Toyota’s Ludicrous Liabilities

While I agree that it is very difficult for loved ones whenever anyone dies in an automobile accident, and while I understand why those left behind want very badly to find out what went wrong and who was at fault, there’s a fine line between constructive inquiry and political show. Without the help of either, the problem is that we still haven’t quite figured out how to stop traffic deaths from happening.

The latest figures from the National Highway Traffic Safety Administration (NHTSA) show that fatality data for 2008 “placed the highway death count at 37,261, a drop of 9.7 percent from 2007.” While safety continues to improve, note that approximately 37,000 people died in a traffic accidents in 2008.

If you’re concerned about these figures, and if you’ve been paying attention to the drama unfolding surrounding Toyota Motor Company, you probably want to know the answers to two questions:  First, what are the safest cars on the road today?  Second, how does Toyota stack up in regard to producing safe cars?

On the latter, the answer is “very well.”  In fact, a recent study of the NHTSA’s complaint database found that “NHTSA’s own data shows: Only drivers of Mercedes Benz, Porsches and Smarts have less to kvetch than Toyota owners.”

Out of the 20 top brands, Toyota ranked 17th. In addition, 25.3 percent of the complaints were for automobiles produced by the federal government’s own General Motors — however, when looking at complaints per car, GM actually ranked in 11th place, better than Ford, Chrysler and Volvo. Toyota, of course, had fewer complaints per car than all of the major automobile manufacturers, U.S. and Foreign, except for the three mentioned above. As the driver of a 1995 Toyota station wagon that stills performs like a new car, I’m not the least bit surprised.

So, if this is the case, why is everyone–especially Congress and the media–so hyped up? Actually, this reminds me of the Ford Pinto case from a number of years ago. At that time, Ford was accused of causing hundreds of terrible, fiery deaths as a result of rear-end collisions and a badly placed fuel tank. The press went wild, Congress went wild, and Ford took it on the chin.

Still today, many are convinced that Ford was at fault and that they had allowed these people to die even though they knew that the placement of the fuel tank was a problem. You will find this case still being discussed in many college ethics classes as an example of unethical corporate behavior. But is it the truth?

Even though the impression was left by the media (which has never been good at reporting data that doesn’t support their agendas) that hundreds died in Ford Pinto fires, research by Gary T. Schwartz of Rutgers University shows that the number of deaths when Pintos caught on fire due to a rear-end collision were 27 — not hundreds. While no deaths are acceptable it is impossible to build a car, even today, that guarantees nobody will die in a crash. When you consider the number of Pintos sold–two million–and the miles driven, that’s an exceptionally low figure.

In fact, the Pinto was the safest car in its class sold in the United States at that time, meaning that it had less fatal accidents than any other subcompact and no more fatal accidents than the average mid-sized car. What this tells us is that people who purchased the competition had a better chance of dying in a crash than those that purchased the Pinto. It is true that, in regard to rear-end collisions, the Pinto’s fatality rate among subcompacts was somewhat higher — but certainly was “not enough to support a claim of it being a major highway hazard.”

What Ford had done was look at the potential for death as it related to company costs, which directly affects profitability, which directly affects the ability of a company to hire employees, pay dividends, and do the research needed to make their cars even safer.  While on the surface it seems insensitive to relate costs to risk that could potentially lead to deaths, the idea of balancing risk with cost savings is not only acceptable but in many instances recommended; even considered essential. It may pain you to know this, but this practice will probably become even more prevalent in the future. In fact, not only do all kinds of industries treat this as a normal and recommended practice, the National Health Plan being presented by the administration will depend heavily on this kind of analysis.  In fact, the plans proposed by the House and Senate and White House all have provisions for the creation of boards, commissions and bureaucracies solely intended to balance risk of death with cost.

So, if all of this is true, why the hype and why didn’t Ford fight it? There are a number of reasons, all of which are very common in our “freedom of the press” society:

Number one, only bad news sells papers. If it bleeds, it leads, and the media has a habit of sensationalizing on the front page and running corrections at the bottom of page A-16.

Second, Congress is always looking for ways to prove that it is “looking out for the people.” With our current system of electing representatives every two years, any controversy where Congress can “prove” that they are worthy of being re-elected is jumped on. Or, as Rahm Emanuel said, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” For those in Congress, this means, “I need every crisis I can find to get re-elected.”

And third, it is extremely difficult to justify any deaths at all when you are under this kind of scrutiny; using a cost/risk analysis as your “excuse” would be counterproductive at the least and a PR nightmare at the worst. It’s better to just take your lumps and move on; as Toyota seems to be doing today.

Finally, Toyota is non-union and that is a great threat to the unions which, especially in this administration, wield major power. If there’s any way to force Toyota to become a union shop or make non-union life more difficult, the current administration–with its close links to and intimate relationships with the most powerful unions in the world today–would not hesitate to make that happen.

The Toyota case has a couple of other ingredients that the Ford Pinto case did not have. Unlike earlier, this time around the government has a major stake in General Motors  and Toyota is undoubtedly its single-greatest competitor.  This conflict-of-interest, of course, is one of the best reasons for keeping the government out of the private sector, including health care.  It’s not unreasonable to question he ulterior motives of everyone involved, and as the power the government to eliminate competition is unraveled, anyone who thinks government run health care won’t ultimately end up as a single-payer system is extremely naïve.

Ultimately, what we’re seeing now with Toyota is all smoke and mirrors, as millions of Toyota owners will happily attest to. If the media and Congress prevail, Americans will be forced into cars that are less safe and the chances of a traffic-related death happening to someone you love will be increased, and not lowered.

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Comments

  1. Michelle Zhang says:

    I read a news article that said that Ford was having the same complaints with the sticky accelerators.

    Haven’t been able to find that article again…strange…

  2. Dee says:

    I have questioned why there has been congressional hearings and numerous headlines over Toyota’s recalls and then I thought about them being non-union and competitors of GM. I now drive a Honda but my past 3 cars were Toyotas. My son is still driving my old 1996 Toyota Paseo with well over 120,000 miles and still getting almost 30 miles per gallon. I have a cousin who is married to a union worker and he will not allow me to park any of my cars in his driveway. I guess GM (Government Motors) will do whatever it takes to take out the competition.

  3. Randy Wills says:

    Excellent article, Brad, and if I wasn’t about to head out the door for an appointment, I would compose a more thorough comment, but let me just say that this is a very complex issue.

    I speak from my 40 years of corporate management, during which “The cost of doing vs the cost of not doing” was one of my most-used “tools”, but also I almost lost my wife many years ago in a runaway Chevrolet Caprice station wagon with a stuck accelerator.

    One thing that we can agree on is that Congress has removed itself from the role of an “honest broker” by becoming an “owner” of GM.

    Randy

  4. paulc says:

    Some time ago (20years?) there was a similar complaint against Audi. I remember that one woman drove into her swimming pool because of unintended acceleration. I owned an Audi 100 (1987 maybe?) so I drove it at 30mph or so and jammed the accelrator to the floor and stepped on the brake. The car stopped.

    I have seen no articles that said the Toyota cars did not stop with normal hard braking in these circumstances. If Toyota (or anyone) builds a car where the engine can overwhelm the brakes, it seems to me it is a brake problem, not an accelerator pedal problem.

  5. Amy says:

    I have recenlty thought that this was getting more press than necessary. While the problem is nothing to ignore, very few people have been affected.

    I’m not trying to minimize what the people who have experienced this problem have gone through, but I also wonder where their common sense was. One lady tried for minutes to get her car to stop. She engaged her emergency brake. She stomped down on the regular brakes. She even called her husband for what she thought would be her last words to him. My question is, if she had time to do all of that, why didn’t she just put the car in neutral? At least it would have stopped accelerating.

  6. Randy Wills says:

    I would like to add a word or two to what I said in my comment above.

    NEVER should the “cost of doing” (i.e. enacting a recall) be deemed higher – regardless of how one measured it – than the value of one human life. I was chief compliance officer for one of our divisions that designed and manufactured “Critical Devices” (the FDA term for devices the failure of which have the potential to cause serious injury or death to the patient), so I know the routine well.

    Our Corporate policy and the FDA demanded no less and we could immediately trace every single component used in the manufacture of the device to its origin if a recall was required. I believe that the auto industry should be subject to the similar rules – IF THE FLAW IS DIRECTLY TRACEABLE TO THE DESIGN OR MANUFACTURING PROCESS. However, demonstrable perator error (coupled with unscrupulous law suits) rather than a design flaw nearly put Audi out of business in the U.S. a number of years ago. Manufactures should be protected from that sort of abuse by tort reform.

    Randy

  7. Randy Wills says:

    Dang! At least two typos in that comment. Won’t I ever learn to proof read what I write?

    At my age, probably not.

    Randy

  8. Dale says:

    Your perspective is a little narrow. Toyota problems have gone on for years . . . attempting to relate this to GM or todays fed govt is nonsense.
    Toyota has stalled, lied and neglected to look into this and other problems for the best part of a decade. The excelleration problem has been around a long time, but, other problems like Steering Shaft separation, seat belts in Yaris, loss of Brakes in Corollas and numerour Prius recalls. Toyota attempted to fix many of these problems in Secret!!! Till people started dying. This is not about ratios, or how safe a toyota is compared to other makes, its about DECEPTION BY TOYOTA.
    Contrast that to Fords cruise control switch recall . . . 6 or 7 incidents . . . public recall, Ford happily replaces switch . . . no DRAMA no EXCUSES.
    Toyota is a dispicable car co . . . North American execs ignored the NHTSA till they sent a rep to Japan to order Toyota to stop selling cars in the US. NEVER has anything like this happened to any other car company, domestic or foreign.
    Toyota brought this on themselves . . . . I knew abouat their problems years ago . . . where was the media???
    What’s the safest affordable sedan in America . . . ranked no. 1 by the HHIS 2010 Safety Awards . . . Taurus . . . all Toyotas FAILED TO PLACE.
    Buy a Toyota . . . after all Japan’s economy has been in recession for 20 years . . . we could help them out . . . lol

  9. Gail B. says:

    From Dee–

    “…and then I thought about them being non-union and competitors of GM.”

    That does explain a lot! But it also makes me wonder what sort of additional automobile safety czars, agencies and commissions will be established in order to regulate Toyota out of business in America!

  10. Bruce Barlond says:

    Over the past 50 years or so Democrats have successfully driven most American manufacturing companies out of business or out of America because of excess taxation and mandated regulations that drove up the cost of those businesses products or services. Those businesses took along with them the American jobs those American manufacturers provided. Now Democrats are poised to drive foreign manufacturers out of America taking all those American jobs with them. Why would these Democrats keep doing this? Do Democrats want Americans impoverished, unemployed, living in dispair and dependent on Big Democrat government for all their needs? Hmmm?

    A dependent population is not free. Do Democrats want Americans free?

    Ronald Reagan spoke of the United States as that “Shining City On A Hill”. Our freedom and liberty shined for all the world to see. Well, our Liberty and Freedom depend on Americans building things in America that people in America and around the world want and can afford to buy! We must make America work again by building things in America that can be sold in America and around the world for a price people here and around the world can afford to pay!

    We must convince Americans that businesses don’t pay taxes and pay for the costs of government mandated regulations. Oh sure, businesses collect and send in the check to the Federal, state and local governmental units but customers pay the bill when they buy the product or services sold by that business.

    Keep in mind that when a business has to pass along too much cost of regulation and taxes in the price of the product or service it sells fewer of it’s products or services will be sold to customers. When the cost of taxes and governmental regulation gets too high nobody buys the product and nobody pays the taxes and Americans find themselves unemployed. That is the position America finds itself in today. A major reason people don’t buy the products of American manufacturers is because of the cost of government regulations and taxes built into that product by government. As a consequence too many Americans are out of work! And now Democrats are in the process of throwing more Americans out of work and into poverty and dependence?

    We need to convince Americans that American businesses are the “gooses” that lay the “golden eggs” (jobs) and that excessive taxation and over-regulation of businesses are strangling businesses and have caused and are causing catastrophic American job losses. Those job losses must be stopped now!

  11. Randy Wills says:

    Dale says “Toyota is a despicable car company”.

    Does that go for all of the U.S. employees, sales outlets, service shops, salespersons, etc, etc, who have made Toyota the number one automobile brand in the world?

    Hmmm. Could it be that your view is a little narrow? And could it be that you are a little naive, as well, when it comes to the political environment (and methods) in Washington?

    Just remember that if it were not for Toyota and Nissan (then “Datsun”) the the Detroit manufacturers would sill be producing the junk that they did up until almost the end of the ’90s. It was the Japanese who adopted Demmings statistical quality control methods after WWII and improved quality by an order of magnitude – not the Detroit guys. They laughed it off until Japan started to eat their lunch and then tried to fight back with such magnificent products as the Pinto and Vega.

    I’m no fan of the Japanese mentality (I had to spend too many hours sitting accross conference tables from them to really appreciate their superior attitude), but I try to be objective when it comes to the facts.

    Randy

  12. Sam says:

    In the 1970′s Detroit imported japanese steel and their cars rusted apart. In the 1980′s Detroit imported japanese engine components and their cars ran like crap. In the 1990′s Ford used japanese tires and suffered from one of the largest tire recalls of all times. Detroit created thier own problems by importing asian junk. The new Fords are probably the best engineered cars ever, but they insist on using cheap chinese parts.

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