FP Comment
Terence Corcoran, Financial Post
There can be little doubt that Toyota, the world's greatest auto maker in recent years, has become the victim of much more than another typical out-of-control All-American media frenzy. When top-line political gamesman such as U.S. Transport Secretary Ray LaHood, Congressional pit bull Henry Waxman, and conniving United Auto Workers executives start piling on, this is clearly much bigger sport that the usual ritual public lynching of auto executives, a routine occurrence in Washington. The attack on Toyota, at this time of U.S. economic weakness and populist excess, is fast turning into a great American nationalist assault on a foreign corporation, an economic war.
The White House has denied any such motivation on the part of the United States. But that denial lacks credibility. While it may be technically true that President Obama's team didn't explicitly reach a decision to target Toyota, nobody in this crowd needs a presidential order to turn the Japanese auto giant's Sudden Unintended Acceleration (SUA) problem into a national industrial advantage for the United States. The owners of union-dominated Government Motors can spot a strategic economic opportunity without waiting for the memo from head office.
California Congressman Henry Waxman swung into action, using recent anecdotal reports of sudden acceleration as a pretext for extended assaults on Toyota and its management. The UAW has joined the project as part of its campaign against Toyota's closure of a unionized California plant.
Wednesday you could practically see the calculating wheels spinning under the hood of Mr. LaHood's cranium when the transportation secretary told a committee that Toyota owners should simply "stop driving" their Toyotas. He later claimed to have misspoken, but then said much the same thing. If Toyota drivers are worried, they can take their vehicles to a dealer where, as Mr. LaHood knows, there was nothing the dealer could do since it is expected to take weeks if not months for Toyota to "fix" the alleged cause of Toyota's alleged sudden acceleration problem.
Toyota shares continued their SUA plunge Wednesday, ending just below $74, down from recent highs of $92. The company has lost $23-billion in market capitalization since the crisis began.
At this stage, there is little hard data on whether Toyota actually has a sudden acceleration problem. The company is not helping matters with its apparent scrambling to come up with an explanation and a "fix" for a phenomenon that has been cropping up in auto industry lore for decades. No maker is immune, but Toyota is seems to have been caught in the latest run of reports. All of the reports are anecdotal accounts of out-of-control vehicles for reasons that nobody can ever adequately explain. The latest stories, including one of a Tennessee man who says his 2003 Camry suddenly jolted into a parking space, become instant media legends.
Of the millions of cars on the road, only a few hundred anecdotal reports exist, making it far more likely that other things are happening, including driver mistakes and even fluke occurrences that no amount of corporate fixing can avoid. Usually the stories fade and the auto companies move on, although Audi famously became victim of a SUA craze a couple of decades ago, losing massive market share even though no problem was ever identified beyond driver error.
Toyota's experience looks like it could become even worse than Audi's, mainly because bashing Toyota serves the national economic interest of the United States, U.S. auto makers, union leaders and others whose economic ideas tend toward nationalism. U.S. jobs for U.S. workers employed by U.S. companies.
Is the media involved? The extent of exaggeration surrounding Toyota's problem may be just a little larger than the usual media frenzy. In a typical over-the-top anti-Toyota item, famed author James B. Stewart Wednesday told Wall Street Journal readers to "avoid - or sell - Toyota Motor shares." His reason is that Toyota may have misrepresented the cause of a now notorious crash of a Toyota Lexus ES-350 in San Diego last August. Toyota said the Lexus crash, in which four occupants were killed following a frantic 911 call, was due to a faulty floor mat.
The official accident report by the U.S. National Highway Traffic Safety Administration makes clear that the floor mat is the likely culprit and Toyota may not quite be responsible. The mat in the Lexus was "not secured" properly, and it was also the wrong mat for that Lexus model. There also appeared to be no notable issues with the accelerator pedal itself.
Another newspaper treatment of the Lexus event, in The New York Times, also treated the San Diego crash as a function of a Toyota acceleration problem that has more causes than a poorly-maintained and wrongly installed floor mat. So far, however, nobody has proven this to be true. Even less clear is how the fix Toyota has announced - involving a new part for the accelerator pedal - is even related to the problem. Was Toyota panicked into doing something - anything - when faced with a looming full-bore economic attack from the United States Economic Marines, with the media imbedded as part of the crusade?
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