• Jan 31, 2010
After a long spell as the apple of the media's eye, Toyota is now officially in the bad news barrel. So far the Japanese automaker has announced the recall of 5.3 million vehicles for floor mat issues that may lead to unintended acceleration and a separate recall of 2.3 million vehicles for sticking gas pedals (watch the explanatory video). The entire ordeal has been a public relations nightmare, and as you'd expect, Toyota's stock is taking a hit.
Last week alone shares in the automaker plunged by a jaw-dropping 14 percent. That's a drop of $21 billion (with a B) in market value. The lion's share of the losses are likely due to investors' unease at how the the mounting recalls are playing out, but we suspect that part of the issue has to do with Toyota's handling of the recalls to date.

Last fall Toyota appeared to be calling the original recall of 3.8 million vehicles for floor mat issues a voluntary matter, only to be rebuked by the National Highway Traffic Safety Administration (NHTSA), which insisted that the recall was mandatory. More recently Toyota announced that it was shipping new pedals to factories, only to change its mind and send the parts to dealerships after an angry response from dealers and the public. Mizuno Credit Advisory director Tatsuya Mizuno reportedly told Business Week that Toyota has "wasted too much time without doing anything," adding that the automaker used to have foresight for taking action but is now, "very far behind the curve."

Other than a 75 second television interview by Toyota president Akio Toyoda in Davos, Switzerland, Toyota hasn't said much of anything about the recalls. That will reportedly change this week as the Japanese automaker hits the news circuit in an attempt to allay customer fear about the recalls. Toyota U.S.A president Jim Lentz will appear on the Today Show Monday morning, followed by a conference call with other media outlets. BusinessWeek reports that Toyota may also be close to announcing a fix for at least one of the recalls, which should help investors feel a bit more comfortable that the situation is being handled.

Toyota also took out full-page ads in 20 major markets to explain why it has temporarily suspended production at several plants. Oddly, the full page ad didn't focus on the recalls. The ad (shown above, click to enlarge) says "A temporary pause. To put you first," in very big letters, followed by an explanation as to why the plants were temporarily shut down in comparatively tiny letters. The ad doesn't give any specifics about the recall, but it directs customers to the automaker's website for information about the Toyota recall.

While Toyota's ad blitz will no doubt be crucial to winning back its very faithful customers and the company's considerable reputation for quality and reliability, still more hurdles lie ahead. The next major step will be the announcement of a fix, followed by a potentially embarrassing February 25 meeting with the House Energy and Commerce Committee to discuss the unintended acceleration claims and the NHTSA's handling of the matter. Beyond that Toyota will need to absolutely nail the execution of the recall and get as many vehicles repaired as quickly as possible. Lets just hope dealers can fix this problem fast than Toyota can explain it.



[Source: Business Week]


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  • 95 Comments
      • 4 Years Ago
      Karma's a bitch, perhaps they should have used all that money spent green washing and on suing governments trying to limit pollution on accelerators that do not stick and kill people.
      • 4 Years Ago
      No excuse.
      • 4 Years Ago
      hmm i noticed some sudden acceleration on my lexus is250 i just thought it was normal i guess not :(
        • 4 Years Ago
        Sell it to me at a discount, i'd gladly take it off your hands.
        invisiblepigeon3
        • 4 Years Ago
        If you have it in sport mode it keeps the car from upshifting until closer to the redline... Is that what you're doing? Do you even have an IS250 for real or are you making it up to go along with the tin foil hat wearers? I have an IS250 and IS300, my mom drives a 250 and my dad's got an ES300.
        invisiblepigeon3
        • 4 Years Ago
        Whatever you do, hold on to your 300. That straight six is so nice. The new IS is more luxury and equipment, but I think the original was best. And the V6's aren't as quick revving as that old straight six.

        What IS300 do you have? I've got an Absolutely Red 2002 IS300 Sportcross. Totally unmodified.
      • 4 Years Ago
      while i feel bad for toyota because i know how seriously a similar situation hurt audi back in the 80's, which took them over a decade to recover from(sales-wise), they kinda had it coming since it apparently is an actual issue...unlike audi's situation, where it was driver error.
      • 4 Years Ago
      you mean market cap. not market share.
      • 4 Years Ago
      Nissan > Toyota
      • 4 Years Ago
      I like how some have said toyota doesnt have a problem since their particular car hasn't had the issue. that makes sense. but no, toyota is the one huge multinational corporation which behaves in a purely altruistic way and would never, ever, make compromises to fatten the bottom line.

      a failure rate of 1 per 10,000 is pretty good until you realize there's hundreds of cars that won't stop. between this and the 1ZZ that cant even keep itself oiled for 100k miles im really wondering what toyota offers now.
        • 4 Years Ago
        If by some you mean millions upon millions, then you are probably right.


        Link to the 100 unintended acceleration stories you're talking about?
      • 4 Years Ago
      I think it took balls to do what Toyota is doing. It shows integrity. GM would have said," let'em go, we'll fix it under warrantee". To shut down production,and put safety concerns in front of profit is amazing in this day in age. I don't own a Toyota, but I do respect them, and I would have no problem buying their product. The media is having a field day with this. Let's keep this in perspective, don't let the media think for you.
        • 4 Years Ago
        Quote: ""I think it took balls to do what Toyota is doing. It shows integrity. GM would have said," let'em go, we'll fix it under warrantee""

        That's exactly what Toyota DID try and do. They tried to send new throttle assemblies to the assembly plants first, so they could keep on building new product to sell, and develop a warantee fix for the cars out on the street second.

        The only reason that Toyota has now decided to fix the cars that are already out on the street first is beacuse NHTSA objected.

        Toyota today is exactly what GM was 20 years ago.
      • 4 Years Ago
      Toyota's unintended acceleration problem, the gift that keeps on giving. I love it!

      Oh What a Feeling!!!


      "God Bless The Christian Nation of America"
        • 4 Years Ago
        America is not a country it's a continent..

        and lots of non-christian people live on that there continent you rube!
      • 4 Years Ago
      "Toyota Motor Corp.'s decision to blame its widening sudden-acceleration problem on a gas pedal defect came under attack Friday, with the pedal manufacturer flatly denying that its products were at fault.
      the Times review of federal safety records shows several instances of complaints of stuck pedals on vehicles built in Japan, which Toyota has said are not subject to the recall. For example, one complaint, filed two years ago, told of a 2007 Japanese-built Camry in Maryland with a pedal that "stuck to the floor."
      A wide group of national automotive experts say there is strong evidence that a hidden electronic problem must account for at least some, if not most, of the Toyota sudden-acceleration events."
      http://www.latimes.com/business/la-fi-toyota-pedal30-2010jan30,0,4401302.story?track=rss


      1. Faulty Toyota models dated back to model year 2002. CTS became a pedal supplier in 2005.
      2. 'Made in Japan' Camry also sudden-acceleration.
      3. CTS 'never' supply their pedal to Lexus model.
      All lexus models are 'made in japan' and use japanese made parts only. 'Lexus' ES 350 killed a California Highway Patrol officer and three members

      Toyota is stll lying. and they never admit their own fault, only cover-up.
      • 4 Years Ago
      The sooner they put this behind them the better off they'll be.
      • 4 Years Ago
      This is not a drop in market share, it's a drop in market cap (capitalization).

      Market share means a company's portion (share) of sales in a particular market, not the total value of it's stock.
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