Tag Archive | "Toyota"

Toyota Recalls 1.67 Million Toyota, Lexus Cars

Japan’s Toyota Motor Corp said on Wednesday it would recall a total 1.67 million vehicles globally in a voluntary move to address three separate defects including a faulty brake master cylinder that could hinder the brake’s performance, Reuters.

Toyota said in an email it was not aware of any crashes, injuries or deaths resulting from the defects. Some 1.05 million vehicles will be recalled in Japan and 615,000 overseas, covering Toyota models Crown Majesta, Crown, Noah, Voxy, Corolla Rumion and Auris, as well as more than a dozen Lexus models.

Car makers have faced heightened global scrutiny on how quickly they share information with regulators and the public since a massive recall crisis in 2009 battered Toyota’s reputation and sales. Most vehicle recalls are issued on a voluntary rather than mandatory basis.

Toyota recalled 6.39 million vehicles globally in April in its second-largest recall announcement ever. Two months later, the company issued a recall of almost 2.3 million vehicles globally for faulty airbag inflators that have also plagued other car makers.

In the latest recall, about 802,000 Crown Majesta, Crown, Noah and Voxy models manufactured between June 2007 and June 2012 will be called back to replace a rubber seal ring in the brake master cylinder to prevent brake fluid from leaking. If brake fluid has already leaked, the brake booster will be replaced.

A second recall of about 759,000 vehicles globally, including 423,000 in the United States, will fix faulty fuel delivery pipes that could, in the worst-case scenario, cause a fire through a fuel leak. Some of these vehicles are also subject to the first recall.

Toyota will also recall in Japan 190,000 front-wheel drive Corolla Rumion and Auris models built between October 2006 and October 2014 that are not equipped with an idling feature to fix a defective fuel evaporative emission control unit.

Shares in Toyota closed 0.2 percent higher in Tokyo at 5,990 yen after the recalls were announced, while the exchange’s Topix index .TOPX gained 0.8 percent.

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Court Upholds $15.6M Verdict Against Toyota Dealerships

HARRISBURG, Pa. — The state Superior Court upheld a ruling last week that awarded the driver and five passengers in a Toyota minivan $15.6 million from Center City Toyota and Ardmore Toyota. The plaintiffs alleged that the dealerships had failed to properly inspect the vehicle, which malfunctioned and careened into a ravine, reports The Legal Intelligencer.

Dr. Noreen Lewis and her passengers were severely injured in March 2008 when the van’s steering wheel locked and the brakes failed. A jury award Lewis $11.3 million and the passengers $4.3 million in March 2013, a decision the dealerships appealed.

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Former U.S. Attorney Monitoring Toyota ‘s Safety Efforts

Nearly five months after Toyota Motor Corp. agreed to a $1.2-billion settlement with the U.S. Justice Department the two sides agreed on a monitor for the Japanese maker’s safety compliance efforts: former U.S. Attorney David Kelley, reported The Detroit Bureau.

In March, Toyota pleaded not guilty, but acknowledged wrongdoing in its handling of cases of unintended acceleration. The two sides reviewed more than a dozen possible candidates before settling on Kelley.

A partner at Cahill Gordon & Reindel LLP in New York, Kelley role will have him reviewing Toyota’s safety policies and procedures as well as verifying the accuracy of its public statements.

“We intend to have a cooperative and constructive working relationship with Mr. Kelley, with the goal of making Toyota an even stronger company,” Julie Hamp, Toyota spokesperson, told the Detroit News. “In our view, this is an opportunity to build on the important changes we have made over the past four years to serve our customers better.”

Kelley’s reports on Toyota will be filed with the U.S. Attorney’s Office in New York, which will decide what, if anything, to release to the public.

This could be the blueprint for any agreement between the Justice Department and General Motors. The feds are investigating GM for any criminal behavior related to its ignition switch problem that led to the recall of 2.6 million vehicles this year and at least 13 deaths.

In 2009 and 2010, Toyota recalled 9 million vehicles worldwide due to problems with unintended acceleration, resulting in as many as 21 fatalities. Initially, the company downplayed the problem as an issue with floor mats, but as time went on the problem became more widespread.

In order to end the investigation, the automaker entered into a deferred prosecution agreement, in which it was fined $1.2 billion – the largest fine ever received by an automaker – and agreed to the monitor.

“Toyota put sales over safety and profit over principle,” said FBI Assistant Director in Charge George Venizelos at the time the deal was announced. “The disregard Toyota had for the safety of the public was outrageous.

“Not only did Toyota fail to recall cars with problem parts, they continued to manufacture new cars with the same parts they knew were deadly. When media reports arose of Toyota hiding defects, they emphatically denied what they knew was true, assuring consumers that their cars were safe and reliable.”

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Toyota Dreams of Green Car Future, But Tied to Gas-Guzzler Present

Toyota Motor Corp is hitching its future to green cars, investing billions of dollars in gasoline-electric hybrids and fuel-cell vehicles, but for now its record profit performance is being powered largely by a gas-guzzling U.S. market, Reuters.

In the United States, relatively cheap gasoline prices helped to spur brisk 9 percent growth in industry-wide light truck sales in the first half of the year, making that one of the fastest-growing major global market segments – accounting for about one-tenth of global vehicle sales.

Toyota outperformed the overall U.S. market, moreover, with its fresh model line-up – the Highlander SUV was redesigned in February and the Tundra pick-up got a facelift last September – powering a 10 percent rise in its January-June U.S. light truck sales to nearly half a million vehicles.

That success is feeding the nearly $40 billion cash pile that Toyota will tap for future green car investments.

“The U.S. is one of the few bright spots contributing to year-on-year profit growth for Toyota while it faces a slowdown in places like Japan and Thailand,” said Koichi Sugimoto, an auto analyst at Mitsubishi UFJ Morgan Stanley.

Light trucks, a category that includes SUVs, accounted for around 42 percent of Toyota’s total U.S. sales in January-June, which were up 5 percent from a year earlier.

The strong showing continued in July, when Toyota’s total U.S. sales rose 12 percent due to robust SUV demand and larger discounts, outperforming the industry’s 9 percent growth and surpassing Ford Motor Co (F.N) to become the No.2 seller for the month.

Analysts forecast that Toyota’s April-June North American operating profit jumped at a double-digit rate from the same period a year ago, with Barclays auto analyst Tatsuo Yoshida putting the figure at 106 billion yen ($1.03 billion), up 30 percent year-on-year. The company will announce its first-quarter earnings on Tuesday.

Toyota’s North America numbers undercount the region’s actual contribution to profits, since they exclude much of the profits made from imported vehicles. Most of what Toyota earns through exports from its home country are counted with Japan profits, which likely fell in April-June due to a sales tax hike in April that dented domestic sales.

Barclays’ Yoshida forecasts Toyota’s Japan operating profit at 381 billion yen for the quarter, a 16 percent drop. In Asia, he expects a 12 percent decline to 92 billion yen.


Overall operating profit at the world’s biggest automaker is expected to drop 4 percent in April-June to 637.3 billion yen from the same period a year ago, according to the average forecast of 13 analysts surveyed by Thomson Reuters I/B/E/S.

For the full year to next March, Toyota forecasts its profit will edge up 0.3 percent to 2.3 trillion yen, extending last year’s record high.

Bigger vehicles such as light trucks tend to be more profitable than small cars.

For this financial year, Toyota is likely to make an operating profit of around $2,500 on average for every light truck such as the RAV4 or Tundra it sells in the United States. The figure for passenger cars such as the Prius or the Camry, Toyota’s best-selling car in the United States, is about $1,500, said Koichi Sugimoto, an auto analyst at Mitsubishi UFJ Morgan Stanley.

While Toyota reaps hefty profits from U.S. light trucks, its sales of the Prius, the world’s best-selling hybrid car, slumped 11 percent in the United States in the first half of the year.

Unlike Toyota’s U.S. light truck line-up, the flagship Prius has not seen a model change in five years. But its fortunes are set for a boost as Toyota readies a fourth generation of the hybrid to hit showrooms as early as next year.

Toyota introduced the Prius in late 1997 and endured years of losses to establish dominance in the segment. After selling more than 6 million hybrids over 17 years, Toyota says it is now earning money on the Prius and aims to make its hybrids as profitable as its gasoline-engine cars.

Toyota will further burnish its image as a green technology pioneer next year when it readies a fuel-cell vehicle for launch by end-March.

But for the rest of this financial year, it’s big gasoline-engine vehicles that will be underpinning Toyota’s profits.

“They are 15 percent share of the U.S. market and they’ve got to sell what the market buys, for sure,” said Kurt Sanger, autos analyst at Deutsche Securities in Tokyo.

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Consumer Reports Wants Toyota to Recall Older Camry Hybrids

An influential consumer magazine on Monday called on Toyota Motor Corp to recall about 177,500 older Camry hybrid sedans to address potential power brake defects, reported Reuters.

Consumer Reports, which many consumers use when studying what vehicles to buy, said the Japanese automaker’s decision to call for a service campaign or a warranty extension on two different problems covering cars from model years 2007 to 2011 does not go far enough. Under a service campaign, an automaker repairs cars as they are brought back to dealers by consumers.

“Consumer Reports believes that Toyota should recall these cars,” the magazine said. “What’s at issue here is a series of acknowledged defects in a crucial safety system.

“A recall is more comprehensive and widely published than a mere service campaign, and owners don’t have to wait for a problem to happen before qualifying for the repair,” Consumer Reports added. “Besides that, unlike extended warranties, recalls don’t expire and are performed proactively.”

Toyota spokesman John Hanson said in an email statement that the automaker was working with the U.S. safety regulators at the National Highway Traffic Safety Administration on a probe related to the issue.

“We believe our actions to address this issue are appropriate, and we are continuing to cooperate with NHTSA in its investigation,” he said.

Consumer reports said Toyota’s decisions were prompted partly by consumer complaints filed with NHTSA. The complaints over the last several years have covered loss of braking performance, increased effort to press the brake pedal and other difficulties, the magazine said.

NHTSA opened a “preliminary evaluation” probe into an estimated 30,000 Camry hybrid sedans from model years 2007 and 2008 after receiving 59 complaints of intermittent loss of assisted braking, resulting in increased stopping distances.

NHTSA said it continues to evaluate all data as part of the investigation and will take action as needed.

A preliminary evaluation is the first step in a process that can lead to a recall if regulators determine a manufacturer needs to address a safety problem.

Consumer Reports, which pointed out Toyota’s service campaign and extended warranty both broadened the scope of the potentially affected vehicles, said its review for the two model years NHTSA cited found power-brake complaints had risen to 269, with 14 crashes and five injuries.

In the service campaign, a problem is potentially caused by a clogged brake-fluid reservoir filter and “front-brake assist could be temporarily lost,” according to a Toyota notice to dealers. Instead of a recall, Toyota will alert owners to the campaign to install a new brake reservoir tank at no cost between now and June 30, 2017.

In the other case, Toyota is extending warranty coverage of the anti-lock brake system’s brake actuator from the standard three years or 36,000 miles, to 10 years or 150,000 miles, according to a separate dealer notice. Remedies could include a new actuator or reprogramming of the skid control electronic control unit.

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Leases Entice Drivers to Upgrade Cars as Often as IPhones

When Adam Gilgis leased a Volkswagen GTI this month, he had one goal: a low monthly payment, reported Bloomberg.

“We pay $320, which is perfect,” said the 35-year-old Chicago attorney. “If we finance the car, we’re paying thousands of dollars more over the course of several years.”

Auto leasing is back in a big way as automakers including Volkswagen AG and General Motors Co. pull back on discounts and rebates and entice Americans with ads promising cheap leases instead. So far this year, leases have accounted for about 27.7 percent of new-auto sales, according to Edmunds.com, the highest rate in years. Buyers like Gilgis shun long-term loans associated with outright purchases because increasingly they see cars as smartphone-like gadgets to be upgraded every few years.

“Like an iPhone, one can get a new vehicle with all the new technology and have a similar payment as before,” said Jessica Caldwell, an analyst for auto researcher Edmunds.com.

The recent surge in leasing is helping power U.S. auto sales, which are headed for the biggest year since 2007, when 16.15 million vehicles were sold. In June, five of the top six automakers beat analysts’ sales estimates. Lenders’ willingness to offer loans that stretch as long as eight years also is boosting sales. Terms of 73 to 84 months accounted for 24.9 percent of all sales in the first quarter, according to data from data services group Experian Automotive.

Once Tacky

Leasing was once considered tacky and financially frivolous, letting posers drive cars they could ill afford.

“Thirty years ago, if you rolled up next to someone riding in a BMW or a Porsche and you said ‘that car is leased,’ it was one of the biggest insults you could throw at someone,” said Mark Wakefield, a managing director at AlixPartners LLP. “Now, you’d say, ‘Yeah? So, what?’”

Attitudes began changing in the late-1990s, when mainstream buyers began leasing family sedans from Honda Motor Co. and Toyota Motor Corp. Now, with the economy improving and the financial crisis receding in the rear-view mirror, leasing is gaining traction once again. Automakers and banks are piling in because they’re betting that a robust used-car market means leased vehicles will hold their value after they’re returned. The higher the “residual value,” the less the car depreciates during the lease and the less consumers pay per month.

Drivers often weigh the cost of leasing versus taking out a loan and buying a car. With a 20-percent down payment on a Toyota Camry SE priced at $23,740, a 60-month loan costs an average of $341 per month compared with $207 for a 36-month lease, according to a TrueCar analysis.

Kia Sorento

Non-luxury buyers are leasing at a pace not seen since the late 1990s. Advertising consultant Drew Ament and his wife leased a Kia Sorento for $450 a month for 36 months in February.

“It’s good for me knowing that the lease gives her peace of mind,” said Ament, who lives in Phoenix. “I’m a guy who will get a car and then drive it until it’s dead. I have a Chevy Silverado right now that I’ll probably have until it’s done. My wife can’t do that. So, I pretty much give her a budget each month, and if it’s under that budget, then go for it. And she gets the most for her money.”

He’d rather not have a monthly payment, but considers it worthwhile to ensure his wife and children have a new vehicle that’s safe to drive.

“It’ll be nice maybe a couple leases from now to not have to lease a three-row SUV once the kids move out,” Ament said.

Auto leasing is a hotly debated topic. Consumer Reports has long said buyers are better off paying cash for a new car or taking out a short-term loan.

Hidden Fees

While leasing offers lower monthly payments and repair costs than buying new or used, Edmunds warns on its website that leasing vehicles is more expensive over the long run than buying a car and keeping it. The research firm also says lease contracts can be hard to understand and include hidden fees, including maintenance and damage charges. Simply exceeding the lease’s mileage limits, typically 12,000 miles per year, can cost a driver thousands of dollars.

Leasing also “puts you on a treadmill to buy a new car over and over every few years with no end in sight,” said Anthony Giorgianni, an associate editor at Consumer Reports. “Leasing is just a bad way to purchase a new car unless you’re a really wealthy individual and you just don’t care about costs. Otherwise, it’s smoke and mirrors.”

Jessica Caswell, communications manager at VSP Vision Care in Sacramento, California, said that when she leased a new Honda Civic she didn’t realize insurers often charge higher premiums and fees for leased vehicles.

Significant Sum

“It’s a significant amount of money, and you don’t really know about it when you sign the lease,” Caswell said.

She said she may buy the car once the lease is up.

Kevin Tynan, a Bloomberg Industries auto analyst, calls leases “the new incentive.” The question, he said, is how long can U.S. automakers rely on them to fuel sales.

Tynan said that when millions of previously leased vehicles end up on used car lots at cheap prices, it might make less sense for consumers to buy or lease a new vehicle.

“I think we’re about 36 months out from a period where pre-owned makes more economic sense for the average buyer,” he said. “New vehicle demand could flatten for a period beginning in 2017-18 as we work through all these off-lease autos.”

Long-term loans also could crimp sales because people don’t buy new cars when they are paying off the one they own. To ensure that doesn’t happen, dealers will have to get creative with their come-ons, said Larry Dominique, the president of TrueCar Inc., an online auto-buying service.

“It’s a bit easier with lessees since they tend to be customers who like new cars every couple of years, so you’d hope they’d be back,” he said. “But how can you build loyalty with those who buy their cars so that they’ll come back seven, eight years later? It’s challenging.”

One way to build loyalty is through giveaways and promotions, including free car washes, Dominique said.

“I’ve even gotten an offer to attend a free wine and hors d’oeuvres tasting at a dealership,” he said. “It’s coming up with things like that to engage customers that’s important.”

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