicle by a dealership representative.
  • Driving the customer to the dealership or to his or her place of work
  • Where necessary, providing other alternate transportation for the customer, such as a rental car, loaner vehicle, or taxi reimbursement for the reasonable period that the customer is unable or unwilling to use his or her car.

These services will be provided by Toyota through the dealers at no cost to either the owners of affected vehicles or the dealer.    (more…)

Lexus Tops Power Customer Service Index, But Toyota Slips Below Average

Hummer leads list of mainstream brands.

by on Feb.24, 2010

Lexus tops the new J.D. Power Customer Service charts, but mainstream Toyota lags well below average, a potentially serious problem.

Lexus, the luxury arm of Toyota Motor Co. yet again topped the customer service charts, though its mainstream sibling, the Toyota brand, slipped well below average, according to a new survey by J.D. Power and Associates.

Luxury brands generally delivered the best performance according to the 30th J.D. Power Customer Service Index, which measures how owners feel about the way their dealers handles repairs and maintenance to their vehicles during the first three years of ownership.  But some mainstream brands rose to the top, notably including Hummer, the brand General Motors hopes to sell in the coming weeks.

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Keeping customers happy in the service bay can be an important way for a manufacturer – and its dealers – to retain loyalty, said Power officials.

(more…)

First Drive: 2011 Hyundai Sonata

Erase your memory banks and start all over.

by on Feb.24, 2010

With a base price of $19,195, the 2011 Sonata could get folks rethinking the Korean brand.

Unless you’re a true novice to the new car market, you may have some preconceived notions about Korean-made products – and they may not be all that kind.  But if you’re looking for a midsize sedan, you might want to erase your memory banks and start all over.

The 2011 Hyundai Sonata should finally put to rest all those bad jokes and nasty references the Korean maker earned – and deservedly, we should add –during its early years in the U.S. market.  The products Hyundai dumped into American showroms, when it debuted, back in 1986, were, to put it politely, cheap and cheerful.  They might have saved you money up-front, but you were likely to shell it out later, at the repair shop.

No longer.

Hyundai’s quality has been steadily climbing up the charts, to the point where its industry-leading 10-year warranty is almost irrelevant.  (Though, Hyundai, won’t dream of taking that feature away.)  But while quality may be “the price of admission,” according to Hyundai of America CEO John Krafcik, it’s not the only thing that matters.)

In today’s hotly competitive market, it takes a lot to get your product on a buyer’s radar screen.  You also need good design, great features, solid performance and impressive fuel economy.  Oh, and don’t forget an affordable price tag.

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Too much to ask?  Not if you’re considering the 2011 Hyundai Sonata. The Korean carmaker’s latest mid-size incarnation scores surprisingly well on all counts, to the point where we had to pull out the magnifying glass to find a few complaints to balance out an otherwise glowing review.

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Horror of Saylor Fatal Lexus Accident Reviewed at Opening of Congressional Hearing

Toyota and NHTSA excoriated for “troubling patterns” of ignoring safety. Toyota unintended acceleration unresolved.

by on Feb.24, 2010

“If Camry and Prius were airplanes they would be grounded,” said Towns.

Committee chairman Edolphus Towns opened his Toyota safety hearings today with harsh words:  “NHTSA failed the taxpayers. Toyota failed their customers – we now have 39 deaths attributed to Toyota products,” said Towns.

“If Camry and Prius were airplanes they would be grounded,” said Towns.

Department of Transportation Secretary Ray LaHood said that  any of the Toyota vehicles subject to recall “are not safe.”

“If your car is listed take it to the dealer to get it fixed,” said LaHood.

Toyota’s recalls – thus far – address  five separate Toyota product safety issues. In total, some 5.3 million Toyota vehicles across 14 model lines  are affected by one or more of
these recalls in the United States.

Millions more Toyota products are involved in global recalls.

LaHood says NHTSA has the resources to enforce safety laws.

Toyota, of course, initially and subsequently asserted that unintended acceleration was solely the result of “pedal entrapment” from floor mats.

That assertion was negated when NHTSA investigators found the floor mats of a Toyota locked in the trunk of a vehicle that was involved in a fatal accident.   (more…)

Korean Hyundai Recalling New Sonata

Defective door latches recalled as American launch ramps up.

by on Feb.24, 2010

The 2011 Hyundai Sonata is now subject to a safety recall for defective doors.

Hyundai Motor has issued a recall for about 46,000 of the new, 2011 Sonata in the largely closed South Korean market, though a small number of the sedans will also be impacted here in the U.S.

The Korean company had seemingly overcome its dismal quality reputation caused by the original models sold in the U.S. two decades ago with clever marketing and one of the best warranties in the business.

The company had hoped to increase its U.S. market share  primarily from sales of the new Sonata, which accounts for almost 40% if sales here. How much of a setback this is remains to be seen.

In a statement, Hyundai Motor said that it has “discovered a mechanical problem with its front door latches which, in very rare instances, will not close properly.”

Apparently, 1,300 of the defective Sonata models now in customer service in the United States would also be recalled.

In total, about 5,000 model year 2011 Sonatas, produced from  December 11, 2009 until February 15, 2010 in a non-union assembly plant in Alabama are affected.

In Korea, Hyundai claimed the recall, which will begin sometime in March, was caused by a “handful” of customer complaints.

Hyundai also says that there have been no reports of accidents or injuries because of the safety defect.

However, U.S. representatives of Hyundai were unable to respond immediately to requests for more information.   (more…)