MANILA, Philippines - Weeping witnesses, angry adjudicators, snooping media – it sure sounds like the ingredients for a high stakes courtroom drama, when in reality, they’re what the people got at Toyota’s highly publicized US congressional hearing on the Japanese automaker’s recent product recall woes. Because of this, Toyota is now often seen as a corporation of greed: putting volumes and profits over safety and consumer well-being.
In Toyota’s defense, recalls happen all the time in the auto industry. Some deal with glitches that affect minor things like radio controls, seat recliners and so forth. Others, however, involve more complicated components that directly affect safe driving. In general, there are two types of auto recalls: voluntary and compulsory, the only difference of which is that in a compulsory recall, the recall is initiated by the government and that any owner who fails to return the defective product to the manufacturer can be fined.
In any case, it’s important that recalls are handled well by auto manufacturers so that every owner of a recalled vehicle has the opportunity to get his or her vehicle fixed in a timely manner. Most of the time, that’s exactly what happens – but sometimes it doesn’t. Sadly, the situation involving Toyota is one of those times, hence the backlash from the US government, consumer advocate groups and even the press.
The Pioneers of Safety
Toyota’s safety troubles are happening predominantly in the US market, where the National Highway Traffic Safety Administration or NHTSA is in charge (though reports of sticking gas pedals have surfaced in the European and Chinese markets), putting the US on a seemingly high pedestal when it comes to stringent automotive safety legislation. However, history doesn’t paint such a rosy picture.
In 1958, while the rest of the world adopted the United Nation’s World Forum for Harmonization of Vehicle Regulations, the US declined to adopt this or any other vehicle safety regulation. However, in 1965 where increased vehicular traffic saw a spike in car crashes and fatalities, public pressure grew in the US to increase the safety of cars. This culminated in the publishing of Unsafe at Any Speed by activist lawyer Ralph Nader – a book that chronicled the resistance of car manufacturers to admit to design flaws and introduce safety features. Still, it took a further five years before the US government formally instituted the NHTSA to oversee the writing and enforcing of safety, theft-resistance and fuel economy standards for all motor vehicles. Since then, the NHTSA has successfully brought down the number of car-related deaths despite the increase of mileage covered.
The LTO and the Philippine Lemon Law
In the Philippines, the closest thing to the NHTSA is, the Land Transportation Office or LTO. Like its US counterpart, the LTO also falls under the Department of Transportation and Communications (DOTC); but unlike the NHTSA, the LTO does not legislate vehicle performance and safety standards, but merely enforces rules and regulations covering land transportation. This includes functions such as inspection and registration of motor vehicles, issuance of licenses and permits and the adjudication of traffic cases. Thus, the LTO cannot issue a compulsory recall on vehicles deemed unsafe because of a design or safety flaw.
As a knee jerk reaction to the recent automotive recalls in the US and other countries, the Philippine Congress wants to revive the so-called “Lemon Law” once again – a bill that has been in limbo for over two years. As the only single piece of legislation directly governing car safety design and manufacture, the Lemon Law seeks to put up some protection for car buyers as well as the proper fulfillment of warranties by the car manufacturers or dealers.
Under this proposed law, a motor vehicle is considered a lemon if it is unfit, unreliable or unsafe for ordinary use during a predetermined Lemon Law Rights period. Within this time frame: any vehicle subject to repair three or more times on the same problem; has been out of service for a cumulative of 30 calendar days; or if the problem is a serious safety defect are considered lemons. The Lemon Law gives the buyer the right to a downright replacement of the vehicle or a complete refund of the purchase price.
History’s Notorious Auto Recalls
The current recall crisis gripping Toyota is certainly massive – covering more than eight million cars. In fact, the NHTSA ranks it as the biggest automotive recall in its history. However, it’s not the size of the recall that makes it bad, it’s the damage it does to the reputation of a company and its products. Popular Mechanics, a magazine devoted to science and technology, recently listed the most notorious recalls in automotive history.
First on their list is the 1991-2001 Ford Explorer. Once America’s best-selling SUV, the Explorer’s notoriously wobbly handling was tested quite few times because of tire separation problems with its Firestone tires. In the end, 200 deaths were attributed to the Explorer/Firestone combination and despite a complete redesign in 2002, the Ford Explorer failed to hold onto its sales dominance.
Second is the 1971-1976 Ford Pinto. At a time when the Japanese were serving up serious competition in the small car category, Ford was under pressure to make a car which would cost no more than US$2,000. The necessary penny pinching was seen in its flawed engineering that included the placement of the fuel tank behind the rear axle with a fuel-filler pipe that was vulnerable to bursting in a rear-end collision. What made matters worse was an internal memo pointing that protecting the fuel tank would cost US$11 per Pinto and that it would be cheaper for Ford to pay settlements for injuries and deaths from the resulting fires. In the end, the US government told Ford to recall 1.4 million Pintos to have reinforced plastic shields installed to protect the gas tank.
Lastly, is the 1978-1983 Audi 5000. Though only 92,000 vehicles were involved, the effect had a devastating impact on Audi’s US business. The first recall of the 5000 was for improperly positioned floor mats that could unintentionally pin the accelerator pedal, potentially leading to runaway acceleration. At some point CBS news program 60 Minutes noticed this allegation and ran a story showing 5000s running out of control. That the story used modified cars or that the sudden acceleration could be attributed to drivers pressing the wrong pedal didn’t matter. The damage was done and Audi’s sales plummeted from 74,061 cars in 1985 to 12,283 cars in 1991.
Toyota’s Dilemma
Toyota has been hammered by daily newspapers and TV pieces suggesting it has been slow to address safety problems and even US transportation secretary Ray LaHood gave an announcement that anyone who owns one of the recalled Toyotas should “stop driving it.” But does Toyota deserve all this? If they’re knowingly selling an unsafe car, then yes. But is that what’s going on here? Not so fast. There’s little question that unintended acceleration is a serious problem, but every major carmaker receives occasional reports of sudden unintended acceleration. In the last decade alone, the NHTSA logged some 24,000 complaints.
But many safety concerns do have validity, and every car manufacturer had conducted numerous recalls involving critical safety features such as brakes, steering, airbags and seatbelts. Still, the fact that some safety problems don’t emerge until cars have been on the road for months or years is not a sign that automakers are careless about safety. The safety issues that lead to recalls generally occur in very small numbers. For example, in Toyota’s case, the problem involved a handful of cases in literally billions of kilometers of driving.
As those cases come to light, it is necessary for carmakers to take action, and it is natural for consumers to be concerned. But the intensity of the backlash against Toyota is almost unprecedented. Even the best cars are far from perfect, and much of the outrage over Toyota’s troubles seems based on the unrealistic expectation that cars should be infallible. That’s an unattainable goal; even well-designed components can wear out and fail in unexpected ways. Recalls are not a sign that carmakers are indifferent to the safety of their customers. On the contrary, recalls are part of the process by which automakers address safety or reliability issues that are often fairly subtle.
Marketing pundits will undoubtedly study Toyota’s handling of this issue, looking for lessons in avoiding the company’s predicament. After all, it took years for Audi’s sales to rebound after its bout with unintended acceleration. Still, some good did come of Audi’s experience: Today all cars have interlock systems that make it impossible for drivers to move the shift lever out of park unless their foot is on the brake. One likely outcome of the Toyota episode will be a requirement for a similar interlock that automatically disengages the throttle whenever the driver steps on the brake. And that would help make all cars safer than before.