TOKYO – Toyota Motor Corp. said it will give details early Monday in the U.S. on how it plans to fix gas pedals in more than 2 million vehicles being recalled there, as the Japanese automaker struggles to reassure anxious owners.
The plan will come in a release at 6:30 a.m EST and will be followed by a conference call for the media at 11 a.m. EST, Toyota Motor Sales USA said. Toyota spokesman Paul Nolasco in Tokyo declined comment.
Toyota has recalled 4.2 million cars and trucks in North America, Europe and China to fix accelerator pedals that can get stuck or are slow to return when released, increasing the risk of a crash. The recalls do not involve Toyota models made and sold in Japan.
American dealers have told The Associated Press that Toyota will disclose details of the fix Monday morning. One dealer was told by a Toyota executive that replacement parts could arrive Thursday or Friday.
The automaker told the dealers about the plan Saturday after hearing from the National Highway Traffic Safety Administration that it did not object to the fix, the dealers said.
Toyota took out full-page ads Sunday in 20 major newspapers in the U.S., saying production was being put on "pause," to put customers first. It does not give details of the planned fix.
Toyota said last week it will halt production of the eight models covered by the recall, starting Monday, until they can be repaired, and has suspended their sales.
Toyota has not said exactly when production will resume. It has said that so far the suspension was planned for a week.
Toyota, the world's biggest automaker, says the problem in the gas pedals is rare and is caused by condensation that builds up in the gas pedal assembly.
Several dealers have said the fix involves slipping a shim into an area where springs push the gas pedal back to its resting position after a driver has eased off the gas.
Dealers have been eager to fix the cars ever since the recall was announced on Jan. 21.
The recall in the U.S. covers 2.3 million vehicles and involves the 2009-10 RAV4 crossover, the 2009-10 Corolla, the 2009-10 Matrix hatchback, the 2005-10 Avalon, the 2007-10 Camry, the 2010 Highlander crossover, the 2007-10 Tundra pickup and the 2008-10 Sequoia SUV.
The faulty gas pedals were made by CTS Corp. of Elkhart, Indiana. Toyota said last week it has begun shipping new gas pedals systems to American dealers.
The pedal recall is separate from a recall involving floor mats that can bend and push down accelerators.
The two recalls combined affect more than 7 million vehicles worldwide, threatening to tarnish the brand image of an automaker that had prided itself on quality.
AP Auto Writer Tom Krisher in Detroit contributed to this story.
LAKEWOOD, N.J. – Toyota has launched a media campaign to bolster its reputation for quality as nervous customers confront dealers across the country about faulty gas pedal systems.
Crisis-management experts said Sunday that the recall of millions of cars and trucks isn't the Japanese auto maker's only problem: its message to Toyota owners — delivered in full-page ads Sunday in 20 major newspapers — isn't as clear and reassuring as it needs to be.
On Monday, the head of Toyota's North American sales division, Jim Lentz, is scheduled to appear on NBC's The Today Show to detail the company's plans for a fix. Federal regulators have approved Toyota's plan to start sending parts to dealers in the coming days.
Toyota dealers over the weekend said there has been a noticeable drop in customer traffic and sales, though they have faith that customers loyal to the brand before last week's recall will not abandon it altogether. Dealers selling U.S. brands have seen more Toyota drivers in their lots than usual, but for now those visits haven't translated into many new customers.
Toyota's black-and-white ads Sunday characterized the halt in sales and production as a "temporary pause" to put customers "first." The ads don't give details on how the pedals will be fixed or when customers can expect a remedy.
The company has said the recall of about 4.2 million cars and trucks is related to condensation that builds up in the gas pedal assembly and can cause the accelerator to get stuck. Dealers say the fix involves slipping a shim into an area where springs push the gas pedal back to its resting position after a driver has eased off the gas. Toyota has not commented on the repair.
"They are trying to do the right thing," said Alexander Edwards, president of automotive research group Strategic Vision, of the ads. "But what's going on isn't stated very clearly and that causes more uneasiness with customers."
Larry Smith of the Institute for Crisis Management in Louisville, Ky., said "The ads are intended to buy Toyota a bit of time, to ask people to give them a chance."
But what matters now is "how Toyota expresses its plan and executes the repairs," Smith said.
Cutting the company some slack, Smith said the ads likely had to be placed on Friday, before Toyota received the go-ahead for its planned fix from federal regulators.
"They are a really good company, and there is no reason they should not snap back from this," Smith said.
At Earl Stewart Toyota in North Palm Beach, Fla., sales initially dropped off after the recall announcement but began to rebound by the weekend. General manager Stu Stewart said he'd even sold some cars in recent days that have the faulty gas pedal system. Customers will just have to wait for the cars to be fixed before picking up their new vehicles, Stewart said.
At Toyota World of Lakewood, N.J., sales manager Joe Glidden said they had received many calls from customers with questions about the recalls. But he said customer traffic had only slightly decreased since the gas pedal recall was announced Jan. 21.
Customer Herb Jackson, shopping at the Lakewood showroom for a new Prius gas-electric hybrid — which is not one of the vehicles that was recalled — said he's still confident in the world's biggest automaker.
"I don't plan on changing horses," said Jackson, who has owned many Toyotas over the years.
Other customers are checking out Toyota's competition, however.
In Pittsburgh's northern suburbs, Richard Bazzy, owner of two Ford dealerships, saw increased traffic on Saturday and noticed more Camrys and Corollas driving onto his lots. But he also said it has yet to turn into increased sales from Toyota customers.
Bazzy said the Toyota troubles should get customers to at least consider Detroit's improved cars.
Industry analysts expect Ford to be among the beneficiaries of Toyota's troubles because some of its models have recently received good quality scores from third parties such as Consumer Reports magazine.
Rob Larson, a sales manager at Larson Ford in Lakewood, said he hadn't seen an influx of disaffected Toyota customers so far. But he expects to see them soon as more people learn about incentives being offered by Ford, such as $1,000 to Toyota, Lexus, Scion, Honda or Acura drivers who trade in vehicles or have leases expiring by June 30. GM and Chrysler are offering similar deals to lure Toyota customers.
At Hyundai Giant in New Port Richey, Fla., CEO Scott Fink said dealers are having trouble figuring trade-in values on Toyotas, wondering if they will drop even after they are repaired.
He said it's too early to tell if there will be a mass exodus from Toyota.
The recall widened beyond Toyota over the weekend. France's largest automaker, PSA Peugeot Citroen, said it was recalling 100,000 cars across Europe to change accelerator pedals on two models designed and produced in a joint venture with Toyota. The recall is a "preventive" measure, Peugeot said, adding that there has been no evidence of accidents or safety problems linked to the pedals.
The National Highway Traffic Safety Administration said on its Web site that it opened an investigation last Tuesday into CTS Corp., the manufacturer that supplied the faulty gas pedals to Toyota. The agency wants to find out whether CTS notified other gas pedal customers of the recall and if other automakers have received reports of similar problems with the pedals.
The pedal recall is separate from another recall involving floor mats that can bend and push down accelerators. The two recalls combined affect more than 7 million vehicles worldwide. While the multiple recalls, investigations and image troubles are disheartening for Toyota owners, for now many still remain loyal.
"They're going to be fine," Stacey Krupski of State College, Pa., said as she parked her Toyota Saturday. "And I would most likely guarantee the fact that my next car will still be a Toyota."
Tom Krisher reported from Detroit. Associated Press Writers Brian Skoloff in North Palm Beach, Fla., Genaro C. Armas in State College, Pa., Dinesh Ramde in Milwaukee and David Koenig in Dallas contributed to this report.
WASHINGTON – President Barack Obama's proposed budget predicts the national deficit will crest at a record-breaking $1.6 trillion in the current fiscal year, then start to recede in 2011 to $1.3 trillion, a congressional official said Sunday.
Still, the administration's new budget to be released Monday says deficits over the next decade will average 4.5 percent of the size of the economy, a level which economists say is dangerously high if not addressed, said the congressional official. The official was not authorized to discuss the budget before its public release.
Details of the administration's budget headed for Congress include an additional $100 billion to attack painfully high unemployment. The proposed $3.8 trillion budget would provide billions more to pull the country out of the Great Recession while increasing taxes on the wealthy and imposing a spending freeze on many government programs.
White House spokesman Robert Gibbs said the administration believed "somewhere in the $100 billion range" would be the appropriate amount for a new jobs measure made up of a business tax credit to encourage hiring, increased infrastructure spending and money from the government's bailout fund to get banks to increase loans to struggling small businesses.
That price tag would be below a $174 billion bill passed by the House in December but higher than an $83 billion proposal that surfaced last week in the Senate.
Gibbs said it was important for Democrats and Republicans to put aside their differences to pass a bill that addresses jobs, the country's No. 1 concern. "I think that would be a powerful signal to send to the American people," Gibbs said in an appearance on CNN's "State of the Union."
Job creation was a key theme of the budget President Barack Obama was sending Congress on Monday, a document designed, as was the president's State of the Union address, to reframe his young presidency after a protracted battle over health care damaged his standing in public opinion polls and contributed to a series of Democratic election defeats.
Obama's $3.8 trillion spending plan for the 2011 budget year that begins Oct. 1 attempts to navigate between the opposing goals of pulling the country out of a deep recession and dealing with a budget deficit that soared to an all-time high of $1.42 trillion last year.
The Congressional Budget Office is forecasting that the deficit for the current budget year will be only slightly lower, $1.35 trillion, and the flood of red ink will remain massive for years to come, raising worries among voters and the foreign investors who buy much of the country's debt.
On the anti-recession front, congressional sources said Obama's new budget will propose extending the popular Making Work Pay middle-class tax breaks of $400 per individual and $800 per couple through 2011. They were due to expire after this year.
The budget will also propose $250 payments to Social Security recipients to bolster their finances in a year when they are not receiving the normal cost-of-living boost to their benefit checks because of low inflation. Obama will also seek a $25 billion increase in payments to help recession-battered states.
Obama's new budget will set off months of debate in the Democratically controlled Congress, especially in an election year in which Republicans are hoping to use attacks against government overspending to gain seats. Obama has argued that he inherited a deficit of more than $1 trillion and was forced to increase spending to stabilize the financial system and combat the worst recession since the 1930s.
Obama's new budget was expected to repeat many of the themes of his first budget. But in a bow to worries over the soaring deficits, the administration is proposing a three-year freeze on spending for a wide swath of domestic government agencies. Military, veterans, homeland security and big benefit programs such as Social Security and Medicare would not feel the pinch.
The freeze would affect $447 billion in spending and is designed to save $250 billion over a decade. However, it would not fall equally on all domestic agencies. Some would see budget cuts to free up spending for programs the administration wants to expand such as education and civilian research efforts.
NASA's mission to return astronauts to the moon would be grounded with the space agency instead getting an additional $5.9 billion over five years to encourage private companies to build, launch and operate their own spacecraft for the benefit of NASA and others. NASA would pay the private companies to carry U.S. astronauts.
Obama's budget repeats his recommendations for an overhaul of the nation's health care system, the fight that dominated his first year in office. It proposes to get billions of dollars in savings from the Medicare program and again seeks increased taxes on the wealthy by limiting the benefits they receive from various tax deductions. Both ideas have met strong resistance in Congress.
Gibbs insisted Sunday that the president's push for health care was "still inside the 5-yard line," but Senate Republican leader Mitch McConnell, also appearing on CNN, said the public was overwhelmingly against the bill and the administration should "put it on the shelf, go back and start over."
In addition to the freeze on discretionary nonsecurity spending, Obama is proposing to boost revenues by allowing the Bush administration tax cuts of 2001 and 2003 to expire at the end of this year for families making more than $250,000 annually. Tax relief for those less well-off would be extended.
The new Obama budget will also include a proposal to levy a fee on the country's biggest banks to raise an estimated $90 billion to recover losses from the government's $700 billion financial rescue fund. Those losses are expected to come not come from the bank bailouts but from the support extended to General Motors and Chrysler and insurance giant American International Group as well as help provided to homeowners struggling to avoid foreclosures.
Also on the deficit front, the president has endorsed a pay-as-you-go proposal that passed the Senate last week. It would require any new tax cuts or entitlement spending increases to be paid for, and he has promised to create a commission to recommend by year's end ways to trim the deficits. However, a legislatively mandated panel was rejected in a Senate vote last week. Republicans opposed establishing the panel because it might recommend tax increases to close the deficit.
AP Science Writers Seth Borenstein and Alicia Chang contributed to this report.