The American Toyota recall is in high gear. Complaints have been filed regarding sticking gas pedals, improper floor mats and faulty electronics. Executives from Toyota are scheduled to testify before Congressional committees this week. Toyota has recalled several models over safety concerns and the U.S. Government is seeking answers.
James Lentz, President and Chief Operating Officer of Toyota Motor Sales, U.S.A., Inc. gave testimony today, February 23, 2010, to the Committee on Energy and Commerce. In his prepared remarks, according to the official Toyota website, he said, "I would like to assure the Committee, and the American people, that nothing matters more to Toyota than the safety and reliability of the vehicles our customers drive. We are committed not only to fixing vehicles on the road and ensuring they are safe, but to making our new vehicles better and even more reliable through strict quality control, enhanced communication and a redoubled focus on putting our customers first."
Lentz continued, "We are confident that no problems exist with the electronic throttle control system in our vehicles. We have designed our electronic throttle control system with multiple fail-safe mechanisms to shut off or reduce engine power in the event of a system failure. We have done extensive testing of this system and have never found a malfunction that caused unintended acceleration."
Akio Toyoda, the President of Toyota, responded to a request from the U.S. Congress to appear in person, saying, "I have received Congressman Towns’ invitation to testify before the House Committee on Oversight and Government Reform on February 24 and I accept. I look forward to speaking directly with Congress and the American people."
Toyota's U.S. Presence
Toyota has been selling automobiles in the United States since 1957. According to their website, Toyota has made significant investments in the U.S. The official numbers are as follows:
- Total Investment: More than $17 billion, including sales and manufacturing operations, research and development, financial services and design
- Toyota Employees: More than 35,000
- Toyota, Lexus and Scion Dealership Employees: More than 1,400 dealerships employ a total of more than 115,000 people
- Toyota Vehicles are Manufactured in: Alabama, California, Indiana, Kentucky, Missouri, Tennessee, Texas and West Virginia
- Vehicles Models Produced: 10 (Avalon, Camry, Camry Hybrid, Camry Solara, Corolla, Sequoia, Sienna, Tacoma, Tundra and Venza)
- 2008 Vehicle Sales: More than 2.2 million vehicles
- Philanthropy: Since 1991, more than $464 million awarded to numerous organizations across the nation, with a particular focus on education, the environment and safety
Conflict of Interest?
The Government of the United States is currently the largest shareholder in one of Toyota's main competitors, General Motors. The U.S. Government owns 61% of GM.
According to a Bloomberg's BusinessWeek article by John Hughes and Theo Francis, from February 23rd, 2010, many are raising questions about a conflict of interest by the government. Chester Spatt, former chief economist for the SEC and now a finance professor at Carnegie Mellon University, said, "There’s definitely a problem. In a private context, people would be talking about all kinds of conflicts."
Mitch Daniels, the Republican Governor of Indiana, concurs. "Here’s another reason you don’t want the government in the car business. It sure has given every impression of the government discriminating against its direct competitor." Daniels continues, "There seems to be a degree of witch-hunting."
In a letter sent to various members of Congress on February 10th, the Governor's of Kentucky, Indiana, Mississippi and Alabama stated that the federal government is in "obvious conflict."
Despite the escalating calls that a conflict of interest clearly exists, congressional hearings continue throughout the week.
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