Toyota recalls over 1 million Corolla and Matrix to replace defective engine control module

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Affected owners of Toyota vehicles have been advised to visit www.toyota.com/recall or call Toyota's customer service line at 1-800-331-4331 to know more about the recall.

The recall covers 1.13 million Corolla and Matrix cars made by Toyota as well as about 161,754 Pontiac Vibes that were made by Toyota in a joint venture with General Motors Co. (GM) in California.

"This recall is an example of our commitment to standing by our products and being responsive to our customers. Our goal is to help ensure that Toyota drivers are completely confident in the safety and reliability of their vehicles," said Steve St. Angelo, chief quality officer of Toyota (North America).

The recall announcement comes barely two days after the US National Highway Traffic Safety Administration (NHTSA) said it has stepped up a probe into complaints of Toyota vehicles stalling without warning.

NHTSA began the probe at the end of November 2009 when it received 26 complaints of vehicles stalling and by August 18, when it commenced an engineering analysis into the reports of stalling Toyota vehicles, the number of complaints had grown to 163. However, NHTSA said there were no reports of injury or death.

NHTSA said Toyota was aware of the issue and had found two potential causes of production defects in the engine control units - improper coating on circuit boards and a crack in the surface of a glass coating.

The automaker had, however, told NHTSA that the percentage of electronic engine control units that would malfunction is extremely small - no more than 0.8 percent or 8 out of 1000 vehicles - over a 10 year period.

In a March 2 letter to NHTSA, Toyota's North American regulatory affairs manager Chris Santucci had said the automaker did not believe the alleged defect "creates an unreasonable risk to motor vehicle safety."

And, hence it did not issue a recall at that time.

However, Toyota saw the problem as serious after NHTSA stepped up its probe and hence decided to announce a recall on Thursday.

Since 2009, Toyota was forced to recall over 10 million vehicles worldwide, including 6.5 million in the US alone, on account of various complaints that related to defective accelerator pedals, brakes, floor mats, seat-belts and electric window switch, among others. Some of the recalls include its top-selling models such as the Prius hybrid and the Camry sedan.

Last month, Toyota, which once prided itself on its status as a world leader in terms of the quality and reliability of its vehicles, recalled nearly half million passenger vehicles, including Avalon, Lexus, Land Cruisers and Pronard models, in the US, Japan, Canada and Saudi Arabia, to address concerns over faulty steering.

Earlier in June, the automaker recalled 270,000 Lexus and Crown cars, of which around 92,000 were sold in Japan and nearly 138,000 were sold in the US, over concerns that a faulty valve in the engine could cause vehicles to stall suddenly.

"This is another bump in the road while Toyota is trying to recover their reputation," IHS Automotive analyst Rebecca Lindland told BusinessWeek. "It will give people who are not Toyota loyalists another reason not to buy the brand."

Surprisingly, however, the recalls and bad press haven't been able to dent the automaker's goodwill or earnings.

Earlier this month, the company beat Street estimates, Wednesday, by reporting a strong surge in its first quarter net profit on the back of higher car sales. It said it swung to a net profit of ¥190.47 billion ($2.2 billion) in the June quarter as against a net loss of ¥77.82 billion in the year ago period. Analysts, on average, had expected the company to report net profit of ¥148.23 billion.

The recalls couldn’t halt the rise in demand for Toyota cars either – the automaker said it witnessed 30 percent jump in demand for its vehicles globally in the June quarter and in North America, sale of its vehicles surged 36 percent to 526,000 units.

Currently, the company is undertaking a massive effort to rebuild its image and has taken a series of measures in recent months to regain confidence of its customers. The company said it has extended product development time on all models by four weeks or at least a month, hand-picked 100 engineers to independently review design and product quality from the perspective of customers, added a new layer of assistant managers in its engineering department, has selected 1000 of its engineers out of its 14,000-strong R&D staff to deal specifically with quality control issues, and has opened new offices in the US to investigate customer complaints more swiftly, among other things.

Toyota shares closed up 0.62 percent at 2928 yen on Thursday.