Toyota has a full-blown crisis on its hands. As has been widely reported, sticking gas pedals and potentially dangerous floor mats caused Toyota to recall 5.3 million vehicles since last fall, including some of its most popular models. The floor-mat problem led the company to call back models from its high-end Lexus brand, hitherto renowned for quality and reliability. These incidents alone would warrant investor caution. But the problem has been compounded by a long-delayed and less-than-reassuring response from Toyota.
Consider the problems themselves. In August, a Lexus ES 350 was weaving wildly and at high speed through traffic on a highway near San Diego until it struck another car, veered off the road entirely, crashed through a fence, hit a dirt embankment and soared more than 100 feet before crashing. The passengers, off-duty police officer Mark Saylor, 45, his wife, his 13-year-old daughter and his brother-in-law, were killed. Just before the crash, a passenger had dialed 911 and reported that the gas pedal was stuck and the car was out of control, according to news reports.
There have been hundreds of reports about sticking Toyota accelerators, few of which came close to August's tragic circumstances. But the problem for Toyota isn't just the frequency of such problems, but also the potentially catastrophic consequences. It's one thing to experience an electrical glitch or a problem opening the trunk, which might sink a vehicle in the J.D. Powers survey ratings. But as the San Diego incident so vividly demonstrated, a runaway vehicle and a defect jamming the accelerator are terrifying and potentially fatal.
Toyota attributed the problem in the Lexus to a floor mat. In November, the company said in a letter to customers that "no defect exists in vehicles in which the driver's floor mat is compatible with the vehicle and properly secured." The National Highway Traffic Safety Administration immediately denounced Toyota's explanation as "inaccurate and misleading," saying the problem was "related to accelerator and floor-pan design."
Source : http://online.wsj.com/article/SB10001424052748703338504575041300808740766.html?mod=WSJ-hpp-LEFTWhatsNewsCollection
Consider the problems themselves. In August, a Lexus ES 350 was weaving wildly and at high speed through traffic on a highway near San Diego until it struck another car, veered off the road entirely, crashed through a fence, hit a dirt embankment and soared more than 100 feet before crashing. The passengers, off-duty police officer Mark Saylor, 45, his wife, his 13-year-old daughter and his brother-in-law, were killed. Just before the crash, a passenger had dialed 911 and reported that the gas pedal was stuck and the car was out of control, according to news reports.
There have been hundreds of reports about sticking Toyota accelerators, few of which came close to August's tragic circumstances. But the problem for Toyota isn't just the frequency of such problems, but also the potentially catastrophic consequences. It's one thing to experience an electrical glitch or a problem opening the trunk, which might sink a vehicle in the J.D. Powers survey ratings. But as the San Diego incident so vividly demonstrated, a runaway vehicle and a defect jamming the accelerator are terrifying and potentially fatal.
Toyota attributed the problem in the Lexus to a floor mat. In November, the company said in a letter to customers that "no defect exists in vehicles in which the driver's floor mat is compatible with the vehicle and properly secured." The National Highway Traffic Safety Administration immediately denounced Toyota's explanation as "inaccurate and misleading," saying the problem was "related to accelerator and floor-pan design."
Source : http://online.wsj.com/article/SB10001424052748703338504575041300808740766.html?mod=WSJ-hpp-LEFTWhatsNewsCollection
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