Toyota starts the long road back

By Alex Taylor III, senior editor


NEW YORK (Fortune) -- Toyota fired another volley this week as it continued its fight to regain the confidence of owners shaken by reports of unintended acceleration.

During a webcast with journalists Monday, the Japanese automaker's hired independent experts went after professor David Gilbert of Southern Illinois University, who has emerged as a gadfly engineer. Gilbert appeared on ABC News broadcasts and before Congress, using rewired cars to attack Toyota's ability to detect faults in its electronic systems.

Toyota contends that Gilbert's experiments are almost impossible to duplicate in real-world conditions, and besides, cars made by other manufacturers behaved the same way when they were rewired -- without adverse consequences.

Gilbert and ABC newsman Brian Ross were temporarily embarrassed when Toyota instrument readings intended to demonstrate runaway acceleration were shown to have been made while the car was actually stopped and a door was open. The tachometer indicated the engine was running at 6,000 rpms but the speedometer said the car was moving at zero miles per hour.

Like gawkers at the scene of an accident, those who enjoy this kind of thrust and parry can expect to see a lot more of it in coming weeks. Tort lawyers and class action suits are beginning to surface, and there will undoubtedly be more unfortunate accounts of accidents that might be attributed to unintended acceleration.

Once again, Toyota finds itself in the same predicament as Tiger Woods: It has apologized extensively for its sloppy and inattentive handling of the recall, but that was the easy part -- even for a company as proud as Toyota.

The hard part for both the golfer and the automaker is regaining their reputations and making sure nothing like this ever happens again.

There are signs that Toyota is headed, however haltingly, in the right direction. It is taking steps that address fundamental issues at the company and go beyond the appointment of a quality committee or a quality czar.

Executive vice president Shinichi Sasaki promised that Toyota would overhaul its quality assurance process in a way that covers the entire production cycle -- from vehicle planning and design to manufacturing, sales, and service. That's the only way to assure real vehicle quality, because defects can arise in every part of the development and manufacturing process.

But the company is a reluctant reformer. At congressional hearings, it was revealed that Toyota's U.S. executives do not have the power to initiate a recall on their own. That would seem to be a fundamental function of American management, but it remains in Japan.

Sasaki promised that quality information would now be shared globally. But he stopped short of delegating any authority to the U.S. He merely promised that it was "our goal" for it to have "even a greater voice in decisions." That's not exactly a ringing endorsement of American management.

What Toyota needs more fundamentally is a top-to-bottom overhaul of its corporate culture.

Up until the 1990s, it was still a family company operating far from the bright lights of Tokyo in Toyota City. That changed beginning in 1995 under the leadership of president Hiroshi Okuda, who pushed the company to grow more quickly. And as the company got bigger, president Katsuaki Watanabe put through successive rounds of cost-cutting to keep expenses in line.

Now that the Toyoda family is back in the driver's seat, president Akio Toyoda has an opportunity to return the automaker to its entrepreneurial origins and stamp out "big company disease."

It won't be easy, as Ed Whitacre is discovering at General Motors. GM has been talking about making better cars for more than two decades and even appointed a quality czar several years ago to make it happen.

But other forces, whether they be cost-cutting in parts procurement or inattention on the factory floor, continue to plague GM. It finished close to the bottom of Consumer Reports' recent rating of automakers selling in the U.S.

Were Toyota to fall to GM's level, it would become just another car company, slugging it out with incentives and rebates in an effort to remain competitive.

Akio Toyota has a critical goal clearly before him. If he succeeds in returning this ailing giant to its roots, he might become known as the Toyoda who saved Toyota. To top of page