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Toyota announces pedal repair

SOUTHFIELD, Mich. — CTS Corp. was honored three times by Toyota for the quality of the accelerator pedals that have now thrust the 114-year-old electronics supplier into the center of a global recall of 4.1 million vehicles.

Toyota's sales freeze last week intensified the focus on CTS, based in Elkhart, Ind., since it was singled out after the world's largest automaker's Jan. 21 U.S. recall of autos whose pedals might "stick." CTS expressed "deep concern" Friday about how its parts were being portrayed.

The supplier's prominence in the case is unusual because automakers usually shield such details. General Motors and Ford in November resisted identifying a parts maker until India's Rico Auto Industries said it was the cause of a shortage that shut GM and Ford factories in the United States.

"CTS was put on the defensive right away, and it was evident there seemed to be finger pointing going on," said Rebecca Lindland, an analyst at consultant IHS Global Insight. "It seemed like they were the sacrificial lamb."

Toyota has said its priority remains restarting five North American assembly lines idled by the recall and getting replacement parts to dealers for models already sold, not assessing any blame in the sudden-acceleration cases.

"We are currently doing all we can to ensure our customers' safety," Hideaki Homma, a spokesman for the automaker, said Monday. "I am not aware of any discussion yet on the question of who will bear responsibility."

CTS began production of a modified pedal approved by Toyota last week that is being shipped to factories, both companies have said. Toyota said Monday its dealers should get parts to fix a sticky gas pedal problem by the end of this week.

In last week's statement, CTS said the pedals shouldn't be linked to any cases of "sudden unintended acceleration," which it said have been reported in Toyota autos as far back as 1999. CTS said it first supplied parts to Toyota for 2005 model-year vehicles. Mitchell Walorski, director of CTS investor relations, didn't return a phone call or e-mail seeking comment.

CTS was pulled into the spotlight Jan. 21 when Toyota cited the supplier in an announcement that accelerator pedals might stick in a depressed position on 2.3 million U.S.-built cars and light trucks, causing them to speed uncontrollably.

On Jan. 26, Toyota said it was suspending sales of eight models in the United States, and three days later it disclosed plans for the recall of as many as 1.8 million Toyotas in Europe. Toyota's China venture will recall 75,522 cars.

CTS chief executive officer Vinod Khilnani said the flaw in the pedals was a slow release after being depressed, and that there have been fewer than a dozen such occurrences in the United States.

The trouble probably was caused by condensation resulting from "extreme environmental conditions that go beyond CTS's original specifications" from Toyota, Khilnani said during a conference call Thursday. Toyota came back to CTS with a "more stronger, robust specification," Khilnani said. CTS said it has liability insurance with a $1 million deductible.

"Once Toyota approved the specification CTS delivered and used on its products, they can't blame CTS," said Koji Endo, managing director of Advanced Research Japan.

The Transportation Department doesn't object to a remedy Toyota is proposing to fix the CTS design, an agency official said. The department's safety agency also said Jan. 26 that it is studying whether additional recalls are required by other vehicle manufacturers who might have installed defective pedals. Toyota said it has been installing a modified pedal in European models since August.

CTS, formed in 1896 as Chicago Telephone Supply Co., sells electronic components and sensors to auto, communications, medical, defense and aerospace manufacturers.

Based on 2008 sales, the last year for which full data are available, Hewlett-Packard was CTS's biggest customer, with sales of 11 percent. Toyota had 3.2 percent of last year's sales, according to CTS. The supplier estimates it has 16 percent to 20 percent of the global market for accelerator pedals.

CTS was recognized by Toyota in September 2005 with an "Excellent Launch Award" for the "design, quality and launch coordination" for electronic throttle controls and pedal assemblies for the Avalon, one of the models now subject to the recall.

In June 2006 and again a year later, CTS issued statements after Toyota honored the supplier for "exceeding quality expectations on the accelerator pedal modules" built by a CTS plant in Canada that makes the pedals now being recalled.

"If they manufacture a defective part, they could be held liable," said Michael Louis Kelly, a lawyer with Kirkland and Packard in El Segundo, Calif. "A plaintiff wouldn't have to sue them, though."

Suppliers usually aren't part of legal actions unless the automaker can't be sued, said Kelly, whose firm filed a class-action lawsuit against Toyota in federal court Nov. 18. It's harder to prove fault at suppliers, which often build parts to specifications and aren't involved in testing them, he said.

CTS also supplies pedals to Honda, Nissan, Chrysler and Mitsubishi, Khilnani said. Each company has its own specifications and designs, and there isn't a common application of the Toyota part with other companies, the CEO said.