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Toyota finds it’s mortal after all

February 5, 2010

Howes: Toyota finds it’s mortal after all


What will they drive up to the red carpet at this year’s Oscars?

Probably not a Toyota Prius, as in years past, that green machine-cum-technological tour de force that says "look at my driver" in a faintly superior way. Because the iconic gas-electric hybrid that defined a market segment is becoming ensnared in Toyota Motor Corp.’s widening global recall scandal, potentially imperiling the automaker’s standing with America’s intelligentsia and glitterati all at the same time.

Right before our eyes — in less time than two Detroit automakers rushed through bankruptcy and reset their competitive balance — mighty Toyota is proving itself to be just another boring global car company beset with its own clique of executives who believe their fawning press clippings and engineers who cut corners to achieve aggressive expansion goals.

Welcome to the club, fellas.

This expanding tale isn’t following the script. If this was happening to, say, General Motors Co., the reaction would be something like, "Of course, more crap from Detroit." But this is Toyota, the cornerstone of Japan Inc., the nobler car company whose braking and "sudden acceleration" problems give a whole new meaning to its "moving forward" tagline.

Mostly, the gaffes make Toyota the mortal maker of cars and trucks that have problems (its people have trouble acknowledging) instead of an invincible clarion of the future. That might pose a dilemma for the cool-and-thoughtful crowd that made the Prius as de rigeurwith the smart set as a bottle of Evian.

I mean, would Sandra Bullock roll up to the Oscars in the backseat of a Corolla? How many environmentally conscious bureaucrats in Washington would commute behind the wheels of pedestrian Chevy Aveos that don’t make much of a political statement?

It could get worse. Investigations in Japan and the United States of potentially faulty brakes in the 2010 Prius threaten to shake confidence in a suite of technologies — brake-by-wire and drive-by-wire, to name two — that underpin potentially broader market acceptance of hybrid and electric cars.

"This is going to affect the entire notion of hybrids, which must incorporate electronic throttle controls (and regenerative brake controls) in a manner that standard gas or diesel engines do not necessarily have to do," says Patrick Anderson, president of Anderson Economic Group. "I myself want a real, live cable or lever attached to both my accelerator and my brake."

How many other would-be hybrid owners will be asking themselves the same thing? What does that augur for Ford Motor Co.’s Fusion hybrid, blamed Thursday for "perceived brake failure" in a test performed by Consumer Reports magazine. And what about GM’s coming Chevrolet Volt, darling of its de facto owners in Congress?

For Toyota, the sullying of the pristine Prius is a blow likely to keep on giving. It’ll smudge its touted environmental cred. It could sow doubt among image-conscious customers appalled by the thought of driving a car whose well-publicized problems might question their judgment. It probably will slice residual values of used cars, undercutting a ready source of profits for Toyota’s finance company.

The damage won’t stop with Prius. An unassailable fact about Toyota-brand vehicles (as well as those from Lexus, Honda, Acura and Subaru, to name a few others) is that they retain the highest percentage of their original price after three years, according to Automotive Lease Guide’s Residual Value Awards.

Already, residual values of Toyota vehicles covered by recalls for sudden acceleration and floor mats are reported to be slipping. If congressional hearings next week reveal that deeper problems had been known for years but withheld from the buying public in the United States, the values could slip further and used Toyotas could prove difficult to sell.

A game-changer? Could be, depending on the paper trail, who did what when and for how long. But the parity foisted on Detroit in the dark days of December 2008 looks like it may be getting an added boost from an unlikely source — Toyota.

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