Released Toyota Memo Boasts of $100 Million Savings from Delaying Recall
From the “never say things can’t get any worse” file, news came out over the past weekend that a PowerPoint presentation with the name of Toyota’s US chief, Yoshimi Inaba, on its cover bragged about “favorable recall outcomes” (page 8). The document, on page 16, noted under the heading of “Wins – Toyota Safety Group” that it saved $100 million by negotiating an “equipment” recall on the Camry and Lexus ES regarding “SA” (sudden acceleration). At face value, the document appears to be contrary to the automaker’s assertion that the safety of its customers is its top priority.
The nature of the document is not clear, but it appears that Inaba is not the document’s author, but rather its intended audience. It appears to be a briefing for Inaba by the company’s Washington lobbying staff to highlight their contributions to the organization.
The timing of the document’s release, which Toyota turned over to Congressional investigators, certainly could not be much worse for the company. Several of its top executives – including Toyota Motor Corporation president Akio Toyoda, Toyota North America president & COO Yoshimi Inaba (the presumed recipient of the presentation in question), and Toyota Motor Sales USA president & COO Jim Lentz – will be testifying before various Congressional committees later this week, beginning tomorrow.
Toyota has already provided the House Oversight and Government Reform Committee with over 50,000 documents prior to this week’s hearings. They are set to get another 5,000 today from Dimitrios Biller, a former in-house lawyer who left the company with a severance package after allegedly expressing his frustration with – in his words – Toyota’s culture of covering up safety issues. In response to the weekend furor over the presentation’s release, Toyota spokeswoman Martha Voss said “our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong.” She added, “Our values have always been to put the customer first and ensure the highest levels of safety and quality.”
Cheering for saving money on recalls, plus some of the other damning-sounding evidence on the document (such as celebrating the delay of various new safety rules) all sounds very bad for Toyota – and it is. But it’s also important to note that the job of a company’s management is to, while maintaining social responsibility and a commitment to its customers, minimize its costs and oppose (or influence) regulations and rules that are going to affect the company. This is normal business practice not just in the auto industry, but indeed in the business world overall. Fortunately for other companies, they aren’t under the level of media, Congressional, and public scrutiny that Toyota is.
Also, it’s not just Toyota that will be under the gun in Washington this week. Various Transportation Department officials, including Secretary of Transportation Ray LaHood, have also been asked to testify. As more details emerge regarding who knew what, and when they knew it, the US government appears to not be squeaky clean. For instance, State Farm announced about two weeks ago that it had notified the NHTSA in 2007 that it noticed an uptick in sudden acceleration claims regarding Toyotas. The NHTSA itself has said that it has been receiving complaints about acceleration problems in Toyotas since as far back as 2003.
Spokesman Kurt Bardella, representing the House Oversight and Government Reform Committee’s ranking Republican, Rep. Darrell Issa of California noted that the committee will be looking into whether “regulators [did] their due diligence once problems were brought to their attention? Did Toyota raise potential safety problems with regulators as soon as they knew a problem existed?”
At least 100 Toyota dealers are flying to Washington today to meet with lawmakers in advance of the hearings. In case you had any doubt about the political clout that auto dealers hold over elected representatives, just look at the closed-dealership arbitration law that Congress passed a few months ago. Those Toyota dealers plan to tell their representatives that the company and its dealers employ some 172,000 people in the US, and that allowing Toyota to suffer too much damage will threaten the livelihood of at least some of them.
In the coming days, expect a lot of mud slinging from the DOT/NHTSA toward Toyota, from Congress toward both, from the media toward both, and from Toyota dealers toward Congress. Perhaps it’s just wishful thinking, but wouldn’t it be nice if the purpose of the hearings was to find out the truth, not using them for political grandstanding and PR reasons, and not using them to shift the blame to others? It’s a nice dream, but unfortunately one that is pretty disconnected from the likely reality.