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Akio Toyoda to be rare Japanese chief under Congressional scrutiny

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Akio Toyoda to be rare Japanese chief under Congressional scrutiny

Automotive News -- February 19, 2010 - 3:45 pm ET

Toyoda: "I am grateful for the opportunity."

TOKYO/WASHINGTON (Reuters) -- Toyota Motor Corp.'s chief bowed to pressure to testify before U.S. lawmakers and explain the company's safety crisis, becoming the highest profile Japanese executive to face such a grilling from Congress.

Akio Toyoda, the grandson of Toyota's founder, said he intends to provide a "sincere explanation" of the problems that led to the recall of more than 8.5 million vehicles when he testifies Wednesday before a congressional panel.

His decision ends days of uncertainty about how the embattled automaker would respond to calls for a better response to its safety issues. Toyoda, 53, originally said he had no intention of appearing before Congress himself, drawing criticism from industry analysts and Japanese politicians.

"Toyota gave the impression that it was not serious enough about the issue or taking the U.S. market too lightly when it said Mr. Toyoda had no imminent plans to travel to the United States," said Tsutomu Yamada, a securities market analyst for

In his Thursday invitation, Committee Chairman Ed Towns, D-N.Y., asked Toyoda to help clear up confusion about how consumers should respond to the automaker's difficulties.

"The public is unsure as to what exactly the problem is, whether it is safe to drive their cars, or what they should do about it," wrote Towns, a month into a safety crisis that has tarnished the company's formerly first-rate reputation for quality, hurt sales and unleashed dozens of lawsuits.

North America chief Yoshimi Inaba and U.S. Transportation Secretary Ray LaHood were already due to testify Feb. 24.

Separately, the House Energy Committee said its witnesses for the first Toyota hearing, on Tuesday, would be Toyota Motor Sales U.S.A. President James Lentz and National Highway Traffic Safety Administration chief David Strickland. The Senate Commerce Committee has a March 2 hearing planned.

A shame

"It's good that he has decided to accept" the invitation, said Seiji Maehara, Japan's transport minister, referring to Toyoda. "But it's a shame there was flip-flopping on the decision."

Toyoda had originally said he would send Inaba to testify but later changed his plans.

"I am grateful for the opportunity to go to America and I intend to cooperate fully," he told reporters on Friday.

The last senior Japanese executive to give testimony before the U.S. Congress was the head of tire maker Bridgestone in 2000 after a series of crashes linked to the handling of Ford Explorer SUVs, according to media reports.

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

Shares of Toyota closed down 1.8 percent in Tokyo on Friday. The stock has fallen 22 percent since Jan. 21, wiping out more than $30 billion of market capitalization.

Analysts and public relations experts stressed the need for a clear and honest testimony from Toyoda. By appearing to dodge questions, he 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.

Media shy

Media-shy Toyoda, who took the post last year, 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 not yet been decided whether Toyoda would speak in Japanese or English, but the company has already contacted some translation companies.

Toyoda, who has a degree from Babson College in the United States, has at times appeared uneasy with the heightened scrutiny and sometimes struggled with comments in English.

"I would recommend that he speak in Japanese to avoid misunderstanding. If he speaks in English, he needs to prepare his statements very well," said Shinichi Tanaka, the president of public relations firm Fleishman-Hillard Japan.

Toyota has recalled more than 6 million vehicles in the United States for problems involving the accelerator pedal becoming stuck, either by a loose floor mat or because of a glitch in the pedal assembly.

As many as 34 crash deaths have been blamed on unintended acceleration in Toyota vehicles since 2000, according to complaints tracked by U.S. regulators.

A separate recall is under way to fix software controlling the brakes on Toyota's Prius hybrid, while U.S. safety regulators have also begun a preliminary investigation into complaints about steering problems in late-model Corollas.

The House oversight panel said it had also issued a subpoena for internal documents Toyota had fought to keep sealed in a legal battle with a former employee who says the automaker routinely hid evidence of safety problems.

Japan's foreign minister, Katsuya Okada, said the recalls could hurt the reputations of other Japanese firms abroad.

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

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