All Entries in the "Auto News" Category

Toyota Accelerator Recall Lawsuits Could Cost $10 Billion

In the last two weeks a few class-action lawsuits against Toyota have been announced (one by the Orange County DA, one in Phoenix, and a few others). Central to all of these lawsuits is the allegation that Toyota knowingly mislead consumers in regards to unintended acceleration problems, which is technically known as “consumer fraud.”

For the record, there are degrees of fraud. Fraud as a result of stupidity or negligence is different than intentional acts that will knowingly injure another party. For example – accidentally writing a bad check from an account you closed is definitely considered fraud, but it’s not the same as stealing someone else’s checkbook and writing what you know to be a bad check. Intent is important.

Toyota’s problem is, it’s very difficult to argue that their actions weren’t intentionally designed to hurt consumers. Here’s how allegations of fraud at Toyota break down (and why they’re probably going to lose billions when it’s all over):

Toyota’s Problems In China Bigger Than Acceleration issue

By sheer volume of sales, China is the biggest automotive market in the world. 13.6 million new vehicles were sold in China in 2009, compared to only 10.4 million in North America…and that trend is only going to become more pronounced as the world’s economy revs up again.

Note that China’s market is only bigger by volume – the average new car in China costs about a third as much as a new car in the U.S. or Canada, so it will be awhile before the actual value of China’s market exceeds the value of the North American market…but that day is coming. Fast.

In other words, an automaker’s success in the 21st century depends on having an effective presence in China. While Toyota’s unintended acceleration problems might seem important to U.S. consumers, the truth is that the unintended acceleration issue is minor compared to Toyota’s struggles in China.

Toyota Crash Victim Speaks Out Against Media Smearing Automaker

Independent journalist and blogger Michael Fumento doesn’t pull any punches. A quick scan of Fumento’s blog posts regarding the Toyota recall fiasco shows that he’s not afraid to be blunt. He calls Prius driver James Sikes a “media whore liar.” blatant liar. [NOTE: We misquoted Mr. Fumento – our apologies.] He takes big media to task for glossing over key facts and details. He outlines the conflict of interest between GM, Chrysler, and NHTSA. At first glance, Fumento definitely seems “pro-Toyota.”

Maybe so. But a story from Fumento’s past would seem to indicate that he doesn’t have a lot of love for the automaker:

Orange County D.A. Suing Toyota

Orange County District Attorney Tony Rackauckas has announced his office will partner with a local private law firm to sue Toyota USA for selling defective vehicles and deceptive business practices. Here’s what Rackauckas is arguing:

Toyota Offers NUMMI Workers $250 Million Severance

We’ve been following the closure of NUMMI for a few months now, and it seems that the story is just about done. Earlier today, Toyota announced that they are giving NUMMI workers a $250 million dollar “transition” fund that could be used to pay out bonuses to NUMMI employees, as well as offer career counseling and training.

While it’s obviously not this simple, $250 million divided up amongst 4,500 workers (plus or minus) is about $55k per person. While this severance isn’t tremendous, it’s certainly nothing to sniff at…especially considering Toyota was forced to close NUMMI when GM filed bankruptcy.