Toyota’s Accelerator Recall and Payout

Toyota Motor Corporation faced a series of 3 separate, related product recalls spanning from the end of 2009 into the first quarter of 2011.  In general, the recalls involved accelerator pedal defects or conditions which caused the accelerator (gas pedal) to become stuck.  As a result, cases of unintended acceleration were reported and presented an alarming safety risk.   In total, recall announcements affected a total of 2.3 million vehicles sold in the US.

  • Recall 1: Nov 2009 – Initial stage of all-weather floor mat recall, mats trap/pin the gas pedal down
  • Recall 2: Jan 2010 – Electronic accelerator assembly found to be faulty
  • Recall 3: Feb 2011 – Second stage of floor mat-related recall, 2.17 million vehicles added to recall

Several small stages of Toyota recalls took place in between the milestones listed above.  Recall 3 was the final and most inclusive, as it was issued upon the close of a 10-month National Highway Traffic Safety Association (NHTSA) study.

Toyota Vehicles and Lines Subject to Accelerator Pedal Recall

  • 2005-10 – Avalon
  • 2007-10 – Camry (hybrid excluded)
  • 2009-10 – Corolla
  • 2008-10 – Highlander
  • 2009-10 – Matrix
  • 2009-10 – RAV4
  • 2008-10 – Sequoia
  • 2007-10 – Tundra
  • 2009-10 – Venza

Nearly every model produced by Toyota, particularly in 2009 and 2010, was affected by the recall. The list above reflects the models sold in the US market and does not include those sold in China and Europe.

Results of the NHTSA Investigation

Ending in 2011, the NHTSA released the results of its 10-month long study concerning the causes of Toyota’s vehicle malfunctions and unintended acceleration:

“According to their findings, there were no electronic faults in the cars that could have caused the sudden-acceleration problems.” The jury is back, the verdict is in: There is no electronic-based cause for unintended high-speed acceleration in Toyotas, period,” Transportation Department Secretary Ray LaHood declared in the LA Times.”

The NHTSA further concluded that it identified floor mat entrapment as the primary cause of the Toyota complaints.  Toyota released a statement on February 1, 2010 stating that its dealers should get parts to “fix the sticky accelerator pedal by the end of the week.”

Financial and Branding Repercussions

The recall came at the heels of the recent recession, yet Toyota’s concern over consumer safety and a responsibility to car owners took center stage. The direct and indirect costs of the recall were initially projected to be near $5 billion.  As many prospective buyers, both those loyal to Toyota and those “on the fence,” migrated over to Honda, Hyundai, and Detroit’s Big 3, Toyota’s initial sales losses became evident.

Today’s current class action lawsuit is made up of nearly 22.6 million current and former Toyota owners and may produce a settlement payout as high as $1.63 Billion. To the present day, additional losses beyond the payout figure have been attributed to declining (lost) sales and a decline in stock values and dividends.

Memories of the recall investigation may still linger in the minds of consumers, but some have already begun to look beyond the recall and account for the big picture.  Toyota still offers an otherwise impressive track record in quality and product reliability. While the settlement will leave its mark on the brand (and the books), Toyota’s product remains competitive in the automotive marketplace. Loyal Toyota owners were reluctant to turn from their brand and many neutral car buyers are likely reconsidering long-term quality over isolated problems.

References:

AutoBlog.com – Toyota sudden acceleration class action may cover 22 million owners

Wikipedia.org – 2009-11 Toyota vehicle recalls