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Toyota Pledges to Take Safety 'To the Next Level'

Fresh from a grueling appearance before Congress, Toyota's chief executive met with Transportation Secretary Ray LaHood on Thursday and pledged "to advance safety to the next level."

Akio Toyoda then headed to Georgetown, Ky., to visit Toyota's largest North American manufacturing plant, which churns out the popular Camry, one of the models in the 6 million-vehicle U.S. recall.

Toyota Motor Corporation President Akio Toyoda
CNBC.com
Toyota Motor Corporation President Akio Toyoda

The cost to Toyota's reputation is only now starting to emerge. The world's biggest automaker is facing legal and PR problems on several fronts: a criminal investigation by federal prosecutors in New York; a probe by the Securities and Exchange Commission; and anger by U.S. dealerships in line to repair potentially millions of recalled vehicles. Toyota is offering customers new reimbursements for rental cars and other expenses.

Company lawyers are bracing for large numbers of death and injury lawsuits. The Senate Commerce, Science and Transportation Committee plans a hearing Tuesday and has asked LaHood, federal highway safety chief David Strickland and two Toyota executives — Toyota's North American president, Yoshi Inaba, and quality control official Shinichi Sasaki — to testify.

Transportation officials said Toyoda's meeting with LaHood lasted about 30 minutes and focused on the importance of safety and protecting consumers. Toyoda "promised to take the initiative to advance safety to the next level," according to a Toyota statement.

Back-to-back congressional hearings this week failed to clear up Toyota's slow actions in dealing with the defects and provide guarantees that the problems that led to sudden, unintended accelerations will be fixed.

At the hearings, Toyoda repeated the company's insistence that there was no link between the problems and the cars' electronic systems.

Many drivers filing complaints with Toyota and the government say their acceleration problems had nothing to do with floor mat interference or sticky gas pedals — the culprits the company is pointing to. Outside experts have suggested electronic problems.

House lawmakers tore into Toyoda, the grandson of the company's founder.

"I am embarrassed for you, sir," Rep. John Mica, R-Fla., said as he brandished an internal Toyota document showing the automaker estimated it saved $100 million by avoiding a broad recall over unintended acceleration in 2007.

The National Highway Traffic Safety Administration is seeking records on Toyota's recalls and is conducting its own review on whether electronics were behind the vehicle defects. NHTSA also continues to look into steering complaints from drivers of the popular Corolla model.

The Toyota logo is displayed on the grill of brand new Toyota RAV4s on the sales lot at City Toyota in Daly City, California.
Getty Images
The Toyota logo is displayed on the grill of brand new Toyota RAV4s on the sales lot at City Toyota in Daly City, California.

Toyota has recalled 8.5 million vehicles, more than 6 million of them in the United States.

In Japan, Toyoda's testimony in Washington was lauded. A crisis management expert at Kyodo Public Relations Co., Ryoichi Shinozaki, said Toyoda performed fine by Japanese standards.

But Shinozaki said the company's problems were deepening. "The hearing is over, but the crisis is only getting more serious," he said.

It may be a while before car buyers are convinced that Toyota really makes safe cars.

Toyota's January sales already fell 16 percent even as most other automakers rebounded from last year's dismal results. Analyst Koji Endo of Advanced Research Japan in Tokyo said he expects February sales, due out next week, to be down 30 percent to 40. Toyota's sales woes well could continue beyond that.

"It will take some time to feel the full effect of this," he said.

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