Yet another enormous auto recall was announced yesterday, this time by Toyota. The recall will cover nearly 1.8 million vehicles for numerous defects including air bags that may not inflate. Included in the recall are: the 2009-2010 Corolla; 2009-2010 Matrix; 2008-2010 Highlander; 2009-2010 Tacoma; 2006-2008 RAV4; 2006-2010 Yaris; 2009-2010 Pontiac Vibe (from when GM and Toyota shared a plant); 2006-2010 Yaris hatchback; 2007-2010 Yaris sedan; and the 2008-2010 Scion XD. According to the AP, automakers have recalled about 9 million vehicles in the U.S. already this year.
It is important to recognize that two-pronged safety net of government oversight and civil tort liability are driving these companies to recall these vehicles. The best case scenario is a recall like this Toyota recall where it appears, through reports from the manufacturer, that the defects have not injured anybody yet. According to the AP, the recent spate of bad publicity and government investigation has resulted in the recalls. Clarence Ditlow, executive director of the nonprofit Center for Auto Safety, said that when faced with this pressure, auto makers “look through their inventory of defective vehicles and recall some of the ones that they had passed over before.”
Even The Wall Street Journal, which is typically adverse to regulation, recognizes that aggressive regulators and potential for court action have pressured the industry to act, pointing out that the new recalls come weeks after Toyota agreed to settle the criminal investigation conducted by the US Attorney’s Office. There, Toyota admitted that it mislead consumers by making deceptive statements concerning the two issues that caused sudden acceleration in conduct that Attorney General characterized as “shameful.” Under the settlement, Toyota also agreed to pay $1.2 Billion. This marks the largest penalty ever imposed by the government on a car manufacturer. I have a feeling that GM is a candidate to surpass that amount.