Car manufacturers’ penitence: Recalling millions of vehicles

By Aida Sevilla-Mendoza April 16,2014

Its’ an uncanny coincidence that major car manufacturers are recalling millions of vehicles globally for safety defects just as the world enters Holy Week, the peak of the penitential Lenten season.

 

By April 12, following General Motors’ recall of 6.1 million vehicles during the first three months of the year that included 2.6 million small cars for flawed ignition switches, Toyota Motor Corp. had announced the recall of 6.39 million vehicles worldwide for five potential safety hazards in 26 models.

 

Perhaps anxious to avoid the grueling government investigations and bad publicity that GM is undergoing, Toyota, Honda Motor Co. and Nissan Motor Co. are recalling more than 2 million vehicles globally for an identical problem with air bags on the passenger side whose inflator may burst, sending plastic pieces flying.  No injuries have been reported related to this problem.  The recall for air bags made by Japan’s Takata Corp. affects other automakers including non-Japanese manufacturers and may involve as many as 3 million vehicles, the Takata spokesperson said without giving details.

 

AIR BAG PROBLEMS. The Associated Press reported that Toyota is recalling 1.7 million vehicles including the Corolla, Tundra and Lexus SC produced between November 2000 and March 2004 for air bag problems.  Toyota said it has received five reports of faulty air bags, but there have been no injuries. Last February, Toyota issued a global recall of 1.9 million Prius hybrid cars, or more than half of the models sold since it debuted 17 years ago.  Toyota said it would update software to fix glitches that could cause the cars to lose power or shut down and stop.

 

Honda Motor Co. is recalling 1.1 million vehicles including the Civic, CR-V and Odyssey in North America, Japan and Europe for an air bag defect while Nissan Motor Co. recalled 480,000 vehicles in the same countries for the same problem including the Cube, X-Trail, Maxima and Teana in Japan made from August 2000 to January 2004.  The recalls reported to the Transport Ministry in Japan extend to Latin America, China, other Asian nations, the Middle East and Africa.

 

PH RECALL. Toyota’s 6.39 million vehicles global recall includes the Philippines, where 50,260 Fortuner, Hilux and Innova units sold between November 2004 and June 2010 are being called back by Toyota Motor Philippines Corp. (TMPC) due to the possibility of the driver’s side airbag not deploying in the event of a crash because of a potential problem with the spiral cable.  TMPC said that so far, no incidents have been reported here  related to the air bag system.

 

The spiral cable problem also covers 3.5 million vehicles including the RAV4, Corolla, Yaris, Highlander, Tacoma and Camry that were produced from April 2004 to December 2010 and sold globally, more than half of these in North America.

 

In the United States, the National Highway Traffic Safety Administration  (NHTSA) said that total recalls in the United States from January this year through April 9, 2014, have already exceeded 12 million vehicles—more than half of last year’s 22 million. Aside from recalls issued by GM, Toyota, Honda and Nissan, Ford Motor Co. said in New York it was recalling about 385,750 Ford Escape SUVs in the model years 2001-2004 for a corrosion risk that could affect steering control and substandard-welded seatback frames in the 2013-2014 model years Ford Fusion, Lincoln MKZ, Ford Escape and C-Max.

 

Chrysler is recalling more than 850,000 SUVs including about 644,000 in the United States because of a possible braking problem, according to The New York Times. The recall covers the 2011 to 2014 Jeep Grand Cherokee and Dodge Durango and was issued when owners contacted the NHTSA last winter about water entering the brake booster and freezing, thus affecting braking performance.

 

SPIDERS. Meanwhile, the Associated Press reported that Mazda is recalling 42,000 Mazda6 cars from the 2010 through 2012 model years equipped with the 2.5-liter engine because spiders—improbable as it may sound—can damage/weave a web in a vent hose and cause the fuel tank to crack.  The yellow sac spider, which is attracted to hydrocarbons, builds webs that cause pressure to build in the fuel tank which increases the risk of fuel leaks and fire.  Mazda will update the cars’ software for free to ensure that the fuel tank pressure does not build up.  Mazda said no injuries or fires have been reported due to the issue.

 

Toyota’s latest global recall announcement came two weeks after it had admitted wrongdoing and agreed to an independent monitor who will assess its safety reporting practices as part of a $1.2 billion settlement with the US Justice Department related to its handling of unintended acceleration problems in 2009-2010.  In the last two years, Toyota recalled the most vehicles in the United States: 5.3 million in 2013 and 5.3 million again in 2012.

 

This year, GM has already recalled 6.1 million vehicles, more than any other automaker did in the United States in all of 2013 and 2012.   GM is facing a Justice Department investigation and its new CEO was grilled by Congress over its 10-year delay in recalling cars with defective ignition switches linked to at least 13 fatal road crashes.  GM also faces fines of $7,000 a day for missing a deadline to answer questions from the NHTSA and a class action lawsuit filed in Texas.

 

EARNINGS. However, recalls have not really damaged Toyota’s earnings as it forecast a record-setting $16 billion profit for the year ending March 31.  Toyota is also poised to sell an unprecedented 10.32 million vehicles in 2014 after outpacing GM and Volkswagen AG in global auto deliveries for the second straight year.  Toyota, Honda, Nissan and Mazda shares rallied in Tokyo, shrugging off the recalls.

 

In GM’s case, many of the recalled vehicles are older models no longer in production, which may help minimize the impact on current vehicle sales.  The large number of recalls announced by other auto makers including Toyota and Nissan in recent weeks may somewhat temper consumers’ views of GM’s recalls.  Fitch Ratings believes GM’s cash flow and cash position will allow it to weather the recalls, although in the long run they may damage GM’s reputation and slow down sales for an extended period. The recalls’ total estimated cost is more than $1.3 billion while GM held $38 billion in liquidity at year-end 2013.

 

Toyota’s latest recalls were announced before the company even developed specific repairs. Carmakers often take years to recall vehicles.  Toyota and GM are not alone in facing challenges with cars in need of fixes. A surge in new models, increasingly complex technology and heightened regulatory scrutiny are behind the increase, ditto the increasing use of standardized parts across vehicle lineups.  To reduce production costs, auto makers are pressing suppliers to make common components that they can put into various models.  The scale of one component has become much larger and that means one incident could result in a huge impact.  The more scale there is, the more difficult it is to control quality.

 

FREEZE. Toyota president Akio Toyoda has imposed a 3-year freeze on new car plants to tilt the company’s priorities to quality and efficiency after its massive 2009-2010 recalls.  To restore Toyota’s once-sterling reputation for quality, Toyoda pledged to improve and speed up the company’s processes, forming a global quality group that he chairs.  Previous decision-making involving safety was too dependent on executives in Japan, so regional operations have been given more autonomy to make fixes.

 

“Toyota is being more active in calling back vehicles to ensure quality,” an auto industry analyst noted. “The number is big, but the faults are minor and not critical.”  Another analyst said that it’s always better to err on the side of caution. Given the sensitivity around auto safety in the last five years and the fact that the modern car contains more than 30,000 parts and components, he said it should be no surprise that we see as many recalls as we do today.  A Credit Suisse analyst added: “Rather than hiding it and creating problems later on, it’s much better to announce at an earlier stage and deal with it properly.” Clarence Ditlow, executive director of the non-profit Center for Auto Safety, summarized it all when he said that automakers historically have been quick to fix safety problems when faced with government investigations and bad publicity.

 

Sources: Associated Press, ABC News, Business Wire, International New York Times, Bloomberg, Agence France-Presse, Inquirer.

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of Cebudailynews. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.