WASHINGTON D.C., United States – Oh my God, I just bought a Toyota! What the … was I thinking!  If I really wanted a Japanese car, Honda was a great choice. If I wanted an American car, General Motors and Ford dealerships were located nearby. To this day, I can’t believe it.

Well, no use crying over spilt milk. The looming question is: Now what?

As a November 2009 buyer of a Toyota Camry 2010 model, it’s quite disheartening to know that the pristine car I have been driving for only three months is subject of a massive recall. Who would have known that just after twelve weeks of occasional use, I have to bring it to the dealer for a very critical adjustment to its accelerator pad.

Had this sudden acceleration issue been publicly raised by Toyota earlier, I would have never bought a Camry. Honda’s Accord and Civic Hybrid actually looked more interesting and safer bets. But here we are now, waiting for the implementation of Toyota’s corrective action. Feeling silly, deceived and lied to, the wait for the new mechanical part is nothing short of excruciating. And U.S. Toyota dealers aren’t always helpful; they prod you to call Toyota USA, not them.

Toyota is undeniably in a world of trouble. The grandson of Toyota’s founder, company President Akio Toyoda, just arrived this past weekend in Washington, DC and is scheduled to testify before U.S. Congressional committees. To testify is a misnomer as he will be intensely grilled. Rightly so. The consumers want blood. With all of the profits they made these last decades that were only made possible by allegedly hiding evidence, it is but appropriate for the company and its leader to face the consequences.

There will be more investigations and subpoenas to come Toyota’s way from the SEC, other agencies, consumer groups, and class action lawyers. More past injuries and accidents involving their cars will be attributed to sudden acceleration. This will mean more scrutiny, more lawsuits, more complaints, lower profits, dealerships shying away, and a large dent on its reputation.

Blind Loyalty and Deceit

I just bought a Toyota. Call it blind loyalty to Toyota’s supposed superior quality. But blind loyalty is simply that – blind.

Toyota’s response to blind loyalty? According to news reports: deceit. Toyota had known of this unintended acceleration problem for years and did little about it to protect its reputation and profit margin. It could also be that the U.S. government through the NHTSA (the transport agency) didn’t put too much pressure on the automotive giant in the early to late 2000s to voluntarily recall their cars and develop a remedy. Maybe both. From what’s being revealed publicly – clearly both.

If you’re going to use your Toyota car these days, you’re thinking: Where am I going? How far is that again? Is that uphill or mostly downhill? Is there snow, sleet or rain water on the road? Will I have to go through a lot of highways? How’s the weather from point A to point B? Planning a long road trip is almost out of the question. Friends and relatives expressing concern are abundant.

The initial public relations campaign launched by Toyota more than a month ago was that it was voluntarily recalling millions of cars in eight of its models, including Camry 2007-2010 models, due to the possibility of sudden unintended acceleration. This first public relations salvo by Toyota portrayed it as a conscience-driven institution that was willing to sacrifice a portion of its reputation and revenues to ensure driver safety.

Some Facebook status updates even read that Toyota ought to be congratulated for being the first automotive company in the world to start a massive recall in this magnitude in the name of safety. I initially felt that, perhaps displaying exemplary corporate governance and true to its Japanese identity, Toyota was initiating this massive recall since it was the right thing to do.

But that was over a month ago.  That’s ancient history by now.   

It appears that Toyota USA and Toyota Japan had known of this sudden unintended acceleration problem for years. It has recently been circulated that lawsuits have been filed in the past where plaintiffs have accused Toyota of this problem. One of the best ways to rock the corporate boat is to file a class action suit against the company. That’ll inform them of the problem, that’ll spur them to action, and that’ll hopefully encourage them to find a solution. Product liability suits, for the most part, keep industries and corporate officers honest.

It’s now coming to light that sudden unintended accelerations have plagued Toyota Tacomas, Camry’s and Solaras in the last few years, as well as certain Lexus vehicles. Toyota tried to explain this away by pointing to all-weather floor mats as the culprit, saying that the accelerator pads got stuck on the mats. But automotive blogs have recounted hundreds upon hundreds of consumer complaints that have nothing to do with floor mat jamming. NHTSA’s Defect Investigation’s database has reports of unintended acceleration in Lexus ES models from 2004 up until late 2008. So this is not a new problem but an old one that appears to have been largely ignored and buried under the rug (or floor mat).

Toyota said in a November 6, 2009 press release that there was no problem with its electronic engine management system (on-board computer), and that it was just a problem of floor mats trapping the accelerator pads. Toyota claimed that engineering experts at the NHTSA has exhaustively investigated this issue in Toyota and Lexus vehicles six times in the last six years and it has closed all of these investigations with no findings that there was a computer-related problem. It claimed NHTSA found floor mats jamming the accelerator pads as the only problem.

Assuming it’s just the floor mats that should be the concern, why then was this most recent massive recall involving 8.4 million vehicles in the U.S., Canada, Europe, and China instituted in the first place? Because Toyota was fearful of more class action lawsuits? Or is it because they themselves realized that it was actually a mechanical problem, perhaps also an on-board computer problem, and not simply floor mat entrapment?

“A Little Safety Deaf”

U.S. Transportation Secretary Ray LaHood said that Toyota is “a little safety deaf”, contrary to its earlier public relations release that it was voluntarily recalling millions of affected vehicles. LaHood said that it took an official visit by his department to Toyota headquarters in Japan and constant agency pressure before it owned up to its responsibility of adhering to consumer safety. LaHood was essentially disputing Toyota’s pronouncement that the recall was totally voluntary. 

Certainly, Toyota is not the first Japanese company to market defective products. There have been past news reports that identify other Japanese companies in the milk, banking, and electric power industries, to name a few, that did the same. Neither is it the first Japanese car company to be embroiled in a scandal, as Mitsubishi was involved in a major 2000 cover-up relating to the belated recall of some 600,000 to 800,000 cars and trucks. This cover-up led to deaths, fires, accidents and injuries since the 1980s, resulting to an author writing that “Mitsubishi officials concede that a culture of cover-up existed at the company.”

The Long Road to Regaining Consumer Trust

Will Toyota ever regain consumer trust? Will it ever regain mine? That’s very hard to say even if my family has been driving Toyotas for decades – whether it was the 1970s and 80s Asian van (Tamaraw), its 1983 Silver Edition car, 1990s Corollas, 2004 Altis, and now the Camry. As a scholar in Japan four years ago, I was driving a beat up-looking 1995 Corolla which still worked well. In Texas more recently, I was driving a Lexus that was reliable and functioned well.

But new circumstances stimulate new reactions. Old loyalties can be replaced by new loyalties in other places. It’s unfortunate but it appears that the car manufacturer millions have been loyal to for decades has been cleverly deceiving its customers. True, its cars are nice to drive, comfortable, efficient and elegant looking; some even have very little impact on the environment such as the Prius and other hybrids. But are they really that safe?

It doesn’t really matter whether these Toyota vehicles ever suffered from sudden unintended acceleration. In fact, one of the questions the ill-equipped Toyota Arlington customer service rep asked me was whether the car showed this behavior, and I answered that it doesn’t matter whether it did or did not. What matters is that it can potentially accelerate on its own later today, tomorrow or in three years.

A motor company, or any corporation for that matter, which surreptitiously hides critical defects of its products, tries to spin negative information into good public relations, and does little to improve safety is doing a great disservice to its customers. It’s opening the door to a flood of class action suits and multi-district litigation. Just imagine how many more were injured or died as a result of this mechanical defect, and the millions of others who bought their vehicles not knowing of this decisive information.

Ethics and Corporate Governance

Even if Toyota is able to resolve this sudden acceleration issue and Toyota President Akio Toyoda is able to survive Congressional pressure, there are far-reaching implications.

One, there is a disconnect between what is being hyped up by Toyota and its own policy of dragging its feet and shielding vital information from the public. Two, there was an obvious problem with the federal regulators supposedly overseeing the U.S. car industry. Three, there is a need to improve the governance system of Toyota Japan’s board of directors and corporate officers.  Four, there may be a deleterious effect towards Japanese exports in general.

Toyota, by belatedly admitting its mistake and announcing the recall, is making itself vulnerable while making its car buyers unsafe. Fundamental business ethics and corporate governance dictate that they should have done the exact opposite years ago.
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The author is a U.S. & Japan-trained and educated lawyer with a Master of Laws degree from the University of Pennsylvania Law School and a Certificate in Business from Wharton. Send comments to carlo.osi@gmail.com or thru http://eastofturtleisland.blogspot.com/.