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Toyota chief readies for Congress grilling

Japan's auto giant Toyota Motor president Akio Toyoda (centre) is surrounded by reporters after meeting with Japanese Transport Minister Seiji Maehara at Maehara's office in Tokyo on February 9, 2010. Toyota announced to recall the company's hybrid vehicle Prius for the brake trouble.


The head of Toyota Motor Corp. 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 on Friday he intends to provide a "sincere explanation" of the problems that led to the recall of millions of vehicles when he testifies next Wednesday before a congressional panel.

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

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"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 market analyst at Securities.

The U.S. House Oversight and Government Reform Committee invited Mr. Toyoda on Thursday, a month into a safety crisis that has tarnished its reputation, hurt sales and unleashed dozens of class action lawsuits.

"It's good that he has decided to accept (the invitation)," Seiji Maehara, Japan's transport minister, said.

"But it's a shame there was flip-flopping on the decision."

Mr. Toyoda had originally said he would send the company's North American chief to testify but later changed his plans.

"I am grateful for the opportunity to go to America and I intend to co-operate fully," the head of Japan's largest company and the world's No.1 auto maker told reporters on Friday.

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

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Mr. Toyoda said the firm is investigating the causes of the unintended acceleration and braking, which have led to a recall of about 8.5 million cars worldwide.

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

Analysts and public relations experts stressed the need for Mr. Toyoda to speak clearly, and honestly, in his testimony. By appearing to dodge questions, he could further stain Toyota's reputation, they said.

"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.

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"The important thing is that they actually answer all questions and don't dodge or run away," said Shoichi Yoshikawa, the president and chief executive of public relations firm Hill & Knowlton Japan.

A company source said it has not yet been decided whether Mr. Toyoda would speak in Japanese or English, but the company has already contacted some translation companies.

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

"I would recommend that he speaks 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 six million vehicles in the U.S. market for problems involving the accelerator pedal becoming stuck, either by a loose floor mat or because of a glitch in the pedal assembly.

Up to 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 auto maker routinely hid evidence of safety problems.

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

"This is an issue related to the safety of an individual company, Toyota, but it is also about 'Made in Japan' ... an issue that could affect the credibility of Japanese technologies and companies," he said at a news conference.

Daiwa Institute of Research estimated in a report on Thursday that Toyota recalls could reduce Japan's nominal gross domestic product by about ¥600-billion ($6.5-billion), or 0.12 percentage point.

Daiwa said its estimate was based on a scenario where recalls could depress domestic auto output by 300,000 units. That would also represent about 3 per cent of the roughly 10 million cars and trucks produced in Japan annually.

Toyota's safety woes are deepening at a time when auto makers worldwide are struggling to emerge from a deep decline in sales, which prompted and the bankruptcies of General Motors and Chrysler.

Toyota's U.S. sales dropped 16 per cent in January and are expected to take a big hit in February as well.

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