Toyota faces new probe on Corolla steering

DETROIT/TOKYO Wed Feb 17, 2010 6:56pm EST

1 of 6. Toyota Motor Corp President Akio Toyoda attends a news conference in Tokyo, February 17, 2010.

Credit: Reuters/Toru Hanai

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DETROIT/TOKYO (Reuters) - U.S. regulators launched a preliminary investigation into reported steering problems on the Corolla sedan on Wednesday as Toyota Motor Corp faced questions from U.S. lawmakers on whether it had ignored red flags on safety before a wave of vehicle recalls.

The National Highway Traffic Safety Administration has received more than 150 complaints about possible steering problems in 2009 and 2010 Corolla models, a U.S. government official said.

The agency began reviewing complaints about the Corolla models last week and on Wednesday determined that the evidence warranted opening a preliminary evaluation, according to the official who asked not to be named because the plan has not been announced.

The Corolla is Toyota's second-most popular model in the U.S. market behind the Camry.

Such preliminary investigations are a common step by NHTSA and are often closed before being upgraded to a second-stage investigation or prompting a vehicle recall.

But the move comes at a time when Toyota and U.S. safety regulators are under intense scrutiny for their handling of safety complaints related to unintended acceleration in Toyota vehicles going back a decade.

In particular, Toyota is being challenged by U.S. lawmakers to answer the criticism that the company's practice of tightly controlling key decisions in Japan had contributed to its deepening problems in the U.S. market and criticism that it has not been forthcoming with safety regulators.

In a move that raised the stakes for a pair of congressional hearings next week, Toyota President Akio Toyoda said he would send North America chief Yoshimi Inaba to testify instead of making an appearance himself.

Toyoda, grandson of the 77-year-old automaker's founder, said he believed Inaba was the logical choice to testify.

"I have full confidence in the management of Toyota Motor North America, led by Mr. Inaba, and I believe he is the best placed to testify," Toyoda told reporters at his third news conference in two weeks.

The statement by Toyoda came a day after the automaker moved to cut production in the United States and NHTSA opened an investigation into whether it had acted in a timely way in responding to safety complaints.

A series of vehicle recalls since January have damaged Toyota's once-vaunted reputation for quality and safety. Up to 34 crash deaths have been blamed on unintended acceleration in Toyota vehicles since 2000, according to complaints filed with U.S. regulators.

Toyoda faces a deepening crisis just seven months into his tenure as the automaker's chief. He said Toyota may have grown too fast in recent years, outstripping its ability to ensure that vehicle quality standards were maintained.

Two congressional panels plan hearings next week to look into Toyota safety issues. The U.S. House Energy and Commerce panel moved its hearing to Tuesday instead of Thursday. The U.S. House Committee on Oversight and Government reform is scheduled to hold a hearing on Wednesday.

The top Democrat and Republican on the oversight panel asked major insurers for information they may have provided to U.S. safety regulators on reports of unintended acceleration in Toyota vehicles.

State Farm, the largest U.S. auto insurer, said last week that it had warned NHTSA about a worrying trend of Toyota accidents in 2007.

Rep. Darrell Issa, the ranking Republican on that committee, also sent a letter to Inaba asking him to answer a series of questions about when Toyota became aware of safety problems with its cars.

Issa also told Inaba to submit a written answer by Monday discussing whether there was a "disconnect" between the company's U.S. operations and its Japan headquarters as critics have charged.

Specifically, he asked about team of NHTSA officials dispatched to Toyota's headquarters in December to deliver the message that the automaker was not moving fast enough to address the U.S. government's safety concerns.

"Why was it necessary for NHTSA officials to visit Japan in order for Toyota to recognize its obligations under U.S. law?" Issa asked in his letter to Inaba.

Earlier on Wednesday, Toyota confirmed plans to install a brake override system on all new vehicles after global recalls for acceleration and braking problems that affect 8.5 million vehicles. The company had said in January that it would take that step to address concerns about unintended acceleration.


Former NHTSA chief Joan Claybrook, a vehicle safety advocate who is scheduled to testify before Congress, said Toyota should install brake override systems on vehicles it has already sold, not just new models.

"The American public has lost trust in Toyota and they need to regain that trust," Claybrook said.

Complaints about unintended acceleration in Toyota vehicles in the United States have been rising since it began installing electronic throttle controls on its vehicles a decade ago.

Earlier on Wednesday, Toyota's quality chief, Shinichi Sasaki, said drivers had complained about a change in steering response compared with older Corollas, which was possibly due to a switch from a hydraulic power steering system to an electric one.

Sasaki said there would be a recall only if the issue were deemed to be a safety breach.

Meanwhile, analyst doubts have been deepening about the pace of Toyota's earnings recovery. Only two weeks ago, the company estimated the recalls would reduce global sales by 100,000 units in the financial year to the end of March.

Toyoda said production cuts had been within expectations so far and he believed the company could stem further sales declines, although it was impossible to tell for sure.

Toyota executives have told dealers that they will roll out a package of incentives in March to keep customers from defecting to rival brands.

Toyota shares have fallen a fifth from a peak on January 21, wiping out more than $25 billion in market capitalization.

Shares ended down almost 2.5 percent at $74.15 on the New York Stock Exchange on Wednesday afternoon.

(Additional reporting by Yumiko Nishitani and Yoshifumi Takemoto, John Crawley in Washington and Steve Gorman in Los Angeles; writing by Kevin Krolicki; editing by Lincoln Feast, Karen Foster and Matthew Lewis)

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Comments (4)
saurabh123 wrote:

Feb 17, 2010 5:17am EST  --  Report as abuse
tardis750 wrote:
Good for Toyoda – he didn’t sidestep congress at all. He is not in the US; not regulated by US law. His company has representation here that can answer and address the waste of time that congress is putting forth. I think congress has other issues that they should be focused on – remember all those people out of work?
Does anyone in Congress know boo about car manufacturing anyway? Yes there is a problem; yes it needs to be corrected. Save time and tax payer money – set a time limit for when you want to know the problem identified; resolution and mitigation strategy. Get back to work and stop chinwagging. talk talk talk – about things you know zero on…

Feb 17, 2010 10:21am EST  --  Report as abuse
Bravo. Here is a man who is focusing on actually running a company and not playing politics. American CEO’s look and learn.

Feb 17, 2010 11:38am EST  --  Report as abuse
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