A document claiming Toyota Motor Corp saved over $100 million by getting US regulators to agree a cheap fix for unintended acceleration problems raised pressure on the company's president as he arrived in Washington to prepare for a grilling from congress.
Akio Toyoda is set to testify before the US lawmakers this week in an effort to contain a safety crisis that threatens the reputation and continued success of the automaker in the market that made it a global powerhouse.
Toyota has recalled over 8.5 million vehicles globally in recent months for problems including sticky accelerators, accelerators that can be pinned down by loose floormats and a braking glitch affecting its hybrid models. Regulators believe five deaths are associated with floor mats and are reviewing up to 29 other fatality reports to see if they are related to unintended acceleration.
A 2009 internal document turned over to lawmakers and made available yesterday shows Toyota's Washington DC staff trumpeting savings of more than $100 million by convincing regulators to end a 2007 investigation of sudden acceleration complaints with a relatively cheap floormat recall.
The document seems certain to add to the high-stakes debate about whether Toyota missed or ignored complaints about sudden acceleration in its vehicles and whether US safety regulators were tough enough.
Toyota shares rose as much as 3 per cent earlier today, lifted by a rally in exporters after the yen slipped against the dollar, but pared gains to close up 1.2 per cent.
"Investors remain reluctant to buy up Toyota, given uncertainty over how the congressional hearings will go," said Fumiyuki Nakanishi, head of the investment information department at SMBC Friend Securities. "We are likely to see more selling of Toyota shares and buying of Honda shares."
Honda Motor rose 2.8 per cent, in line with the benchmark Nikkei average. Toyota stock has lost 19 per cent over the past month but has steadied over the past 10 trading sessions.
Toyota on yesterday reiterated that it was conducting a top-to-bottom review of all its operations.
Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong," the company said.
But the US Department of Transportation said the document highlighted Toyota's slow response to the safety problems. "Unfortunately, this document is very telling," said department spokeswoman Olivia Alair in an emailed statement.
Toyota has launched a publicity campaign to convince current and prospective customers that the company is addressing the problems. Its US sales plummeted 16 per cent in January and the company has estimated the recalls will cost it $2 billion at the operating level in the fiscal year ending March.
Japanese rival Mazda Motor Corp said it would not launch a special marketing campaign to draw customers away from Toyota, shunning a strategy used by other car makers keen to capitalise on Toyota's recall woes.
Mr Toyoda, who is set to testify Wednesday after initially ruling out such an appearance, has acknowledged that the automaker founded by his grandfather let its standards slip during fast growth over the past decade. The company has been tight-lipped about his schedule, with a spokesman declining to confirm whether its president was already in the United States. Japanese media reported he had arrived in Washington and television showed images of his private jet.
Analysts said Mr Toyoda's appearance in Washington will be a defining moment in whether and how quickly it can move beyond its safety crisis.
"Congress is doing him a favour. He can be apologetic and be contrite and take responsibility and acknowledge that there have been some stress points in growth of the company," said Jeffrey Sonnenfeld, a Yale School of Management senior associate dean and an expert on corporate leadership.
Toyota is mustering political support as well. More than 100 Toyota dealers, who are influential with Congress because of their impact on local economies, are gathering in Washington starting today.
The line of questioning that Toyoda faces will focus in part on how the automaker and officials handled a growing number of petitions to investigate whether there was a glitch with the electronic throttles in Lexus and Toyota vehicles. Before an August 2009 crash that killed an off-duty California Highway Patrol officer and three others, Toyota had limited its action on sudden acceleration complaints to a recall of 55,000 floormats on the Camry and Lexus ES350.
But the the National Highway Traffic Safety Administration also faces criticism for having done little to force Toyota to come to terms with a growing record of consumer complaints.