"Toyota: It's Getting Even Worse"

[a_Username]

http://www.fool.com/investing/genera...ven-worse.aspx

Toyota (NYSE: TM) has been on the hot seat for months over safety defects with a number of different vehicle models. The problem, as you'll recall, isn't so much the safety issues (though they're bad and they need fixing) as it is the company's longtime pattern of responding to problems with a mix of denial and foot-shuffling.

News flash: We can apparently add "regulatory bamboozlement" to that list.

According to Bloomberg, Toyota's Washington office hired former regulators from the National Highway Traffic Safety Administration (NHTSA), the car-safety arm of the Department of Transportation, and put them to work talking NHTSA out of forcing Toyota to recall cars.

It'd be easy to say, "Eh, that's business nowadays, they all do it," except that they don't: Ford (NYSE: F), General Motors, Chrysler, and Honda (NYSE: HMC) all say they have exactly zero ex-NHTSA people employed to deal with the agency on defects.

Toyota, once again, is a unique and special flower.

It isn't going away
All of this negative news coverage has had at least two effects: Toyota's sales seem to have taken a hit, and officials in high places in both the U.S. and Japan have gotten cranky. On Tuesday, the Department of Transportation ordered Toyota to turn over documents related to the various safety issues. That may not sound like a big deal, but it is -- the DOT is aggressively looking for evidence that Toyota knew of safety defects but didn't take appropriate action.

And if they find that evidence? Oh boy. With Secretary of Transportation Ray LaHood personally involved, it's clear that the heat -- inside NHTSA and inside Toyota -- is now intense.

Is there fire behind the smoke?
Meanwhile, the company's senior management keeps trying to beat back the flames. In a press conference in Tokyo on Wednesday, Toyota made a number of interesting revelations:

* The Corolla could be next. Responding to reports of steering issues with the Corolla, Toyota said that the company is actively investigating and made a point of noting that it is considering a recall. The Corolla is the world's best-selling car. A global recall for a serious safety defect would be a huge deal.
* Brake-system modification to become standard on all new Toyotas. Control systems will be modified to ensure that pressing the brake pedal always overcomes acceleration. (Yes, fellow car geeks, this one's an eyebrow-raiser. I look forward to your comments.)
* Toyota is creating a global quality task force. You mean they didn't have one already? Seriously?
* Toyota will add more black-box recorders. Sounds great, but these are supposed to become mandatory in the U.S. by 2012 anyway.
* Toyota is cutting production due to declining sales. Two U.S. factories will be idled for a combined total of 14 days. The company estimates that it has lost 100,000 sales due to the safety mess during this fiscal year, which ends in March.

Also, company president Akio Toyoda said that yeah, maybe they've overreached a little: "The basic rule of the Toyota Production System is to only build as many cars as there is demand for, and we ourselves broke that rule."

That's nice to hear, but it's not even the beginning of enough.

The upshot
Most consumer-facing companies have recalls every now and then -- Johnson & Johnson (NYSE: JNJ), Mattel (NYSE: MAT), Campbell Soup (NYSE: CPB), Newell Rubbermaid (NYSE: NWL) ... I could go on and on, and I haven't even mentioned the other automakers. But all of those companies have had their share of recalls, as have many others.

The recalls, by themselves, aren't Toyota's big issue. The issue is what have they been hiding? And more to the point, can we trust their products?

With Congressional hearings starting later this month, and the full attention of regulatory bigwigs focused on finding smoking guns in the interim, it isn't going to get easier for Toyota any time soon. How bad will the damage be long-term? Only time will tell.

The Ex-NHTSA comment really surprised me. Toyota is the only automaker that has these VERY INFLUENTIAL people by their side? Some fishy stuff going on here.

[TFord]

I've been saying it for years!

[a_Username]

Also, I'd assume that everyone company has some sort of team that looks over the quality of its vehicles. Toyota is just now making one?

[Motown Machine]

Originally Posted by a_Username

Also, I'd assume that everyone company has some sort of team that looks over the quality of its vehicles. Toyota is just now making one?

Toyoda himself did say that the company put safety and such on the back burner because it was focused on growing as fast as possible.

[2000v6]

Everyone thought that toyota was safe and reliable, there was no reason for a quality control team. Well except, they would have found out about the brake problems a lot sooner and people wouldn't have died. If anything toyota needs to stop making excuses and finally put some sort of plan into action. Toyota is a company full of cowards who refused to admit their wrongdoings for a long time

[ron10]

toyota management has made a lot of bad decisions and it has come back to bite them.i hope they get things straightened out.after all those things are made right here in the ol u.s. of a.that is all we need,more people out of work.

[Mr. Wyndham]

Originally Posted by ron10

toyota management has made a lot of bad decisions and it has come back to bite them.i hope they get things straightened out.after all those things are made right here in the ol u.s. of a.that is all we need,more people out of work.

[Motown Machine]

Originally Posted by Dragoneye

My honest opinion? F-em. I hope they go out of business.

[DGthe3]

Originally Posted by ron10

toyota management has made a lot of bad decisions and it has come back to bite them.i hope they get things straightened out.after all those things are made right here in the ol u.s. of a.that is all we need,more people out of work.

I'd prefer that GM, Ford, and Chrysler could hire back some of their workers who have been laid off as Toyota increased their market share.

[Axe]

Whats more likely to still be on the road in 2020 - a 2002 Toyota or a 2002 Chrysler product?

I agree Toyota is basically screwed, and they made their own bed, but are there people who actually think 80s-90s GM products were more reliable then Toyotas? I think Captain Obvious needs to have a talk with all the nutswingers on this, and other similiar sites. Im thrilled that GM and Ford (Chrysler deserves to go out of business) are finally, for the first time ever - making relevant vehicles that people want, and apparently even decided to throw quality into the mix too...but 2 of the big 3 needed taxpayer bailouts after decade after decade of making crap...oh, but thats right, Toyotas and Hondas were never reliable, right? I love my Camaro, but Im not one of those close-minded fanboy types.

[Mr. Wyndham]

Originally Posted by Axe

but 2 of the big 3 needed taxpayer bailouts after decade after decade of making crap...oh, but thats right, Toyotas and Hondas were never reliable, right? I love my Camaro, but Im not one of those close-minded fanboy types.

Don't get me started on who's fault it was that they finally asked for LOANS.
Suffice to say you're very......off-base in your assumptions.

[Mr. Wyndham]

Originally Posted by coolman

Big oil and the ultra high gas prices is what killed GM. They were completely invested in SUVs and trucks and overnight the landscaped changed and nobody wanted low gas mileage SUVs and trucks. Gas prices are going to go back to $4.00 and even a lot higher, and this will then show who has their ducks in a row or who will be sinking in the pond.

In the short term, yes...one could argue that fuel prices were the "spark" that set off last summer's catastrophic events. I like to look back long-term, though...what I was referring to goes back decades....

[CamaroScotty]

Steering in the Corolla? That must be the same part they sold GM for the Cobalt

[DGthe3]

The problem that Toyota has is that they became what they are because of their reputation. In the minds of many, that reputation has been shattered. Take away Toyota quality, and you are left with bland vehicles that cost more than a comparable Chevy or Ford.