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Recall Announcements
Toyota recalls nearly half million vehicles in US, Japan to address steering problems
Embattled Japanese auto giant Toyota Motor Corp. (TYO.7203) said, Thursday, it has recalled nearly half million passenger vehicles, including Avalon, Lexus, Land Cruisers and Pronard models, in the US, Japan, Canada and Saudi Arabia, to address concerns over faulty steering.
Toyota said, Thursday, it has recalled 373,000 Avalon cars in the US that range from model year 2000 to 2004 as improper casting of the steering lock bar - a component for the steering system - could cause cracks to develop on the surface.
Toyota warned that that the cracks could cause the lock bar to break, leading to a potential crash if the steering wheel locks.
However, the company added that no injuries relating to the defect has been reported yet.
The recall is voluntary in nature, the company added.
Toyota has also recalled 39,000 Lexus SUV - model LX 470s - in the US for the 2003-2007 model years because of a steering shaft problem, which is different from the steering problem affecting Avalon cars.
According to the auto maker, "the snap ring on the shaft may disengage when the vehicle experiences an unusually severe impact to the front wheels, such as striking a deep pothole."
"If the snap ring becomes disengaged and the steering wheel is then repeatedly turned to the full locked position, the steering shaft may disengage over time," the company said.
In Japan, the auto maker is also recalling 9670 vehicles comprising of two Land Cruiser models and 6750 vehicles of Pronard model. The Pronard model ranges from build year 2000 (February) through 2004 (January).
While the recalled Land Cruisers suffer from the same defect like Lexus, Pronard owners have reported steering problems similar to Avalon.
The Japanese transport ministry said no accidents have been reported yet in connection to the defects in either vehicle type.
An undisclosed number of vehicles in Canada and Saudi Arabia are also being recalled to address similar defects, Toyota spokeswoman Mieko Iwasaki said.
Toyota said owners of the recalled vehicles will be notified next month and instructed to bring their vehicles to the nearest Toyota and Lexus dealers for free repair.
"Toyota is continuing to work diligently to address safety issues wherever they arise and to strengthen our global quality assurance operations so that Toyota owners can be confident in the safety of their vehicles," said Steve St. Angelo, Toyota chief quality officer for North America.
"Our engineers have thoroughly investigated this issue and have identified a robust and durable remedy that will help prevent this condition from affecting drivers in the future," added Mark Templin, Toyota group vice president.
The news of the recall failed to dent Toyota's stock. Shares of the company closed down 0.32 percent at 3070 yen on the Tokyo Stock Exchange as investors shrugged off the recall announcement.
According to market analysts, investors shrugged off news of the recall as Toyota has been quick to announce the recall and no accident or injury relating to the defect has been reported yet.
"It's not as if there has been an accident caused by the possible defect. Investors are not worried as long as carmakers act quickly to address quality problems," said Kazaka Securities analyst Yoshihiko Tabei.
Agrees Ryoichi Saito, an auto analyst from Mizuho Investors Securities Co. Ltd. "It is clear that Toyota has learned a lesson from the (earlier) recall disaster(s). The company has acted very swiftly to deal with problems," Saito said.
However, analysts warned that any further recall announcement could batter the reputation of Toyota, which is being hounded by quality control problems for the past several years.
Since 2009, Toyota was forced to recall over 10 million vehicles worldwide, including 6.5 million in the US alone, on account of various complaints that related to defective accelerator pedals, brakes, floor mats, seat-belts and electric window switch, among others. Some of the recalls include its top-selling models such as the Prius hybrid and the Camry sedan as well as its popular, top-end Lexus and Crown sedans.
Last month, the auto maker recalled 270,000 Lexus and Crown cars of which around 92,000 were sold in Japan and nearly 138,000 were sold in the US.
Toyota's recall woes have resulted in over 325 lawsuits tied to accidents being filed against the company and market analysts claim that the company faces potential civil liability estimated at more than $10 billion.
The recalls have also impacted resale value of Toyota vehicles and the company's credit rating, which was cut by Moody's Investors Service in April from Aa1 to Aa2, the third highest grade.
The recall fallout also forced Toyota to take a $2 billion hit to its earnings last year and had forced Toyota President Akio Toyoda to issue a public apology to the US Congress and customers worldwide.
Earlier this year, Toyota also paid a record $16.4 million fine to settle allegations by the US Transportation Department that it hid gas pedal defects blamed for more than 80 deaths in the US and was too slow in recalling the defective vehicles in 2005 despite discovering the defects much earlier.
The company, which once prided itself on its status as a world leader in terms of the quality and reliability of its vehicles, made a desperate attempt earlier this month to improve its quality control department by revamping its product development unit and putting stringent quality control measures in place.
The company said it has extended product development time on all models by four weeks or at least a month, hand-picked 100 engineers to independently review design and product quality from the perspective of customers, added a new layer of assistant managers in its engineering department, and has selected 1000 of its engineers out of its 14,000-strong R&D staff to deal specifically with quality control issues, among other things.
