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Toyota to boost brakes; Toyoda sidesteps Congress

Toyota Motor Corp said on Wednesday it would install a system to ensure braking trumped acceleration in all new car models as it seeks to limit the damage from its vast recall woes.

autos Updated: Feb 17, 2010 22:12 IST

Toyota Motor Corp said on Wednesday it would install a system to ensure braking trumped acceleration in all new car models as it seeks to limit the damage from its vast recall woes.

But in a statement unlikely to appease U.S. lawmakers who want him to appear at U.S. congressional hearings on the recalls later this month, Toyota President Akio Toyoda said he believed North America chief Yoshimi Inaba was the logical choice to testify.

"I have full confidence in the management of Toyota Motor North America, led by Mr Inaba, and I believe he is the best placed to testify," Toyoda told a news conference.

U.S. Rep Darrell Issa, the top Republican on the House Oversight and Government committee, has said he would support a subpoena to force Toyoda's appearance to explain the automaker's handling of the series of recalls totalling more than 8.5 million vehicles worldwide for problems with braking and unintended acceleration.

Toyoda said he planned to visit the United States at some point but the best timing needed to be worked out. He would consider whether to testify when and if there was a request, he added.

"I will focus on internal reform to improve quality and support Inaba from our headquarters," Toyoda said.

Toyoda's news conference follows the automaker's announcement this week it would halt U.S. production further to match slowing sales and as U.S. safety regulators opened an investigation into whether it had acted in a timely fashion on the recalls.

The recalls have dealt a devastating blow to Toyota's reputation, built on quality, safety and reliability, which not long ago was the envy of the auto industry.

Up to 34 crash deaths have been blamed on unintended acceleration in Toyota vehicles since 2000, according to consumer complaints filed with U.S. regulators.

The National Highway Traffic Safety Administration (NHTSA) has said it believed five deaths were related to floor mats and none to the "sticky pedal" problem.

The NHTSA said it was continuing its review of complaint alleging steering problems in 2009 and 2010 Corollas to see if a formal investigation was warranted.

Toyota's quality chief, Shinichi Sasaki, said an internal study had shown drivers had complained about a change in steering response compared with the older Corollas, which was possibly due to a switch from a hydraulic power steering system to an electric one.

Sasaki said there would only be a recall if the issue was deemed to be a safety breach.

CORRECTIVE MEASURES Toyota's brake over-ride system, similar to those used by a number of automakers, would cut engine power when the brake and accelerator pedals were engaged at the same time.

Toyota chief Toyoda said the world's biggest automaker may have grown too fast, neglecting adequate training of staff to ensure quality did not trail behind.

"The basic rule of the Toyota Production System is to only build as many cars as there is demand for, and we ourselves broke that rule," he said during his third news conference in two weeks.

Toyota said it would set up training centres for quality improvement around the world, much like it did to train its growing overseas staff on Toyota's famous manufacturing process.

Toyota said it would also assign a chief quality officer in each major region as part of its "Special Committee for Global Quality" announced earlier this month.

PRODUCTION CUTS The latest cutbacks at its U.S. factories throw further doubt on the pace of Toyota's earnings recovery. Only two weeks ago, the company estimated the recalls would hit global sales by 100,000 units in the financial year to the end of March.

"There's no question that sales are suffering (in the United States)," said Mamoru Kato, analyst at Tokai-Tokyo Securities.

"They've estimated a 100,000-unit impact for this financial year. If this multiplies to several hundred thousands next (financial) year, that could lead to a year-on-year fall in sales, and a big hit to earnings," Kato said.

Toyoda said production cuts had been within expectations so far and he believed the company could stem further sales declines, although it was impossible to tell for sure.

Toyoda, the grandson of company founder Kiichiro Toyoda, faces one of Toyota's deepest crises just seven months into his job.

The company is already suffering from declining sales in the United States, its biggest and usually most profitable market, after it suspended sales of about half its inventory of vehicles including the Camry and Corolla sedans due to the potentially sticky accelerator pedals.

In January, U.S. sales dropped 16 percent to the lowest level in more than a decade and another sharp decline is expected for February as Toyota dealers expect repairs to inventory will take most of the month to complete.

REPUTATION DAMAGED Some analysts said they saw limited direct damage from the U.S. production cuts announced on Tuesday. They said the bigger concern was the harm to Toyota's image as U.S. regulators look into the possibility of any wrongdoing by the automaker.

"Reduction of estimated output of a little over 10,000 vehicles would have only a limited impact, while the move shows Toyota's careful efforts to minimise the impact of a drop in sales and a rise in incentives," Nomura Securities analyst Shotaro Noguchi said.

Like most automakers, Toyota books revenue when it produces vehicles and ships them to dealers.

By cutting output, it is choosing to take a sales hit to keep inventories of unsold vehicles from rising.

Prior to the news conference, Toyota shares ended flat at 3,380 yen in Tokyo, while rivals Honda Motor Co was up 3.8 percent and Nissan Motor Co was up 3.19 percent.

Toyota shares have fallen a fifth from a peak on Jan. 21, wiping out more than $25 billion in market capitalisation.