General Motors Co. said Tuesday that they plan to pay off their government loans this year, five years ahead of schedule. They say that production and sales have increased in the beginning of 2010 and repaying government loans has been a top priority. The government’s autos task force set a repayment deadline of 2015, but GM has already paid back $2.4 billion and plans to pay the rest by June. The money is expected to come from public stocks which will be offered when the markets and the company are ready.

But GM may have some competition. Ford Motor Co., which didn’t take government aid, reported a $2.7 billion profit for 2009, outselling GM in February for the first time in over a century. Toyota Motor Corp. came close to outselling GM last month when it used heavy incentives to lure buyers after a series of safety recalls.

Things are also on the mend at Chrysler Group LLC, which also went into bankruptcy protection last year and is now managed by Fiat SpA. Chrysler CEO Sergio Marchionne said last week that the automaker has $5 billion in cash on hand and expects to break even this year.

But the improvements in the auto industry has come with sacrifices. Auto manufactures were forced to downsize by stopping production or selling off some brands, closing down dealerships and laying off thousands of employees.

Toyota could be receiving a $16.4 million fine from the National Highway Traffic Safety Administration (NHTSA) for their delay in notifying authorities about problems with acceleration pedals. Additional fines for their handling of the recall and civil suits could add up to millions more. “We now have proof that Toyota failed to live up to its legal obligations,” said Transportation Secretary Ray LaHood. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect drivers.”

Toyota said in a statement that it had not received formal notification from NHTSA about the fine, but that it has taken “a number of important steps to improve communications with regulators and customers on safety-related matters as part of strengthened overall commitment to quality assurance.” The steps include appointing a new chief quality officer.

Under federal law, Toyota has five days to agree to the fine or negotiate a different agreement with NHTSA. If it fails to reach an agreement, it can appeal the fine in federal court.

After 25 years, California’s last automobile plant will be closing it’s doors. Toyota announced the closure last year shortly after General Motors Co. pulled out of the facility which was a joint venture between the two companies. The plant made Toyota Tacoma trucks and Corolla sedans. The last Tacoma rolled off the assembly lines last week, and the production of the Corolla ended Thursday. Over four thousand jobs will be lost due to this closure.

Mazda’s long time relationship with Ford is weakening as Mazda looks to Toyota for hybrid drive train technology. In the past Mazda has used Ford’s hybrid system in its sport-utility vehicle, the Tribute, but because Mazda plans to make their new hybrid car in Japan, they decided to lease the technology from Toyota instead. Masaharu Yamaki, Mazda’s executive vice-president, said the group had chosen Toyota’s technology over Ford’s because, “We need to procure components quickly and reliably from domestic suppliers.” The agreement which the two companies had been negotiating since last spring, will include hybrid components such as control systems, inverters and the regenerative braking mechanism.

Takeshi Uchiyamada, Toyota’s executive vice-president, said the Mazda deal would help lower production costs for Toyota’s own hybrid cars by expanding the market for shared components. As a result, “We hope that the cost of parts will fall and new innovations will emerge.”

In the recent shadow of Toyota’s unintended acceleration, Toyota has offered price and loan incentives to get customers back in the doors and buying automobiles. Honda, in an attempt to not fall behind, is offering its biggest deals ever, starting a price war which could leave other automobile manufacturers behind. The irony of this price war is that it is being started by Japanese automakers which historically don’t use these types of tactics. American automakers have been cautious about entering the price wars since they do not have a lot of cash to offer incentives.” said Aaron Bragman, auto industry analyst at IHS Global Insight.

These incentives may end up hurting Toyota in the near future. The company has seen sales soar as bargain hunters and loyal customers stream into showrooms to take advantage of the deals. Once that traffic runs out, Toyota will find it even harder to sell to people who are not loyal or who are skeptical of the brand.

If you have taken your Toyota in for repairs under their January recall for unintended acceleration and you are still unhappy with its operation, Toyota is offering another fix. The Japanese automaker said in a memo obtained Tuesday by The Associated Press that if a customer is unhappy with the feel of the accelerator after the car is repaired, dealers can provide a replacement pedal at no charge. “A replacement pedal should only be offered to a customer after the reinforcement bar has been installed and the customer has expressed dissatisfaction with the operation and/or feel of the pedal,” Toyota said in a memo to dealers, service manager and parts managers.

Over 100 owners have complained about problems with sudden acceleration after Toyota dealers fixed their vehicles. Toyota has said it is confident in its repairs and has found no evidence of other problems. Many feel the problem with the vehicle is not a problem with the accelerator parts but rather with electronic interference. A group of consumer advocates and engineers who contend Toyota has discounted potential electronic problems in problem vehicles planned to hold a news conference Tuesday on the massive recalls.

Kristen Tabar, an electronics general manager with Toyota’s technical center in Ann Arbor, Mich., said in a video clip posted by the company on Monday that the automaker has eight labs in Japan that it uses to bombard vehicles with electronic interference. She said Toyota ensures that “every system in the vehicle operates properly under those conditions.”

Below is a list of Toyota Vehicles recalled:

  • 2005-2010 Avalon
  • 2007-2010 Camry
  • 2009-2010 Corolla
  • 2008-2010 Highlander
  • 2009-2010 Matrix
  • 2004-2009 Prius
  • 2010 Prius
  • 2009-2010 RAV4
  • 2008-2010 Sequoia
  • 2005-2010 Tacoma
  • 2007-2010 Tundra
  • 2009-2010 VENZA

In February 2009 over one hundred complaints had been made to The National Highway Traffic Safety Administration (NHTSA) Office in regards to 2010 Prius brakes that do not always function correctly. An internal NHTSA agency memo indicated that the issue was a “short delay” in regenerative braking when hitting a bump. Japan’s Ministry of Transportation ordered Toyota to investigate Prius braking problems after it received 14 complaints, and Toyota received 77 complaints in Japan. On February 9, 2010 Toyota announced a voluntary global recall of third generation 2010 Prius models. A total of 133,000 Prius vehicles in the U.S. and 52,000 in Europe received software updates to fix the problem.

NHTSA has received at least 10 reports of unintended acceleration on Prius models that Toyota claims to have already been fixed under its recall. The Associated Press reported on March 5, 2010 that additional complaints may be a psychological response of “mass hysteria” to “relentless media coverage” of the Toyota recalls.

Below are two accounts of runaway Prius’s that Toyota concluded the problem was driver related as they could not find anything wrong with the car.

On March 8,2010 the California Highway Patrol (CHP) received a 911 call from a man speeding down a California highway at 90 mph in his 2008 Toyota Prius. James Sikes, the driver of the vehicle claimed that his gas pedal was stuck and pressing the brakes would not slow down the car. The highway patrol officer at the scene says he could see the brake lights turn on and off periodically, and he could smell the heated brakes from a quarter mile away.

When the officer told Sikes to shift to neutral Sikes refused, later telling reporters he feared shifting to neutral would cause him to loose control of the car. Eventually, the car stopped on its own by applying the foot brake and parking brake at the same time.

Toyota’s investigators examined the car and found that the accelerator pedal was functioning normally with no mechanical binding or friction. However, the front brakes showed severe wear and damage from overheating. One of the most surprising Toyota findings was evidence of numerous, rapidly repeated on-and-off applications of both the accelerator and brake pedals. Sikes insisted he was pressing hard on the brakes to stop the car, so repeated application of the gas pedal does not seem to make sense, says Toyota. Toyota’s engineers also purposely overheated the brakes, but could still stop the vehicle.

On March 9, 2010 a similar story in New York involved a housekeeper who said that the 2005 Toyota Prius she was driving sped up on its own down a driveway and crashed into a stone wall. The driver of the car was not seriously hurt, but the car was totaled.

The NHTSA said the computer data from a Toyota Prius showed that at the time of the accident the throttle was open and the driver was not applying the brakes.

According to Toyota’s company earnings results, it is estimated that Toyota’s unintended acceleration will affect almost 8.5 million cars world wide and could end up costing the company almost $2 billion. Analysts say that this is a conservative estimate and that the cost will more likely be almost $6 billion, if you include repairs for recalls, lost sales and the ever growing lawsuits being filed against the company.

Still, amongst all the bad publicity, Toyota has done a good job cutting costs over the past year, and it is still a leader in environmental technologies. Most analysts predict good profit growth next year as demand grows in markets like China.

“Toyota has announced plans to deal with the recalls, and is working to address the problems promptly,” said Noriyuki Matsushima, an auto analyst at Citigroup Global Markets Japan. “We think the recall story is likely to die down by April if its quality dealerships can quickly repair the problems while providing reassurance to customers.”

For now, Toyota’s incentives appear to be working. Dealers are reporting surging sales and expect to post a net profit of $885 million in the fiscal year ending March 31, coming back from a loss last year.