- The Washington Times - Thursday, January 28, 2010

Toyota extended to China and Europe its recall of vehicles with malfunctioning gas-pedal systems, deepening the massive recalls that threaten to undermine the reputation of the world’s top automaker as a manufacturer of safe, durable vehicles.

The announcement Thursday came after the company earlier this week said it was suspending U.S. sales and production of eight models — including the Camry, America’s top-selling car — to fix faulty pedal systems that could stick and cause acceleration without warning.

The supplier of the gas-pedal systems said Thursday it is shipping newly designed replacement parts to Toyota factories for future cars and trucks.

CTS Corp., the supplier, also is working with the Japan-based Toyota to develop a fix for millions of Toyota vehicles currently on the road.

Vinod M. Khilnani, the chief executive of CTS, said in an investor call that “we are working diligently and collaboratively with Toyota to find a field fix and to put additional capacity in place to manufacture the new pedal and support the recall.”

Mr. Khilnani said the problem was due to pedals that are slow to depress or release when drivers try to accelerate or slow down. He said the only cases when the pedals could get stuck was when they were used in conditions that go “beyond Toyota specifications.” Mr. Khilnani did not elaborate what those conditions are.

He also distanced CTS, based in Elkhart, Ind., from reports of problems with Toyota models accelerating suddenly. He said CTS knows of no injuries or deaths connected to the slow-pedal problem. “The slow-pedal-return phenomenon is clearly unrelated to the sudden, unintended acceleration issue,” he said.

Toyota Motor Corp. also announced an additional recall of 1.09 million vehicles in the United States covering five models — 2008-10 Highlander, 2009-10 Corolla, 2009-10 Venza, 2009-10 Matrix. The 2009-10 Pontiac Vibe also is being recalled.

Toyota dealers across the United States have been swamped with calls from concerned drivers but had few answers as the recalls snowballed.

A week before the sales suspension, Toyota issued a U.S. recall for the same eight models, affecting 2.3 million vehicles. In late 2009 it recalled 4.2 million vehicles amid concerns that floor mats could bend across gas pedals, causing sudden acceleration.

Toyota has insisted the problem of sudden, uncontrolled acceleration was “rare and infrequent” and said dealers should deal with customers “on a case-by-case basis.” But drivers of Toyotas and those who share the road with them were left with uncertainty.

The automaker has informed Chinese authorities it will start a recall in February for 75,500 RAV4 vehicles that were manufactured in China between March 2009 and January 2010, said Toyota spokeswoman Ririko Takeuchi.

They use the same problem parts in accelerators that caused the recent spate of massive recalls in the United States, she said.

In Europe, Toyota is still unsure how many vehicles are affected by the problem with pedals that are manufactured by CTS.

Colin Hensley, a manager at the carmaker’s European operations, said the company is checking how many European models use the parts involved in the latest U.S. recall.

“Toyota is making every effort to address this situation for our customers as quickly as possible,” its European arm said in a statement.

The sales suspension in the United States —Toyota’s biggest market — could endanger the company’s fledgling earnings recovery. Toyota only returned to the black for the July-September quarter with net income of $241 million after three straight losing quarters.

“It is still uncertain how this recall problem will affect Toyota’s profits, but investors are worried it could really pressure the company’s overall earnings,” said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd.

Fitch Ratings warned Thursday the massive recalls and sales suspension could dent Toyota’s recovery, especially in the vital U.S. market.

Fitch placed Toyota’s credit rating of ‘A+’ on watch negative, meaning the rating could be downgraded. That could increase the interest rate Toyota pays on any debt.

“The recalls and sales and production suspension cast a negative light on Toyota’s reputation for quality, just as the company emerges from an unprecedented downturn in the auto industry,” Fitch said in a statement.

Toyota spokesman Hideaki Homma said Toyota decided to recall more vehicles in the United States because of the risk of accelerator pedals becoming stuck in floor mats.

Toyota said in a statement it will fix or replace the accelerator pedals for the recalled vehicles to avoid the risk of floor-mat entrapment. The company said it will replace floor mats as well for the latest recalled vehicles.

In March of 2007, Toyota started getting reports of gas pedals being slow to rise after being depressed for acceleration. Engineers fixed the problem in the Tundra pickup early in 2008.

But troubles persisted in other models, eventually leading to last week’s U.S. recall and the plans to suspend sales and shut down of six factories while Toyota tries to fix the problems.

Associated Press writers Yuri Kageyama and Shino Yuasa in Tokyo, Aoife White in Brussels and Stephen Manning in Washington contributed to this report.

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