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Toyota Doesnt Run Away From Problems, Toyoda Says (Update2)

February 24, 2010, 04:27 PM EST

(Adds Toyodas comments starting in third paragraph.) By Angela Greiling Keane and Jeff Plungis Feb. 24 (Bloomberg) -- Toyota Motor Corp.s president told a U.S. congressional panel we never run away from our problems, as lawmakers examine record recalls by the worlds largest automaker. Akio Toyodas remarks before the House Oversight and Government Reform Committee came in his rst appearance before U.S. lawmakers following recalls of about 8 million cars and trucks worldwide for defects that may cause sudden acceleration. Toyota is struggling to repair a reputation damaged by the recalls and questions about how the company responded to consumer complaints. Committee Chairman Edolphus Towns opened todays hearing saying the automaker was more concerned with prot than with customer safety. Toyoda pledged to change the companys approach to safety. My name is on every car, said Toyoda, 53, grandson of the automakers founder. Toyota has fully shared the information we have with U.S. auto safety regulators, Toyoda, speaking through a translator, told Towns, a New York Democrat. At times, we do nd defects, Toyoda told the panel. But in such situations, we always stop, strive to understand the problem, and make changes to improve further. We never run away from our problems or pretend we dont notice them. The executive linked the defects to the expansion that made the company, based in Toyota City, Japan, the industrys biggest. Right Tone Toyodas remarks introduced the right tone and sense of candor, even though they were delivered several weeks too late, said James Bell, executive market analyst with Kelley Blue Book, an Irvine, California-based vehicle-data service, in an e-mailed statement. Our sense is that, barring new technical revelations or driver deaths, this day could be seen as a small step toward image recovery. Toyota U.S. American depositary receipts, each equal to two ordinary shares, rose $2.78, or 3.9 percent, to $74.33 at 4:15 p.m. in New York Stock Exchange composite trading. The automaker has lost about $35 billion in market value since Jan. 21, when it recalled about 2.3 million vehicles in the U.S. to x sticking accelerator pedals. Toyota may not know the cause of unintended acceleration in as many as 70 percent of reported incidents, Jim Lentz, the companys U.S. sales chief, told a congressional committee yesterday. The recalls to x accelerator pedals and replace oor mats will not totally mitigate sudden acceleration in Toyota vehicles, linked to 34 deaths, Lentz told a House Energy and Commerce panel. Embarrassed Company Lentzs testimony at times belied Toyotas image as an automaker obsessed with quality and customers, portraying instead an embarrassed company that failed to communicate globally about safety questions and waited for directions from Japan that were slow in coming. Im sure all Americans are shocked to learn that the company didnt share defect information internally and that this system of quality control that Toyota represents to be at the heart of their corporation doesnt reect reality, Representative Edward Markey, a Massachusetts Democrat, said yesterday. A Toyota internal document sent to the House oversight panel and dated July 6, 2009, said the company saved $100 million through a negotiated vehicle recall. The document, obtained Feb. 21, showed the company outlining accomplishments described as Wins for Toyota, including the savings. No Knowledge Toyoda told lawmakers at the hearing today that he doesnt have knowledge of such a document. U.S. Transportation Secretary Ray LaHood, who oversees the National Highway Trafc Safety Administration, testied earlier today before the same committee, saying regulators have no cozy relationships with the auto industry.

NHTSA Administrator David Strickland, who was scheduled to testify, canceled, according to a spokesman for Representative Darrell Issa of California, the committees top Republican. If this committee fails to receive satisfactory answers today, we will not hesitate to convene a second hearing next week to get the answers the American people are demanding, said Kurt Bardella, the spokesman. LaHood told lawmakers he would be accountable for the agencys actions. Im not going to have our NHTSA administrator, whos been on the job 40 days, appear, LaHood said in response to questions from Representative Dan Burton, an Indiana Republican. If someone wants to criticize NHTSA or the department, Im going to be responsible for that. Former Employees Burton also questioned LaHood about former NHTSA employees who went directly from the regulator to work for Toyota. Employees are prohibited from contacting the agency on issues that you dealt with at the Transportation Department, LaHood said. At least four NHTSA investigations into unintended acceleration by Toyota vehicles were ended with the help of former regulators hired by the automaker, warding off possible recalls, court and government documents show. Asked about reports that Toyota executives who used to work at NHTSA inuenced decisions to limit sudden-acceleration recalls, LaHood said restrictions prevent former employees from working directly on issues they handled while with the government. LaHood said hed be willing to assist lawmakers on writing legislation to tighten those lobbying rules. I dont want any ethical problems with anyone, LaHood said. While all automakers have employees who handle NHTSA issues, Toyota may be alone among the major companies in employing former agency staffers to do so. Spokesmen for General Motors Co., Ford Motor Co., Chrysler Group LLC and Honda Motor Co. all say their companies have no ex-NHTSA people who deal with the agency on defects.

--With assistance from Alan Ohnsman in Los Angeles. Editors: Joe Richter, Larry Liebert To contact the reporters on this story: Angela Greiling Keane in Washington at +1-202-654-1287 or agreilingkea@bloomberg.net; Jeff Plungis in Washington at +1-202-624-1835 or jplungis@bloomberg.net To contact the editors responsible for this story: Larry Liebert at +1-202-624-1936 or lliebert@bloomberg.net