Toyota Gets a Brake (Pun Intended)

Feb.10.11 | About: Toyota Motor (TM)

By David Silver

As I was preparing to write this piece, I googled the crash back in October 2009 that started one of the largest automotive recalls in the history of the industry, and I found an audio taping of the 911 call of the family before they crashed. It was chilling to hear it again; it is rather cold in New York City, but that call gave me more chills than walking around the canyons of Wall Street ever could. That crash initiated the recall of Toyota (NYSE:TM) vehicles for sticky accelerator pedals and floor mats that caused the accelerator to get stuck and cause unintended acceleration. 12 million vehicles and about 16 months later Toyota still hasn't completely emerged from the shadow. Tuesday, the Department of Transportation released a report that was a step in the right direction for Toyota (and the auto industry as a whole) that said the electronics were not to blame for the unintended acceleration.

NASA scientists participated in the study to see if it was a mechanical or electrical problem that caused these unintended accelerations. While the study says it is not likely that the electronic system caused the problem (apparently they couldn't recreate a similar defect), it does not completely absolve Toyota either as it doesn't prove that it wasn't the electronic system. So everyone who drives a Toyota should feel a little safer behind the wheel; however, they are mass produced machines so of course there are going to be recalls. There are recalls in just about every industry, but few get the media coverage that Toyota received.

I did about 20 radio interviews Wednesday morning for radio stations across the nation and it was interesting to see just how strongly some of these hosts felt about Toyota. Additionally, just about each one made a comment about how their wife or son or daughter or co worker drives a Toyota and they love it, so apparently the reputation hit wasn't too bad. Hopefully it was a wake-up call for Toyota, which seems to have gotten complacent as the largest automaker in the world, one with the reputation for quality and longevity. During 2010, Toyota lost the number two spot in the United States to Ford and lost 2 points of market share. While 2 points may not seem like much, tenths of a percent moves are either cheered or scorned.

Every automaker was sitting with bated breath waiting for this nine month long panel to decide if the electronic systems were the cause as just about every automaker now has some sort of computer in their vehicles, and most of these electronics share components. Ford (NYSE:F), General Motors (NYSE:GM), Chrysler, Honda (NYSE:HMC) etc. all have electronics in their vehicles, which share parts with Toyota. So an indictment against Toyota would have caused a massive recall across the industry. The next pseudo logical step would be to assume that the Department of Transportation could never allow that to happen to an industry that we bailed out. Well there are conspiracy theorists that think the government orchestrated the massive recalls for Toyota to help the American automakers rebound (don't think I can call them the Big Three anymore). If you believed in those conspiracy theories before, this report won't change your mind. If you are a loyal Toyota customer, you may feel vindicated, but it wasn't a ringing endorsement.

So what's changed? Most of the problems for Toyota were blamed on floor mats and a small piece of the accelerator that rusted and caused some sticking (both were relatively easy to fix), but the third cause was the doosie that not many people wanted to hear, user error. Remember that guy who was driving down the San Diego freeway with cops following him? Those NASA scientists did some tests on that vehicle and it seems that the only way they could produce a similar experience was by standing on both the accelerator and the brake pedal. That leads me to one of the few positives from this whole ordeal. By 2012, every vehicle will need to have a system installed that will prevent such a problem from occurring. User error is to blame when both the accelerator and the gas pedals are pressed at the same time, and this new fix will cause the brake to have priority. When both are pressed at once, the brake will take priority and cancel out the accelerator's action. I guess no more peeling out and burning rubber; I know it's a sad day for street racers everywhere.