Toyota's troubles an example of consumer safety power

Thanks to the web, consumers complain more and sooner. It has forced regulators…

The Toronto Star
February 20, 2010

Toyota's troubles an example of consumer safety power
Because not so long ago, dangerous defects were kept secret, governments wouldn't act, and consumers were powerless
Tony Van Alphen and Dana Flavelle

Corvair.jpeg

Thank this car: Publicity about the Chevrolet Corvair’s handling problems in the 1960s sparked government action, forced automakers to take more responsibility, and made consumers aware.

To understand how vastly the making and consuming of automobiles has changed, you need to have Total Recall

In May 1972, California homemaker Lily Gray pulled out on to a highway in her new Ford Pinto when the engine failed and the car stalled. Another car behind the Pinto couldn't stop in time and crashed into it.

The Pinto's fuel tank, sandwiched between the bumper and rear axle, ruptured. Gasoline vapour mingled with the air in the interior and the car exploded into a fire.

Lily Gray died in a hospital emergency room later that day. The fire had charred and incinerated her entire body. A young teenager inside the car survived but his features had melted away. He spent a long time in operating rooms where surgeons would try to graft a new nose and ear.

Six years and many more charred bodies and exploding gas tanks later, the U.S. Department of Transportation concluded the Pinto's fuel system had a "safety related defect." Ford then recalled 1.5-million Pintos to reduce the chance of fires.

In August 2009, the floor mat of a Toyota Lexus sport utility vehicle jammed against the accelerator pedal and the auto ran out of control on another highway in California. It crashed and killed four people.

The fatal accident and widespread public exposure triggered a massive recall a few months later in the U.S. and Canada. Toyota's president Akio Toyoda apologized and expressed remorse.

Concerns about those floor mats prompted the reopening of other investigations into problems with accelerator pedals. It resulted in another recall and the biggest crisis in the company's history last month. Toyoda apologized again.

Although Toyota is receiving criticism for not getting to the bottom of the pedal problem and missing signs earlier, the urgent Toyota recalls do show times have changed.

Lily Gray never had what consumers have today.

High-profile recalls, which were virtually non-existant in Gray's day, have shown signs of climbing, although Transport Canada could not provide annual statistics this week.

Regulators are more active. Manufacturers are generally more responsive. Cars are more complex. And consumers are more powerful because of a simple tool – the Internet.

In the 1970s, someone with car trouble would have a lot of difficulty finding out if anyone else or even a few people had the same problem and whether the manufacturer should correct it. It could take a long time before a manufacturer even acknowledged it.

Not anymore. The advent of the World Wide Web in the 1990s and its growing use since then allows consumers to share information instantly. If a motorist has a problem, he or she can tap into a search engine and learn more.

"Consumers can connect through forums much easier, particularly on the Internet," says David Soberman, a professor at the University of Toronto's Rotman School of Management. "People are able to connect, share common problems and unite to do something about it. Flaws are publicized on forums and easy to access.

"Now, there is solidarity among consumers. That was not the case in the past. They feel a sense of common purpose and the company has to listen to them."

George Iny, president of the Automobile Protection Association, which represents consumer interests, said manufacturers could be certain 30 years ago that motorists never saw much information on safety problems with their products.

"But now, in less than 60 seconds, you can just ‘Google’ more information than the most privileged consumers would ever be able to get their hands on," he said.

Alan Middleton, a marketing professor at York University, says consumers armed with piles of information are more confident about pursuing a big manufacturer than a decade ago.

"We call it the ‘prosumer,’" he says. "We take charge of this far more now."

James Hodgson, a veteran Bay Street lawyer who specializes in product liability cases, said in addition to access to far more information, Canadians and Americans live in a "far more litigious society" than one or two decades ago.

"That is attributable to a combination of attitudes of consumers and lawyers," he said, noting that in addition to information on the Internet, consumers can find legal firms that specialize in auto class-action lawsuits there.

Consumer power has turned into class-action lawsuits which can cost a manufacturer hundreds of millions of dollars in damages and lost future sales.

Regardless of its pedal recall last month, Toyota faced several class-action lawsuits within days. Plaintiffs claimed that the company's actions on the recall endangered consumers' safety and reduced the value of their cars.

The power and actions of regulators have also come a long way from the early days of American consumer advocate Ralph Nader, who was one of the first people to publicly slam a car, the Chevrolet Corvair, in his sensational 1965 book Unsafe at Any Speed. Despite improvements, Nader is still critical of government oversight including the U.S. National Highway Traffic Safety Administration which he described as a "consulting firm" in the recent Toyota controversy rather than a public service that is supposed to save lives and force automakers to fix their vehicles.

Thanks to the web, consumers complain more and sooner. It has forced regulators including Transport Canada to act faster on investigations and forcing recalls.

Manufacturers are also paying more attention to even small safety defects and initiating recalls because of the financial fallout from resolving lawsuits and the lingering effect on sales.

One former veteran insider with a major manufacturer said that when his company ran into a defect, one of his guiding principles was to deal with it quickly and efficiently and limit any public relations damage.

"If it was true, the worst thing you (could) do was not admit it and let it drag on which could get you in more trouble," he said. "Admit it, cut your losses and move on."

Consumers may be responsible for a rise in recalls but there are other factors that are driving the trend.

Industry officials say autos are far more complex than a generation ago because of additional electronics that deal with numerous functions ranging from fuel systems to ignitions and communications.

"There's more opportunity for things to go wrong," said Tony Faria, a professor at the University of Windsor's Odette School of Business. "They can suffer from a defect that wasn't possible years ago. It's quite natural there are going to be more recalls."

Stephen Beatty, managing director for Toyota Canada, said he expects recalls and the size of them will increase in the near future because of government regulations to boost fuel efficiency and lower emissions.

Furthermore, industry officials note that manufacturers have gradually moved to the use of more common parts on different vehicles. It means that when there is a recall on a part, it will affect more vehicles.

Meanwhile, Iny of the automobile association said the recent Toyota recalls have gained far more media and public attention than normal notices because of how the company mishandled some of them in view of its past stellar reputation for quality and durability.

"My sense is that the persistence of interests in Toyota's recall has something to do with a sense of betrayal or of a trust broken rather than an objective measure of clear and present danger in Toyota automobiles," he said.

"Based on past experience, the buying public is very forgiving and has a relatively short memory. A year from now, the Toyota recalls will be consigned to history."

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