Victoria Curran, associate in the commercial insurance team at Weightmans LLP discusses the latest Toyota recall and manufacturer liability for product safety.
Japanese car giant Toyota announced a recall of 6.4 million vehicles globally as a result of a number of safety concerns.
There are fears that 3.5 million may be affected by a broken cable which may prevent the driver’s side airbag from deploying in the event of a crash. Other concerns relate to seat rail springs which could cause a seat to move in the event of a crash and steering column brackets which might break causing the column to move.
These problems are thought to affect around 35,000 cars in the UK.
There are also concerns about windscreen wiper motors and engine starter motors, affecting cars not sold in the UK. Toyota have said they are not aware of any crashes, injuries or fatalities caused by these conditions however there have been two reports of fires thought to be related to the engine starter problem.
This is not the first recall Toyota has made this year.
In February around 2 million Prius cars were recalled over a software problem which could cause the car to stop suddenly.
Since early 2012 Toyota has recalled around 20 million vehicles.
As well known devotees of the Lean manufacturing philosophy – whereby followers seek to continually improve an operation by eliminating wasteful costs and improving quality – this current recall will come as a further blow to Toyota’s reputation.
That some of these problems may lie within the supply chain is of scant consolation to Toyota.
But recalls like this have more than reputational repercussions.
Toyota’s share price fell in response to the news; sales fell following recalls in 2009 and 2010 and resulted in criminal investigations concerning misleading safety statements and a £720 million fine by US regulators.
Product recalls are not an uncommon phenomenon in the car industry. The General Product Safety Regulations 2005 define a safe product as being one which presents minimal risk consistent with high level of consumer protection.
It is a criminal offence to put unsafe products onto the market and manufacturers and distributors are required to warn of any safety risks and take appropriate action. This includes recall as a last resort.
If manufacturers take all reasonable steps to prevent the risk of injury to consumers, then they can avoid criminal sanctions.
Toyota has issued the recall and has – quite rightly! – offered to fix the defective parts free of charge. But what happens if one of those recalled cars is involved in a collision and the airbag fails to deploy?
Is the fact that they have issued a recall enough to avoid any liability? The short answer is no.
The Consumer Protection Act 1987 says a product is defective if the safety of the product is not such as persons are generally entitled to expect.
People are entitled to expect that if they crash their car, the airbag will deploy. If the product is defective, the manufacturer will be liable.
The defences available under this legislation are limited. Toyota would have to show that the defect did not exist at the time the car was supplied i.e. it was caused by general wear and tear or that the state of scientific and technical knowledge was not such that the defect should have been discovered prior to supply.
As these recalls relate to faulty parts, these defences will not apply. So until the affected vehicles have been checked and rectified, there remains a risk of liability.
So what will this recall mean for Toyota?
Other than an increase in their product liability insurance premiums, it may raise questions about the impact of its rapid expansion policy. If handled correctly, a recall can actually increase consumer support for a brand, emphasising transparency and the importance that a company places on consumer safety.
However, the fact that so many vehicles can be affected by a range of potential problems risks severe reputational damage over perceptions of build quality and safety.
That some of these problems may lie within the supply chain is of scant consolation to Toyota. Their badge on the car means it is their reputation on the line.
