TOPICS > Economy

Toyota Halts Sales Amid Renewed Safety Fears

January 27, 2010 at 12:00 AM EST
Loading the player...
In an unprecedented move caused by faulty gas pedals, Toyota has halted the sale and production of eight of its top-selling models. Judy Woodruff reports.
LISTEN SEE PODCASTS

TRANSCRIPT

JIM LEHRER: Nearly two-thirds of Toyota’s product lineup in the United States was in limbo today over a safety scare.

Judy Woodruff has the story.

For the record, Toyota is a “NewsHour” funder.

JUDY WOODRUFF: Instead of putting new Toyotas on display at the lot last night, employees at a Texas dealership were busy taking them off.

Toyota ordered dealers nationwide to stop selling eight of its models. It also halted production of those vehicles at six North American plants, as of February 1. The move was unprecedented, and the culprit was a faulty part made by a U.S. supplier, causing gas pedals to stick and drivers to lose control.

JUSTIN CABULOY: It’s kind of surprising because, you know, Toyota is really popular and really famous in terms of their dependency.

JUDY WOODRUFF: The vehicles in question include the Camry, America’s bestselling car, as well as the Corolla, Matrix, and Avalon. Trucks and SUVs are on the list, too, with the RAV4, Highlander, Tundra, and Sequoia all being pulled off dealer lots.

DON MOORE, Moore Automotive Group: It’s a little frustrating because I’m here to sell cars. By the same token, I don’t want to put something on the road that’s not going to be safe.

JUDY WOODRUFF: Toyota said it has had no new reports of accidents or injuries. But, last week, it recalled the same eight models, affecting more than two million cars and trucks. Toyota has not said why sales were not halted then.

Toyota became the world’s biggest automaker in 2008, beating out General Motors. But two years earlier, questions had arisen about quality after fatal accidents in Japan. In the U.S., Toyota first noticed gas pedal problems three years ago. And, last year, the company recalled four million vehicles in the U.S., saying floor mats were pinning accelerators to the floor.

Now it turns out removing the floor mats didn’t solve the problem.

SEAN KANE, Safety Research and Strategies: We continue to find evidence from a variety of consumers who come to us with incidents that cannot be explained by a floor mat.

JUDY WOODRUFF: The automaker said today, American workers will stay on the job, but the company’s bottom line stands to take another severe hit. Last year, Toyota suffered its first-ever annual loss.

For more on this story, we turn to Jessica Caldwell. She’s a senior automotive analyst with Edmunds.com, a consumer Web site.

Jessica Caldwell, thank you for being with us.

Unprecedented, is that because never before have this many cars been taken off the lots?

JESSICA CALDWELL, senior automotive analyst, Edmunds.com: Right, Judy.

I think — you know, I think, really, the unprecedented comes from the fact that they’re stopping sales. So, this is going beyond a vehicle recall. This is going beyond problems in production.

This is, you know, consumers going to the dealership that cannot buy these investigation. And it’s — and it’s such a wide variety of vehicles, too. So, I think that’s when you throw out — want to throw out that word unprecedented, because we — you know, we really haven’t seen anything like this in the industry ever.

JUDY WOODRUFF: The eight models that we mentioned, 2005, 2007, ’8, ’9, and ’10, why is this just surfacing now?

JESSICA CALDWELL: Well, there’s been some grumblings really for past few years. And I think the news report earlier kind of alluded to it. You know, was it a floor mat issue? Was it an accelerator issue?

And I think, really, what’s come out now is that we just don’t know, you know, and they’re trying to isolate that problem right now. So, it’s not just one thing. It seems like it’s been a lot of things that have kind of snowballed into the predicament we are in today.

JUDY WOODRUFF: So, they haven’t isolated the problem? I mean, they have talked about a part, the accelerator pedal.

JESSICA CALDWELL: Right.

JUDY WOODRUFF: How much have they pinpointed this?

JESSICA CALDWELL: Right. It seems as if what has come out today is that they have really pinpointed a part. But in terms of how that part plays into the larger production, how it works with the electronic systems, I think those questions are still up in the air right now.

So, it looks like they may have an inkling of where it’s going, but, as to the fix and the process of fixing all those millions of cars, I think that’s really still TBD.

JUDY WOODRUFF: And I’m reading today the company that makes at least I guess one of these parts, CTS Corporation based in Elkhart, Indiana, they are saying they don’t know of any instances where definitely people have been hurt or there have been accidents. Is it definitely connected to this company?

JESSICA CALDWELL: Right. That’s kind of where — if you read between the lines, it looks like that is where it kind of is all leading, to that company. But I saw the same report you did, and it looked kind of like they, you know, were not taking responsibility there.

There was a lot of, I think, hints of the — or remembrance, I should say, of the Ford and the Firestone debacle many years ago. But I think, really, at the end of the day, there isn’t an answer and there isn’t a fix.

JUDY WOODRUFF: What — so what are people who own these cars or are driving these cars and trucks supposed to do?

JESSICA CALDWELL: Yes, that’s a good question. We’re getting that a lot from the consumers on our site.

And it’s, if I own this car, can I even drive it to the dealer to get it fixed? And the answer is, we just — you know, we don’t know what the answer is. You know, at the end of the day, it’s a gamble. Of course, you know, no one wants anyone to be injured out there. But I think, there have been signs, if you feel as if your accelerator has been sticking, then don’t drive it.

But it’s a lot of people out there that are affected, and it’s really — a lot of people need these cars for their everyday life. So, while you don’t really want to suggest that people don’t drive them, you don’t want to suggest them to drive them if they’re not going to really have a safe experience.

JUDY WOODRUFF: So, Toyota has given what kind of guidance on that?

JESSICA CALDWELL: They really haven’t said a lot.

I think, finally, today, they finally gave dealers some guidance earlier. I haven’t seen exactly what their talking points were yet, as far as how to deal with some of the customers coming in with all the concerns.

Some of the customers we have spoken said they have called their dealer, and they didn’t really get a solid response in terms of what they should do. Right now, it’s — you know, the dealers are having a hard time trying to pin down the problem and which vehicle this applies to. I think a lot of it has to do with, where did the car come from?

So, the dealers themselves have to research the origin. So, it’s not 100 percent clear at the dealer level either. So, you know, we’re kind of waiting to see some direction from Toyota as far as where to proceed from here.

JUDY WOODRUFF: And I — of course, we saw — we quoted the Obama administration, the secretary of transportation, saying that the administration had to ask Toyota or insist that they not only recall these vehicles, but that they stop making them. Do we know how much pressure the government had to put on Toyota?

JESSICA CALDWELL: You know, they definitely had — they definitely put some pressure on. I don’t think Toyota has really hinted at the fact that that was the case, but, of course, the reports coming out from the government said that that was.

We know it’s definitely a big step, stopping production, and stopping sales, and, like you said, dealers having to put these cars away and not sell them. So, you know, again, I think it comes down to really a safety issue that’s been building for some time now.

So, something dramatic needed to happen, and something needs to be reversed, and it looks like this is really the outcome of it.

JUDY WOODRUFF: And, finally, Jessica Caldwell, what is it believed that this is going to mean for the Toyota brand?

JESSICA CALDWELL: Well, right now, you know, it definitely doesn’t look good. There’s been so many grumblings from consumers for months now dealing with these recalls about, hey, I thought Toyota was about quality, was about reliability. And that certainly doesn’t seem to be the case today.

You know, we have seen companies bounce back from some things like this. I think Tylenol comes to mind. Again, Ford and Firestone come to mind. And, you know, if anyone can do it, I really think it is — it’s Toyota, in terms of the car companies out there. They have, you know, very advanced just-in-time manufacturing systems that could probably produce cars with the correct parts if needed much faster.

But, in the short term, I think their reputation has definitely taken a hit. But, in terms of five, 10 years from now, will people still only remember this? I think history from other companies suggests that they won’t.

JUDY WOODRUFF: Well, we will be watching it for the days to come and beyond.

Jessica Caldwell with Edmunds.com, thanks very much.

JESSICA CALDWELL: Great. Thank you, Judy.