The fallout from Toyota's troubles
Toyota vehicles are displayed on the lot at Continental Toyota/Scion in Hodgkins, Ill.
TEXT OF INTERVIEW
Kai Ryssdal: Hard as this may be to believe for a company that's in the middle of a record recall and that has stopped making and selling a huge chunk of its product line, but things somehow managed to go from bad to worse for Toyota today. Talking to a House committee this morning, Transportation Secretary Ray LaHood said he knows exactly what Toyota owners ought to do with their cars.
RAY LAHOOD: Stop driving it, take it to a Toyota dealer, because they believe they have the fix for it.
It took about an hour for LaHood to come out and say he had misspoken. But by then the damage was done on a day when the damage seemed to keep on coming. Marketplace's Alisa Roth has been following the Toyota story for us. Hi Alisa.
ALISA ROTH: Hello.
Ryssdal: Other than the Transportation secretary changing his mind today about whether or not you ought to drive your Toyota, it has been a rough couple of days for this company.
ROTH: That is true. Today, there's a lot of speculation out there that unintended acceleration is actually caused by a problem with electronics in the vehicles. And it's credible enough that the Transportation Department is reportedly looking into this. There have been reports Toyota's woes go beyond accelerators. Some people are saying that 2010 Priuses are having trouble breaking on slippery or uneven surfaces. Japan has ordered Toyota to look into the problem, and there have been complaints about it in the U.S., too. And finally, Toyota is saying today that it will be giving money to dealers to help do the right thing with customers to pay for things like extended hours, free oil changes, things like that.
Ryssdal: Depending on the size of the deal, it's about what, $75,000 or so. But it does raise this question, how much is this going to cost the company in the long run? Do we know?
ROTH: Well, Toyota says it doesn't know. What we do know is that last month sales fell 16 percent. Goldman Sachs is saying that from now until March it's going to cost the company $1.6 billion in lost sales and recall fixing. I've seen some estimates that go as high as $2 billion. Obviously the two big questions are whether the fix really does solve the problem, and whether people are still willing to buy Toyotas when this is all done.
Ryssdal: Well, right, and we were talking about that at our morning meeting today. And nobody raised their hand when I said, hey, listen, are you going to buy one of these fixed cars? What about the general public?
ROTH: It's really hard to know. For starters, those recalled cars aren't actually for sale right now. When Toyota does start selling them again, it's pretty clear that it will have to offer some buyer incentives. That's something Toyota has rarely done in the past. One analyst I talked to today said that in other auto recalls it's taken a full generation, and I'm talking human generations here, not car generations, to recover. The other thing is that the media environment has changed completely since the last time we dealt with something like this. So if Congress holds all kinds of hearings about Toyota, we're going to know about it. And that's not something that would have happened in the past necessarily.
Ryssdal: Well, is it possible, though, that that media environment is contributing to us worrying about the wrong thing -- that we're all afraid that these eight million Toyotas are all going to go crazy at the same time.
ROTH: Absolutely. There is the point here that this recall is bigger in scope than a lot of past recalls. It involves multiple model years and multiple models. That said, like anything else, this is a bit of a numbers game. The National Highway Traffic Safety Administration, aka NHTSA, is saying that five people have died and only in two incidents that were a result of the floormat problem, and that it hasn't confirmed any deaths from the accelerator pedal problem. One safety group out there is saying that this has been an ongoing problem for Toyota, that over the last decade there have been more than 2,000 episodes involving unintended acceleration, that 19 people have died as a result. But not to minimize the hurt for those families, even if you take those higher numbers, it's really more likely that you'll get run over crossing the street than that your Toyota is going to go crazy on you.
Ryssdal: Alisa Roth at the Marketplace bureau in New York. Alisa, thanks a lot.
ROTH: You're welcome.