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Toyota: Recall Rerun?
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The U.S. government has sped up its investigation into Toyota Motor's (TM - Analyst Report) Corolla and Matrix vehicles on the back of a possible engine defect that could cause them to stall while in motion.
According to the National Highway Traffic Safety Administration (NHTSA), the investigation began on August 18 and includes the vehicles of model years 2005, 2006 and 2007. The defect could stem either from improper coating applied to circuit boards or a crack in the surface of a glass coating in the engine control units.
Since October last year, the automaker has recalled more than 8.5 million vehicles globally related to problems such as faulty accelerator gas pedals, slipping floor mats and defective braking systems.
The string of recalls has already tarnished Toyota’s reputation, resulting in declining sales, lower vehicle resale value and fallen stock price. The company also faces numerous personal injury and wrongful death lawsuits in federal courts. The value of claims under the lawsuits has been estimated to reach about $4 billion, reflecting an average loss of $600 per vehicle.
The U.S. government has also imposed the highest-ever fine of $16.4 million on Toyota, accusing it of a deliberate delay in recalling the vehicles by hiding its flaws even though manufacturers are legally obligated to notify the U.S. safety regulators within five business days once they come to know of a safety defect.
Until now, it is unsure whether another recall would be announced by Toyota following the investigation into the vehicles. However, recalling a top-selling model such as Corolla would definitely add to Toyota’s woes.
According to the National Highway Traffic Safety Administration (NHTSA), the investigation began on August 18 and includes the vehicles of model years 2005, 2006 and 2007. The defect could stem either from improper coating applied to circuit boards or a crack in the surface of a glass coating in the engine control units.
Since October last year, the automaker has recalled more than 8.5 million vehicles globally related to problems such as faulty accelerator gas pedals, slipping floor mats and defective braking systems.
The string of recalls has already tarnished Toyota’s reputation, resulting in declining sales, lower vehicle resale value and fallen stock price. The company also faces numerous personal injury and wrongful death lawsuits in federal courts. The value of claims under the lawsuits has been estimated to reach about $4 billion, reflecting an average loss of $600 per vehicle.
The U.S. government has also imposed the highest-ever fine of $16.4 million on Toyota, accusing it of a deliberate delay in recalling the vehicles by hiding its flaws even though manufacturers are legally obligated to notify the U.S. safety regulators within five business days once they come to know of a safety defect.
Until now, it is unsure whether another recall would be announced by Toyota following the investigation into the vehicles. However, recalling a top-selling model such as Corolla would definitely add to Toyota’s woes.
Read the full analyst report on TM
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