TIME: Another Safety Issue: Can Toyota Ever Bounce Back? [View All]

[Omaha Steve]

http://www.time.com/time/business/article/0,8599,2012701,00.html

By Joseph R. Szczesny Wednesday, Aug. 25, 2010


A Toyota dealership advertises a 0% interest rate on the windshield of an unsold 2010 Toyota Matrix in Lakewood, Colo.
David Zalubowski / AP

The flood of recalls — nearly 9 million vehicles in the past 12 months — and reams of nasty publicity involving runaway cars and unintended acceleration seemed finally to have abated for the beleaguered automaker Toyota. Then, on Tuesday, the National Highway Traffic and Safety Administration (NHTSA) said it was intensifying its investigation into another potential Toyota safety issue: sudden-stalling problems on its Corolla and Matrix models.

This new NHTSA move, a formal engineering investigation of the Matrixes and Corollas from model years 2005 to '07, stems from more than 1,000 complaints that have been received by Toyota and the NHTSA. It could possibly lead to another major round of recalls if mechanical or electrical problems are found. (See the 50 worst cars of all time.)

The investigation is just the latest in a barrage of challenges — and heavy damage — to the once gilt-edged reputation of the world's top automaker. While solidly profitable during the first quarter of fiscal year 2011, the company still has a way to go before it can repair that reputation. "They are still a successful company, they just aren't on a pedestal anymore," says Rebecca Lindland, an analyst with IHS Global Insight. (See where Toyota fits in the top 10 congressional tongue-lashings.)

"This controversy has damaged our reputation," acknowledges Toyota spokesman John Hanson, referring to the sudden-acceleration issue. But it's about more than just reputation: Toyota faces liability claims over incidents that have been blamed for 79 deaths and hundreds of crashes.

Earlier in August, Toyota executives were heartened to receive a report from the NHTSA that the agency hadn't found any evidence that faulty electronics played a role in sudden-acceleration accidents, and instead suggested driver error was responsible — drivers may have inadvertently stepped on the accelerator instead of the brake pedal. "The NHTSA information substantiates our position that after many years of investigation, we have found nothing in our electronic-control systems that has led to unintended acceleration," Hanson says. (See a photo brief history of the Japanese automaker.)

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