Toyota crisis: US insurer informed government

The largest U.S. auto insurer alerted regulators earlier than first believed about a worrying trend of accidents involving Toyota Motor Corp vehicles, while the Obama administration’s top transportation official said on Friday he would not relax pressure on the carmaker.

Both developments came as Toyota’s president, Akio Toyoda, readied to fly to Washington in an extraordinary appearance to answer questions from lawmakers next Wednesday about the safety crisis that has engulfed the company founded by his grandfather.

State Farm, whose records have been sought by two congressional committees investigating recalls and complaints related to unintended acceleration in Toyota cars and trucks, revised its report on Friday of when it notified the government about certain Toyota claims activity.

The insurer said earlier this month it had contacted the National Highway Traffic Safety Administration in late 2007. However, prompted by the public interest in Toyota, the insurer reviewed its records again and has now found that it contacted safety regulators initially in 2004, State Farm spokesman Phil Supple said in an emailed statement.

The information has been sought by House of Representatives committees probing questions around recent recalls of millions of Toyota vehicles related to loose floor mats that can jam accelerators and gas pedals that do not spring back as designed.

The government believes five crash deaths are linked to unintended acceleration and are investigating consumer complaints alleging up to 29 other fatalities since 2000 could be linked as well. Regulators have not linked any deaths to the “sticky pedal” problem.

The first of three congressional hearings takes place on Tuesday but much of the focus for the moment has settled on the second hearing, the next day, when company president Toyoda is scheduled to testify.

Toyoda said he intends to provide a “sincere explanation” to the House Oversight and Government Reform Committee of problems that led to the string of recalls since late last year.

Toyoda’s decision on Thursday to accept a congressional request to testify ended days of uncertainty over how the company would ultimately respond to calls that he come to the United States to address safety questions.

The media-shy Toyoda, who took the top job last June, originally said he had no intention of appearing before Congress himself, drawing criticism from industry analysts and Japanese politicians.

Even if Toyoda’s appearance before the Oversight panel goes well, the carmaker still has problems to overcome from engineering challenges to lawsuits to restoring brand image.

Toyota’s stock has fallen 22 percent since January 21, erasing more than $30 billion in market value.

U.S. Transportation Secretary Ray LaHood said on Friday that he is “very pleased” he will be able to meet Toyoda next week, and that the government has no intention of turning down the heat on the automaker.

“We at DOT (the Department of Transportation) and we at our safety agency (the National Highway Transportation Safety Administration) will continue to work 24/7 and we will not sleep until every Toyota is safe for every American who owns one,” LaHood told a news conference in Los Angeles.

Congress is examining several issues in a string of Toyota recalls that date to September. A priority of lawmakers is how Toyota and NHTSA handled complaints and other matters related to unintended acceleration, whether the recalls were done swiftly enough, and whether they were sufficient.

The Oversight committee will also hear from LaHood and a witness representing the family of Mark Saylor, a California highway patrol officer killed along with his wife, daughter and brother-in-law in an August crash that triggered renewed government scrutiny of unintended acceleration.

Toyoda has said the company is investigating the causes of the unintended acceleration and braking that have led to a recall of about 8.5 million cars worldwide.


Analysts and public relations experts stressed the need for clear and honest testimony from Toyoda. By appearing to dodge questions, Toyoda could further stain Toyota’s reputation.

“Rather than getting bogged down with the details, I think (Toyoda) should use this as a chance to communicate Toyota’s corporate philosophy,” said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities in Tokyo.

“What’s missing from Toyota right now is the big picture.”

Executives giving such testimony should also expect difficult questions, experts said.

“The important thing is that they actually answer all questions and don’t dodge or run away,” said Shoichi Yoshikawa, chief executive of public relations firm Hill & Knowlton Japan.

Toyoda, 53, will have to craft and deliver a message that resonates with millions of consumers, investors, employees and lawmakers around the world.

He is likely to undergo intense preparation. Toyota may hire lawyers to drill him with mock questions, one consultant said.

A company source said it had not yet been decided whether Toyoda would speak in Japanese or English, but the company has already contacted some translation companies.

In addition to the recalls over unintended acceleration, a separate recall is under way to fix software controlling the brakes on Toyota’s iconic Prius hybrid. Regulators have also begun a preliminary investigation into complaints about steering problems in late model Corollas.

Toyota’s safety woes are deepening at a time when automakers worldwide are struggling to emerge from a sharp sales dip that led to the bankruptcies of General Motors and Chrysler.
Source: Reuters

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