Toyota’s Search for a Solution

Without a clear cause of its problems, the automaker couldn’t figure out how to respond.

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Akio Toyoda will sit before a panel of U.S. congressmen Wednesday and try to explain why Toyota—the world's largest automaker and a company founded by his grandfather—sold cars with runaway accelerators, erratic brakes and undependable steering systems.

As Gerald Meyers sees it, the senior management of Toyota would love to do the right things for the company, for their customers and for the regulatory agencies—if only they had a clue as to what the right course of action was.

“What they should do is easy,” said Meyers, the former CEO of American Motors, the Detroit auto company bought by Chrysler in 1987. “Every crisis management expert will tell you to be transparent. You have to be quick, get the bad news out, get it all out, bury it and move ahead. That’s what every crisis-management expert will tell you.

“But they have evidently run into something that is so puzzling that they don’t quite know what is wrong, and they don’t know quite what to do, and they don’t know if they can do it even if they did know what needed to be done.”

Finding the right path will be difficult as Toyota is tugged in several directions. The National Highway Traffic Safety Administration (NHTSA) launched its fifth, separate, simultaneous investigation into possible procedural, technical and criminal violations by the giant car company in its handling of four different problems throughout the Toyota fleet. The latest investigation is into the manner in which Toyota handled complaints that the power steering failed in some 2009-2010 Matrix and Corolla models.

The investigation launched last Thursday came two days after NHTSA announced it is seeking documents from Toyota to determine when the company learned of problems with accelerator pedals that either stuck in one position, preventing the car from slowing down, or inexplicably increased acceleration. Under federal law, companies selling cars in this country have to notify NHTSA within five days of discovering a safety defect, and then launch a recall. Failure to do so could result in fines of up to $16.4 million, the maximum permitted under the statute.

This is a departure from the agency’s past relations with the Japanese automaker. Previous investigations have relied on Toyota’s assertion that acceleration problems result from mechanical issues, primarily sticking pedals and shifting floor mats.

It is also an unusual microscope for a company which has the fourth least number of complaints—after the Smart ForTwo, Mercedes and Audi—out of the 40,000 filed monthly with the federal transportation agency.

In addition, at least three congressional committees have announced they will hold hearings into Toyota’s actions in handling the various technical problems and the oversight provided by NHTSA. The regulatory agency has come under the congressional microscope because during the Bush administration, safety complaints about Toyotas were essentially left to the company to resolve.

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