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Business

Toyota chief accused of insufficient contrition

Text by News Wires , Euny HONG

Latest update : 2010-02-24

Toyota President Akio Toyoda has apologised. He has bowed. He has written an Op-Ed in the Wall Street Journal. But some feel that, in relation to Japanese business tradition, he hasn't done nearly enough.

Japanese automaker Toyota has been subpoenaed in a US criminal investigation for its handling of the massive recall of some of its models. Lawmakers accuse the Japanese auto giant of "misleading" the public.

The world's biggest carmaker has pulled more than eight million vehicles – mostly the Prius model – over accelerator and brake problems, and faces class-action lawsuits that could potentially cost them billions of dollars if the defects can be linked to more than 30 deaths.

“Resign or go commit suicide”

Toyota President Akio Toyoda wrote an Op-Ed piece in Monday’s edition of the Wall Street Journal, in which he explains his vision for future of Toyota. He lists “concrete steps” his company has taken, including hiring an independent consulting firm to analyse the throttle control system, and a vague promise that he is “personally leading a company-wide effort to institute more stringent quality control.” He also praises his company’s handling of the crisis: “Our commitment to move rapidly is underscored by the speed at which we recently launched recalls” of the Prius and Lexus HS250.


Toyoda’s reaction to the scandal flies in the face of conventional wisdom that Japanese executives respond to company failures by resigning or committing suicide. So prevalent is this stereotype that in March 2009, when AIG was in hot water for doling out large bonuses despite receiving a state bailout, US Senator Chuck Grassley said AIG executives should “follow the Japanese example” either “resign or go commit suicide.”

Toyoda, grandson of the company’s founder and president since June, did apologise for the problems caused by the faulty vehicles. However, some Japanese felt his bow was not low enough or long enough.

In fact, he originally had no intention of attending the US Congressional hearings which opened on Tuesday, but was forced to change his mind at the insistence of the House, and made his appearance Wednesday.

Dr. Mark Rebick, a lecturer at the Nissan Institute for Japanese Studies at Oxford University, gave one possible explanation to FRANCE24 for Toyoda’s holding on to his job: “He may feel that it’s not appropriate to resign since he just took on the job recently. He may also feel these problems did not occur under his presidency.”

“The Ford Pinto memo”

For some experts whether Toyoda resigns or not is the least of Toyota’s problems. William Steward, instructor in international business at the American University of Paris, told FRANCE24: “Rather than resign, [Toyoda] should fix the problem.”

US Congress is expected to determine when the world's biggest carmaker first knew of the "sticky accelerator" problems, and whether it delayed informing US regulators and the public about them. Congress has reportedly subpoenaed damning internal documents.

Steward likens these documents to the infamous “Ford Pinto memo” circulated in-house at Ford in 1968, which explained that the US automaker was aware of fatal defects in its Ford Pinto model but that it would be more expensive to recall the units than to pay damages in individual lawsuits. The memo was exposed in a 1981 lawsuit. According to Steward, “What destroyed Ford at the time was not that the cars blew up; it was the memo.”
 

Date created : 2010-02-23

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