Zo! Beware of the Big Shareholder

Authorities are blaming 34 deaths on Toyota malfunctions. Almost 10 million Toyota manufactured automobiles have been recalled since recent investigations have shown defects ranging from brake failures, mostly in hybrid vehicles, to sticking accelerator pedals in other Toyota models, with possible additional problems also under investigation. Those investigations, by the U.S. government’s National Highway Traffic Safety Administration, were mounted after, it appears, a federal bailout in which the government wound up as the majority owner of General Motors and a 10% shareholder in Chrysler.

Ah, a weak General Motors and Chrysler and a very strong number one global car maker, Toyota. And once the recalls were announced, Toyota sales plunged even as all American car manufacturers showed sales increases. Hmmm…¦ If you are a conspiracy theory player,¦ and you happen to be Japanese, guess where you think this story goes? Yup;¦ the Japanese spin may find Toyota at fault at how it handled the mess, but a whole flock of Japanese believes that this was a carefully orchestrated plan by the American government to help their recent charges survive out of bankruptcy. Effectively, these conspiracy theorists say, the U.S. government wrongfully used its governmental regulatory power to investigate and then humiliate GM’s and Chrysler’s biggest competitor, Toyota. What American cars could not do in a head-to-head contest based on quality and popularity, so the story goes, the American government did for them.

The February 26^th Los Angeles Times looked at a few Japanese reactions: “Even some Japanese analysts, while acknowledging problems in Toyota's handling of its recall, said they thought Congress has been a bit too opportunistic in its pursuit of a solution.” It does seem that emotions are a factor at these hearings, said Masahiro Fukuda, manager of Fourin Inc., a research and publishing company specializing in the auto industry. “Many Japanese see these hearings as an effective way for the U.S. to beat up Toyota and allow General Motors and Chrysler to recover and grab a bigger share of the market,” said Koji Endo, an analyst at Advanced Research Japan, an independent research house. Wait a minute, those guys aren’t Japanese Jesse Venturas on a “Conspiracy Theory” cable show, they’re professional financial and business analysts!

And there are even American experts who see truth in this view of the world. “It can't be ignored,” said Mark Zupan, dean of the University of Rochester's School of Business. Zupan said that if lawmakers applied the same standard to all auto companies, the hearings would never end. “This is not an unbiased jury.” Toyota has made things worse by not addressing its problems more aggressively, he said. [On February 26^th] auto information company Edmunds.com released its analysis of sudden-acceleration complaints to NHTSA and found that while Toyota's rate of complaints was higher than any other automaker, Ford Motor Co. also had a high number. “The emphasis of the recent congressional hearings seems to have been who learned about what and when they learned it. The core issue of what's re ally causing the unresolved cases of unintended acceleration has been skirted.” said Jeremy Anwyl, chief executive of Edmunds.com. “The truth is that no one can say for sure.” The Times. But in testifying before a House subcommittee, Toyota President Akio Toyoda and the senior U.S. sales representative, Jim Lenz, specifically rejected this theory. Were they just being polite and trying to avoid more criticism? Lenz actually said, “I don't believe that's true. I think the government's acting fairly.” Or did they really believe otherwise?

“It's not about politics, it's about safety,” said Kurt Bardella, spokesman for Rep. Darrell Issa (R-Vista), the ranking minority on a House committee that organized one of the Capitol Hill hearings. “ The view that the House Oversight and Government Reform Committee efforts to review Toyota's safety defects and recalls to assist U.S. companies is ‘idiotic’ considering that Issa was an ardent opponent of the automaker bailouts, Bardella said.” The Times. Interesting. Which side do you believe? Really? 100%? Does it matter that even the Japanese government is now investigating 38 consumer complaints about Toyotas with sticking accelerator pedals?

I’m Peter Dekom, and there are two sides to almost any story…¦ at least.