Toyota president battles crisis in family company

By Dan Strumpf and Yuri Kageyama/The Associated Press

TOKYO — Akio Toyoda’s appointment as the president of Toyota last June was full of promise. The grandson of the automaker’s founder, he was expected to boost morale for the rank and file and help steer the company through a brutal slump in the auto market.

Eight months later, he is being criticized as slow and indecisive as Toyota Motor Corp. grapples with the worst crisis in its 70-year history — global recalls ballooning to 8.5 million vehicles over four months. Its reputation for high-quality, reliable cars has been tarnished.

Toyoda, 53, said Thursday that he plans to testify at a U.S. congressional hearing next week about the automaker’s recalls in the United States.

The announcement came two days after he said he wouldn’t and follows an onslaught of criticism from both the Western and Japanese media about his reluctance to go to Washington.

Toyoda will testify before the U.S. House of Representatives Oversight and Government Reform Committee next Wednesday. By issuing the invitation, the committee had essentially forced Toyoda to testify.

“I am hoping our commitment to the United States and our customers will be understood,” Toyoda told reporters. He said he intends to explain steps the company is taking to improve safety, which includes a special committee he is leading.

Toyoda was criticized for being absent as the recalls surfaced in the U.S. in October. He did not speak publicly on the crisis until January, when he was cornered by a Japanese TV crew at a conference in Davos, Switzerland.

Toyoda’s testimony will be his first time addressing lawmakers and American consumers in the U.S. since the recalls began in October. In Japan, Toyoda is viewed as colorful and approachable. Vocal about his love for sports cars and racing, he has appeared in racing outfits and zipped around test-drive courses in prototype vehicles.

At the Tokyo Motor Show in October, Toyoda personally unveiled a two-seat super car, the Lexus LFA, which reaches up to 200 miles per hour and costs $375,000. Toyoda played a key role in the development of the sports car, a stark departure from Toyota’s usually staid lineup of family cars and trucks.

He was an active blogger until the recent crisis and pioneered efforts in the 1990s to build Toyota’s brand on the Internet. In 1998, he founded an Internet retail business called that sold Toyota cars, as well as plastic models, music CDs and even laundry detergent.

No stranger to the U.S., he earned his business degree at Babson College in Massachusetts after studying at Japan’s prestigious Keio University. He has headed Toyota’s joint venture with General Motors Co., New United Motor Manufacturing, in Fremont, Calif., in the late 1990s.

Despite his experience in the U.S., Toyoda’s English was jumbled and halting during his first press conference on the recalls earlier this month and he stuck mostly to Japanese. At a second press conference, his English was stronger but he read from a prepared script.

Josephine Cooper, Toyota’s group vice president for public policy and government and industry affairs, said Toyoda may bring a translator when he testifies before Congress next week.

“He speaks English well, but he may want the safety net of a translator to make sure that the questions are explicitly understood,” Cooper said.

Toyoda will be best served delivering his remarks in English, as difficult as it may be, said Ulrike Schaede, professor of Japanese Business at the University of California San Diego.

“We need to pay attention to the fact that there might be something lost in translation and give him credit for doing this, but I think he has to do it in English,” Schaede said.

Toyoda will be joined by North American chief Yoshi Inaba, who speaks fluent English, and Toyota Motor Sales USA President Jim Lentz, an American.

Whether Toyoda — or the chief of any Japanese company — can deftly handle a hostile grilling by U.S. lawmakers is in doubt.

The U.S. government has opened a fresh investigation into Corolla compacts over potential steering problems. Toyota’s earlier recalls have been over sticky gas pedals, floor mats that ensnare accelerators and faulty braking.

Toyoda’s initial plan to send Inaba alone to the congressional hearings drew criticism from some Western-style crisis-management experts.

“This is the place where you want to have your top guy,” Paul Argenti, Professor of Corporate Communication at Tuck School of Business at Dartmouth, said of the congressional hearings.

“If you have a leader who isn’t capable of handling global issues of this magnitude, he probably shouldn’t be in the driver’s seat,” he said.

Some Japanese companies, like Sony Corp. and Nissan Motor Co., have become more Westernized in recent years. But Toyota has remained largely insular, with a tight-knit board of directors that includes no foreigners.

Heads of Japanese companies are chosen for their skills at team decision-making, ensuring harmony and stability. They are typically in their 60s or older and have made the rounds of the company’s divisions without rocking the boat.

Like the Ford family at Ford Motor Co., members of the Toyoda family has long held leadership positions at the company.

But at Ford, putting family in charge has not always worked out. Bill Ford Jr., the great-grandson of founder Henry Ford, struggled for five years to steer the automaker toward financial stability before stepping down in 2006.

Like Toyoda, Ford inherited a company in crisis — it was mired in losses, plagued by eroding sales and accused of making shoddy vehicles. He turned over the CEO title to Boeing executive Alan Mulally after telling his board, “I’m wearing too many hats.” He continues to serve as executive chairman.

Toyoda owns less than 1 percent of Toyota stock, minuscule compared to other family owners like the Ford family, but he is still widely perceived as having a stake in salvaging Toyota’s reputation.

“Perhaps he can walk the tightrope between global and Japanese expectations and demands,” said Roland Kelts, author of “Japanamerica: How Japanese Pop Culture Has Invaded the U.S.” and a lecturer at the University of Tokyo. “I say give him time.”


Strumpf reported from New York and Associated Press Writer Ken Thomas contributed to this report from Washington.

Click video to hear audio