Toyota Head Apologises for Recalls in Second Day of Congressional Hearings

The second day of Congressional hearings dragged on into the evening as the U.S. House of Representatives Committee on Oversight and Government Reform called several witnesses to testify before the committee on the ongoing saga of Toyota's unintended acceleration recall. Three panels of experts and witnesses were sworn in, covering a wide range of topics and involving personnel from the U.S. government, Toyota's top executives, safety organisation crusaders, and actual consumers who have reported incidences of trouble with their cars. Here is a recap of yesterday's Toyota-related events:

• Transportation Secretary Says Toyota Became "Safety Deaf". The country's top transportation official, Secretary Ray LaHood, testified first in Wednesday's hearings, answering questions and defending the National Highway Traffic Safety Administration's (NHTSA's) actions in its ongoing investigations of Toyota, and how it has handled the stunning recall. "Toyota became a little safety-deaf," LaHood told the committee. LaHood felt that Toyota's Japanese management was perhaps not listening to its North American executives in terms of how serious the company's safety issues were, nor how concerned NHTSA had become. "Things have changed" since then, with trips to Japan by his organisation being used to get Toyota's attention.

• Global President and Company Scion Akio Toyoda Apologises for Recall. The most attention-getting testimony came in the second panel however, which consisted of Toyota President Akio Toyoda, the grandson of the company's founder, and Toyota North America President Yoshimi Inaba. In a prepared statement, Toyoda apologised for the recall situation, and for the deaths that the faulty vehicles have caused. "I am deeply sorry for any accidents that Toyota drivers have experienced," said Toyoda in halting but clear English after being sworn in before the House Committee on Oversight and Government Reform. "As you well know, I am the grandson of the founder, and all the Toyota vehicles bear my name. For me, when the cars are damaged, it is as though I am as well." The executive made the challenge personal as well. "My name is on every car," Toyoda said. "We never run away from our problems or pretend we don't notice them. I fear the pace at which we have grown may have been too quick. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers." The executive rejected the idea that the unintended acceleration issues could be caused by an electronic malfunction, however, as many Congressmen have suggested as a possible fault. "I'm absolutely confident that there is no problem with the electronic throttle system," Toyoda told the committee.

• Former Toyota Board Member Jim Press Speaks Out About Company's Safety and Recall Issues. Former top U.S. executive Jim Press, the only American ever to sit on Toyota's board of directors, has broken his silence about why he feels the company is in the trouble it is in today. "Toyota doesn't want me to speak out, but I can't stand it anymore, and somebody has to tell it like it is," Press said in a statement e-mailed to the Detroit News and other media outlets yesterday. "The root cause of their problems is that the company was hijacked, some years ago, by anti-family, financially oriented pirates." Press then praised the newest president, company scion Akio Toyoda, as a person who can restore the company's path. "They didn't have the character necessary to maintain a customer-first focus. Akio does," Press wrote. "Akio Toyoda is not only up for the job, but he is the only person who can save Toyota. He is very capable, and he embodies the virtues and character that built this great company."

• The U.S. Senate Called for a Probe Into NHTSA's Relationship with the Auto Industry. The Senate Commerce Committee chairman Senator Jay Rockefeller and Senator Mark Pryor, chairman of the consumer protection subcommittee, have called for the Department of Transportation's Inspector General to expand an audit of the NHTSA's handling of the Toyota safety recalls. The senators requested an audit of "industry-wide complaints or reports collected by NHTSA regarding sudden unintended acceleration and brake failure in automobiles with electronic throttle and braking control systems" and compliance with a landmark 2000 auto safety law. "We are concerned by recent news reports that may lead the public to believe that NHTSA employees and leadership in recent years have not lived up to this mission," the letter said. "These recent reports indicate that NHTSA may have internal deficiencies in investigating certain safety defects, and even worse, the potential to be excessively influenced by the industry they are supposed to oversee on the public's behalf." The safety regulatory body has come under specific fire in two days of Congressional testimony, as Representatives repeatedly question why unintended acceleration complaints that stretch back as far as 2003 that triggered eight separate investigations never resulted in a recall until a very public and tragic accident in August 2009 that killed a family of four in an out-of-control Lexus ES sedan.

Outlook and Implications

All in all, the appearance of Akio Toyoda at the Congressional hearings has to be viewed as a positive for Toyota's overall situation. Despite the language barrier that sometimes became something of a hindrance (usually when oblivious Congressmen would ramble on at a rapid-fire clip about something unrelated), the executive's mere symbolic presence did somewhat help to temper the tone of the committee hearing, unlike the previous day's skewering of Toyota Motor Sales president Jim Lentz. Toyoda came across as honest and genuinely interested in the fate of the company that bears his grandfather's name, and his presence most certainly acted to put a much more personal touch on the faceless behemoth that is the world's largest automaker. Accompanied by local executive Yoshi Inaba, whose command of English was much better and acted to help support Toyoda, the pair were generally viewed as contrite and respectful.

However, the veil of secrecy that surrounds Toyota's internal processes and decision-making patterns remained firmly in place during questioning that related to how Toyota could have boasted about saving US$100 million by "successfully negotiating" an "equipment recall" of floor mats in early 2009 instead of a full vehicle recall. When challenged about the document that bore Inaba's name, as it was a presentation prepared for him to bring him up to speed on the North American division's actions to that date, Inaba offered no explanation for why that would be considered a positive development instead of a negative, given its eventual impact on consumer safety. Repeated questioning about that document was met with claims that he did not prepare it, and had no explanation of its content. That proved to be very frustrating to the assembled members of Congress, and is likely to be a point of contention in future discussions with company executives on the topic.

In the end, the two days of hearings proved to be likely just the starting point for ongoing investigations of the company from several parts of the U.S. government. The Senate Commerce Committee is looking into its own hearings, and word has come that a criminal probe is also likely to be in the works from the Securities and Exchange Commission and a federal grand jury out of New York. The testimony from various parties has almost certainly opened up additional exploration of the company's testing with regards to electromagnetic interference, so more hearings are likely to come from that avenue of discussion as well. No, these are only the opening salvos in what is likely to be a long and protracted discussion between the federal government and Toyota, not to mention the dozens of lawsuits that are going to be resulting from this, and the possible criminal probe as well. Toyota's dealers have rallied to accuse the U.S. government of bias towards Toyota due to its investment in General Motors and Chrysler, but this argument does not hold water. Any downfall of Toyota is far more likely to benefit Honda and Hyundai over the domestic automakers, and frankly the conspiracy theory that the government is acting in collusion with the automakers is folly—neither party has the co-ordination or influence necessary for such a feat. Claims that the government and media are going on a witch hunt to bring down Toyota would hold a lot more weight if the company itself had not admitted that it did indeed have some serious problems that it has identified with its vehicles. Toyota has an opportunity now to move forward in a way that will help reinforce a spirit of transparency, for the company's culture of quiet secrecy for troubling issues (not an uncommon Japanese corporate tendency) is not going to play well in the U.S. market or around the world.