Toyota/US Government: Intentional Procrastination Saves $100s of Millions

Washington, D.C., Feb. 25, 2010 Once again, the heat is being turned up on Toyota. With FBI raids on Toyota component manufacturers in the US and intense congressional hearings occurring, the company continues its struggle to rebuild the faith of worldwide consumers. And now, newly released documents reveal that the automaker giant intentionally dragged its feet in dealings with government safety regulators.

For instance, in slick negotiations with the US government, Toyota was able to save $100 million by limiting the scope of the Toyota/Lexus floor mat recall. In July of 2009, Toyota stated that the Sept. '07 55,000-unit recall of Toyota Camry and Lexus ES350 vehicles was a winning move for company profit margins. In addition, the company worked deliberately to slow down defect investigation processes and various other industry procedural requirements. Now, Congress is vigorously pursuing information to determine if Toyota showed more concern for sheer profits than for public safety.

The US House Oversight and Governmental Reform Committee was provided with newly-uncovered documents supplied from the Associated Press this past Sunday. Although not released for public viewing yet, the documents are reported to show evidence that Toyota worked to deliberately thwart the progress of safety regulators. Further, Toyota is thought to have deviously conspired to push regulators into over-limiting the reach of the initial recalls. Of course, people are assuming that this was done to minimize any public awareness of the situation – and avoid the recall fallout for as long as possible.

Toyota recall profit-saving facts:

• A slow phase-in period to new side airbag safety regulations saved Toyota $124 million and 50,000 man hours;
• $11 million more was saved by delaying the implementation of new standards for door lock manufacturing;
• $100 million was saved by convincing safety regulators to limit the Toyota/Lexus floor mat recall to just 55,000 units;
• 10% of Lexus ES350 owners reported issues with unintended acceleration;
• 34 fatalities have been reported to the NHTSA allegedly due to unintentional acceleration issues;
• Toyota has recalled more than 8 million vehicles including 223,068 Prius hybrids;

President of Toyota Motor Company, Akio Toyoda was grilled by members of Congress for 3 hours yesterday. Toyota's North American representative, Yoshi Inaba had to step in and speak for Toyoda several times throughout the proceeding. Toyoda stated in a post-session interview, "At the hearing, I was not alone. My colleagues in North America and around the world, were there with me." After maintaining a stoic air during the hearing, Toyoda broke into tears and said he is `truly sorry`.

Congressional hearings, FBI raids, rebuilding efforts from Toyota and huge public interest will undoubtedly continue as the weeks progress. Of course, the long-term losses to Toyota will cost far more than the current losses in sales coupled with any legal settlements encountered. The true damage and costs will arrive slowly, over decades, in terms of lost consumer loyalty.