By David Silver
The Toyota (TM) saga continues this week as President Akio Toyoda is set to testify before Congress about what he knew and when, regarding the latest recalls. Over the past year, the Company has recalled more than 8.5 million vehicles for defects ranging from floor mats to brakes to accelerators that stick. The Company is also mulling a recall of Corollas after complaints about the vehicles' steering began to surface.
If the problems with the vehicles weren't enough, more than 44 class action lawsuits have been filed, and this morning the Company announced that it has received subpoenas from a US federal grand jury requesting documents related to unintended acceleration of its vehicles and the braking system of its Prius hybrid.
Additionally, Toyota indicated it received another subpoena from the Los Angeles office of the US Securities and Exchange Commission for documents related to sudden unintended acceleration and the Company's disclosure policies and practices.
Mr. Toyoda accepted Congressman Darrel Issa's (R – CA) invitation to appear before the House Government Reform and Oversight Committee. It is unlikely that we will learn anything ground breaking (or new for that matter) from Mr. Toyoda's testimony. I personally feel that the President of Toyota North America, Yoshi Inaba, would have more insight, but the PR nightmare that would have followed Mr. Toyoda shunning Congress would have overshadowed any additional insight and eventually the rebound for the Company.
It may take a few months for all the fixes to be made to the Company's cars and manufacturing facilities, but it will take years for the structure of the Company to change, and probably longer for all the lawsuits to be finished. I've heard a few lawyers on TV over the past few days discussing their cases, and sadly, each and every one of them proclaimed that it was their duty to punish this company. Throughout the entire interview, I was thinking to myself, ‘wait, what about the people you represent? Aren't you supposed to be helping them?'
Testimonies start on Tuesday and are sure to bring some fireworks. It would be great to see more than half of the committee's seats filled with the members. This news affects people from about every constituency, and the number of open seats really could show how important this topic is, and how much of a scapegoat Toyota will be.
Toyota was (and in many cases still is) a model for how to grow a Company on a global scale. Many smaller auto manufacturers are following Toyota's model. The test of a good company is not whether or not it makes mistakes (every company makes mistakes), but what it learns from them and how quickly they implement the newfound knowledge to change those mistakes. Toyota is still in that little grace period, but it needs to get moving to show that it belongs at the top of auto world.
Disclosure: No positions