Transportation Secretary Ray LaHood is back in front of Congress for the second straight day, and he put on a better performance yesterday than he was this morning. Mr. LaHood tried to deflect some of the questions with humor; I respect the move as many of the questions have been eerily similar. Also, why is there no one in the chamber? There is such outrage over this problem with Toyota, and yet there are only five congressmen (or women) in their chairs. Later today, when Mr. Toyoda is testifying, I can guarantee that most of those seats will be filled because these congressmen will need their sound bites. After seeing yesterday’s testimonies, Ms. Smith’s story tore at the heart strings and it really is amazing she was able to sit there and tell her story. To anyone that has lost control of their car momentarily on a sheet of ice or snow, she lost control of her car going about 80 mph and didn’t have control of it for approximately 5-6 minutes. She tried everything (standing on the brakes, emergency brakes, turning the engine off), but nothing worked. It was a difficult story to listen to, and it will be interesting to see how many representatives refer to that story later today.
Mr. LaHood at his last testimony said that Toyota’s weren’t safe to drive; he later recanted that statement saying that people misunderstood what he was trying to say. He reiterated that statement this morning saying that Toyota owners needed to get their vehicles in to be fixed as soon as possible. Toyota is fixing about 50,000 vehicles per day, and many dealerships are staying open 24 hours a day to try to help with the influx of cars. Oddly, there hasn’t been the backlash against Toyota’s that many had feared. Yes, there are some outspoken people, but they probably wouldn’t buy Toyotas anyway. I have spoken to a few Toyota dealerships around the New York City, New Jersey, and Philadelphia areas and most are seeing people that still love their cars. They are actually becoming even bigger fans of Toyota because of the steps the local dealerships are taking.
Akio Toyoda, President of Toyota (and grandson of the founder) will be a punching bag for Congress, but it will be up to him to put on a solid performance if Toyota is to have any hopes of rebounding quickly. Many think that all of Japan’s export economy rests on Mr. Toyoda’s shoulders this afternoon. If he is shown to be an inept leader, than there are fears that the negative cloud could spread to all of Japan’s exports, ranging from Honda to Sony. I expect Mr. Toyoda to hold his own during the testimony, and while he may leave with a black eye, he (and Toyota) will still be standing tall.
Written by David Silver, a Research Analyst for Wall Street Strategies (wstreet.com) covering companies in the Transports, Autos, and Beverage sectors. For more information about Mr. Silver, refer to the company’s website, wstreet.com.