Strategy

Does D.C. have it in for Toyota?

U.S. congressional inquiry raises concerns about the politics of 'Government Motors.'

Washington stands accused of launching a self-serving witch hunt into Toyota’s spectacular fall from grace — thanks, in part, to U.S. Secretary of Transportation Ray LaHood, who warned Americans to stop driving all recalled Toyota vehicles before facts forced him to admit his advice was unwarranted. Indeed, with support from the governors of Alabama, Indiana, Kentucky and Mississippi, which all house Toyota plants, more than a few observers now wonder if public ownership of General Motors and Chrysler influenced the decision to hold congressional hearings into Toyota’s product woes.

The Japanese automaker rocked the automotive world in recent months when it disclosed a number of potential safety issues on more than eight million vehicles globally. These include ill-fitting floor mats and sticky gas pedals that have alledgedly led to fatal accidents involving unexpected acceleration. The multiple recalls have severely dented Toyota’s reputation for producing better and safer cars than North American competitors — at least in the all-important U.S. market, where Toyota’s sales declined 9% on a year-over-year basis last month. (GM and Chrysler posted modest gains in February while Ford, which avoided the need for government assistance, roared into first place with a 51% increase.)

In February, Toyota president Akio Toyoda — grandson of the company’s founder — met U.S. demands to testify at federal government hearings into the affair. With tears in his eyes, he apologized for the need to recall cars sporting his family name (and for any injuries or loss of life that may have resulted from them), but his words fell on some deaf ears. Ohio Democrat Marcy Kaptur waved a book touting Toyota quality at the executive while expressing dissatisfaction with his apology. “I don’t think it reflected adequate remorse for those who died,” she said.

Japanese company officials have been forced to face Congress before. Bridgestone executives, for example, were questioned when Firestone tires on Ford vehicles were linked to dozens of deaths a decade ago. In Toyota’s case, more than 30 deaths are under investigation for possible links to unexpected vehicle acceleration. Nevertheless, company supporters insist Toyota is getting a bum rap, comparing the congressional investigation to U.S.-led military tribunals during the Second World War and the nasty Japan-bashing that cropped up in the ’80s over the Asian nation’s rising influence in the U.S. market.

These supporters point out that auto recalls (and trying to avoid them) are as American as apple pie — witness GM’s recall in early March of 1.3 million cars with potential power-steering problems. Ford holds the record, thanks to an ongoing recall of more than 14 million vehicles with cruise-control switches linked to sudden car fires.

Some Toyota supporters claim U.S. politicians are using the company to score easy political points. Others think the automaker is being hung out to dry because it helped drive GM and Chrysler into bankruptcy.

Whatever the case, attitudes toward Toyota are clearly harsher in the States than Canada. (In this country, sales actually jumped 25% last month, despite federal rumblings about the need for a political probe.) “When people were dying from tampered Tylenol in the ’80s,” says American business professor Scott Testa, who teaches at Cabrini College in Philadelphia, “Johnson & Johnson pulled the product and gave everybody money back. And they stopped advertising. But I am still seeing ads for Toyota minivans. That’s insanity.” Canadian auto sector analyst Dennis DesRosiers couldn’t disagree more. Noting public hearings into recalls don’t always take place, he says potential hidden motives are “indeed one of the more important sub-stories” of political reaction to this recall. “If Toyota is guilty of something,” he says, “it is promising bullet-proof vehicles when this is impossible. They are also guilty of producing vehicles that are not idiot proof.”

Consumers, DesRosiers adds, need to understand that a lot of the complaints levelled at Toyota vehicles resulted from “idiot drivers” and “aftermarket, not Toyota, floor mats.” There are real problems with some vehicles, but they are being addressed and don’t justify “the feeding frenzy around this issue.”