Page last updated at 23:05 GMT, Wednesday, 24 February 2010

Toyota boss Akio Toyoda responds to US Congress

Analysis
By Jorn Madslien
Business reporter, BBC News

Akio Toyoda testifies in Congress

Toyota president Akio Toyoda has faced an almost three-and-a-half hour long grilling from US politicians over the carmaker's handling of problems that have not only led to the recall of millions of vehicles worldwide, but also been linked to hundreds of injuries and reports of a number of deaths.

It seems clear that Mr Toyoda is introducing a number of fundamental changes to how the company deals with customers' security concerns, as well as how it relates to regulators and shares information with them across the world.

But its assurances that faulty electronics were not the cause of faulty accelerator or brake pedals in Toyota or Lexus models do not appear to have convinced the politicians. Toyota's reluctance to remove encryption of so-called "black boxes" in its cars also upset the committee members.

Many of the politicians were also less than impressed with Mr Toyoda's responses to numerous questions about why it had taken Toyota so long to respond to complaints about sticky pedals.

Mr Toyoda told them he did not know how long the company had known about the problem and insisted he himself only found out in December 2009.

Further investigations into safety issues by the National Highway Traffic Safety Administration (NHTSA) will continue for some time and even involve other carmakers so there is every reason to expect more problems to be uncovered, resulting in further vehicle recalls - if not by Toyota than perhaps by some of its rivals.

And in many ways, further investigations may prove to help Toyota.

US Transport Secretary Ray LaHood said he will not stop investigating this affair until the carmaker has convinced him its cars are perfectly safe, at which point he would give them a clean bill of that could help revive the company's tattered image.

As such, Mr LaHood, who has often been seen as Toyota's nemesis, could turn out to be Toyota's best friend.

ANALYSIS AS IT HAPPENED
2146 It is humiliating for Mr Toyoda to admit that he did does not know when Toyota first knew about the problem with pedals causing cars to accelerate as he is bombarded with reports that suggest the company has known for at least a year.

The embarrassment becomes even more acute as Mr Inaba admits the firm knew about sticky pedals in Europe, but knowledge about the problem was not effectively shared within the company.

2135 The questions about whether faulty electronics caused the accelerator pedals to stick are just not going away, but Toyota at last comes up with an answer that satisfies many committee members as it promises that an independent, outside advisory board will look into the issue.

2115 A moment that is likely to be seen as embarrassing for Mr Toyoda comes as he is presented with an internal Toyota document that describes the NHTSA under the Obama administration as "not industry friendly". Neither he nor Mr Inaba is prepared to either stand by the document or to distance themselves from it.

2105 With Toyota's competitors in Detroit making their "black box" data available to NHTSA investigators without encryption, the Japanese company is urged to make a commitment to do the same with its black boxes, but responds by insisting that it would require customers' authorisation to do so - a response that does little to calm concerns about what committee members see as a culture of secrecy within the company.

2037 Mr Toyoda comes across as vague when questioned about what he knew when, insisting that he only found out about the pedal problems in December 2009, even though NHTSA officials had visited Tokyo to inform the company of this at an earlier date - though he acknowledges that he knew about the issue, albeit in scant detail, as early as last summer.

2028 Toyota Motor North America's Mr Inaba comes under pressure as a committee member presents a Toyota document from 6 July 2009 that identifies the pedal problems that led to recalls in February this year. As he struggles to give a satisfactory answer it becomes clear that committee members are less than impressed.

2005 Mr Toyoda's insistence that information sharing will be improved within the company will go some way to appease committee members, but it does little to address Mr LaHood's expressed concerns about a lack of autonomous decision making power by Toyota Motor North America.

1949 Mr Toyoda's insistence that the pedal problems were not caused by electronics problems is clearly not accepted by the committee's chairman and members. Given that questions about electronics will undoubtedly continue to flow during this session there is every chance that doubts will remain, regardless of what he says.

1939 It is becoming clear that Toyoda, who is joined by Yoshimi Inaba, president and chief executive, Toyota Motor North America, is here to announce that the company will introduce safety systems that go beyond minimum regulatory requirements in the US.

He obviously hopes that this will mollify customers who might once again see Toyota's models as superior to those made by rival carmakers.

1933 Mr Toyoda completes his statement by pointing out that his name is on every car and to reiterate his promise to restore the trust of Toyota's customers.

Indeed, making this statement is a key part of such efforts. At some stage Toyota said Mr Toyoda would not appear in front of the committee, but that decision was swiftly reversed after it was met with an uproar among industry analysts who described it as a public relations disaster.

But for Toyota, much damage has already been done and there is a widely held belief within the industry that the recalls and the way Toyota had dealt with them will hit both sales and the bottom line for months if not years to come.

1932 Mr Toyoda goes on to insist managers should drive Toyota and Lexus cars to make sure they fully understand the product and any problems. This is consistent with the company's Genchi Genbutsu, or "go see for yourself" principle, which has been in place for years, so it really begs the question why this is not being done already.

1931 Mr Toyoda explains what changes will be made to the way Toyota decides on recalls, and much of this seems to address questions raised by committee members during the previous session.

Up to now, recall decisions have been taken by engineers. In the future, customer concerns will be taken more seriously - a hint that reports of faults will not need to be proven by Toyota's own technical experts before recalls are made, but rather the mere fact that people are worried will be enough to warrant action.

As an additional safeguard, Mr Toyoda says it will bring in independent experts who will be given powers to pipe up if they feel Toyota is too slow to respond - again, a promise that will go some way to mollify committee members.

1928 Mr Toyoda's apology to members of the Saylor family refers to an accident that happened back in August. Several members of a family traveling in a Lexus died after the accelerator pedal got stuck, sending the car surging through a junction, swiping another car, then through a fence and eventually into a riverbed below where the car caught fire.

1927 Mr Toyoda admits that Toyota has grown too fast and this chimes with his autumn speech, where he said "Toyota has become too big and distant from its customers".

But it seems Mr Toyoda has carefully avoided mentioning profit motives in his list of priorities, but concerns about the company's first ever loss of 436.9bn yen ($4.4bn; £2.9bn at the time) for the fiscal year to March 2009 was a key reason for his appointment later that year.

Earlier, Chairman Edolphus Towns said that Toyota had at times been more concerned with profit than with customers safety.

1925 Mr Toyoda moves on to insist that the company always stops, strives to understand problems and makes improvements.

This is at the heart of the congressional hearing as the company is accused of having responded too slowly to known safety concerns raised by its customers.

1924 Mr Toyoda has also taken responsibility for the quality problems at Toyota and for the way customers have become uncertain about their safety.

Indeed, the main reason why he became president of the company last year was because he felt Toyota's former top management had lost their way. As early as in October last year he publically slated their efforts in a highly vocal speech, in which he said Toyota was on the verge of "capitulation or death".

1922 Mr Toyoda's opening statement comes across as an attempt to establish his credentials. As the grandson of Toyota's founder, he stresses his love for cars and for Toyota, and this is clearly is beyond doubt.

But he is also subtly reminding us that Toyota is a major manufacturer in the US, one that employs 20,000 American people.

1904 It seems likely that Toyota will have to remove the encryption of its so-called "black boxes" that record what happens during a car's journey. Mr LaHood says that would be a good idea after he was reminded that US carmakers' black boxes can be read by the NHTSA, but those in Toyota cars cannot. Some 80% of cars in the US are fitted with black boxes, and Mr LaHood says he will study whether such technology should be made compulsory in all new cars.

1800 It seems likely that the heat will be turned on General Motors after LaHood was asked if he would urge the US automotive giant to speed up its cooperation with the NHTSA in connection with an ongoing investigation into GM models that have attracted more complaints over a longer period than any of the Toyota models.

1750 The NHTSA has clearly got the bit between its teeth, with Mr LaHood announcing a comprehensive review of the electronics in all cars, not just Toyota's models.

Given that there were 23 million recalls in the US last three years, it is reasonable to expect that problems will be uncovered elsewhere too, so no one should be surprised if this results in further large-scale recalls from other carmakers.

1728 As the hearing takes a break, it is becoming increasingly clear that Mr LaHood could turn out to be Toyota's best friend.

So far, he has insisted he will not stop investigating this affair until the carmaker has convinced him its cars are perfectly safe - and such a clean bill of health from the NHTSA, if and when it comes, could help revive the company's tattered image.

1724 The entire motor industry must be breathing a sigh of relief as Mr LaHood is resisting suggestions that he should, on the spot, come up with minimum safety requirements for automobiles, as such requirements could prove very costly for all of them.

1714 It bodes well for Toyota that Mr LaHood is dismissive of suggestions that Toyota has a culture of secrecy, though only up to a point, as he also says the company had been slow in giving NHTSA the information it needs.

1700 A comment from Mr LaHood suggests NHTSA investigations could continue long after this hearing has been completed. He says a claim by US media that Toyota has long known about problems caused by software issues is "on our radar".

1640Mr LaHood makes it clear that this hearing is being held in order to improve safety and has nothing to do with any animosity towards Toyota or Japan.

Mr LaHood has been accused of bias, on the basis that the US government owns a 61% stake in Toyota's arch rival General Motors (GM), with one US governor having previously said the hearing is giving the impression that the government is discriminating against a direct competitor.

1625 US Transport Secretary Ray LaHood says he wants to establish whether it is true, as was suggested in Tuesday's hearing, that the problems that led to accelerator pedals getting stuck were caused by electronic faults - rather than driver error, floor mats or a sticky pedal, as Toyota has been suggesting.

Toyota has previously insisted that its electronic throttles are not defective, but the House Energy and Commerce Committee has not yet accepted that Toyota understands what caused some cars to surge out of control.

1620 The hearing opens with Chairman Edolphus Towns accusing Toyota of having known about accelerator and brake pedal problems long before they led to deadly accidents that have claimed 39 lives so far.

Key to his opening statement is a suggestion that Toyota had sought to influence the National Highway Traffic Safety Administration (NHTSA) to block the discovery of safety defects, and that NHTSA officials had been working with Toyota at times. The accusations could prove very damaging for both Toyota and NHTSA, regardless of whether or not they are proven to be true.



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