Toyota Recall: Internal Document Declares 'Win' After Negotiating Limited Recall, Saving $100 Million In 2007
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WASHINGTON — Toyota officials claimed they saved the company $100 million by successfully negotiating with the government on a limited recall of floor mats in some Toyota and Lexus vehicles, according to new documents shared with congressional investigators.
Toyota, in an internal presentation in July 2009 at its Washington office, said it saved $100 million or more by negotiating an "equipment recall" of floor mats involving 55,000 Toyota Camry and Lexus ES350 vehicles in September 2007.
The savings are listed under the title, "Wins for Toyota – Safety Group." The document cites millions of dollars in other savings by delaying safety regulations, avoiding defect investigations and slowing down other industry requirements.
The documents could set off alarms in Congress over whether Toyota put profits ahead of customer safety and pushed regulators to narrow the scope of recalls. Two House committees are holding hearings this week on the Japanese automaker's recall of 8.5 million vehicles in recent months to deal with safety problems involving gas pedals, floor mats and brakes.
The world's largest automaker has been criticized for responding too slowly to complaints of sudden acceleration in its vehicles, threatening to undermine its reputation for quality and safety.
The documents were turned over to the House Oversight and Government Reform Committee and obtained by The Associated Press on Sunday. The presentation was first reported by The Detroit News.
Toyota said in a statement: "Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong. Our values have always been to put the customer first and ensure the highest levels of safety and quality."
Kurt Bardella, a spokesman for Rep. Darrell Issa, R-Calif., the top Republican on the Oversight Committee, said the documents raise questions on "whether Toyota was lobbying for less rigid actions from regulators to protect their bottom line."
Transportation Department spokeswoman Olivia Alair called the document "very telling. And that's why Secretary (Ray) LaHood has been saying we're going to hold Toyota's feet to the fire and make sure they do what's necessary to make their cars safe for the driving public."
The new documents show the financial benefit of delay. In the presentation, Toyota said a phase-in to new safety regulations for side air bags saved the company $124 million and 50,000 man hours. Delaying a rule for tougher door locks saved $11 million.
On defect regulations, the document boasts that Toyota "avoided investigation" on rusting Tacoma pickup trucks. The National Highway Traffic Safety Administration investigated the case in 2008 but closed it without finding a safety defect. Toyota agreed to buy back certain rusty pickups, inspect other and extend warranties.
The document lists seven "Wins for Toyota & Industry," including "favorable recall outcomes," "secured safety rulemaking favorable to Toyota" and "vehicles not in climate legislation." Another page lists "key safety issues," including "Sudden acceleration on ES/Camry, Tacoma, LS etc."
In one passage, the document says Toyota "negotiated 'equipment' recall on Camry/ES re SA; saved $100M+, w/ no defect found."
NHTSA had launched an investigation in March 2007 over allegations that floor mats were interfering with accelerator pedals. Toyota told the government a month later that there was "no possibility of the pedal interference with the all-weather floor mat if it's placed properly and secured."
By that August, the government had connected the problem to a dozen deaths and a survey of 600 Lexus owners discovered 10 percent reported sudden or unexpected acceleration. But the recall in September 2007 was limited to 55,000 Camry and ES350 vehicles to replace the floor mats.
The 10-page internal presentation was dated July 6, 2009, less than two months before a high-speed crash near San Diego killed a California highway patrol officer and his family and reignited concerns over sudden acceleration in Toyotas.
In October 2009, Toyota issued its largest-ever U.S. recall, involving about 4 million vehicles, over concerns of pedals getting stuck in floor mats.
The presentation lists Yoshi Inaba, Toyota's chief executive in North America, on its cover. Inaba is scheduled to testify before the House Energy and Commerce Committee on Wednesday, along with Toyota president Akio Toyoda and Jim Lentz, president of Toyota Motor Sales USA. The committee is also expected to hear from LaHood, NHTSA Administrator David Strickland and safety advocates.
The Oversight Committee is holding a hearing Tuesday with Lentz, LaHood and Strickland. A Senate committee is planning a March 2 hearing.
Toyota has said it will create an outside review of company operations, do a better job of responding to customer complaints and improve communication with federal officials.
Separately, the government said Sunday it was already investigating reports of sudden acceleration in Toyota vehicles when the nation's largest auto insurer shared complaints about the issue.
The Transportation Department released documents showing that in December 2003 it began investigating 39 complaints of sudden acceleration involving 2002-03 Toyota Camry sedans. That was about three months before State Farm shared with NHTSA complaints of sudden acceleration in 2003-04 Lexus ES300s and 2002-04 Camrys.
The document released by LaHood said the department had received allegations of 26 crashes and 4 injuries involving drivers complaining of their vehicles surging when backing up, pulling in and out of parking spaces and shifting gears.
Reports of deaths in the U.S. connected to sudden acceleration in Toyota vehicles have surged in recent weeks, with the toll of deaths allegedly attributed to the problem reaching 34 since 2000, according to new consumer data gathered by the U.S. government.
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KEN THOMAS 02/21/10 08:19 PM ET Associated Press