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Eversheds comment: Toyota recall puts safety first, but may add to reputational challenges

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    Commenting on news that Toyota is recalling 1.43 million vehicles over faulty airbags, Peter Shervington, expert in product liability at Eversheds, says:

    "A recall on this scale is a serious undertaking for any manufacturer – the direct costs of contacting vehicle owners, liaising with regulatory authorities around the world and disseminating information through dealer networks are substantial. In the long term, the impact on brand reputation and investor confidence can be much greater.

    “This is yet another in a long line of high profile recalls which Toyota has had to undertake in recent years. The list includes the notorious floormat/hybrid system issues which sparked three recalls in quick succession in 2009 and 2010. Further substantial recalls followed in subsequent years, including a recall of 1.75 million vehicles in October 2014 over fuel and brake system issues, and recall of over 4 million vehicles in 2015 over Takata airbags (understood to be unrelated to the latest events). The carmaker has also faced some challenging questions from the authorities - in late 2014, Toyota agreed to pay US authorities a record fine of $1.2 billion to resolve a criminal investigation into the extent to which it withheld information from safety regulators about unexpected acceleration issues.

    “Most major carmakers undertake recalls from time to time. Indeed, concerns over Takata airbags over the past year have triggered large scale recalls from many of Toyota’s rivals. Carmakers have strict legal obligations to identify, report and respond promptly to safety risks. In one sense, the number of recalls undertaken by Toyota in recent years may be seen as a sign of a business taking its responsibilities seriously and putting consumer safety first. In this case, Toyota is taking the action as a preventative measure in circumstances where no deaths or injuries have been linked to the issue. The move might also reflect a higher degree of scrutiny being applied to the design and manufacture of airbag inflators in the light of the Takata debacle. Nevertheless, the recall will inevitably provoke much soul-searching within Toyota and its dealer network as to how another safety issue, relating to vehicles produced as long as 7 years ago, could have slipped through the net.”


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