Toyota Halts Sales, Production of Eight Models
TORRANCE, Calif. — Following last week's safety recall for sticking accelerator pedals, Toyota has told its U.S. and Canadian dealer bodies to stop selling the eight vehicles that were involved for the time being, and is planning to temporarily halt production on these units in North America, as well.
On Thursday, Toyota originally announced it was recalling roughly 2.3 million vehicles. Basically, the automaker put owners of the impacted models on notice that its officials are working on a correction. At issue, apparently, is the fact that the accelerator pedals could stick.
Officials said their latest move is separate from the ongoing recall of about 4.2 million Toyota and Lexus vehicles that could be in danger of pedal entrapment by incorrect or out of place accessory floor mats.
More specifically, the sales suspension covers the following units:
—Certain 2007-2010 Camry
Impact on Residuals, Used Values
In some positive news, KBB's Eric Ibara, director of residual value consulting, said the company will be monitoring how the recall impacts vehicles in the auction lanes, but that his team doesn't expect this move will affect two-, three- and five-year old residual values.
However, Juan Flores, director of vehicle valuation for KBB, said, "On the used-car values side of the business, Kelley Blue Book's kb.com would not be surprised if there was some incremental softening in Toyota values among the models that are two to three years into their product cycle and in need of a refresh."
James Bell, executive market analyst with KBB, went on to add, "Unfortunately for Toyota, the sticking throttle issue is now global. Reports this morning are that they are in discussions with European governments on the best way to address a recall and suspension of production and sales, similar to what was announced yesterday for the United States and Canada. The only question that seems to remain is what impact all of this news will have on their existing customers' loyalty as well as their reputation for quality with new buyers.
"At Kelley Blue Book's kbb.com, our position has been that Toyota is unique in the auto world in that they have the intellectual base and financial strength to proactively survive the sort of recall and suspension action they are now reactively supporting," he continued.
"The voice and action of the consumer will be the ultimate judge on if we are witnessing Toyota's slide from a pedestal they worked so hard for 40 plus years to meticulously build," Bell stated.
More Details on Production/Sales Halt
Toyota officials explained that the automaker has been examining "isolated reports" of sticking accelerator pedals in certain units without floor mats. The automaker noted that it is possible "that certain accelerator pedal mechanisms may, in rare instances, mechanically stick in a partially depressed position or return slowly to the idle position."
"Helping ensure the safety of our customers and restoring confidence in Toyota are very important to our company," stated Bob Carter, group vice president and Toyota division general manager. "This action is necessary until a remedy is finalized.
"We're making every effort to address this situation for our customers as quickly as possible," he further emphasized.
The automaker also stressed that the recall and suspension do not apply to any Lexus or Scion division models, nor does it impact Toyota's Prius, Tacoma, Sienna, Venza, Solara, Yaris, 4Runner, FJ Cruiser and Land Cruiser models. Also, it does not affect select Camry models, including all of the hybrid versions, which will continue to be sold.
Moving on, as a result of this temporary sales halt announced Wednesday, Toyota plans to suspend production at the following production lines at these North American facilities during the week of Feb. 1 to "assess and coordinate activities":
—Toyota Motor Manufacturing, Canada (Corolla, Matrix and RAV4)
—Toyota Motor Manufacturing, Indiana (Sequoia and Highlander)
—Toyota Motor Manufacturing, Kentucky — Line 1 (Camry and Avalon)
—Subaru of Indiana Automotive Inc. (Camry)
—Toyota Motor Manufacturing, Texas (Tundra)
Europe could be impacted, as well, by this recent issue. According to a report, apparently, some of the vehicles built in Europe include the supplier parts involved in the recall here, but Toyota is still evaluating which and how many vehicles in Europe could be potentially affected.
The report indicates that Toyota has yet to make a decision regarding the European vehicles.
Advice for Toyota Dealers
Just out this morning, the National Automobile Dealers Association officials said it had been in contact with Toyota throughout the day yesterday. The association is seeking ways to help dealers overcome this latest hurdle.
"NADA was in contact with Toyota throughout the day yesterday urging the manufacturer to clarify the situation for its dealers," officials indicated. "NADA is continuing to work with Toyota to identify a plan to help dealers get through this.
"In the meantime, NADA is encouraging Toyota dealers to check to see if they have business interruption insurance, more specifically contingent business interruption. Such a policy is designed to provide coverage when you have to suspend your business operations as a result of a covered loss to your independent supplier," they added.
Russ Darrow, chairman of the American International Automobile Dealers Association, also released a statement. He said, "AIADA fully supports Toyota's decision to prioritize the safety of its customers, and other drivers on the road, ahead of all other considerations.
"Throughout this process, Toyota has remained committed to consumer safety and product quality — the foundation of its business. Toyota's dealers are prepared to weather this short-term challenge in order to preserve their customer's safety and trust. Toyota is communicating openly and honestly with its dealers and we are confident that, in the long run, this decision will only increase the loyalty of its customers," he said.
After news of Toyota's sales and production halt came out, Edmunds.com senior analyst Michelle Krebs said this move highlights the severity of the situation. She explained that these safety issues could lead to questioning of the automaker's credibility.
"This unprecedented automotive decision indicates how serious a safety problem this is," Krebs suggested. "We've gone from floor mats to recalls for wear items to a full shutdown, and I can't help but think that the company's credibility is being called into question. This could have a long-term impact, but then again, Ford recovered from the rollover debacle."
Meanwhile, Edmunds.com chief executive officer Jeremy Anwyl said Toyota needs to take control of the situation and send the right message to customers.
"Tylenol pulled its products off the shelves, and I imagine that in this situation, Toyota eventually had the same decision-making thought process: realizing that the company has to get ahead of the problem," Anwyl pointed out. "Toyota needed to send a clear message they care more about their customers than monthly profits. And they are."
Edmunds senior analyst Jessica Caldwell added: "In this highly competitive market, no automaker — not even Toyota — can afford to stop selling its cars and trucks for long, but perhaps Toyota is banking on the idea that customers will appreciate the priority of their safety in this decision.
"When an airline delays a flight for mechanical reasons, passengers may grumble, but on some level they're always grateful that the technical issue was found before they were midair," she said.
Jack Nerad, KBB's executive editorial director and executive market analyst, also pointed out, "Given the news, this is not the best week for a consumer to try to trade-in their Toyota for a new car. While dealers are savvy about these things and understand that the car can still be re-sold once proper repair has been identified, they might be reluctant to accept the vehicle in trade, or offer a lower price for it than would otherwise be the case."
Toyota Advises Owners
For owners of the impacted models, Toyota has released some suggestions on how to deal with a pedal problem if it occurs.
"The incidence of this condition is rare and occurs gradually over a period of time," automaker executives explained. "It can occur when the pedal mechanism becomes worn, and in certain conditions, the accelerator pedal may become harder to depress, slower to return or, in the worst case, stuck in a partially depressed position."
If this happens, Toyota says consumers should drive to the nearest safe location, shut off the engine and contact a Toyota dealer.
If the pedal issue occurs while driving, Toyota offered these suggestions:
—If you need to stop immediately, the vehicle can be controlled by stepping on the brake pedal with both feet, using firm and steady pressure. Do not pump the brake pedal as it will deplete the vacuum utilized for the power brake assist.
—Shift the transmission gear selector to the neutral position and use the brakes to make a controlled stop at the side of the road and turn off the engine.
—If unable to put the vehicle in neutral, turn the engine off. This will not cause loss of steering or braking control, but the power assist to these systems will be lost.
—If the vehicle is equipped with an engine start/stop button, firmly and steadily push the button for at least three seconds to turn off the engine. Do not tap the engine start/stop button.
—If the vehicle is equipped with a conventional key-ignition, turn the ignition key to the ACC position to turn off the engine. Do not remove the key from the ignition as this will lock the steering wheel.
Finally, automaker officials said, "Toyota is working quickly to prepare a correction remedy and will issue owner notifications in the future. No action is required at this time unless you feel you are experiencing this condition. If you are experiencing this condition, immediately contact your nearest Toyota dealer for assistance."