Last evening, U.S. Transportation Secretary Ray LaHood declared he’d be seeking the maximum penalty from Toyota. That’s $16.4m, because “they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” That’s the largest civil penalty the U.S. Department of Transportation has ever sought. According to Reuters, “previously, the largest fine was $1 million against General Motors Co for failing to promptly recall windshield wipers in 2002-2003 model vehicles.” One would think Toyota can pay that out of petty cash. But the matter has Toyota concerned. Plaintiff lawyers are rubbing their hands.
There is no better way to tell the impact and importance of a news item in Japan than taking the fever of the Nikkei wire. One mention a day = no worry. Two mentions = eyebrows go up. Multiple mentions = Red alert!
Today is such a day.
At 9:37 in Tokyo’s morning, The Nikkei [sub] remains sanguine: “Toyota treads water after U.S. fine” is the headline as ToMoCo’s stock is unimpressed and trades at round 3820 yen, higher than the previous day’s close. The matter receives a few lines on the wire, and The Nikkei goes on its merry business.
Half an hour later, Japan is worried. The stock drops to 3750. At 10:38, The Nikkei [sub] sees the matter worthy of a bigger story. “Toyota to face largest civil fine over recalls” is the headline of a lengthy article.
The surprise is buried deep in the article. Flabbergasting U.S. commentators which “expect Toyota to appeal the fine,” as Reuters put it, the Nikkei carries an official Toyota statement “that it is unlikely to lodge a protest against the penalty.” Toyota even ”understands that the NHTSA has taken a position on this recall.” Admission of guilt? Lawyers in the U.S. who are still awake and sober reach for their cells and call their partners: “Did you hear what the nips just said? We’ll be rolling in dough.”
Thirty minutes later, The Nikkei [sub] ticker spits out another Toyota message: “Toyota falls on U.S. fine, S Korea recall.” To add insult to LaHood’s injury, South Korea ordered the recall of 13,000 Toyotas.
Five minutes thereafter, 11:15, The Nikkei [sub] reports that the Japanese government chimes in. It’s taking a wait-and-see position. The U.S. move is ”based on laws in the United States, and therefore it is difficult for the Japanese government to make any direct comment,” says Japanese Economy, Trade and Industry Minister Masayuki Naoshima. That’s Japanese for “we have no idea of what to do, please get lost.”
11:29, the next Toyota News: The Prius was Toyota’s best selling car in the 2009 fiscal year, says The Nikkei [sub]. “So what?” says the market.
11:45, the next Toyota News. Detail on South Korea. Affected are 13,000 Lexus ES350, Camry and Camry Hybrid: Accelerator pedals are getting entrapped by floor mats again. The market is taking a lunch break.
Back from lunch, The Nikkei [sub] reports at 1:09 pm that Toyota is between a rock and a hard place: “Admitting to the charge could strengthen the cases of car owners suing the firm, while refuting it risks inflaming U.S. public opinion.” There are more than 100 lawsuits pending against Toyota. The Toyota stock goes down.
Later in the afternoon, with no other news on the ticker, the stock inches back up to 3775 Yen.
Rough day at Toyota. And a bright morning for lawyers in the US.
“Ms. Dingelfinger, get me some brochures for that 150 foot Sunseeker.”
“Yes, Sir. Gulfstream just called, and are we still interested in that G5?”
“Tell them we’ll call back.”
Bookmarks