Toyota boss prepares for rough ride

Akio Toyoda must answer claims that the world's largest car maker has been slow to respond to safety fears, and that it doesn't care for American lives
Click to follow

We acknowledge our mistakes, we apologise for them and we have learnt from them. This is the full-throated "sorry" that Akio Toyoda will deliver today, when the Toyota president appears before a baying Congressional committee.

He is the most senior Japanese executive ever to travel to the US for this sort of political theatre, and he was initially reluctant to do so, but these are dangerous times for the car manufacturer, which is in the throes of recalling almost 9 million vehicles worldwide after faulty accelerators were linked to several fatal crashes.

The US is its most important market – and it is also the most litigious, and has the most aggressive politics. Mr Toyoda couldn't afford not to go.

The recalls will have cost Toyota $2bn by the end of next month, the company says, but if it can't shake the insinuation that it is covering up still-worse problems, and persuade drivers it has fully fixed its technical problems, then the cost in lost sales will balloon, something that could take years to reverse.

As if that's not pressure enough, Mr Toyoda is having to choose between answering questions in his halting English, in which case nuanced answers could be misinterpreted, and using a translator, with its own awkwardnesses. It appears he will do the latter.

These might be the highest stakes Toyoda has played for since the president's grandfather, Kiichiro Toyoda, took the family looms business into car manufacturing in 1933.

Some people, including the governors of four states where Toyota has US factories, have suggested that the political outcry is motivated by the desire to damage Toyota, to the benefit of US-headquartered car makers, including General Motors and Chrysler, in which the American taxpayer has big stakes after a bailout. But this is really about something much more emotive than American dollars. It's about American lives.

It is five months since Toyota first announced it was recalling some models because of concerns that accelerators could become locked, sending the cars speeding out of control. If Mr Toyoda stays around in the hearing room today, he will be able to witness the testimony of Fe Lastrella, whose son, daughter, granddaughter and son-in-law were killed in a speeding Lexus last August, a tragedy that became national news in the US.

Toyota is following the strictures of dealing with a major product recall, including keeping some dealerships open 24/7 to make repairs, and piling money into newspaper and television adverts. But its efforts to restore confidence are complicated by two unfolding dramas. The first is over whether it should have responded earlier to a rising number of complaints about "unintended acceleration", something that might have averted tragedy. The second is whether, today, it really has a grip on what is causing its problems.

That second issue, the potentially most dangerous, was already being hashed out on Capitol Hill last night, in the first of the three political hearings, of which Mr Toyoda's appearance before the House oversight committee today is the second. In front of the House energy committee, the head of Toyota's US business, Jim Lentz, rejected a suggestion from lawmakers, following up on media investigations, that the causes of unintended acceleration were not limited to the official explanations given by Toyota. At the start of this month, Mr Lentz was travelling US television studios declaring that the incidents were the result of two defects: sticky pedals and slipping floor mats, lawmakers said. Except that a week earlier, Toyota had written to the committee saying sticky pedals were rarely a cause. And a random sample of complaints to Toyota's driver hotlines revealed that 70 per cent did not implicate either sticky pedals or floor mats.

Bart Stupak, a Democrat sub-committee chairman, accused Mr Lentz of "misleading the American public". But the Toyota executive dug in to insist that there were no grounds to the speculation that something more fundamental is wrong with its cars. In the early 2000s, the company began producing vehicles with an electronic throttle control system that severed the mechanical link between the accelerator pedal and the engine. In place of the cable that used to connect the two, a computer and sensor system now communicates an accelerator pedal's position to the engine throttle, telling the car how fast it should go. There has been speculation that computer faults or electrical interference might be a cause, although the National Highway Traffic Safety Administration (NHTSA), the regulator, has found no evidence so far.

Everyone involved remembers the case of Audi in the Eighties, which had to make a string of vehicle recalls amid more and more cases of unintended acceleration, and which saw its US sales collapse by more than 80 per cent in five years. For Toyota, which sold 2.2 million vehicles in North America in its last fiscal year, this is a pivotal concern.

Mr Lentz's good faith would have been treated less sceptically if it had not emerged on Monday that Toyota's safety managers boasted of saving the company $100m by persuading US safety regulators to limit an early recall of potentially defective vehicles. An internal presentation put that 2007 recall, which affected just 55,000 vehicles, on a list of "Wins for Toyota Safety Group".

The presentation was among the thousands of documents subpoenaed by Congress, and whose revelations have only added to the hostile atmosphere. In addition, transcripts of hotline complaints showed that Toyota representatives commonly responded to drivers by concluding that the events they were describing simply could not have happened.

Investigators are now crawling all over Toyota, not just Congressional committees but also criminal prosecutors in New York, where a grand jury subpoenaed information earlier this month. Class action suits filed by lawyers on behalf of drivers are also accumulating across the US.

Mr Toyoda's testimony to the House oversight committee was released last night. In it, he promises much better communication internally and with regulators to tackle safety concerns as soon as they arise. And he said Toyota had grown so fast, its culture had not matured fast enough to deal with these issues.

But most of all, he says sorry, and specifically to Mrs Lastrella and her family. "I would like to send my prayers again, and I will do everything in my power to ensure that such a tragedy never happens again."

Akio Toyoda: 'The Prince'

In Japan, they call him The Prince. Not because Akio Toyoda is known for any Machiavellian qualities – if anything, the opposite – but because he has been destined to inherit the presidency of Toyota since joining the company as a lowly manager in 1984. His is the family destiny: his grandfather, Kiichiro Toyoda, founded the company in 1933; his father, Shoichiro, ran it for most of the Eighties and Nineties. It was only in June of last year that he took the mantle of president, giving up the last playboy aspects of his lifestyle, including racing motor cars, a passion he enthusiastically chronicled on a public blog.

The quiet-spoken 53-year-old has not had a good crisis. While friends have said he is simply following the Japanese style of consensual leadership, he was pilloried for waiting until earlier this month to hold his first press conference addressing the issue, and his halting English was a dismay to the company's spin doctors in the US. He has also been uncomfortable with the prospect of appearing before an election-year Congressional panel, every bit as aggressive as the managerial bullying he suffered when he was still on the lower ranks at Toyota. Little wonder he wanted to leave the job of appearing before Congress to his better-placed lieutenants in the US – a stance that quickly became politically untenable.

Such missteps have led to a mounting criticism of his leadership. It has come as a surprise. On taking over last year, he promised a more hands-on style than other Japanese chief executives, using his MBA from the US and experience from a successful period running Toyota's Chinese division. His performance before Congress today could be the remaking of his reputation, or its final undoing.