Toyoda buries head as recall crisis grows

Chief's refusal to face media soiling image

by Makiko Kitamura and Alan Ohnsman

Bloomberg

As Toyota’s recalls spread to at least 7.6 million cars across five continents, President Akio Toyoda’s only public comments on the matter have consisted of an impromptu, 75-second interview with NHK in Davos, Switzerland.

More than a week after the world’s biggest carmaker said it would recall vehicles in the United States to fix defective gas pedals linked to unintended acceleration, Toyoda, 53, still hasn’t addressed other media. The grandson of Toyota’s founder has left the task to U.S. sales chief Jim Lentz and to Executive Vice President Shinichi Sasaki, who is in charge of quality control.

“Toyota is a global company, but their way of handling this problem hasn’t been up to global standards,” said Yasuhiro Matsumoto, a Shinsei Securities analyst in Tokyo. “For the top executive to be invisible when there is a fatal problem for the company gives the impression that he is trying to keep a low profile and hide.”

Domestic pressure on Toyota rose Wednesday after the Japanese government said it ordered the automaker in August to investigate its new Prius hybrid, which has not been part of the recalls. The carmaker’s sales in the U.S. dropped to a 10-year low in January, pushing its stock in Tokyo down 5.7 percent.

Toyota won’t comment on Toyoda’s whereabouts, citing company security policy, according to spokeswoman Ririko Takeuchi.

Last week, the carmaker declined to confirm his attendance at the World Economic Forum in Davos, where he said in an unscheduled NHK television network interview on Jan. 29: “I am deeply sorry that we’re giving cause for concern to customers.”

The carmaker has received 14 brake-related complaints about the latest Prius model since it was introduced in May, the transport ministry said Wednesday. Toyota’s Takeuchi declined to say whether the company had begun investigating the complaints.

“Executive management should be clearly in front to inform customers of actions that are being pursued,” said Margaret Key, managing director of public relations company Edelman Japan in Tokyo, which specializes in crisis management. “This is critical in matters such as product recalls.”

Toyota executives and public relations staff in the U.S. and Japan clashed last week over who should appear in public to apologize, two sources said, declining to be identified as the discussions were private.

Some insisted Toyoda should make a public statement, and participants in conference calls shouted at each other, one of the sources said, adding U.S. staff were frustrated at a lack of swift action by the parent company.

Mike Michels, a spokesman for Toyota’s U.S. sales unit, said he wasn’t aware of any disputes between company officials in Japan and the U.S. over Akio Toyoda’s role.

“Information on this recall has been coming mostly out of the U.S.,” said Takashi Aoki, who helps manage about $1 billion at Mizuho Asset Management in Tokyo. “There is definitely a concern about what is going on with Toyota headquarters’ corporate governance.”

Toyota’s Lentz, who appeared on NBC Universal’s “Today” show and other U.S. news programs on Feb. 1, said dealers will begin fixing accelerator pedals with kits they will receive “in the next day or so.” The kits include steel plates to prevent pedals from sticking, said John Hanson, a company spokesman.

Elkhart, Ind.-based CTS Corp., maker of the original pedals, is delivering modified versions to Toyota’s North American factories, where five assembly lines were shut as the company suspended U.S. sales and production of eight recalled models. Manufacturing will resume Feb. 8, Lentz said.

The recall to fix accelerator pedals includes the top-selling Camry and Corolla models and covers 2.57 million vehicles in the U.S. and Canada, 1.71 million in Europe and 80,000 in China. It also includes 180,000 in Latin America, Africa and the Middle East, Toyota’s Sasaki told reporters yesterday in Nagoya.

Separately, the company is recalling 5.35 million vehicles in the United States because of floor mats that could jam pedals.

Covered vehicles include model years 2004-2009 Prius hybrids, 2007-2010 Lexus ES350, 2006-2010 Lexus IS250 and 2006-2010 Lexus IS350. Toyota has said 2.1 million vehicles are covered by both safety actions.

The carmaker expects sales to drop by more than 20 percent as a result of the recalls, Sasaki said, without giving a time frame. His press conference was Toyota’s first in its home market to address the recall.

“In the past, we have seen sales drop by 20 percent after a recall, but with this recall, we are worried that the sales drop will be bigger than that,” he said.

Akio Toyoda has been outspoken in the past. In October, he told journalists in Tokyo his company had to make better cars and listen more to customers.

The carmaker should be given more time, said Yuuki Sakurai, chief executive officer of Fukoku Capital Management in Tokyo.

“Toyota may be taking time to check everything over and waiting for the right time for Akio Toyoda to give a formal comment,” Sakurai said. “They will explain things when the time comes.”