Toyota Memo Brags of Saving $100M with "Limited" Recall

Posted: Feb 22, 2010 11:01 a.m.

As Toyota officials head to Washington for a series of Congressional hearings this week, a potentially damaging internal document is grabbing headlines.  All three TV news networks and hundreds of newspapers nationwide led with the story this weekend, adding to a public relations nightmare for the Japanese automaker.

The Detroit Free Press explains, “Toyota’s leading U.S. executive boasted to the automaker’s Washington staff last summer that they had saved the company more than $100 million by limited any regulatory action on sudden acceleration to a recall of equipment such as floor mats, according to documents turned over to a key U.S. House committee holding hearings on the issue Wednesday.”  The News notes, “Earlier this month before the hybrid recall, Toyota executives estimated that the unintended acceleration recalls would cost $2 billion in lost sales and cost of extra parts for repairs.”

The company did not turn over the documents voluntarily.  Reuters reports, “The company said on Monday it had received a federal grand jury subpoena for documents related to unintended acceleration that led to the recall of millions of cars in the United States.”

The claim, the Wall Street Journal notes, was made in a presentation for Toyota executives titled “Wins for Toyota Safety Group.”  Among the “wins” the document lists are the savings claim, as well as a federal government “decision to close safety investigations of the Toyota Tacoma truck without ordering recalls, and delays to new safety rules that saved the company hundreds of millions of dollars.”  The presentation, the Journal speculates, “By linking safety issues to corporate profits, could prompt difficult questions for company executives, including President Akio Toyoda, who is scheduled to testify Wednesday before the Oversight Panel.”

The Tacoma investigation, according to the New York Times, concerned hundreds of reports or premature frame rust, which could compromise the structural integrity of a truck in a collision.  “Toyota offered to repair or, in some cases, replace damaged Tacomas built from 1995 to 2004,” avoiding a high-profile recall in the process.  We reported on the issue at the time, as well as a similar problem affecting Tundra trucks.

The existence of the document could pose a public relations problem for officials headed to Washington to testify, but some analysts aren’t surprised by its existence.  Autoblog asks, “If you saved your company $1 million, you'd brag about it, right? How about $100 million? Certainly you'd be looking for a few pats on the back for such a massive sum…it's likely that there are similar documents floating around the halls of every major automaker.”

Jalopnik adds, “Toyota's actually a *gasp!* profit-maximizing company like every other automaker. They're not looking to save the world, they're looking to make money for their shareholders. Surprised? You shouldn't be. What we are surprised by is Toyota's level of tone deafness to what kind of a negative story something like this would create for them.”

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