2 September 1998

Sacramento, CA—The California Air Resources Board (ARB) ordered a recall of approximately 330,000 Toyota and Lexus automobiles because of a defect in the vehicles' computers. The recall applies to all 1996-1998 model-year Toyota and Lexus cars made for sale in California by Toyota Motor Corp., Japan's largest automaker.

ARB said the automobile recall was the largest it had ever ordered and was prompted when the vehicles' on-board diagnostic system, OBD II, failed to detect gasoline vapor leaks under normal driving conditions.

ARB spokesman Richard Varenchik stressed that the problem posed no danger to drivers of the affected vehicles but was related to the state's strict emissions law.

According to an ARB preliminary estimate, it would cost Toyota about $82.5 million to replace the computers ($250 per vehicle). Toyota had been given until January 1 to come up with a plan on how it would replace the systems.

California regulations require automakers to equip vehicles with an OBD II that alerts the driver of engine and emission-control system malfunctions by illuminating a dashboard light. ARB said these systems play an important role in reducing emissions, particularly from aging vehicles.

ARB said an investigation found that Toyota and Lexus OBD II systems work properly under laboratory conditions but fail to detect vapor leaks from gas tanks, vapor lines and other areas of the fuel system under normal on-road use.

California and federal laws prohibit the use of devices that reduce the effectiveness of emission-control equipment unless those devices are approved when vehicles are certified for sale. ARB said Toyota failed to disclose design elements that significantly weaken the OBD II system's ability to detect vapor leaks under normal operating conditions when ARB certified the 1996-98 vehicles for sale in California. Gasoline vapors contain cancer-causing substances and contribute significantly to the formation of smog.

Toyota had rejected a request to voluntarily resolve the issue and correct the problem. State law subjects auto manufacturers to substantial fines for each vehicle that does not meet California's tough emission standards. "It is unfortunate that Toyota, which positions itself as an environmentally sensitive company, would resist recalling these vehicles and correcting this problem," said ARB Chief Deputy Executive Officer Tom Cackette. "We hope this matter will be resolved quickly," he added.

Toyota said its diagnostic systems work and comply with California laws, and that its disagreement with ARB was the result of a different interpretation of the state's emissions rule. To that end, the automaker filed a lawsuit last Friday in state court in Sacramento in a bid to clarify the rule.

"Toyota regrets that the California Air Resources Board has chosen to take action that involves an ordered recall," Jim Olson, Senior Vice President for Toyota Motor Sales, USA Inc. said in a statement. "There is no evidence of an emissions-related problem with these vehicles. Toyota vehicles have the best in-use emission performance of any automaker's products," Olson said.

Toyota spokesman Joe Tetherow added that the company had not estimated a cost for recalling the vehicles and repairing them because it did not think there was a problem.

Other automakers who had been subject in the past to ARB-ordered recalls had filed similar lawsuits against ARB but had been unsuccessful. "Others have challenged our authority to do this and have lost in court, and I don't expect that this result would be any different," Varenchik said.

ARB said Toyota and Lexus owners would be contacted by the automaker after it designs a repair plan that meets the agency's standards.