What Toyota once saw as a small glitch is now an escalating emergency

TOKYO--Long before the high-profile deaths, the lawsuits, the record recalls, and the government reprimands, engineers at Toyota Motor Corp. began noticing red flags.

What they were on to would eventually explode into the company's worst-ever quality crisis.

It was March 2007, and engineers were getting strange reports about the pedals in Toyota Tundra pickups. Sometimes, the accelerator was slow to return to the idle position after being depressed.

They decided excess moisture caused swelling of the friction lever, a mechanism that controls the pedal's movement. Engineers changed the material and moved on.

In late 2008, more complaints came in--this time from Europe.

Drivers of the Aygo and Yaris small cars, by then equipped with the new friction lever, said their pedals were sticking, too. Toyota lengthened the lever and changed material again.

In each case, Toyota wrote off the problem as a rare one-off or a driveability, not safety, glitch.

But that assessment changed last fall, when more cases popped up in the United States and Canada. It took from October 2009 to January 21, 2010--nearly four months--for the world's biggest automaker to pinpoint the same problem and recall 2.3 million possibly defective vehicles.

As chronicled in Toyota's Jan. 21 Defect Information Report to the National Highway Traffic Safety Administration, the buildup to the pedal recall was years in the making.

Safety experts say Toyota had ample opportunity to act sooner.

"They let this thing go way out of control and didn't deal with it early like they could have," said Sean Kane, president of Safety Research & Strategies Inc., a consumer advocacy group and auto safety consultancy in Rehoboth, Mass.

In many cases, it will be a jury deciding whether Toyota failed to act.

The company is besieged by lawsuits brought by people saying they were injured--or had relatives killed--in a runaway Toyota Motor vehicle. Key to the cases will be what Toyota knew and when.

One case was filed Jan. 22 by Los Angeles attorney Michael Kelly. He accuses Toyota of trotting out floor mat and pedal recalls to cover up deeper problems with its electronic throttle control system.

"First they said aftermarket carpets were causing the pedal to stick. Then they said it could occur with Toyota carpets. Now they're saying they want to change the gas pedal," Kelly said. "The bottom line is when you step on the brake, it should stop."

Unprecedented crisis

It's all part of Toyota's escalating emergency. The pedal recall followed a devastating 4.3 million vehicle recall last fall related to floor mats that was Toyota's biggest ever in the United States. And just last week, the carmaker added 1.1 million cars to its expanding fix list.

Toyota says the pedal and floor mat recalls are unrelated. But both recalls aim to stamp out the possibility that a Toyota product will suddenly bolt on a driver without warning. "People are suspicious that Toyota knew about the problems before because of the timing of the recall," a Toyota official close to the recall concedes. The official requested anonymity due to the nature of the ongoing investigation.

"But there was no intentional delay," the official said.

The first new complaints about sticking pedals came to Toyota's attention in October after it had decided to recall floor mats, the person said. In October and the next three months, Toyota was recovering parts, trying to duplicate the problem, conducting engineering analysis, he said.

Toyota has no reports linking the pedal problem to accidents and ultimately judged the immediate risk of sudden acceleration was lower from the pedal than from the floor mats, he said.

Last year's floor mat recall was intended to address cases in which the carpets interfere with the accelerator and jam it into an open-throttle position, causing run-away speeding vehicles.

Kane's Safety Research & Strategies has tallied 2,057 sudden acceleration incidents involving Toyotas since 1999, with 725 resulting in crashes. A total of 18 people were killed and 304 injured, by its count.

Long history

Toyota and Lexus accounted for 41 percent of all sudden acceleration complaints industry-wide for the 2008 model year--more than Chrysler, General Motors, Honda, and Nissan combined, according to a December study by Consumer Reports.

As recently as last month, Toyota officials had been saying floor mat entrapment was the main cause of the mounting complaints. But the Jan. 21 recall to fix sticking accelerator pedals broadsided customers and dealers and pointed to more serious troubles.

Indeed, complaints of sudden acceleration in Toyota vehicles stretch back at least to 2004, when NHTSA investigated 2002-03 Toyota Camrys, Camry Solaras and Lexus ES 300s for possible throttle control problems. NHTSA concluded at that time that there was no defect trend.

But similar allegations persisted, along with more accidents. In 2007, Toyota pinned the problem on all-weather floor mats interfering with the accelerators. The result was a recall of the factory carpets in certain 2007 and 2008 Lexus ES 350s and Toyota Camrys.

Another safety campaign launched in 2009 targeted sudden acceleration in 2004 Sienna minivans. But this time, the problem was a floor carpet cover that if not replaced properly after repair could also jam the gas pedal and lead to sudden acceleration.

"Toyota has known that its vehicles suffer from unintended acceleration since May 2003, when the first consumers began demanding that NHTSA investigate this problem," Safety Research & Strategies says in its Safety Record Blog.

Kane's research indicates there are multiple causes for sudden acceleration, ranging from mechanical interface to unidentified electronic defects. But many incidents can't be explained by either the floor mats or the pedal mechanism, suggesting lingering unidentified defects, he says.

War room

The causes and consequences of problems aren't always clear.

Toyota believed the 2007 complaints about sticking accelerators were limited to the Tundra, according to the NHTSA report. And the European problems in the Aygo and Yaris were isolated in right-hand-drive cars with a particular configuration of the heat duct and accelerator pedal. Warm air from the heater could induce condensation on the friction lever, thereby causing it to stick, Toyota said.

The man at the eye of the storm is Toyota's top quality troubleshooter, Managing Officer Hiroyuki Yokoyama. In consultation with Executive Vice President Shinichi Sasaki, Yokoyama is the one making the final call on whether to launch a recall or not, insiders say.

Needed: '50-hour workday'

The quality division war room at the Toyota City headquarters is in crisis mode, with one insider saying, "We need a 50-hour workday to handle this situation."

In an unprecedented move, Toyota also stopped U.S. sales of eight models equipped with the faulty pedals. The company has spun that move as a preemptive safeguard to protect consumers.

But federal law requires such action.

And U.S. Transportation Department officials gave a different explanation. In a widely reported interview with WGN radio in Chicago, Transportation Secretary Ray LaHood said: "The reason Toyota decided to do the recall and to stop manufacturing is that we asked them to."

LaHood continued: "We were the ones that really met with Toyota, our department, our safety folks, and told them, 'You've got to do the recall.' "

Wider worries

In an interview with Automotive News last month, Yokoyama said quality has suffered in recent years for several reasons, including the company's rapid increase in production, a proliferation of model types and the introduction of more electronic controls.

Toyota Motor President Akio Toyoda admitted as much after taking office last June. "I don't think we were wrong to expand," Toyoda said then. "But we may have stretched more than we should have."

The recalls come just as the U.S. market shows signs of recovery. And rivals are looking to leverage Toyota's missteps to steal sales and market share from the Japanese juggernaut.

Analysts say the recalls will hurt Toyota financially. The company is expecting its second straight year of red ink for the fiscal year ending March 31. And it returned to operating profit in North America only in the quarter that ended Sept. 30 after four straight quarters of losses.

Toyota's week-long production shutdown starting Feb. 1 could cost Toyota $450 million in lost sales, reckons Kurt Sanger, an auto analyst with Deutsche Securities in Tokyo. Then the company has to foot the bill for fixing the floor mats and the pedal mechanism.

"It could be the difference between an operating profit and a loss," says Sanger, who had been forecasting Toyota to eke out a full-year operating profit of ¥38 billion (about $424.7 million).

Toyota's long-standing reputation for quality and service could be the bigger casualty. "Toyota has to be more candid," says Chris Richter, an auto analyst with CLSA Asia-Pacific Markets in Tokyo.

"Right now they're not reassuring the public. They're scaring the public."

(Source: Automotive News)