The day after Christmas, Toyota announced it would pay more than $1 billion, an all-time record in the auto industry, to settle hundreds of lawsuits filed by people saying the value of their vehicles plunged after recalls involving unintended acceleration.
That would seem to be more bad news for the beleaguered automaker. Yet on the very same day, Toyota said it expected to sell a record 9.7 million vehicles worldwide by the close of 2012, a 22 percent surge over 2011 and a number that likely will enable Toyota to once again pass General Motors as the world's No. 1 automaker.
Taken together, the announcements seem incongruous.
Experts contend, however, that they're in perfect harmony in an industry where consumers embrace automakers that quickly own up to problems or outright mistakes.
"Toyota wants to put its unintended acceleration recalls behind once and for all, and as costly as it might be, this settlement will allow them to remove most of the lingering financial uncertainty," said Jesse Toprak, senior analyst for Santa Monica-based TrueCar.com.
Toprak said "Toyota's outstanding performance (in 2012) is proof that consumer sentiment for the company's products has already recovered to a degree as if nothing ever happened."
Toyota remains king in California, where overall new car sales are expected to show a jump of more than 20 percent in 2012 once all the deals are counted.
Through the first nine months of the year, Toyota accounted for 21 percent of new car sales in the Golden State, according to the Sacramento-based California New Car Dealers Association. That was well ahead of second-place Honda's 12.4 percent and the 11.5 percent notched by both General Motors and Ford.
Toyota's Prius was the best-selling car in California during that period, with 46,380 vehicles going out dealership doors. The long-popular Toyota Camry was in a close race with the Honda Accord to be the best-selling midsize passenger car.
Toyota vehicles led the segments of compact pickup (Tacoma), minivan (Sienna) and midsize SUV (Highlander). Toyota's Lexus division produced the state's top-selling luxury SUV, the RX lineup.
David Rodgers, senior vice president and general manager of the Sullivan Automotive Group, which oversees Roseville Toyota-Scion in the Roseville Automall, reported last month that Toyota sales were humming along at near pre-recession pace.
Toyota has been a market leader in California for more than a decade, building on years of highly favorable ratings in closely watched consumer surveys gauging reliability, dependability, satisfaction and overall quality.
Likewise, Toyota has relentlessly marketed its cars to California, the nation's No. 1 auto market. The Golden State has been the nation's top Prius market since the gas-electric hybrid vehicle was introduced in 2000. Toyota's U.S.-based sales and marketing arm is headquartered in Torrance.
Even so, Toyota's current momentum seems to defy logic, given a couple of years of recalls and natural disaster setbacks.
In 2010, the company's U.S. market share plunged amid recalls related to reports of sticking gas pedals that caused fatal crashes. Generous buyer incentives helped Toyota bounce back from that, but production was hit by the tsunami that slammed into Japan in March 2011.
Auto analysts now say Toyota's mass recalls created the impression that it was responding quickly to its problems, helping to contain the negative publicity.
Toyota also appears to have benefited from another phenomenon: Consumers seemingly have short memories when it comes to automaker setbacks. And if companies step up with a free-fix recall or monetary compensation, so much the better.
"A billion-dollar payment will sting any company, even a major international automaker like Toyota," said Michelle Krebs, senior auto industry analyst with Santa Monica's Edmunds.com. "But by announcing the settlement Toyota hopes to leave these troubles behind and move forward in the new year.
"Toyota's other big news it's poised to overtake GM and reclaim the crown as the world's biggest automaker should help to offset any bad publicity that this settlement will generate."
A random sampling of Sacramento-area consumers at local Toyota lots seemed willing to give Toyota the benefit of the doubt.
"Honestly, if there is a problem with a car, and they act to fix it for free or compensate you for your time and money, I'm good with it," said Renee Smith of Roseville as she walked the lot of Roseville Toyota-Scion. "I would wonder about (an automaker) that kept having problems and did nothing.
"But if they make it right, I'll give them credit."
At Maita Toyota Scion along Auburn Boulevard, Sacramentan Tony Anderson said he was willing to keep shopping for Toyotas.
"We've had three Toyotas. I'm not changing now. Yeah, I've kept up with the recalls and what's going on. If they're going to pay out that kind of money to settle it, that says something. They probably could have settled for less than a billion."
Even as Toyota was announcing the billion-dollar settlement, it continued to insist that the computerized acceleration systems in its cars did not cause cars to suddenly speed out of control.
"This was a difficult decision, especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota's electronic throttle control systems," said Christopher Reynolds, group vice president and general counsel of Toyota Motor Sales U.S.A. "However, we concluded that turning the page on this legacy legal issue through the positive steps we are taking is in the best interests of the company, our employees, our dealers and, most of all, our customers."
A BRIEF HISTORY OF AUTO RECALLS
Toyota recently agreed to pay an auto industry-record $1 billion settlement in connection with problems that were part of a recall of more than 8 million motor vehicles in 2010. Here are some other sizable recalls from the past:
1971: General Motors recalls nearly 7 million vehicles, citing engine mounts separating. In some cases, engines tilt onto throttle cables, prompting uncontrolled acceleration.
1972: Volkswagen recalls 3.7 million Beetles, following complaints from motorists who said their windshield became detached. The VW fix centers on bolts securing the wiper arms. That same year, Ford recalls more than 4 million vehicles over shoulder seat belt harnesses becoming frayed and detaching from the interior frame.
1973: A GM recall of more than 3 million vehicles centers on steel components to protect steering assemblies from damage from road debris.
1978: Under pressure from consumer organizations, Ford issues a recall of its Pinto compact over incidents of fuel tank fires following tail-end crashes. Subsequent fixes include reinforcing the area around the gas tanks.
1981: GM recalls 5.8 million vehicles over reports of loose suspension bolts prompting drivers to lose control of their cars.
1995: Honda recalls 3.7 million vehicles over problems with cracks in the seat belt release button, prompting unexpected releases or belts staying fastened after a crash.
1996: Ford recalls about 8 million vehicles to replace defective ignition switches, cited as a potential problem for electrical shorts and engine fires.
1998: GM recalls about 1 million Cadillac, Pontiac and Chevrolet cars over reports that air bags can deploy unexpectedly during normal driving.
2000: Japanese tire producer Bridgestone recalls 14.4 million tires as Ford is sharply criticized by consumer groups and public officials over numerous rollovers of its Explorer sport-utility vehicle. Ford contends that Bridgestone's tires contribute to the rollovers. In 2007, a Sacramento Superior Court judge approves a large settlement in an Explorer safety case pitting Ford against California residents.
2004: GM recalls about 3.6 million pickups because of reports of injuries linked to corrosion of the trucks' tailgate cables.
2005: GM recalls an estimated 2 million vehicles for problems that include seat belt safety in some of its light trucks. That same year, Toyota recalls more than 1 million vehicles over reports of headlight malfunctions.
2007: Chrysler announces a recall of about 600,000 light trucks, citing reports of worn gear shifters slipping out of park unexpectedly.
2008: GM recalls nearly 900,000 vehicles amid complaints about a faulty system designed to heat windshield wiper fluid. That same year, Honda initiates a recall over reportedly faulty air bags, a recall that was later extended to nearly 1 million vehicles.
2008-09: Ford recalls 14.1 million vehicles in connection with malfunctioning cruise control switches. The federal government calls it the biggest auto recall in U.S. history.
2010: Toyota recalls 8.5 million vehicles worldwide to fix potentially serious problems that include sticking gas pedals and malfunctioning brakes. Under terms of the billion-dollar settlement filed Dec. 26, 2012, in federal court in Santa Ana, Toyota agreed to terms to resolve hundreds of lawsuits from Toyota owners who said the value of their vehicles plunged after recalls related to unintended acceleration.
National Highway Traffic Safety Administration, Bee research