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Fri, Jul 14, 2006 - Page 10 News List

Failure to issue a recall for Hilux Surf SUV haunts Toyota

NY TIMES NEWS SERVICE , TOKYO

An investigation by the Japanese police into an accident involving a Toyota sport utility vehicle (SUV) threatens to turn into an embarrassing scandal for the carmaker, which has built its success on a reputation for reliability.

On Tuesday, the police in Kumamoto, a small city in southern Japan, accused Toyota of failing to recall the type of SUV involved in an accident in 2004 that injured a family of five, despite having known for years of a fault in the steering assembly. Toyota started issuing recalls for the vehicle, called a Hilux Surf in Japan and a 4Runner in the US, two months after the accident.

Executives probed

The police asked local prosecutors to investigate three current and former executives in Toyota's head office for possible negligence in their decision not to issue the recall earlier, or to take other safety measures, said Akitoshi Takahashi, an officer in the city police traffic division.

He refused to identify the three, but said prosecutors were reviewing the request before deciding whether to file charges. The Kumamoto district prosecutor's office declined to comment.

Toyota discovered the design flaw in 1996, after customer complaints prompted an internal inquiry, but decided that the problem was not big enough to merit a recall, a spokesman, Paul Nolasco, said. It issued a statement on Tuesday saying it believed that the "three individuals concerned addressed the matter appropriately," but also promised to cooperate with the investigation and to strengthen its quality control.

Still, "Toyota views this as a serious case and a serious accusation," Nolasco added.

Surmountable

Analysts said the accusation was unlikely to grow into a big enough problem to derail Toyota's push to overtake General Motors and become the world's largest carmaker. But they said that the failure to disclose the flaw promptly and fix it was an embarrassing misstep for the company.

The analysts also recalled the troubles at another Japanese vehicle manufacturer, the truck and bus maker Mitsubishi Fuso. Its sales dropped two years ago after the authorities concluded that it had covered up a defective front axle that led to the death of a pedestrian.

"Mitsubishi's brand suffered for a long time as a result of the negative publicity," said Koichi Sugimoto, an analyst at Nomura Securities in Tokyo. "The risk for Toyota is that this incident becomes the same sort of public issue."

Sugimoto said he thought that Toyota would be more successful at damage control than Mitsubishi, partly because it had already recalled the vehicles in question and because Mitsubishi's problems were more widespread.

Still, Toyota's image has started to take a battering in Japan, where the police accusation was a top item in Wednesday's newspapers. The effect was particularly acute because Toyota has become a source of national pride here for its success in besting Detroit.

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