Earlier this week I spoke with Graham Ledger on the recent Toyota and GM recalls. So far this year, automakers have recalled about 9 million vehicles in the U.S. If that pace continues, the nation would break the record of 30.8 million recalled vehicles set in 2004.
Toyota’s recalls come as rival GM recalls 2.6 million small cars for defective ignition switches the company links to at least 13 deaths. Of those, 2.2 million are in the U.S. As that crisis unfolded, GM announced recalls of another 3.4 million U.S. vehicles.
Toyota’s latest recalls were announced before the company even developed specific repairs. They come two weeks after the Justice Department skewered the Japanese automaker for allegedly covering up problems that caused unintended acceleration in some cars starting in 2009. Toyota agreed to pay $1.2 billion to settle that case, but federal prosecutors can resurrect a wire fraud charge if the company fails to comply with the terms of the settlement.
The bigger picture is that Toyota’s cars are hardly unsafe. For the 2001-04 model years, for example, Toyota and Lexus accounted for five of the 12 models with the lowest death rates per driver year, and zero of the 12 with the highest. But the company is a multinational whose bottom line depends on a return to good publicity and putting legal troubles behind it in the huge U.S. market.
Is all this a triumph for safety? Or in the case of Toyota, have aggressive federal prosecutors seized on relatively minor missteps to stampede an image-conscious company into a big payout?
As for GM, the bankruptcy and government bailout complicate the feasibility of class action lawsuits.
While clearly the deaths linked to the GM defects are horrific and worthy of much furor. We’re also seeing a trend in enormous government crackdowns on the private sector with enormous fines that lead one to question the utility and purpose of such aggressive actions.