More Toyota duplcity, this deserves a topic of it's ownl

[Byteme]

Toyota: It's Getting Even Worse
By John Rosevear
February 17, 2010



Toyota (NYSE: TM) has been on the hot seat for months over safety defects with a number of different vehicle models. The problem, as you'll recall, isn't so much the safety issues -- they're bad and they need fixing -- as it is the company's longtime pattern of responding to problems with a mix of denial and foot-shuffling.

News flash: We can apparently add "regulatory bamboozlement" to that list.

According to Bloomberg, Toyota's Washington office hired former regulators from the National Highway Traffic Safety Administration (NHTSA), the car-safety arm of the Department of Transportation, and put them to work talking NHTSA out of forcing Toyota to recall cars.

It'd be easy to say, "Eh, that's business nowadays, they all do it," except that they don't: Ford (NYSE: F), General Motors, Chrysler, and Honda (NYSE: HMC) all say they have exactly zero ex-NHTSA people employed to deal with the agency on defects.
Toyota, once again, is a unique special flower.

It isn't going away
All of this negative news coverage has had at least two effects: Toyota's sales seem to have taken a hit, and officials in high places in both the U.S. and Japan have gotten cranky. On Tuesday, the Department of Transportation ordered Toyota to turn over documents related to the various safety issues. That may not sound like a big deal, but it is -- the DOT is aggressively looking for evidence that Toyota knew of safety defects but didn't take appropriate action.

And if they find that evidence? Oh boy. With Secretary of Transportation Ray LaHood personally involved, it's clear that the heat -- inside NHTSA and inside Toyota -- is now intense.

Is there fire behind the smoke?
Meanwhile, the company's senior management keeps trying to beat back the flames. In a press conference in Tokyo on Wednesday, Toyota made a number of interesting revelations:

The Corolla could be next. Responding to reports of steering issues with the Corolla, Toyota said that they are actively investigating and made a point of noting that they are considering a recall. The Corolla is the world's best-selling car. A global recall, for a serious safety defect, would be a huge deal.

Brake-system modification to become standard on all new Toyotas. Control systems will be modified to ensure that pressing the brake pedal always overcomes acceleration. (Yes, fellow car geeks, this one's an eyebrow-raiser. I look forward to your comments.)

Toyota is creating a global quality task force. You mean they didn't have one already? Seriously?

Toyota will add more black-box recorders. Sounds great, but these are supposed to become mandatory in the U.S. by 2012 anyway.

Toyota is cutting production due to declining sales. Two U.S. factories will be idled for a combined total of 14 days. The company estimates that it has lost 100,000 sales due to the safety mess during this fiscal year, which ends in March.

Also, company president Akio Toyoda said that yeah, maybe they've overreached a little: "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."

That's nice to hear, but it's not even the beginning of enough.

The upshot
Most consumer-facing companies have recalls every now and then -- Johnson & Johnson (NYSE: JNJ), Mattel (NYSE: MAT), Campbell Soup (NYSE: CPB), Newell Rubbermaid (NYSE: NWL) ... I could go on and on, and I haven't even mentioned the other automakers. But all of those companies have had their share of recalls, as have many others.

The recalls, by themselves, aren't Toyota's big issue. The issue is what have they been hiding? And more to the point, can we trust their products?

With Congressional hearings starting later this month, and the full attention of regulatory bigwigs focused on finding smoking guns in the interim, it isn't going to get easier for Toyota any time soon. How bad will the damage be long-term? Only time will tell.

   
 

[SVT666]

How the mighty fall.

[Tave]

Mix a few cocktails this evening, eh guv'na?

[S204STi]

Yikes.  This could be a real disaster.  But sometimes a correction like this is good for the system.

[Eye of the Tiger]

Go to hell, Toyota!

[CALL_911]

Ol' Akio isn't showing up to the congressional hearings either.

[Jon?]

With the economy in the shape it's in you don't want to hear about assembly line stoppage and less consumer confidence, but if the end result is that people who would never look at a domestic brand finally samples what they have on offer, I guess that works.

[GoCougs]

One has to be extremely naive if one doesn't believe that ANY large business worth its salt doesn't hire IP lawyers to skirt patents, or trial lawyers to skirt business regulations, or environmental lawyers to skirt environmental regulations.

[BimmerM3]

Makes me kind of glad I don't work for Toyota anymore.

[Laconian]

One has to be extremely naive if one doesn't believe that ANY large business worth its salt doesn't hire IP lawyers to skirt patents, or trial lawyers to skirt business regulations, or environmental lawyers to skirt environmental regulations.

AMEN! Every large company has its own dirty laundry.

I'm contemplating buying Toyota stock. The public has massively overreacted. Sure, Toyota took some shortcuts in its designs... and? Every car is built to a cost.

[GoCougs]

AMEN! Every large company has its own dirty laundry.

I'm contemplating buying Toyota stock. The public has massively overreacted. Sure, Toyota took some shortcuts in its designs... and? Every car is built to a cost.

Peel back the onion of a Ford or GM and you'll surely find all sorts of behind-the-scenes maneuvering that some or many would find unseemly.

[the Teuton]

Ol' Akio isn't showing up to the congressional hearings either.

This guy makes me facepalm. He just doesn't get it, does he?

[J86]

One has to be extremely naive if one doesn't believe that ANY large business worth its salt doesn't hire IP lawyers to skirt patents, or trial lawyers to skirt business regulations, or environmental lawyers to skirt environmental regulations.

What the hell do you think I'm in law school for.

[Rupert]

AMEN! Every large company has its own dirty laundry.

I'm contemplating buying Toyota stock. The public has massively overreacted. Sure, Toyota took some shortcuts in its designs... and? Every car is built to a cost.

What's their stock done in the last couple of months? Crashed like a rock?

[Laconian]

What's their stock done in the last couple of months? Crashed like a rock?

All the gains since the big crash have been erased and then some. It's like at 2003 levels.

[giant_mtb]

What's their stock done in the last couple of months? Crashed like a rock?

It was just above $90 around Jan. 18th or so...now it sits around $75.

[the Teuton]

It was just above $90 around Jan. 18th or so...now it sits around $75.

I'm surprised that's all of the hit its taken. I was thinking it'd go down to $50-60.

[giant_mtb]

I'm surprised that's all of the hit its taken. I was thinking it'd go down to $50-60.

As was I, really.  That'd put it right back down to its 52-week low from back in March, which was about $56.  Perhaps as the scandals continue to hit the news, it'll continue falling.  Seems to be becoming more stable, but it's probably a very news-driven stock, so we'll just hafta see how much more dirt the media/government digs up.

[Laconian]

As was I, really.  That'd put it right back down to its 52-week low from back in March, which was about $56.  Perhaps as the scandals continue to hit the news, it'll continue falling.  Seems to be becoming more stable, but it's probably a very news-driven stock, so we'll just hafta see how much more dirt the media/government digs up.

I wonder if the news companies are making money by short-selling the companies they are harping on.

[giant_mtb]

I wonder if the news companies are making money by short-selling the companies they are harping on.

Probs.

[cawimmer430]

You guys should read some Toyota/Lexus forums for enjoyment. Over there the folks talk about only two things: quality and reliability. All the time. Every friggin thread comes down to those two words. A topic on a friggin Pagani Zonda will turn into a Toyota quality vs "unheard of, overpriced and ugly Italian car maker with typical shabby Italian build quality" thread. 

The general consensus on those forums is that "Toyota is just fine and the media is overblowing things". Funny. When another car brand experiences recalls or quality problems those guys are the first to complain, make an elephant out of a fly and generally just bad mouth the brand. But when their precious, overrated Toyota is in the same boat, it's the fault of the media. Suuuuuuure. 

I must admit there is a bit of Schadenfreude in me at the moment. 

[sportyaccordy]

You guys should read some Toyota/Lexus forums for enjoyment. Over there the folks talk about only two things: quality and reliability. All the time. Every friggin thread comes down to those two words. A topic on a friggin Pagani Zonda will turn into a Toyota quality vs "unheard of, overpriced and ugly Italian car maker with typical shabby Italian build quality" thread. 

The general consensus on those forums is that "Toyota is just fine and the media is overblowing things". Funny. When another car brand experiences recalls or quality problems those guys are the first to complain, make an elephant out of a fly and generally just bad mouth the brand. But when their precious, overrated Toyota is in the same boat, it's the fault of the media. Suuuuuuure. 

I must admit there is a bit of Schadenfreude in me at the moment. 

No Lexuses that compete with MBs have been caught in the melee. They are still better cars.

[Jon?]

I must admit there is a bit of Schadenfreude in me at the moment. 

+1

No Lexuses that compete with MBs have been caught in the melee. They are still better cars.

What difference does it make if MB makes a competitor?   

[Byteme]

One has to be extremely naive if one doesn't believe that ANY large business worth its salt doesn't hire IP lawyers to skirt patents, or trial lawyers to skirt business regulations, or environmental lawyers to skirt environmental regulations.

Twenty years ago, well, even as recently as ten years ago, I would have agreed with you.  But not today.  After the Ford Explorer mess, Enron, and many other incidents involving financial houses, most companies are tryuing to play it pretty straightforward and up front.  Media exposure, the internet -where a stray memo get worldwide coverage in hours,  The ability of people to access information that was impossible just a decade ago means the risk of exposure is really too great.

You're right in that the large corporations have large legal staffs, but it's my experience, and I work with our lawyers daily on IP issues, work more to keep the company within legal bounds rather than searching for that elusive gap in the rules. Also most legal departments are more involved in cleaning up the mess left when the commercial side of the house does something they shouldn't have; something that could have been avoided had they first consulted with the legal dept.

Toyota's mistake, IMO, is their arrogance, they seem to think they can get a way with stuff becasue they are Toyota.  They've gne farther with this than most companies would have.  That might have worked ten years ago, but not today.   Couple that with the smell of covering up complaints and this situation is ripe to explode in Toyota's face.

I heard this morning on the news that Gov Rick Perry (Texas) is asking congress to "go easy on Toyota".  Remember Texas gave Toyota a sweetheart deal to locate the Tundra plant in the San Antonio area a few years ago.  

[Byteme]

More on this.  I love this from the sotry:  "I am concerned about the safety issue but at the same time I want to make sure that we balance this with jobs at a company that's been good for the United States," said Mr. Cuellar, the lone Texan on the House oversight committee, which plans to take on the Toyota recalls at a hearing Wednesday."  So are we planning to trade lives for jobs?
   


Politicians Rally to Toyota's Side


Lawmakers Worried About Jobs Wonder Whether U.S. Is Being Overzealous By NEIL KING JR.
Nearly 1,900 people work at the Toyota Motor Corp. truck factory that skirts Rep. Henry Cuellar's district in South Texas. The San Antonio Democrat also sits on a House committee that is digging into the car maker's safety problems, with hearings planned for next week.

All of which explains why Texas Gov. Rick Perry called Mr. Cuellar last week to put in a plug for Toyota.

"He said, 'Hey, Henry, will you please look at the other side of the issue? They have been a good company...Let's not pummel Toyota,"' Mr. Cuellar said of the conversation, which Gov. Perry's office confirmed.

A number of prominent politicians are going so far as to question the motives surrounding the federal safety probe. In a sign of how much the political landscape has shifted since the Japan-bashing of 20 years ago, a group of governors are siding with Toyota in the safety probe, while subtly jabbing at the safety records of U.S. car companies.

Their stance reflects lingering unease among conservatives over the government ownership stakes in General Motors Co. and Chrysler Group LLC, but also how entrenched foreign-owned car makers now are in much of the heartland.

Republican governors Mitch Daniels of Indiana, Haley Barbour of Mississippi, and Bob Riley of Alabama, as well as Democrat Steve Beshear of Kentucky, jumped into the fray with a letter last week to key congressional chairmen.

In the letter, sent to the heads of the House Committee on Energy and Commerce as well as the House oversight committee, the governors described Toyota as a victim of an overly aggressive press and said the company had responded to its safety problems in a more "emphatic manner" than any other car company under scrutiny by the Department of Transportation.

The governors then questioned whether federal regulators could be fair toward Toyota, considering the government's "obvious conflict of interest because of its huge financial stakes" in GM and Chrysler.

Mr. Daniels "was making an appeal for basic fairness," said the governor's spokeswoman.


Gov. Perry sent his own letter Tuesday to Rep. Joe Barton, a fellow Texan and the ranking Republican on the House Energy and Commerce Committee, which plans to hold Toyota hearings Tuesday. Gov. Perry lamented that "negative news [on Toyota] is being encouraged by plaintiffs' trial lawyers, union activists and those interested in cutting into Toyota's market share."

Administration officials reject the suggestion there is any conflict in their oversight of Toyota. "We take auto safety very seriously and base all decisions for investigations on the merits of the data regardless of who manufactures the vehicle," said Olivia Alair, spokeswoman for Transportation Secretary Ray LaHood.

Toyota has major car-assembly and engine plants in Indiana, Kentucky, Alabama and Texas, as well as in West Virginia, employing close to 18,000 people combined. The company has temporarily halted a $1.3 billion Prius factory in Mississippi that is meant to employ 2,000 workers.

U.S. Toyota officials insist they had no hand in the governors' missive, but they did applaud it afterward. Toyota officials also have been reaching out to lawmakers like Mr. Cuellar, who are worried that a sustained dent to Toyota's reputation could hurt jobs in their districts.

"I am concerned about the safety issue but at the same time I want to make sure that we balance this with jobs at a company that's been good for the United States," said Mr. Cuellar, the lone Texan on the House oversight committee, which plans to take on the Toyota recalls at a hearing Wednesday.

In Japan, some Toyota executives have privately questioned whether the U.S. government's majority ownership of GM has colored the Toyota investigation. GM is Toyota's largest competitor, both in the U.S. and overseas. One senior Japanese auto executive in the U.S. described the probe as "60% political," and asked whether federal regulators were "trying to help GM by vilifying Toyota."

Toyota's troubles have caused discomfort in congressional offices with ties to the auto maker. When Ford Motor Co. was embroiled in a recall furor a decade ago over Explorer rollovers, the Senate Commerce Committee?then chaired by Arizona Republican Sen. John McCain?swiftly launched an investigation and called top Ford executives to testify.

The current committee chairman, West Virginia Sen. Jay Rockefeller, has proceeded more cautiously in the case of Toyota, a company he spent years luring to his state. The auto giant has invested over $1 billion in West Virginia since 1995, and employs almost 1,200 people. The Democratic senator has a page on his Web site devoted to Toyota's role in the state.

The committee's staff is now gathering materials on safety complaints from both Toyota and the National Highway Traffic Safety Administration. Sen. Rockefeller plans to hold a hearing on the matter March 2.

In a statement, his office said the senator's "primary focus has been on passenger safety and how well our monitoring and recall procedures work to protect passengers." At the same time, the statement praised how Toyota was "making every effort to minimize the impact on its U.S. work force."

[Raza]

The more people who die in fiery Toyota crashes, the fewer jobs we'll need.

[565]

Eh everyone makes a bit deal about this, but usually these things tend to blow over.  I'm not worried about Toyota in the least.

The automakers in trouble are still the domestics.  Flashpoints like this aren't what kill automakers.  The Corvair didn't bankrupt GM.  The Explorer controversy didn't obliterate Ford.  People get all angry for a while, and then they forget.  What kills automakers is years and decades of mediocrity.  What bankrupted GM in the end wasn't something dangerous or shocking in the short term, they were products disappointing and uncompetitive in the long run.

Toyota will fix this, Consumer reports will put them back on the recommended list, Toyota goes back to being anal retentive about car quality, and life goes back to normal.  The domestics think this is somehow their golden moment to get ahead.  They are in for a massive disappointment if they think so.  The only way for domestics to fight back is with decades of continued products clearly consistently superior to the competition.  That is the only way.

[r0tor]

It'd be easy to say, "Eh, that's business nowadays, they all do it," except that they don't: Ford (NYSE: F), General Motors, Chrysler, and Honda (NYSE: HMC) all say they have exactly zero ex-NHTSA people employed to deal with the agency on defects.
Toyota, once again, is a unique special flower.

like i'd believe for a split second that Ford, GM, Chrysler, and Honda don't employ a fair amount of lobyists to sway government lawmaking and industry rulings

[Raza]

The Explorer controversy didn't obliterate Ford.

What car company has had such widespread issues happen all at once?  If the Explorer, Focus, F150, Taurus, and Mustang all had line wide recalls within a month, it might have obliterated Ford.

I think it's safe to say that this is a unique situation, and judging it against single model recalls in the past (that didn't result in a stoppage of sale, no less) is nowhere near accurate. 

[GoCougs]

What the hell do you think I'm in law school for.

And you'll likely make a nice tidy sum too.