The Real Scandal Behind the Toyota Recall

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Ignored in all of this is the financial damage done, ostensibly in the name of protecting the public. The unfortunate owners who'd already bought these unjustly maligned vehicles took serious losses on their resale value. But the harm these ill-researched stories do to car owners, like the havoc they wreak on automakers, never makes the news.

Neither do the final, vindicating facts—at least, not loud enough to overcome the initial bad impression.

To this day the public believes there might have been a problem with the Audi 5000, but it's not true. They believe the Suzuki Samurai rolled over easily, and that's not true either. They think Ford built an unsafe Crown Victoria, when all evidence shows that the other driver's extreme high-speed impact was actually to blame. Firestone is remembered as the world's worst manufacturer of tires, but that was far from the truth: In the vast majority of Firestones' tread-loss incidents, the culprits were old tires, improper inflation, and driving too fast in hot weather. Exactly the conditions that cause all tires to lose their treads.

The Audi official who said his company had investigated those complaints and found nothing was telling the truth. 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. Suzuki officials' pleas that their Samurai was incredibly stable fell on deaf ears—but it was.

Today, no one remembers any of that.

Now it's Toyota's turn. They investigated the complaints, found a number of small problems and said that's the only problems they could find, and moved relatively fast to fix those issues. The only way Toyota could be in trouble now is if, in a Nixonian moment, it was discovered that they'd lied or covered up another defect. The likelihood of that happening is low.

About That Drop in Resale Value

Oh, and about that drop in Toyotas' resale value? According to the National Auto Research Black Book, which covers prices of vehicles sold at regional wholesale auctions each week, a one-year-old Toyota Camry CE dropped $100 in value from Feb. 1 to Feb. 8. And it had dropped $400 in average value from the Jan. 11 book.

However, looking at a one-year-old base model Honda (HMC) Accord coupe in the same book, we find it too dropped $100 in value from Feb. 1 to Feb. 8, and $500—or $100 more than the Camry—from the Jan. 11 book. So the Honda Accord's reputation is intact, but it actually dropped more in value during this period. For what it's worth, the Nissan (NSANY) Altima seems to have gained a couple hundred dollars in value over the past month.

As they too often do, the media took a so-called expert's word on what was happening to Toyota's wholesale prices. Looking up such things as the real-world wholesale auction figures seems to disprove the expert's position.

Then again, most recalled Toyotas are not being sold at auction right now until the updates are done. Two weeks from now when they can be auctioned again, we might have a different story.

Ed Wallace is a recipient of the the Gerald R. Loeb Award for business journalism, given by the G. and R. Loeb Foundation, and is a member of the American Historical Society. His column leads the Fort Worth Star-Telegram's "Sunday Drive" section. He reviews new cars every Friday morning at 7:15 on Fox Four's Good Day, contributes articles to BusinessWeek Online, and hosts the top-rated talk show Wheels Saturdays from 8 a.m. to 1 p.m. on 570 KLIF.

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