advertisement

Trouble for Toyota won't end after congressional hearing

Thursday, February 25, 2010 | 9:26 a.m. CST; updated 11:18 a.m. CST, Thursday, February 25, 2010

WASHINGTON — Even as Toyota CEO Akio Toyoda wrapped up a grueling appearance before Congress, the head of the world's largest automaker wasn't leaving his problems behind.

Toyota faces a criminal investigation by federal prosecutors in New York. The Securities and Exchange Commission is investigating the company. Its beleaguered U.S. dealerships are facing repairs to potentially millions of customer vehicles that have been recalled. The company is offering customers new reimbursements for rental cars and other expenses.

Its lawyers are bracing for waves of death and injury lawsuits. The Senate will conduct a new hearing next week, and the cost to Toyota's reputation is only now starting to emerge.

"There is still a very large bull's-eye pinned to Toyota right now," said Aaron Bragman, an auto industry analyst with IHS Global Insight.

Despite back-to-back congressional hearings this week, left to be said were a better explanation for slow actions to deal with the defects and believable assurances that the problems that led to sudden, unintended accelerations will be fixed.

Toyoda said those changes were being made nearly around the clock, but during three hours of often tense questions and answers he repeated the company's insistence that there was no link to the cars' electronic systems.

Many drivers filing complaints with Toyota and the government said their acceleration problems had nothing to do with floor mat interference or sticky gas pedals — the culprits the company is pointing to. Outside experts have suggested electronic problems.

House lawmakers unleashed blistering criticism on Toyoda, the grandson of the company's founder.

"I am embarrassed for you, sir," Rep. John Mica, R-Fla., said as he brandished an internal Toyota document showing the automaker estimated it saved $100 million by avoiding a broad recall over unintended acceleration in 2007.

The National Highway Traffic Safety Administration is seeking records on Toyota's recalls and is conducting its own review on whether electronics were behind the vehicle defects. NHTSA also continues to look into steering complaints from drivers of the popular Corolla model.

Toyota has recalled 8.5 million vehicles, more than 6 million of them in the United States.

Back home in Japan, Toyoda's testimony in Washington was lauded. A crisis management expert at Kyodo Public Relations Co., Ryoichi Shinozaki, said Toyoda performed fine by Japanese standards. But Shinozaki said the company's problems were deepening.

"The hearing is over, but the crisis is only getting more serious," he said.

It may be a while before car buyers are convinced that Toyota really makes safe cars.

Toyota's January sales already fell 16 percent even as most other automakers rebounded from last year's dismal results. Analyst Koji Endo of Advanced Research Japan in Tokyo said he expects February sales, due out next week, to be down 30 percent to 40. Toyota's sales woes well could continue beyond that.

"It will take some time to feel the full effect of this," he said.


Like what you see here? Become a member.


Show Me the Errors (What's this?)

Report corrections or additions here. Leave comments below here.

You must be logged in to participate in the Show Me the Errors contest.


Comments

Leave a comment

Speak up and join the conversation! Make sure to follow the guidelines outlined below and register with our site. You must be logged in to comment. (Our full comment policy is here.)

  • Don't use obscene, profane or vulgar language.
  • Don't use language that makes personal attacks on fellow commenters or discriminates based on race, religion, gender or ethnicity.
  • Use your real first and last name when registering on the website. It will be published with every comment. (Read why we ask for that here.)
  • Don’t solicit or promote businesses.

We are not able to monitor every comment that comes through. If you see something objectionable, please click the "Report comment" link.

You must be logged in to comment.

Forget your password?

Don't have an account? Register here.

advertisements