Toyota head prepares for Congress grilling on recalls | autos | Hindustan Times
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Toyota head prepares for Congress grilling on recalls

autos Updated: Feb 19, 2010 22:03 IST
Reuters
Toyota Motor Corp

Toyota Motor Corp's head bowed to pressure to testify before US lawmakers and explain the company's safety crisis, becoming the highest profile Japanese executive to face such a grilling from Congress.

Akio Toyoda, the grandson of Toyota's founder, said on Friday he intends to provide a "sincere explanation" of the problems that led to the recall of millions of vehicles when he testifies next Wednesday before a congressional panel.

His decision ends days of uncertainty about how the embattled automaker would respond to calls for a better response to its safety issues. Toyoda originally said he had no intention of appearing before Congress himself, drawing criticism from industry analysts and Japanese politicians.

"Toyota gave the impression that it was not serious enough about the issue or taking the US market too lightly when it said Mr. Toyoda had no imminent plans to travel to the United States," said kabu.com Securities market analyst Tsutomu Yamada.

The US House Oversight and Government Reform Committee invited Toyoda on Thursday, a month into a safety crisis that has tarnished the company's formerly first-rate reputation for quality, hurt sales and unleashed dozens of lawsuits.

"It's good that he has decided to accept (the invitation)," said Seiji Maehara, Japan's transport minister.

"But it's a shame there was flip-flopping on the decision."

Toyoda had originally said he would send the company's North American chief to testify but later changed his plans.

"I am grateful for the opportunity to go to America and I intend to cooperate fully," the head of Japan's largest company and the world's No. 1 automaker, told reporters on Friday.

The last senior Japanese executive to give testimony before the US Congress was the head of tire maker Bridgestone in 2000 after a series of crashes linked to the handling of some Ford Motor Co SUVs, according to media reports.

Toyoda said the company is investigating the causes of the unintended acceleration and braking that have led to a recall of about 8.5 million cars worldwide.

Shares of Toyota closed down 1.8 percent in Tokyo on Friday. The stock has fallen 22 percent since Jan. 21, wiping out more than $30 billion of market capitalization.

BIG PICTURE
Analysts and public relations experts stressed the need for a clear and honest testimony from Toyoda. By appearing to dodge questions, he could further stain Toyota's reputation.

"Rather than getting bogged down with the details, I think (Toyoda) should use this as a chance to communicate Toyota's corporate philosophy," said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities in Tokyo.

"What's missing from Toyota right now is the big picture."

Executives giving such testimony should also expect difficult questions, experts said.

"The important thing is that they actually answer all questions and don't dodge or run away," said Shoichi Yoshikawa, chief executive of public relations firm Hill & Knowlton Japan.

Media shy Toyoda will have to craft and deliver a message that resonates with millions of consumers, investors, employees and lawmakers around the world.

He is likely to undergo intense preparation. Toyota may hire lawyers to drill him with mock questions, one consultant said.

A company source said it not yet been decided whether Toyoda would speak in Japanese or English, but the company has already contacted some translation companies.

Toyoda, who has a degree from Babson College in the United States, has at times appeared uneasy with the heightened scrutiny and sometimes struggled with comments in English.

"I would recommend that he speak in Japanese to avoid misunderstanding. If he speaks in English, he needs to prepare his statements very well," said Shinichi Tanaka, the president of public relations firm Fleishman-Hillard Japan.

Toyota has recalled more than 6 million vehicles in the United States for problems involving the accelerator pedal becoming stuck, either by a loose floor mat or because of a glitch in the pedal assembly.

Up to 34 crash deaths have been blamed on unintended acceleration in Toyota vehicles since 2000, according to complaints tracked by US regulators.

A separate recall is under way to fix software controlling the brakes on Toyota's iconic Prius hybrid, while US safety regulators have also begun a preliminary investigation into complaints about steering problems in late model Corollas.

The House oversight panel said it had also issued a subpoena for internal documents Toyota had fought to keep sealed in a legal battle with a former employee who says the automaker routinely hid evidence of safety problems.

MADE IN JAPAN
Japan's foreign minister, Katsuya Okada, said the recalls could hurt the reputations of other Japanese firms abroad.

"This is an issue related to the safety of an individual company, Toyota, but it is also about 'Made in Japan' ... an issue that could affect the credibility of Japanese technologies and companies," he said at a news conference.

Daiwa Institute of Research estimated in a report that Toyota recalls could reduce Japan's nominal gross domestic product by about 600 billion yen ($6.5 billion).

Daiwa said its estimate was based on a scenario where recalls could depress domestic auto output by 300,000 units. That would also represent about 3 percent of the roughly 10 million cars and trucks produced in Japan annually.

Toyota's safety woes are deepening at a time when automakers worldwide are struggling to emerge from a deep sales dip that led to the bankruptcies of General Motors and Chrysler.
Toyota's US sales dropped 16 percent in January and are expected to take a big hit in February as well.