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Updated: February 24, 2010 14:36 IST

Toyota chief faces ‘crucial test’ in US hearing

AP
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Toyota Motor Corp. President Akio Toyoda. File photo: AP.
Toyota Motor Corp. President Akio Toyoda. File photo: AP.

Toyota President Akio Toyoda, faces increased pressure to win back consumer trust in his congressional testimony on Wednesday after the company’s U.S. sales chief failed to provide clear answers to the automaker’s slew of safety problems.

The national Asahi newspaper said in an editorial that Mr. Toyoda’s performance would be a “crucial test” for his company - and perhaps for Japan’s reputation among consumers globally.

His testimony “not only determines Toyota’s fate, but may affect all Japanese companies and consumer confidence in their products,” it said. “President Toyoda has a heavy load on his shoulders.”

Morning TV shows ran clips of a U.S. congressional panel grilling James Lentz, president of Toyota Motor Sales USA Inc., on Tuesday in Washington - while most Japanese were asleep.

But much more TV time in Japan on Wednesday was devoted to women’s figure skating at the Vancouver Olympics, an event in which Japan has a couple of medal contenders.

Toyota’s safety woes haven’t generated as much public concern in Japan because the bulk of the cars recalled - mostly over faulty gas pedals and floor mats - are in the U.S. and elsewhere. The only recall in Japan has been for the antilock braking system in the Prius gas—electric hybrid.

And while some Japanese have been critical of Toyota’s quality control, there is still generally strong trust in the company many regard as the flagship of Japan Inc.

Analysts in Japan said the questioning by members of Congress wasn’t overly harsh but Mr. Lentz did little to restore consumer confidence.

In his testimony on Wednesday, Mr. Lentz said the huge recalls of popular Toyota cars and trucks - totalling 8.5 million worldwide - may “not totally” solve frightening problems of sudden, unintended acceleration. Mr. Lentz apologized repeatedly for the safety defects.

Mr. Lentz “failed to clarify the cause of unintended acceleration, leaving American consumers unconvinced and concerned about safety,” said Ryoichi Saito, auto analyst at Mizuho Investors Securities Co. Ltd. “The American public will not buy uncertainty.”

Members of the House Energy and Commerce Committee also questioned Toyota’s insistence that the problems are mechanical and not linked to sophisticated electronics in the vehicles. Without a more vigorous investigation of the possibility that electronics are involved, Rep. Joe Barton said Toyota’s probe was “a sham.”

Japanese public attention will grow when Mr. Toyoda, the grandson of Toyota’s founder, appears before the House Oversight and Government Reform Committee on Wednesday. Mr. Toyoda speaks some English and has prepared an English statement, but is expected to mainly address the committee and the American public through an interpreter.

“People will be interested in seeing how Mr. Toyoda—san will perform,” said Koichi Nakano, a professor of political science at Sophia University in Tokyo, adding the “san” honorific to show respect. “People will be worried about that because he’s the Japanese man dragged to a very public arena and having to face a hostile panel of native English language speakers.”

In his prepared statement released in advance, Mr. Toyoda said he will accept “full responsibility” for the recalls. He also will offer his condolences over the deaths of four San Diego, California, family members in a Toyota crash in late August.

“I will do everything in my power to ensure that such a tragedy never happens again,” Mr. Toyoda will tell the committee. “My name is on every car. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers.”

“Quite frankly, I fear the pace at which we have grown may have been too quick,” his statement said. Toyota’s traditional priority of safety first, quality second and sales volume third “became confused,” it read.

His family name differs from the company name because the number of brushstrokes in “Toyota” - eight - was considered luckier than “Toyoda” with 10 strokes.

Some commentators in Japan have suggested that members of Congress may want to show they are tough on Toyota to make an impression on voters ahead of midterm elections later this year.

There is widespread public suspicion here that the intense scrutiny of the company may be partly politically motivated now that the U.S. government owns more than half of General Motors Corp. after its bankruptcy filing. Toyota overtook GM in 2008 to become the world’s biggest automaker. The U.S. government also has a minority share of Chrysler.

“Given the seriousness of some of the incidents, at least the allegations, it’s not unjustified to ask tough questions,” said Mr. Nakano.

Still, “most people in Japan think that Toyota cars are very, very safe and reliable,” he said. While some recognize Toyota has quality problems, they may think “that it’s being overplayed - and if that’s the case it must be because of political gains.”

Trade Minister Masayuki Naoshima, told reporters on Wednesday that he felt Toyota was “responding very sincerely” to the questioning so far. But he said it may be difficult to thoroughly convince the American public with hearings alone.

“After the hearing, its action will be closely monitored and judged,” he said.

The Asahi newspaper said Mr. Toyoda’s testimony would be a chance for him to correct the company’s “unthinkable” response to the crisis, which even some Japanese have criticized as slow.

“Can he really deliver honest and clear explanation and demonstrate leadership of a sincere president who does not run away from his responsibility in safety and quality?” it asked in the editorial.

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