A top Toyota Motor Corp U.S. executive promised a quality shake-up on Tuesday as the Obama administration said it would hold the carmaker's head to a pledge to address safety issues after massive recalls.
In a statement prepared for a hearing on the recalls, U.S. Transportation Secretary Ray LaHood said he would hold Akio Toyoda to his assurance that the carmaker is working to address all safety issues.
Toyota's top-ranking American executive Jim Lentz apologized for what he called unacceptable delays in dealing with safety issues as well as poor communication with regulators and consumers.
Toyota has recalled over 8.5 million vehicles worldwide in recent months for problems including sticky accelerators, accelerators that can be pinned down by loose floor mats and a braking glitch affecting its hybrid models.
It is also investigating reports of steering problems in the Corolla, its second most popular U.S. model, and is facing a U.S. criminal probe over its handling of the recalls.
We now understand that we must think differently when investigating complaints and communicate faster, better and more effectively with our customers and our regulators, Lentz said in testimony prepared for his appearance before a congressional committee investigating Toyota's safety crisis.
Toyota President Akio Toyoda, grandson of Toyota's founder, who took the helm at the world No. 1 automaker last June, is scheduled to testify before the U.S. House Oversight and Government Reform Committee on Wednesday.
The Capitol Hill hearing will examine unintended acceleration problems that have been linked to at least five U.S. deaths, with 29 other fatality reports being examined.
Toyota's woes deepened this week as it revealed it faces a U.S. criminal probe into the handling of the recalls, while Japan voiced concern over the economic impact of its problems.
Strong growth in Asia-bound exports seems to be slowing and we also have to consider Toyota's recalls, so we've given a cautious judgment on exports, Keisuke Tsumura, a parliamentary secretary on economic affairs, said as the government issued a report on the economy.
In a gesture it said was intended to reassure customers, Toyota said it would install brake-override systems on three more models of vehicles already on U.S. roads: the Tacoma truck going back to the 2005 model year, the Venza crossover from 2009 and the Sequoia SUV from 2008.
Toyota has sold around 1 million units of the three vehicles combined dating back to the respective model years, based on rough estimates using sales figures provided by Toyota. Toyota declined to say how much it expected the installations to cost.
Toyota's extra installation of the brake-override systems extends the scope and cost of a recall that had already targeted five models including the top-selling Camry. Toyota said it would have the same safety technology on most new models sold in the United States by the end of 2010.
Morgan Stanley auto analyst Noriaki Hirakata wrote in a report last week the cost of installing brake-override systems was about $50 per vehicle. At that cost, Toyota could spend around $50 million for the move -- a relatively small sum for a company that had $58 billion in sales last quarter.
Shares of Toyota fell 0.5 percent, matching the Nikkei 225's fall.
Investors are not worried about such one-time costs. Instead they welcome Toyota's efforts to restore confidence in its products and its relations with the U.S. government, said Yoshihiko Tabei, analyst at Kazaka Securities.
PRELUDE TO TESTIMONY
In a preview of the line Toyoda could take in his testimony, Toyoda said in a statement published in the Wall Street Journal he was committed to making sure Toyota learns from the crisis and changes its ways.
It is clear to me that in recent years we didn't listen as carefully as we should -- or respond as quickly as we must -- to our customers' concerns, Toyoda said.
The extended apology from Toyoda came hours after Toyota said it had received a federal grand jury subpoena from the U.S. attorney's office in Manhattan on February 8.
The automaker also said the SEC had asked for documents related to unintended acceleration of Toyota vehicles and the company's disclosure policies. Toyota said it would cooperate with the investigations.
(Additional reporting by Chang-Ran Kim and Kevin Krolicki; Editing by Hugh Lawson and David Holmes)