Toyota’s problems far from over; so where is CEO Akio Toyoda?

When Toyota executives come to Washington next week for the first of at least two Congressional hearings, they can expect plenty of grilling on two main themes:

  • Is the small metal shim that dealers are now scrambling to use to repair the accelerator pedal in millions of customers' vehicles really a definitive remedy to the sudden acceleration problem? That is beyond the definitive fix Toyota declared last last when it saw the problem as "floormat entrapment?"
    .
  • What did they know and when did they know it? Transportation Secretary Ray LaHood's recent comments call in to question Toyota's responsiveness: "While Toyota is taking responsible action now, it unfortunately took an enormous effort to get to this point," LaHood said.

Having the right answers to both sets of issues are central to Toyota winning back public trust and restoring confidence in its brand.

The company has gone "all-in" on the efficacy of its shim fix, with Jim Lentz, president of Toyota Motor Sales USA, declaring the fix will completely solve the problem. He better be right. If it turns out there is another cause to the problem, for example in the car's electronic throttle control as alleged in numerous lawsuits, the direct costs of a third recall, while massive, will be minuscule compared to the devastating cost to the company's reputation and brands. Simply put, trust will be shattered. Even a company as successful as Toyota would stagger under the weight of a complete loss in public confidence.

Already Sen. Henry Waxman is questioning publicly Toyota's confidence in having truly isolated the problem: "I want to know what caused the problem, and I don't just want a statement because their statements seem to be at variance from what they've said publicly and what they've said privately,"

Congress will grill for inconsistencies. Toyota better be prepared to talk definitively and contritely. A Congressional hearing is not really an exercise in fact-finding, as I discuss in detail in a chapter in Feeding Frenzy titled, "Congressional Circus Act." Congressional investigators are busy hunting up juicy leads right now so that each Congressperson on the committee can shame the Toyota witnesses and impress the voters back home that they are on top of the problem.

Which brings up another lesson learned from the Ford-Firestone crisis, "When Congress calls you on the carpet, they want to hear from your CEO." Jim Lentz is a strong communicator and deeply knowledgeable. But he is merely the most senior sales executive in this country. Akio Toyoda Toyota CEO Akio Toyoda has been silent on the greatest crisis his company has ever faced, except for the brief apology he provided in response to being button-holed last week by Japanese TV network NHK at the World Economic Forum in Davos, Switzerland.

This isn't the leadership demanded of a CEO.

Look for Toyota to announce plans for Lentz to represent the company in Washington, which will lead to white-hot heat for Toyoda to stand before Congress. The company can save itself a lot of time it needs to prepare for those hearings by announcing right away than Toyoda himself will take the heat.

Oh, and one other thing. Looks like Toyota's emblematic Prius brand, so far kept out of the recall mess, is facing unrelated questions about another potential safety issue involving failing brakes. The ugliness is far from over.

- Jon Harmon

Speak Your Mind

*