How Toyota Lost Its

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How Toyota lost its Way From Toyota City to Kentucky and from Detroit to Washington and Tokyo, Reuters’ reporters examine what went wrong at the world’s largest automaker in this special report

FEBRUARy 2010 REUTERS SPECIAL REPORT ON TOYOTA

Inside Toyota’s epic breakdown

By Nathan Layne, Taiga Uranaka and Kevin Krolicki

TOYOTA CITY, Japan/DETROIT - Toyota Motor in a deposition room being grilled by lawyers Corp, the world’s most dominant and profitable for the family of a 77-year-old Michigan woman automaker, was not accustomed to outsiders telling who was killed in 2008 when her Camry took off it what to do, let alone some obscure bureaucrat uncontrollably and slammed into a tree just four from the United States, whose own car industry was blocks from her home. on taxpayer-funded life support. Medford’s warnings went unheeded. By late But in the middle of December, on a cloudy day January, Toyota’s safety problems would explode in the middle of the Japanese archipelago’s main into a crisis that has battered its finances and island, Ron Medford, the acting head of the U.S. shaken consumer confidence in one of the world’s agency that regulates auto safety, was reading best-known brands and an icon of Japan’s Toyota executives the riot act. spectacular post-war economic success. Medford had been quietly dispatched by the Obama Since the American team’s visit, an additional 4.7 administration to deliver a firm message: Toyota, he million Toyota cars have been recalled globally, told them, had better get its act together, according the largest safety action ever for the automaker. to U.S. regulators. Reported problems with acceleration now shadow the Camry, the plain-vanilla sedan that powered By the time Medford arrived in Japan, Toyota was working through a recall that would involve over 5 million vehicles in the United States. The problem was mundane but potentially lethal: floor mats were trapping the accelerator pedal. U.S. safety regulators had tied five deaths to accidents where that seemed to be the cause, and there were growing doubts about whether the Toyota floormat and pedal design -- a relatively cheap fix -- was the only flaw that needed to be addressed. Over the prior seven years, the number of U.S. consumer complaints about unintended acceleration in Toyota cars had been steadily climbing, hitting 400 reported cases for the 2007 model year, according to an analysis of National Highway Traffic Safety Administration (NHTSA) data. But five previous investigations into Toyota opened by NHTSA under the Bush administration had hit a dead end, with no action taken. Two safety probes resulted in relatively cheap floormat recalls by Toyota in 2007 and early 2009. Neither attracted much notice. In the closed-door meeting in Nagoya, Medford told four Toyota executives that the automaker was moving too slowly in addressing safety defects under investigation by U.S. authorities. He said he wanted changes, and he wanted them fast. NHTSA regulators, who face new scrutiny for the agency’s response to consumer complaints about Toyota vehicles, provided an account of the watershed meeting to Reuters. One of the Toyota officials in the room, Chris Santucci, had spent two days the week before

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Toyota’s success in the 1990s, and braking glitches AKIO TOYODA threaten to unplug the Prius, Toyota’s green “halo Grandson of Kiichiro car” for a new era. Toyoda who founded the automaker in 1937. Akio What’s more, critics charge that the automaker Toyoda took the helm in still has not come to terms with the root causes June 2009 after 25 years of the safety issues and it has only just begun to with Toyota, the sixth acknowledge how badly it has lost its way. Toyoda family member to “Anybody working on the Toyota assembly line can head the firm. His father pull the cord and stop the line if there’s a problem tried to talk him out of that needs to be fixed,” said Ed Hess, a business joining the company in the consultant and professor at the University of 1980s, saying "no one will Virginia who has studied the risks of growth for big want to be your boss." companies. “Why did it get to where we are now? Toyoda, 53, was long Why didn’t somebody at Toyota pull the cord?” seen as a candidate to head the world's larg- Versions of that same question are being asked est automaker as he rose on Wall Street and on Capitol Hill -- as well as through the ranks at in Toyota City, a company town where veteran nearly twice the speed of workers confronted the crisis with a sense of shared his predecessor, Katsuaki responsibility that the carmaker has prided itself on Watanabe. fostering. Toyoda vowed to quash “We are not sitting on our hands in Japan,” said a big-company disease" 30-year veteran production manager at Toyota at and steer Toyota "back to a bar in Toyota City where the automaker’s recalls “Toyota used to be a great listener,” said one basics" after a decade of dominated the chatter. Said another worker: “We consultant who asked not to be named because massive expansion as the have a sense of crisis. How can we not with all the he still has business with the company. “But about firm grappled with a steep media attention? Everyone feels that way.” three to five years ago, there was something that downturn in global auto On Feb. 24, the U.S. House of Representatives suddenly shifted. There was a view that nobody sales. Oversight Committee is set to grill U.S. outside Toyota had the answer. It got to the point A car enthusiast and ac- Transportation Secretary Ray LaHood and Toyota’s where the organization was hearing, but not tive amateur racer, Toyoda senior U.S. executive, Yoshi Inaba, about why listening.” joined the automaker Toyota’s safety complaints appeared to have mid-career in 1984 after When crisis hit in late January, Toyota stumbled spiraled out of control and whether the causes have earning a master's degree to provide a clear message to consumers and been fully identified. in business administration investors. The company’s secrecy and tendency to from Babson College in A day later the House Energy and Commerce centralize decision-making in Japan contributed to Massachusetts. Committee will hold its own hearing on the Toyota the public relations debacle, experts say. Picture credit: REUTERS/Kim safety crisis. “Toyota had the perfect model for the 1980s and Kyung Hoon “I just don’t accept that Toyota couldn’t put the 1990s, but its approach now looks outdated,” said dots together,” said Joan Claybrook, former Stefan Lippert, a business professor at Temple administrator of the National Highway Traffic Safety University in Japan. “The concentration of decision- Administration and one of the expert witnesses making at headquarters is one of the factors behind called to testify in Congress. Toyota’s problems right now.” In a sense, insiders say, Toyota has become a victim of its own dizzying success. GETCHA BOOTS ON Consultants, suppliers, dealers and analysts say One of the organizing principles of Toyota’s fast growth strained the company’s resources to industrial ideology is that you have to “genchi breaking point. The additional stress of achieving genbutsu” a problem. In Japanese that means you near constant cost reductions in parts added to the have to go to the place, to touch the thing itself. You pressure. have to meet the customer, lift the hood, get your hands dirty. Walk, don’t talk, Toyota instructs its Others say a hint of complacency crept into dealings workers. with outsiders as Toyota moved toward taking over the industry’s top spot by sales in 2008 from It is a phrase that Akio Toyoda, grandson of the General Motors. The protracted back-and-forth company’s founder, is fond of trotting out. “Quality with U.S. safety regulators on the acceleration is Toyota’s lifeline,” he said in his first public complaints also suggests an organization hunkering appearance in the United States after becoming down against change, critics say. Toyota’s president in June.

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In its relentless quest for quality, said Toyoda, the KATSUAKI WATANABE company had to live and breathe the two big ideas Former Toyota president that had made it great: “customer first” and “genchi Katsuaki Watanabe rose genbutsu.” to the helm of the automaker in 2005 after a Some of Toyota’s first U.S. production workers hired 41-year career that began for its flagship plant in Kentucky two decades ago with the role of cafeteria joked that they heard that latter phrase differently in manager in charge of English. To them, it sounded like “Getcha boots on.” trimming costs from the After three months of busy and sometimes kitchen. frustrated exchanges with Toyota’s U.S. staff on Watanabe, 67, was best safety issues, the U.S. Department of Transportation known as a cost-killer in- decided last December to try a very Toyota tactic side Toyota who pressed to get the automaker’s attention. Medford got his subordinates to wring boots on and headed to Japan. costs out of operations by simplifying components In a crowded meeting hall in Toyota’s headquarters and sharing them across on Dec. 15, Medford and two other senior NHTSA model lines. By slam- officials first delivered what amounted to a remedial ming the brakes on costs, lesson in U.S. safety regulation for about 100 Toyota Watanabe put his career engineers and executives, a primer in how the and Toyota's profits in the system is supposed to work. fast lane. Then the Americans retired to a conference room He was chief architect to hammer home the no-nonsense warning to a of Toyota's aggressive smaller group. streamlining initiative Across the table was Toyota’s top officer in charge Construction of Cost of quality, Hiroyuki Yokoyama, and the head of Competitiveness for the the engineering team that handled consumer 21st Century (CCC21), complaints, Shinji Miyamoto. In a company that built which eliminated nearly its reputation on an almost paranoid obsession with $10 billion in parts pro- quality, Yokoyama and Miyamoto were the keepers curement costs by 2005. of the flame. Watanabe stepped down as president in Toyota knew that NHTSA officials were also He had been expecting the same broad presentation June 2009 and has since scheduled to meet with Honda and Nissan and that officials had given to automakers in China and served as vice chairman. Japan’s transport ministry so they were blindsided Russia, both risk-heavy newcomers without a sales Picture credit: REUTERS/Yuriko by this kind of tough meeting. presence in the United States, he had said in his Nakao “At that point we weren’t expecting the discussions deposition a week before. to have any deep meaning because at that point we But this was Toyota. This was the auto company had already dealt with the floormat issue,” Toyota that revolutionized factory production in the 1960s, Executive Vice President Shinichi Sasaki said. launched a luxury brand in the Lexus against Toyota officials in the room with Medford suggested the odds in the late 1980s, and then confounded that perhaps the placement of floormats was skeptics again in the 1990s by delivering the Prius responsible for the unintended acceleration cases and turning itself into a byword for environmental that had drawn tougher scrutiny from the U.S. side. stewardship. NHTSA officials chastised Toyota for “still talking in By 2009, Toyota had become an economic those terms,” Sasaki recalled. powerhouse with over 300,000 employees. In the The irony of the moment was rich. This was a little- United States, where it employed over 35,000, known U.S. official in an arm of the government it stood at the center of a web estimated at over most Americans could not identify lecturing Toyota 380,000 auto sector jobs including dealers and about quality. The same U.S. government that had suppliers. bailed out General Motors and Chrysler just four For all the company’s success, Toyota workers were months earlier was excoriating Toyota for falling still being rallied to achieve the impossible. Toyota short. president Katsuaki Watanabe, who held the top job Santucci, a former NHTSA investigator who until June 2009, would tell them to build a car that joined Toyota in 2003, had flown to Japan from can go from New York to California on a single tank Washington for the tense meeting. of gas. Build a car that makes the air cleaner or one that makes the driver healthier, he would say.

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In its relentless quest for quality, said Toyoda, the Fast-forward a few months and the picture could not JIM PRESS company had to live and breathe the two big ideas be more different. By February, Toyota was in full The first non-Japanese that had made it great: “customer first” and “genchi retreat. After two weeks largely out of the spotlight, person elected to Toyota's genbutsu.” Toyoda called a hasty press conference in Nagoya to board of directors, Press apologize. rose to become head of Some of Toyota’s first U.S. production workers hired U.S. sales over a 37-year for its flagship plant in Kentucky two decades ago Toyoda, who earned an MBA from Babson College career that mirrored the joked that they heard that latter phrase differently in and had worked for Toyota in California, struggled automaker's transforma- English. To them, it sounded like “Getcha boots on.” to provide an English-language soundbite when tion from a minor player prompted. “Believe me, Toyota’s cars is safety but After three months of busy and sometimes in the United States into we try to increase our product better,” he said. frustrated exchanges with Toyota’s U.S. staff on one of the world's top “This kind of procedure is good for the customers.” safety issues, the U.S. Department of Transportation automakers. The awkward clip played on CBS News and cycled decided last December to try a very Toyota tactic With a soft-spoken through YouTube. to get the automaker’s attention. Medford got his manner that seemed a boots on and headed to Japan. By Super Bowl Sunday, two days later, Toyota had perfect match for the refined the message in a TV commercial. The spot In a crowded meeting hall in Toyota’s headquarters outward humility of cor- harkened back to Toyota’s more than 50-year-history on Dec. 15, Medford and two other senior NHTSA porate Japan, Press took in the U.S. market with images of happy families. officials first delivered what amounted to a remedial on the slow and deliber- “In recent days, our company hasn’t been living up lesson in U.S. safety regulation for about 100 Toyota ate speaking style of his to the standards you’ve come to expect from us -- or engineers and executives, a primer in how the Japanese superiors and that we expect from ourselves,” an announcer said. system is supposed to work. it was said that he never On Tuesday, the Washington Post ran an editorial lost his cool. Then the Americans retired to a conference room comment by Akio Toyoda, a day before the first Press, now 63, left Toyo- to hammer home the no-nonsense warning to a congressional committee had been scheduled to ta in 2007 to become one smaller group. meet. “As the president of Toyota, I take personal of the top three executives Across the table was Toyota’s top officer in charge responsibility,” he said, promising a “top-to-bottom” at Chrysler, saying he of quality, Hiroyuki Yokoyama, and the head of review of the company’s operations. wanted to help restore an the engineering team that handled consumer American icon. His tenure What he didn’t answer is how this had happened. complaints, Shinji Miyamoto. In a company that built at Chrysler, which fell The company’s dictum holds that workers have its reputation on an almost paranoid obsession with into bankruptcy in 2009, to ask why (“naze” in Japanese) at least five quality, Yokoyama and Miyamoto were the keepers lasted two years. times to get to the bottom of a problem. It is not “When you start to see significant claims activity of the flame. Picture credit: REUTERS/ yet clear how many “nazes” have been asked by that indicates there may be widespread problems Rebecca Cook Toyota knew that NHTSA officials were also management. with a product, that’s when you go to NHTSA,” said scheduled to meet with Honda and Nissan and Diggs. “There had to have been significant activity, a

Japan’s transport ministry so they were blindsided noticeable trend for that to happen.” by this kind of tough meeting. CRACKS IN THE ARMOR Elsewhere, Toyota insiders and rivals had also begun “At that point we weren’t expecting the discussions In October 2007, Dave Champion, director of auto to note other signs of distress in an organization to have any deep meaning because at that point we testing for Consumer Reports in Connecticut, was that had started the decade with a goal to double its had already dealt with the floormat issue,” Toyota confronted by a shocking result from the magazine’s global market to 15 percent. The implicit outcome Executive Vice President Shinichi Sasaki said. influential survey of subscribers. “After years of was understood by everyone in the industry: sterling reliability, Toyota was showing cracks in overtaking GM as No. 1. Toyota officials in the room with Medford suggested the armor,” Champion recalled. In a bombshell, the that perhaps the placement of floormats was On the cusp of hitting that benchmark, some inside non-profit magazine dropped the V6 version of the responsible for the unintended acceleration cases Toyota began to worry. To their minds, the goal had Camry and two other vehicles from its recommended that had drawn tougher scrutiny from the U.S. side. always been intended as one of Toyota’s audacious list. stretch targets, like Watanabe’s vision of a car that NHTSA officials chastised Toyota for “still talking in About the same time in Bloomington, Illinois, a team would clean the air. Toyota had even dropped it as those terms,” Sasaki recalled. of number-crunching accident investigators was a target, but now it was happening. “We feel more The irony of the moment was rich. This was a little- seeing a worrying pattern. A team known as CRASH comfortable being behind someone else and not known U.S. official in an arm of the government at privately held insurer State Farm had noticed a No. 1,” said Yoshi Inaba, who was summoned out of most Americans could not identify lecturing Toyota spike in accidents involving Toyota vehicles including retirement to set right U.S. operations. about quality. The same U.S. government that had the top-selling Camry. By 2007, Toyota’s U.S. sales had rocketed by 80 bailed out General Motors and Chrysler just four State Farm, the largest U.S. auto insurer, notified percent from the start of the decade. Market share months earlier was excoriating Toyota for falling U.S. regulators of the pattern. “If we believe a had almost doubled from just under 9 percent to 16 short. vehicle played a significant part in causing damages, percent. In unit sales terms, it was as though Toyota Santucci, a former NHTSA investigator who we go back to the manufacturer,” said spokesman had absorbed a second automaker the size of Honda joined Toyota in 2003, had flown to Japan from Kip Diggs. “We tell them ‘We believe your product is and the bulge was still moving through the snake. Washington for the tense meeting. faulty and you need to pay us for the damages.’” “The checks and balances started to break down,”

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said Vikas Sehgal, an auto industry expert and JIM LENTZ partner at Booz & Co. “At some point, the dis- The head of Toyota Motor economies of scale come into play.” Sales USA, Jim Lentz is a soft-spoken career car At the same time, Toyota found itself struggling salesman from Colorado to inculcate newcomers in the company’s unique who joined the auto- culture -- The Toyota Way. Kazuo Akatsuka, 55, saw maker 28 years ago as the generational change first-hand and worried at merchandising manager the signs of change at the Tsutsumi plant where they for its Portland, Oregon build the Prius. region. Akatsuka worried that a new crop of temporary Lentz headed the workers, some sporting piercings and dyed-hair, launch of the Scion brand might just be working for a paycheck. They might early last decade as not have bought into the Toyota Way, he said. Toyota targeted younger “The people that were so precise, the people that drivers. He became the sweat and built this company are no longer here. public face of the auto- And to a certain degree I feel that passion has not maker in the week after been passed on,” he said. “I feel like that attention to its extraordinary move quality is gradually being forgotten.” to suspend the sale and production of top selling To keep the Toyota Way alive, workers have long models in the United carried booklets that include distilled wisdom from States on Jan. 26. Sakichi Toyoda, a self-taught inventor who founded In wide-ranging inter- the textile equipment maker that preceded Toyota, views, Lentz was contrite and his son, Kiichiro, who drove it into the auto and spoke reassuringly in industry in 1937. relaxed tones, conveying Over the years, the Toyota Way evolved as an odd the message that nothing mix of the homespun and the borrowed. Some liked to say in greeting reporters. was more important to advice -- “be faithful to your duties ... be practical Toyota than the safety of In September 2007, in a move that shocked industry its customers. and avoid frivolousness” -- seemed a relic of watchers but now seems to have underscored the hardscrabble Japan. The constant battle to kill Picture credit: REUTERS/ pressure on Toyota to hold it all together, Press Rebecca Cook waste (“muda”) produced the company’s legendary defected for a chance to help run Chrysler. “It’s great frugality. to be back on the home team,” he said. Other insights arrived from abroad. Eiji Toyoda, Kiichiro’s cousin and the Toyota leader who steered its first big wave of U.S. sales growth, toured PAYING FOR A SCREW-UP Ford Motor Co and returned home with the idea Toyota knew how to run a textbook recall. When for improving a worker’s suggestion box he had Toyota launched its Lexus brand in 1989, the seen. And so, the company legend goes, was born long-awaited LS400 was hit by a series of glitches, ”INDONESIAN LOVE AFFAIR” “kaizen,” the ethic of constant improvement. including a tail lamp prone to overheating. The The inspiration for Toyota’s just-in-time production recall threatened to kill the luxury brand in its system was a post-war visit to the American grocery cradle. chain Piggly Wiggly, where self-taught engineer Toyota suspended production and ramped up Taiichi Ohno watched shelves restocked as soon as output of replacement parts. Its California-based consumers emptied them. sales arm sent representatives out to pick up every Five decades later, The Toyota Way became a one of the 8,000 LS400s that had been sold and culture unto itself, deeply Japanese but even more provide owners with a free loaner while repairs were deeply Toyota. By 2007, the company ran a Toyota under way. The cars were returned washed and with University in California and a Toyota Institute in a full tank of gas. Japan to teach Toyota how to be Toyota. Lexus dealers and customers were impressed by the Jim Press, the first non-Japanese to be appointed to attention and the brand went on to outsell BMW Toyota’s board, had mused in 2006 that the focus on and Daimler AG in the U.S. market over the next two culture made the automaker “kind of like a country decades. ... sort of a society within itself.” At the time, Press That record of success made Toyota dealers deeply was seen as an embodiment of Toyota, a soft-spoken loyal -- and rich. It also drew investment from listed man from Kansas with a self-effacing style. “Thank dealership groups that bet Toyota franchises would you for your interest in our little car company,” he continue to outsell and out-service the rest of a

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wildly cyclical industry. far more profitable than U.S. car dealerships. In 2008, during a recession, the average Toyota As of end September, 2009, Houston-based Group dealership sold four cars a day. The average Ford 1 Automotive drew 39 percent of its new-car sales dealer sold one. revenue from its Toyota stores. At Fort Lauderdale- based AutoNation it was 21 percent. For Bloomfield In a pep talk last month partly aimed at its dealers, Hills, Michigan-based Penske it was 20 percent. Toyota pledged to contain the damage to its brand from the recall announced in September for the risk “Toyota is struggling with being the largest that floor mats could trap accelerator pedals. automaker in the world. It certainly has issues, but you have to give them credit. They face reality. They “A product recall is an opportunity to reconnect with deal with it,” AutoNation CEO Mike Jackson said in customers in ways we haven’t before and to re-prove September, before the first of two massive recalls. ourselves in their eyes,” Inaba said on Jan. 12 in a speech in Detroit. In part because Toyota had kept a tight lid on the number of its dealerships, the franchises remained But four days later -- a Saturday -- Toyota’s safety

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But the move had not been announced to an increasingly jittery public and would not be for hours, a gap that made some dealers immediately uneasy. “Our jaws dropped when we heard that,” said one, who said he thought the episode showed how the company was slow to come to terms with the stakes of the safety crisis. When asked to comment that afternoon, Toyota spokesman Brian Lyons said talk of the recall was “an unsubstantiated rumor.” Just before 8 o’clock that night on the East Coast, Toyota’s Washington office filed the paperwork making the expanded staff in Washington called NHTSA to let the agency recall for floormat risk official. know it had discovered a flaw with an accelerator manufactured by CTS Corp, an Indiana supplier that IIn a similar move that has prompted criticism and the automaker had begun to use in 2005 during its drawn at least one lawsuit in California, Toyota fast-growth phase. quietly fixed a problem with the brakes on the Prius for vehicles still on its Japanese assembly line in The problem: the CTS-built accelerator -- a $15 January. part -- could become stuck in some cases due to wear and moisture, Toyota had found. The bigger But consumers were not informed that Toyota had problem: the flaw affected over 2 million vehicles found the flaw or developed a fix for the software and the automaker had not yet fully figured out a controlling the Prius brakes until safety engineer way to fix it quickly. Yokoyama told reporters in Tokyo on Feb. 4. On Tuesday, Jan. 19 Inaba, Toyota U.S. sales Analysts say Toyota’s wild ride has brought it back chief Jim Lentz and others were summoned to to a crossroads. It has a chance to start to win back Washington. NHTSA officials say they said they trust the old-school way but it also faces the risk wanted prompt action. Toyota’s executives called that the congressional inquiry will open a second act back several hours later to say that they were of the crisis. launching a recall. “The damage to the reputation has been done,” The announcement on Thursday, Jan. 21 looked bad said Jeff Hess, a professor of marketing at California for Toyota. But the situation turned dire the next Polytechnic State University and former auto Monday. U.S. safety regulators told Toyota it would industry analyst with J.D. Power. “It’s not about the have to take the unprecedented step of suspending message now. It’s about hundreds of dealers and sales of eight models while it rushed to find a fix. millions of customers.” In one stroke, Washington stranded $2.5 billion Sean Kane, founder of Safety Research & Strategies in unsold inventories of cars and trucks at the and an expert witness who has been called to testify automaker’s dealerships. Worse, the negative in the upcoming congressional hearing, said Toyota publicity was driving away shoppers in the last has to confront the possibility that it has problems week of the month, typically the peak for showroom with unintended acceleration in its vehicles that go traffic. Toyota rushed to keep dealers informed with beyond models that have been recalled and beyond daily updates and conference calls. But frustrations the fixes it has described. were starting to boil over. Back in Toyota City, there was evidence of the quiet The lines of communications also got tangled. resolve the automaker will need a lot more of in the Sometimes Toyota’s California-based sales weeks ahead. arm seemed not to know what its Kentucky- “The difficulty when a company -- any company based manufacturing arm was doing or what its -- becomes big is that employees become detached Washington regulatory team had heard in the fast- from the problems,” said one Toyota manager, evolving talks with NHTSA. Sometimes it spun the who like most others asked not to be named. other way. “When you can’t do anything about this, that’s how In one example, Toyota representatives told dealers companies fail. But our job is to drill this sense on the morning of Wednesday Jan. 27 that the of crisis into as many employees as possible.” company would be expanding its floormat recall by (Additional reporting by John Crawley in Washington, Soyoung Kim, 1.1 million vehicles. Toyota had determined that five David Bailey, Bernie Woodall and Nick Carey in Detroit, Chang-ran additional models including the 2010 model-year Kim, Chikafumi Hodo, Nobuhiro Kubo in Tokyo, Yuriko Nakao in Toyota Corolla, Venza and Matrix were at risk of having City, Japan, Tim Gaynor in Georgetown, Kentucky, Steve Gorman their accelerators held open by floormats stuck and Sue Zeidler in Los Angeles, editing by Jim Impoco and Claudia underneath them. Parsons)

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were red flags missed?

By John Crawley and David Bailey

WASHINGTON/DETROIT - As the U.S. Congress Toyota has recalled more than 8 million vehicles gears up to delve into Toyota Motor Corp’s massive worldwide for problems with either floor mats , global vehicle recall, the question they face is which can trap a gas pedal, or a mechanical glitch whether the automaker and regulators misread or in the accelerator, which can cause the pedal to ignored rising consumer complaints. become stuck. Complaints about unintended acceleration rose But safety advocates and lawyers for a Michigan sharply from model years 2002 to 2007 -- a period woman killed in a high-speed wreck in April 2008 when Toyota expanded its use of electronic throttle argue that evidence suggests electronic throttle controls, according to an analysis of data compiled controls are at fault, not floor mats or “sticky by Safety Research and Strategies. pedals.” But by 2007, only two formal federal investigations The National Highway Traffic Safety Administration had been launched with one leading to a modest said in early February it would review the past recall -- for floor mats. Some 1,700 complaints have probes that found no problems with electronic been raised for the six model years, peaking at 400 throttle systems even though complaints had grown for 2007. steadily during times of those reviews. About one-third of those sudden acceleration What appears crucial is the role of Toyota and U.S. complaints involve Toyota’s best selling Camry regulators in narrowing the focus of earlier safety sedan. investigations. Potentially more worrying for regulators and In one case Chris Santucci, a former U.S. safety consumers: More than half of the 2,262 complaints regulator hired by Toyota in 2003, played a role in compiled by Safety Research involve vehicles that discussions with NHTSA during a 2004 probe in Toyota has not recalled. which the agency sharply narrowed the scope of its

9 REUTERS SPECIAL REPORT ON TOYOTA inquiry, according to his deposition in a lawsuit seeking damages from the Michigan crash. The substance of the discussions between the Toyota representatives and NHTSA investigators was unclear. In that instance, NHTSA agreed to exclude from consideration reports of uncontrolled acceleration in Toyota vehicles where the incident lasted more than a few seconds or the driver hit the brakes. As a result, Toyota did not provide information to the U.S. government about reports it had taken about such cases. Under the narrower scope of the investigation, NHTSA eliminated nearly all of the 260 complaints it received and closed the investigation without taking action in July 2004. Toyota defended Santucci. “Mr. Santucci has an exemplary professional reputation that he earned by working diligently on safety issues at NHTSA as well as here at Toyota,” Toyota matters.” spokeswoman Martha Voss said in a statement. Toyota began using electronic throttle controls, or a “Industry professionals across the spectrum who drive-by-wire system, in U.S.-sold vehicles with 1998 know Mr. Santucci would agree that any insinuation models and expanded their use with 2002 models. that he violated federal ethics laws or that he did Complaints of sudden acceleration soared more not live up to the highest professional standards is than tenfold when Toyota switched to an electronic reckless and without merit.” throttle for the 2002 model year Camry, its best- Critics say NHTSA has a number of tools that selling vehicle, according to data compiled by Safety have gone unused. Supporters say regulators are Research. overwhelmed by 30,000 complaints per year and The founder of the firm, Sean Kane, has been called a mandate that forces them to confront deep- as an expert witness in one of the congressional pocketed automakers loaded with engineers, hearings. technical analysts, lawyers and political muscle. The spike in complaints about Toyota vehicles Two U.S. House of Representatives committees coincided with a growth spurt for the automaker, want to examine the government’s response to the which roughly doubled its U.S. market share and Toyota recalls and get a better understanding of saw sales leap nearly 80 percent from 1999 to 2006. what is behind unintended acceleration. Safety Research puts the number of unintended Transportation Secretary Ray LaHood, NHTSA acceleration cases at over 2,200, including 26 Administrator David Strickland and Toyota’s top reported deaths. North American executive Yoshi Inaba are due to testify at one hearing on Feb. 24. The second is also Toyota “has employed several strategies to deflect expected to draw a heavyweight witness list. the agency investigations,” Kane said in a report on Friday. In a statement published in the Washington Post on Tuesday, Toyota President Akio Toyoda said The automaker declined to comment on Kane’s he had personally assured LaHood “that lines report. of communications with safety agencies and LaHood has said NHTSA has the tools to do a regulators will be kept open ... and that we will be thorough review of safety issues related to the more vigilant in responding to those officials on all electronic controls on Toyota cars.