Presentation shows Toyota knew of tougher regulations

WASHINGTON – Toyota’s Washington executives warned new U.S. chief Yoshimi Inaba last summer that federal regulators were getting tougher on vehicle recalls, and said the $3-billion cash-for-clunkers plan was a “conquest bill for Toyota.”

In the same presentation given to congressional committees where Toyota’s staff said limiting a 2007 recall of floor mats was a $100-million “win” for the company, the staff warned Inaba that the National Highway Traffic Safety Administration had new powers to force recalls, including civil fines.

Earlier this month, NHTSA opened three investigations into Toyota’s handling of two recalls covering 5.6 million vehicles and other complaints of sudden acceleration. In theory, the agency could fine Toyota as much as $49 million if it found the company withheld information in all three cases, although NHTSA has never levied a fine greater than $1 million over a recall.

During his testimony Wednesday, Inaba said he did not recall the July 2009 meeting where he received the presentation, but that the claim of saving $100 million by limiting the 2007 recall to floor mats was “inconsistent” with Toyota’s principles.

“New strong civil and criminal penalties were implemented for knowingly hiding a defect/recall, or less-than-timely reporting,” executives said in the notes to the presentation. NHTSA’s new stance is “resulting in more investigations, and more forced recalls — even those that historically were not deemed ‘safety’ in nature.”

The presentation also touted the scrappage plan that would be launched the following month as a “conquest” for the company. Earlier versions of the plan would have limited sales to vehicles built in North America, giving Detroit automakers more of an advantage.

Instead, Toyota sold 120,530 vehicles under the plan, or 20% of the total, more than any other automaker.

In addition to those two issues, executives raised several others with Inaba, according to the full presentation obtained by the Free Press today.

The automaker worried that a mandate requiring its vehicles be able to burn 85% ethanol fuel could cost $400 million to $600 million a year, with costs rising in the future due to tougher emission standards. Detroit automakers have vowed that half of their new models by 2012 will have such capability, and President Barack Obama had made a campaign pledge to push for flex-fuel models.

Toyota was working to reduce California state rules requiring automakers to sell certain numbers of zero-emission and electric vehicles. It estimated those rules would cost $260 million in the 2009-11 model years, with unknown costs in the years ahead.