By Mark Huffman
ConsumerAffairs.com
March 8, 2010
It's been a rough winter for Toyota, with everyone from drivers to members of Congress castigating the carmaker for its series of safety-related recalls. Now, the embattled company may be preparing to strike back at its critics.
Over the weekend the Wall Street Journal reported that Toyota plans a series of public events and statements to blunt the cascading criticism. It has marshaled its own group of experts to discredit a study that traces the sudden acceleration problem to Toyota's electronics systems.
Late last week suspicion once against turned to electronics after scores of Toyota owners, whose cars had been recalled to repair the accelerator pedal, reported additional events of sudden acceleration, suggesting the agreed-upon fix was not the root of the problem.
The company has also gone on the attack against a whistleblower who turned over sensitive Toyota documents to U.S. Congressional investigators. The Journal reports the company has provided reporters with court documents that purport to show the whistleblower was a poor employee and has a history of mental illness.
All of this comes at a time when Toyota has its hands full on the legal front, facing more than 70 suits that are seeking class action status. One of the suits was filed by Beasley Allen, a plaintiffs firm best known for its 2007 on behalf of Vioxx users who suffered a stroke, heart attack, or death. At $4.85 billion, that settlement stands as the largest in U.S. history.
Tough critics
Two critics in Washington may be harder to intimidate. Rep. Henry Waxman (D-CA), Chairman of the House Energy and Commerce Committee, and Rep. Bart Stupak (D-MI), Chairman of the committee's subcommittee on investigations, have sent a letter to Toyota, complaining that the company has yet to show it has fully investigated its electronics system as a possible cause of the sudden acceleration problem, other than insisting that it isn't the cause.
Were the problem to be traced to the vehicles' electronics system, the repair costs could be catastrophic for Toyota. Toyota officials acknowledged getting the lawmakers' letter and said the company would cooperate with the committee.
Toyota is fighting back because the recalls and surrounding publicity have been toxic for sales. In January, Toyota's purchase intent averaged just over 13 percent and then fell to a 9.7 percent low as a result of the recall announcements, according to automotive Web site Edmunds.com.
Money talks
The company has respondedwith a number of aggressive financial incentives that appear to making results. The announcement of zero-percent financing and special lease deals generated nearly a 40 percent spike in purchase intent by visitors to Edmunds.
Slightly later announcements of zero-percent financing by Chrysler and General Motors didn't have the same effect, Edmunds reports. In fact, Chrysler purchase intent decreased from 3.3 percent to 2.9 percent and GM purchase intent rose slightly from 12.6 percent to 12.7 percent.
"Because of the Toyota recall, people have been closely watching the company's moves, and many were ready to take action upon hearing the announcement of this highly-anticipated incentives program," said Edmunds.com Senior Analyst David Tompkins. "Chrysler and GM didn't get quite as much attention for two main reasons: historically - such as in the Keep America Rolling campaign in 2001 - followers never get the same level of attention that the initiators do, and, second, this type of announcement is far more rare for Toyota."
"The Toyota recall saga allowed other automakers to snag some market share, and now Toyota wants it back," said George Kang, Senior Analyst at Edmunds.com. "Despite their ongoing challenges, the company still has plenty of brand strength and consumer confidence."
