Wednesday, April 7, 2010
Tuesday, April 6, 2010
Toyota may face $16.4 million fine for hiding defect, U.S. says
WASHINGTON (Bloomberg) -- Toyota Motor Corp. “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly, the U.S. said, for the first time accusing the world's largest automaker of breaking the law.
Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended Monday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals.
The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of about more than 8 million vehicles worldwide for flaws that may cause unintended acceleration..
The Transportation Department's action showed “safety matters and they're going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That's very appropriate. They caught Toyota red-handed.”
The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement. Companies have five business days to report safety defects, the agency said.
`We now have proof'
“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”
Toyota hadn't received NHTSA's letter on the fine, according to an e-mailed statement Monday from the company's North American sales unit.
“We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine.
LaHood has increasingly faulted Toyota's response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they're supposed to do.”
Toyota in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals.
The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group.
NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29.
“NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum, an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won't contest the fine, “since they've essentially said they screwed up.”
‘Firepower to attorneys'
At a February congressional hearing, Toyota's U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals.
Toyota has two weeks to accept or contest the proposed fine, Olivia Alair, a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn't reached, “it would go to court,” she said.
“One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim, an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.”
NHTSA's largest civil penalty was $1 million against General Motors in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles.
‘Free Publicity'
“Both industry and government failed the test of putting the safety of America's drivers first” in the Toyota recalls, Representative Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement Monday.
The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier, who has filed class-action and individual lawsuits related to the claims.
“Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn't be introduced in court because “it's not like a criminal finding in that there was due process,” he said.
Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said.
Transportation Secretary Ray LaHood proposed a record civil penalty of $16.4 million, the most the government can impose. The fine recommended Monday escalates the confrontation between Toyota and LaHood, who initially praised the carmaker for its handling of recalls the company attributed to faulty accelerator pedals.
The fine was announced the week after Toyota reported U.S. sales rose 41 percent in March with the help of no-interest loans and discount leases, signaling the company may be recovering from recalls of about more than 8 million vehicles worldwide for flaws that may cause unintended acceleration..
The Transportation Department's action showed “safety matters and they're going to be tough as nails,” Joan Claybrook, a former head of the National Highway Traffic Safety Administration, said in an interview. “That's very appropriate. They caught Toyota red-handed.”
The Japanese automaker waited at least four months before telling the agency that accelerator pedals might stick, LaHood said in a statement. Companies have five business days to report safety defects, the agency said.
`We now have proof'
“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”
Toyota hadn't received NHTSA's letter on the fine, according to an e-mailed statement Monday from the company's North American sales unit.
“We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” the company said, without saying whether it will exercise its right to dispute the fine.
LaHood has increasingly faulted Toyota's response since Jan. 28, when he said he had “no criticism” of the company and Toyota “did what they're supposed to do.”
Toyota in January recalled about 2.3 million U.S. cars and trucks for sticky accelerator pedals.
The penalty could “very possibly” be the first of multiple fines, said Claybrook, who is former president of Public Citizen, a Washington-based consumer advocacy group.
NHTSA cited documents obtained from Toyota in saying the company knew about the pedal defect since at least Sept. 29.
“NHTSA wants to make it clear that it was Toyota that was at fault and the agency did its best within the system,” said Alan Baum, an auto industry analyst at Baum & Associates in West Bloomfield, Michigan. He said Toyota probably won't contest the fine, “since they've essentially said they screwed up.”
‘Firepower to attorneys'
At a February congressional hearing, Toyota's U.S. sales chief Jim Lentz told lawmakers “we failed to promptly analyze and respond to information emerging from Europe and in the United States” about the sticky pedals.
Toyota has two weeks to accept or contest the proposed fine, Olivia Alair, a Transportation Department spokeswoman, said in an e-mail. If Toyota contests the penalty and a settlement isn't reached, “it would go to court,” she said.
“One of the biggest reasons to fight the fine would be to defend themselves from the language used by the Department of Transportation,” Ed Kim, an industry analyst for forecaster AutoPacific Inc. in Tustin, California, said in an interview. “That would seem to provide some firepower to attorneys that are suing the company.”
NHTSA's largest civil penalty was $1 million against General Motors in 2004 to settle charges that the company failed to conduct a timely recall involving windshield-wiper failures in about 581,000 vehicles.
‘Free Publicity'
“Both industry and government failed the test of putting the safety of America's drivers first” in the Toyota recalls, Representative Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, one of three panels that has held hearings on Toyota actions, said in a statement Monday.
The proposed NHTSA fine may help consumers suing Toyota over sudden acceleration, said Houston attorney W. Mark Lanier, who has filed class-action and individual lawsuits related to the claims.
“Toyota is spending millions of dollars on public relations right now to sway consumers or a potential jury pool,” Lanier said in a phone interview. The fine “is free publicity that counters Toyota.” The penalty probably couldn't be introduced in court because “it's not like a criminal finding in that there was due process,” he said.
Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents, according to data compiled by Bloomberg. Lanier has filed two personal injury cases and is considering filing about 100 others, including a dozen involving deaths, he said.
Sunday, April 4, 2010
Lexus surges in March, passes Mercedes in '10 U.S. luxury race
Lexus -- the leading luxury-auto brand in the United States for the past decade -- used a 42 percent gain in March to inch ahead of rival Mercedes-Benz after the first quarter.
Lexus sold 20,219 vehicles last month and 49,523 for the year's first three months. Mercedes reported sales of 20,023 cars and SUVs for March, a 28 percent increase from a year earlier, and 49,229 for the quarter. The Mercedes tallies exclude Sprinter vans formerly sold by Dodge -- 1,337 of them in the first quarter.
Mercedes, helped by its revamped E-class sedan, had moved ahead of Lexus and BMW through 2010's first two months. The BMW brand posted a 3 percent increase in March to 18,060 and finished the quarter at 46,323.
Industrywide sales rose 24 percent in March, to push the market 16 percent ahead of a depressed 2009 after the first three months.
“The luxury market is doing pretty well,” said Jessica Caldwell, a senior analyst at Edmunds.com, a provider of industry data. “We assumed when times were tough that luxury sales would fall. It has held its share of the market.”
Toyota Motor Corp.'s Lexus benefited from a tripling of sales of its redesigned GX mid-size SUV, as well as increases of 31 percent for the RX SUV and 29 percent for the IS car.
At Mercedes, sales of the E class more than doubled while the C class, its highest-volume model, rose 20 percent.
Not holding back
Mercedes expects more increases from the E class as it adds a convertible version in May and a diesel E-350 in October, said Ernst Lieb, CEO of the brand's U.S. unit.
“We're not holding back,” he said. “We have newer products than some of our competitors. We're going after whatever we can get.”
BMW intends to pass Lexus for the No. 1 rank in the United States by 2012 on the strength of new models, Jim O'Donnell, president of the North American unit, said Wednesday.
In March, BMW spent an average of $4,797 a vehicle on incentives, compared with $3,527 for Mercedes and $1,778 for Lexus, according to Edmunds.com.
“BMW has a lot of good lease deals,” Caldwell said. “They're trying to hold onto the market.” The brand's U.S. share has fallen a tenth of a point to 1.8 percent this year. Sales have risen 8 percent.
Rest of the pack
Among the March results for other luxury brands:
• General Motor Co.'s Cadillac reported a 42 percent increase to 11,639 as sales of the redesigned SRX crossover SUV surged more than sixfold. Cadillac spent a per-vehicle average of $4,307 on incentives, third among luxury brands behind BMW and Ford Motor Co.'s Lincoln, according to Edmunds.com.
• Honda Motor Co.'s Acura brand gained 30 percent to 11,722 cars and SUVs.
• Lincoln sales rose 19 percent to 8,693.
• Nissan Motor Co.'s Infiniti sold 9,942 vehicles, a 37 percent increase from a year earlier and the brand's best month since August 2008.
• Volkswagen AG's Audi sold 8,589 vehicles, up 34 percent.
• Tata Motors Ltd.'s Land Rover increased 21 percent to 2,726 vehicles, while Jaguar dropped 16 percent to 983.
Lexus sold 20,219 vehicles last month and 49,523 for the year's first three months. Mercedes reported sales of 20,023 cars and SUVs for March, a 28 percent increase from a year earlier, and 49,229 for the quarter. The Mercedes tallies exclude Sprinter vans formerly sold by Dodge -- 1,337 of them in the first quarter.
Mercedes, helped by its revamped E-class sedan, had moved ahead of Lexus and BMW through 2010's first two months. The BMW brand posted a 3 percent increase in March to 18,060 and finished the quarter at 46,323.
Industrywide sales rose 24 percent in March, to push the market 16 percent ahead of a depressed 2009 after the first three months.
“The luxury market is doing pretty well,” said Jessica Caldwell, a senior analyst at Edmunds.com, a provider of industry data. “We assumed when times were tough that luxury sales would fall. It has held its share of the market.”
Toyota Motor Corp.'s Lexus benefited from a tripling of sales of its redesigned GX mid-size SUV, as well as increases of 31 percent for the RX SUV and 29 percent for the IS car.
At Mercedes, sales of the E class more than doubled while the C class, its highest-volume model, rose 20 percent.
Not holding back
Mercedes expects more increases from the E class as it adds a convertible version in May and a diesel E-350 in October, said Ernst Lieb, CEO of the brand's U.S. unit.
“We're not holding back,” he said. “We have newer products than some of our competitors. We're going after whatever we can get.”
BMW intends to pass Lexus for the No. 1 rank in the United States by 2012 on the strength of new models, Jim O'Donnell, president of the North American unit, said Wednesday.
In March, BMW spent an average of $4,797 a vehicle on incentives, compared with $3,527 for Mercedes and $1,778 for Lexus, according to Edmunds.com.
“BMW has a lot of good lease deals,” Caldwell said. “They're trying to hold onto the market.” The brand's U.S. share has fallen a tenth of a point to 1.8 percent this year. Sales have risen 8 percent.
Rest of the pack
Among the March results for other luxury brands:
• General Motor Co.'s Cadillac reported a 42 percent increase to 11,639 as sales of the redesigned SRX crossover SUV surged more than sixfold. Cadillac spent a per-vehicle average of $4,307 on incentives, third among luxury brands behind BMW and Ford Motor Co.'s Lincoln, according to Edmunds.com.
• Honda Motor Co.'s Acura brand gained 30 percent to 11,722 cars and SUVs.
• Lincoln sales rose 19 percent to 8,693.
• Nissan Motor Co.'s Infiniti sold 9,942 vehicles, a 37 percent increase from a year earlier and the brand's best month since August 2008.
• Volkswagen AG's Audi sold 8,589 vehicles, up 34 percent.
• Tata Motors Ltd.'s Land Rover increased 21 percent to 2,726 vehicles, while Jaguar dropped 16 percent to 983.
Saturday, April 3, 2010
More vehicles being scrapped than purchased, R.L. Polk says
More Americans ditched older cars than bought new ones during a 15-month period ending last September, according to a report released this week by R.L. Polk & Co.
Polk found that more than 14.8 million cars and light trucks were scrapped in the U.S., compared with new vehicle registrations of just more than 13.6 million.
The tally, taken between July 1, 2008, and Sept. 30, 2009, includes thousands of cars demolished during last year's cash-for-clunkers program.
Scrapping statistics are viewed in the industry as a bellwether for future gains in vehicle sales. The higher the rate of scrapping, the more likely that the demand for new and used vehicles will rise -- especially if the economy is improving.
This is the first time Polk's analysis covered a 15-month period, in large part to accommodate the clunkers program. Cash for clunkers gave consumers up to $4,500 in rebates on a new vehicle if the trade-in and new purchase met certain requirements. The program ran from July 27 through Aug. 25, 2009, and was funded with $3 billion in taxpayer funds.
Polk did not compile figures from comparable 15-month periods, but the research company said light-vehicle scrap rates have increased in the past five years.
Higher scrap rates
As of October 2009, the scrap rate was 6.1 percent of the total U.S. light-vehicle fleet, compared with 4.3 percent in July 2005.
Polk, which tracks the ability of automakers to retain customers, expects current trends for scrappage and vehicle ownership to continue for at least another year. The assessment assumes a general upward trend for vehicle scrappage rates as high volumes of older vehicles continue to retire from the U.S. fleet, according to the report.
The average age for all light vehicles during the 15-month period is 10.2 years, a trend supported by Polk's research that consumers are keeping cars and trucks longer. As of September 2009, the average length of ownership for a new or used vehicle was 49.9 months, up from 45 months at the same point a year earlier.
The economy, limited financing and leasing options, extended warranty offers and improved vehicle quality support the longevity trend, according to Polk. The company said this could provide increased business for various segments of the industry.
“As vehicles age and consumers continue to hold onto them longer, there are significant opportunities for repair services and parts demand for the aftermarket as vehicles are falling out of warranty as they age,” Mark Seng, Polk vice president of sales and client services, said in a statement.
Thursday, April 1, 2010
Ford, Toyota soar as incentives fuel 24% industry gain
General Motors Co. posted a 21 percent increase in March U.S. sales while Toyota Motor Corp. and Ford Motor Co. rose more than 40 percent as higher incentives industrywide helped lure buyers to showrooms.
Ford, which advanced for the sixth straight month, was outsold by Toyota and GM in March after leading the industry in February. Toyota's 41 percent gain was aided by richer incentives aimed at luring buyers after its recall crisis.
"Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand,” said Jessica Caldwell, director of industry analysis at Edmunds.com. “April will be a good indicator of real consumer demand."
Overall U.S. sales rose 24 percent from the depressed levels of March 2009, when automakers were battling the weakest demand in almost three decades. The seasonally adjusted annual sales rate of 11.7 million was the year's highest and the second strongest since August, when the U.S. cash-for-clunkers campaign lifted demand
Chrysler Group fell 8 percent after posting its first monthly gain in more than two years in February. Chrysler, No. 5 in U.S. sales through February, was outsold for the second time this year by Nissan North America, which soared 43 percent.
The Hyundai brand's 15 percent increase was below analysts' forecasts of a gain of more than 30 percent.
American Honda was up 22 percent, in line with predictions. Subaru, the only automaker to post U.S. sales gains in each of the past two years, rose 46 percent.
Last month's SAAR was below the 12 million average forecast of eight analysts compiled by Bloomberg. Still, it was the fifth straight gain from a year earlier. The March 2009 pace was 9.3 million, according to Automotive News data.
Incentive discrepancy
For the first time on record, GM's per-unit incentives were below the industry average, said Susan Docherty, vice president of U.S. marketing. GM spiffs totaled $2,800 per vehicle, down nearly $2,000 from March 2009, she said. The industry averaged $2,910.
GM incentives ranked fourth highest, behind Ford Motor, Chrysler and “an import competitor,” she said.
GM, Ford and other automakers use J.D. Power and Associates data to measure incentives, Docherty said.
But Edmunds.com's incentive measure puts GM first among all automakers with $3,519 spent per vehicle last month. That compares with an industry average of $2,742, the consumer auto site says.
Both Edmunds.com and J.D. Power measure customer cash, interest and lease incentives, along with cash to dealers for specific vehicles. But J.D. Power also includes cash that automakers give dealers for meeting sales volume objectives.
Still, that shouldn't make J.D. Power's per-vehicle numbers lower for GM, said Edmunds.com's Caldwell.
“We've been doing the same thing for years, and it's weird that we're coming to a point where all of the sudden we're showing a huge discrepancy,” she said.
GM retained Chevrolet, Cadillac, Buick and GMC brands as part of its government-backed restructuring, and is selling or closing Saab, Hummer, Saturn and Pontiac, whose sales plummeted 88 percent in March. GM released results for the four remaining lines, which each posted gains of more than 40 percent, almost an hour before the complete tally.
“They haven't increased consideration for the remaining brands,” said Jim Hall, principal of the consulting firm 2953 Analytics Inc. in suburban Detroit. “Killing brands does not increase the consideration for the brands you're continuing. Obviously, they have to do that.”
Industry sales that failed to match analysts' estimates underscored the market's contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009's tally of 10.4 million was the lowest in 27 years.
Automakers were buoyed in March by rising consumer confidence and spring weather after February blizzards in the Northeast. The Conference Board's confidence index rose to 52.5 from 46.4 a month earlier as gloom over job prospects began to lift.
On March 2, Toyota began offering incentives such as subsidized leases after the automaker recalled more than 8 million vehicles globally to fix defects linked to unintended acceleration and to adjust brakes.
Competitors responded with their own discounts while avoiding the spending levels the industry rang up in March 2009 as GM and Chrysler added incentives ahead of their bankruptcy filings. Incentives are down 14 percent from a year earlier, according to Edmunds.com.
Ford, which advanced for the sixth straight month, was outsold by Toyota and GM in March after leading the industry in February. Toyota's 41 percent gain was aided by richer incentives aimed at luring buyers after its recall crisis.
"Retail sales were really artificially inflated by huge incentives going on in the marketplace and did not reflect true demand,” said Jessica Caldwell, director of industry analysis at Edmunds.com. “April will be a good indicator of real consumer demand."
Overall U.S. sales rose 24 percent from the depressed levels of March 2009, when automakers were battling the weakest demand in almost three decades. The seasonally adjusted annual sales rate of 11.7 million was the year's highest and the second strongest since August, when the U.S. cash-for-clunkers campaign lifted demand
Chrysler Group fell 8 percent after posting its first monthly gain in more than two years in February. Chrysler, No. 5 in U.S. sales through February, was outsold for the second time this year by Nissan North America, which soared 43 percent.
The Hyundai brand's 15 percent increase was below analysts' forecasts of a gain of more than 30 percent.
American Honda was up 22 percent, in line with predictions. Subaru, the only automaker to post U.S. sales gains in each of the past two years, rose 46 percent.
Last month's SAAR was below the 12 million average forecast of eight analysts compiled by Bloomberg. Still, it was the fifth straight gain from a year earlier. The March 2009 pace was 9.3 million, according to Automotive News data.
Incentive discrepancy
For the first time on record, GM's per-unit incentives were below the industry average, said Susan Docherty, vice president of U.S. marketing. GM spiffs totaled $2,800 per vehicle, down nearly $2,000 from March 2009, she said. The industry averaged $2,910.
GM incentives ranked fourth highest, behind Ford Motor, Chrysler and “an import competitor,” she said.
GM, Ford and other automakers use J.D. Power and Associates data to measure incentives, Docherty said.
But Edmunds.com's incentive measure puts GM first among all automakers with $3,519 spent per vehicle last month. That compares with an industry average of $2,742, the consumer auto site says.
Both Edmunds.com and J.D. Power measure customer cash, interest and lease incentives, along with cash to dealers for specific vehicles. But J.D. Power also includes cash that automakers give dealers for meeting sales volume objectives.
Still, that shouldn't make J.D. Power's per-vehicle numbers lower for GM, said Edmunds.com's Caldwell.
“We've been doing the same thing for years, and it's weird that we're coming to a point where all of the sudden we're showing a huge discrepancy,” she said.
GM retained Chevrolet, Cadillac, Buick and GMC brands as part of its government-backed restructuring, and is selling or closing Saab, Hummer, Saturn and Pontiac, whose sales plummeted 88 percent in March. GM released results for the four remaining lines, which each posted gains of more than 40 percent, almost an hour before the complete tally.
“They haven't increased consideration for the remaining brands,” said Jim Hall, principal of the consulting firm 2953 Analytics Inc. in suburban Detroit. “Killing brands does not increase the consideration for the brands you're continuing. Obviously, they have to do that.”
Industry sales that failed to match analysts' estimates underscored the market's contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009's tally of 10.4 million was the lowest in 27 years.
Automakers were buoyed in March by rising consumer confidence and spring weather after February blizzards in the Northeast. The Conference Board's confidence index rose to 52.5 from 46.4 a month earlier as gloom over job prospects began to lift.
On March 2, Toyota began offering incentives such as subsidized leases after the automaker recalled more than 8 million vehicles globally to fix defects linked to unintended acceleration and to adjust brakes.
Competitors responded with their own discounts while avoiding the spending levels the industry rang up in March 2009 as GM and Chrysler added incentives ahead of their bankruptcy filings. Incentives are down 14 percent from a year earlier, according to Edmunds.com.
Subscribe to:
Posts (Atom)
