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Fuzzy findings, media manipulation, and tort lawyers scare the public and destroy millions in shareholder and resale value, writes Ed Wallace
By Ed Wallace
Following my own advice to go to the source, I called a few respected local Toyota (TM) dealers in the Dallas area to ask a simple question: "In the past 10 years, how many Toyotas have come into your service department with the complaint of unintended acceleration?" The answer I got again and again? "None." And they would remember: For new-car dealers across America, unintended acceleration is the most serious complaint a customer can make. Not because the situation exists as represented but because, as any auto industry insider knows, this condition can invoke a media firestorm whether it happened or not. The newest story is that Toyota products are falling in resale value as a result of this issue. If true, this proves that our ability to remember widely reported, identical automotive complaints from the past goes down our collective memory hole intact. Ask anyone who dealt in luxury cars what happened when the Audi 5000 unintended acceleration case panicked drivers in the mid-1980s. Owners of those vehicles rushed into competing dealerships trying to unload their automobiles, but retail sales for used Audis, already poor, had dropped off to nothing. Even wholesalers wouldn't buy them because they couldn't resell them. Audi dealers didn't want them. A typical bid for a one- or two-year-old Audi 5000 that originally sold for close to $30,000 often came in at $3,500. Now, that's a serious hit to resale value.
A Trip Down Audi Memory Lane
What's ominous is that the Audi 5000 case seems to have set the example for how stories concerning serious defects in automobiles would be covered in the future.
the brakes are always found to be functioning just fine." Again from the book. It should also be noted that Toyota looked into the complaints covering brakes on its hybrid electric Prius. He said his company had investigated these incidents and could find nothing wrong with their vehicles. like other new cars. The Audi case seems to have foreshadowed a scenario occurring now with Toyota. There was a tidal wave of calls for the National Highway Traffic Safety Administration to recall 200. like the Audis'. While no real problem was found. they had drilled a hole in the vehicle's transmission and pumped extreme high-pressure air into it. Never before had car engines been built around such sophisticated computers. and there's little doubt that they sincerely believed what they said. Nobody believed him.000 Audis. too. the car's electronics were numbered among the lead suspects. and came up with a solution. As for the Toyotas' electronics.Yes. to regulate emissions. This from Peter Huber's book. The audience and all of America came to believe that this Audi with two black marks against it was possessed. there were people on TV (and in newspaper articles) who swore that their Audis. Junk Science in the Courtroom: "The Audis. That does not alter the fact they were mistaken: In time. it was rigged. had come packed with sophisticated electronics to maintain idle. they brought in William Rosenbluth to prove that Audis were defective on camera. . "We took a car that had already been involved in two suddenacceleration incidents and. which had the effect of moving the gas pedal down without the driver pressing it. and massive engineering studies were done. the company can find no issue at all." and no causative defect was ever found. an Audi official appeared on that broadcast. had become possessed and uncontrollable. "It Didn't Start with Dateline NBC:" Off camera. And after the accident. As 60 Minutes correspondent Ed Bradley said. So from the beginning. without his foot on the gas pedals. In reality. our government painstakingly tested every "possessed car. Contrast that with Toyota's admission that it examined complaints on this issue. But what the viewers didn't see was also revealed in Walter Olson's column. Always. Toyota did issue a recall to update the computer codes. did find a problem with gas pedals made by CTS. Junk Science: "« and 30 million viewers saw it with their own eyes. As you'd expect. and to operate cruise controls. Turns out the Audi official had been correct: The cars did not have any known defect." Sound familiar? In the 60 Minutes piece on Audis' unintended acceleration that put this story over the top. showed it could do this. Galileo's Revenge." What they saw was the gas pedal apparently moving under its own power.
if one clicked on the lower tab showing accidents tabulated according to where the tires were built. When Lea Thompson with Dateline NBC lifted up a Firestone tire's torn and separated tread for the camera. where the resulting tread separation would start. Those stories certainly got broad and intense coverage. Goodyear's accompanying photo showed a chronically underinflated tire's abnormally worn edges. that was an honest mistake. There was a problem with that rush to judgment: NHTSA's database contained a corrupt sort command. Anyone who went there could easily find Goodyear's (GT) explicit warning: If you drove on Goodyear tires that were seriously underinflated. because I found it and reported it to NHTSA.) factory that were substandard. on the other hand. remember the story in which a Ford Expedition with only 800 miles and Wilderness tires on it rolled over? It never happened²except in NHTSA's database. it juxtaposed the data²which then showed faulty tires being built in one plant when in reality those tires had been manufactured elsewhere. as did the chilling videos of the aftermath. That was also the week the Ford-Firestone story went away. But against that film. Ford brought scientific evidence that the Crown Vic didn't just meet federal standards . Old tires without treads often fail. Firestone's Firestorm In some ways this case is little different from the Ford-Firestone fiasco of a decade ago. Another Overstated Case Shortly after the Ford-Firestone story left the headlines came the story of the exploding Crown Victorias. One video. the exact same thing would happen to you. the media countered and claimed to have found faulty Firestone tires built at other plants. Still.And just for the record: Many antilock brake systems feel as if they are skipping or failing to take hold quickly when engaged suddenly on bumpy roads. Firestone. and the City of Dallas considered suing Ford Motor (F) for failing to build a safer car. A number of incidents happened in North Texas (and across the nation) in which that car's gas tanks exploded when rear-ended by speeding drivers. But even that did not slow this story down. created by a law firm working on these cases and given to TV stations. NHTSA corrected it within minutes and informed the media of the correction on its Web site. We lost several respected police officers to such fires during traffic stops. few viewers noticed that particular tire had almost no tread left. As an example. showed a static Crown Vic being plowed into at a high rate of speed and bursting into flames. That glitch also transposed all sorts of data about accidents reported. admitted finding a small batch of tires from its Decatur (Ill. I know. It turned out that on their Microsoft Excel spreadsheet. Almost unreported during the media coverage of that event were the easily available consumer warnings on the Goodyear Tire Web site.
" That day Editorial Director Irwin Landau and Technical Director David Pittle were present at the track. was going uncommonly fast. for this type of collision. In some cases the estimated impact speed exceeded 80 miles an hour. No car.for rear-end collisions. Of course. the Crown Vic was substantially more robust than most vehicles of its class. and rated the vehicle "5 plus.000 Mercedes S Class. Consumer Reports' raw video and its test drivers' reports were released in the mid-1990s when Suzuki (SZKMF) sued Consumers Union. 20. drivers must either move over one lane or slow to 20 miles an hour less than the posted limit as they pass the emergency vehicle. In fact. at CU's test track on Apr. When approaching an emergency vehicle with lights flashing on the shoulder. Sales of the Suzuki Samurai fell from 83. drunks driving in the middle of the night aren't generally demonstrating mastery of the law." David Pittle took the wheel himself nine times and managed to lift the wheels off the ground once. But the public never heard the worst: When it sued because Consumer Reports continued to disparage the company. Nothing changed. driver Kevin Sheehan took the Suzuki Samurai through its paces 16 times. Suzuki suffered serious damages from the exposé. so reporters could see just how duplicitous those tests were. can stand up to that much kinetic energy. According to that evidence. I will. No real problems. That law is widely ignored today. Sheehan wrote in his notes: "Easy to control « Never felt it would tip over. not even a $120. CU then changed the course setup²and would still have trouble getting the Samurai to show a propensity to roll. Somehow that became a nonissue: Consumer Reports proceeded to warn the American public that this was one very dangerous vehicle. at least one at 55 miles an hour. often drunk in the middle of the night. driver Richard Small took over and performed 21 runs. Suzuki made copies of actual CU testing video available to the media. it exceeded them. destroying not just a vehicle but nearly its manufacturer. . "If you can't find someone to roll this car. some runs going in excess of 50 miles an hour. Texas finally passed a law to cut down on this particular problem. The magazine's "investigation" of rollover problems it "found" while reviewing the Suzuki Samurai focused intense media coverage on a nonevent." At that point. one eyewitness claimed to have heard Landau tell Sheehan.314 units to just 5. The Auto Industry Hall of Shame Automotive history should have a Hall of Infamy for scandals like this next one²the 1988 story involving Consumer Reports. And according to the lawsuit. In 2003.031 after the Consumer Reports story ran. All of those exploding gas tanks did actually turn out to have one thing in common: Every individual who hit those Crown Victorias. without ever once lifting the vehicle's wheels off the ground. 1988.
but whoever can sway the public's mind the best. Neither do the final. and driving too fast in hot weather. we seem to be letting courtroom-worthy theatrics sway our emotions. In 2004. Firestone is remembered as the world's worst manufacturer of tires. but it's not true. They believe the Suzuki Samurai rolled over easily. ostensibly in the name of protecting the public. but that was far from the truth: In the vast majority of Firestones' tread-loss incidents. and NHTSA refused to do so. These stories are not to be confused with legitimate automotive safety recalls. The Scorecard So what's the net effect of this situation? First. But the harm these ill-researched stories do to car owners. when all evidence shows that the other driver's extreme high-speed impact was actually to blame. because it met all government standards. Exactly the conditions that cause all tires to lose their treads. no one remembers any of that. So was Ford when it maintained that Crown Vics could actually take a worse rear-end impact than virtually any other car on the road. To this day the public believes there might have been a problem with the Audi 5000. virtually every year since NHTSA's creation. The . NHTSA still refused to recall the Suzuki. not loud enough to overcome the initial bad impression. vindicating facts²at least. They investigated the complaints. the culprits were old tires. we no longer let our logic be steered by engineering and science. Now it's Toyota's turn. like the havoc they wreak on automakers. Ignored in all of this is the financial damage done. Instead. improper inflation. Suzuki officials' pleas that their Samurai was incredibly stable fell on deaf ears²but it was. found a number of small problems and said that's the only problems they could find.CU demanded that NHTSA recall those vehicles as inherently unsafe. and that's not true either. It's not the true facts of the case that win the day. Yet as of that date NHTSA had done so not once. which happen on a regular basis. But neither side backed down from their previous position. The unfortunate owners who'd already bought these unjustly maligned vehicles took serious losses on their resale value. They think Ford built an unsafe Crown Victoria. never makes the news. The Audi official who said his company had investigated those complaints and found nothing was telling the truth. Suzuki and CU agreed to drop the lawsuit. Today. declaring mutual respect for each other. Consumer Reports has demanded that a vehicle be recalled (because CU testing showed it unsafe). And this is a government agency that loves to recall cars. As a NHTSA spokesperson told me at the time. and moved relatively fast to fix those issues.
The likelihood of that happening is low. and hosts the top-rated talk show Wheels Saturdays from 8 a. Loeb Foundation. He reviews new cars every Friday morning at 7:15 on Fox Four's Good Day. Loeb Award for business journalism. on 570 KLIF. Two weeks from now when they can be auctioned again. which covers prices of vehicles sold at regional wholesale auctions each week. contributes articles to BusinessWeek Online. a one-year-old Toyota Camry CE dropped $100 in value from Feb. 1 to Feb. About That Drop in Resale Value Oh. His column leads the Fort Worth Star-Telegram's "Sunday Drive" section. So the Honda Accord's reputation is intact. looking at a one-year-old base model Honda (HMC) Accord coupe in the same book. in a Nixonian moment. and R.m. the Nissan (NSANY) Altima seems to have gained a couple hundred dollars in value over the past month. However. And it had dropped $400 in average value from the Jan. it was discovered that they'd lied or covered up another defect. but it actually dropped more in value during this period. 8. the media took a so-called expert's word on what was happening to Toyota's wholesale prices. 1 to Feb. 8. we might have a different story. and is a member of the American Historical Society. Ed Wallace is a recipient of the the Gerald R. most recalled Toyotas are not being sold at auction right now until the updates are done. 11 book. we find it too dropped $100 in value from Feb. and about that drop in Toyotas' resale value? According to the National Auto Research Black Book. Looking up such things as the real-world wholesale auction figures seems to disprove the expert's position. Then again. and $500²or $100 more than the Camry²from the Jan. . 11 book. to 1 p. given by the G.m.only way Toyota could be in trouble now is if. For what it's worth. As they too often do.