Toyota Saved Millions Convincing NHTSA to Limit Scope of 2007 Recall

Toyota executives were apparently quite pleased with the outcome of a limited recall of 2007 Toyota Camry and Lexus ES models for sudden acceleration. According to The New York Times, documents the automaker turned over to the House Committee on Oversight and Government Reform show that Toyota estimated it saved $100 million by negotiating with U.S. regulators to limit the scope of the recall.

Since September, Toyota has recalled nearly 8 million vehicles worldwide for issues involving unintended acceleration and faulty brakes. The recalls have seriously injured Toyota’s long-standing reputation for quality and reliability. Toyota has also been strongly criticized for what many see as a slow response to the unintended acceleration problem.

According to The New York Times report, Toyota made the $100 million savings estimate for the 2007 Camry and Lexus ES recall in a confidential presentation from July 2009 listing legislative and regulatory “wins” for the company. According to the document, Toyota officials said the National Highway Traffic Safety Administration (NHTSA) had become “more sensitive to public/Congressional criticism, resulting in more investigations and more forced recalls.” But the company said it had achieved “favorable safety outcomes” and “secured safety rulemaking favorable to Toyota.”

Specific to the 2007 Camry and Lexus ES recall, Toyota said it had “negotiated an equipment recall” without a finding of a defect, saving the company $100 million, the Times said. Instead of fixing the cars, Toyota only recalled 55,000 floor mats which it said could become lodged under the accelerator pedal.

The House Committee on Oversight and Government Reform, which obtained the documents detailed by the Times through a subpoena, is one of three congressional committees that have scheduled hearings into Toyota’s recalls and safety problems. Toyota president Akio Toyoda is set to testify before the committee on Friday.

Toyota is also facing other investigations. According to Reuters, Toyota said today that it had received a federal grand jury subpoena for documents related to unintended acceleration and braking that led to the recall. The subpoena came from the attorney’s office for the southern district of New York on February 8.

Reuters is also reporting that Toyota has been asked by the U.S. Securities and Exchange Commission (SEC) for documents related to unintended acceleration of Toyota vehicles. U.S. unit Toyota Motor Sales U.S.A. separately received a subpoena for related documents, including about the company’s disclosure policies, Reuters said. Both the request and the subpoena from the Los Angeles office of the SEC.

Finally, the Detroit News has obtained a series of e-mails between State Farm and NHTSA officials from 2004 that show the government had already been probing the Toyota unintended acceleration issue. In 2004, State Farm notified the government of a spike in unintended acceleration complaints involving Toyota vehicles.

The e-mails show NHTSA was appreciative of the “timely” submissions by the insurer. The records also show that NHTSA continued working with State Farm in 2009 as it further probed the issue of unintended acceleration in Toyota vehicles, the Detroit News said. However, the emails obtained by the Detroit News do not shed any new light on why the NHTSA ended its investigation in July 2004 without requiring any action by Toyota.

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