Toyota faces a Capitol grilling

By Jennifer Liberto, senior writer


WASHINGTON (CNNMoney.com) -- As Toyota's troubles mount, the automaker is gearing up for a new front in the battle to salvage its once-sterling image and credibility: Capitol Hill.

Toyota officials have been called to testify before two House panels this month, and the Senate may schedule one as well. The snowy weather spurred Congress to postpone one hearing scheduled for Wednesday until later this month.

And a lot is at stake for Toyota, experts say.

"They need to rebuild credibility with regulators and legislators," said Yale School of Management professor Jeffrey Sonnenfeld.

The latest blow to that credibility came Tuesday when Toyota recalled more than 400,000 hybrid vehicles, most of them its vaunted Prius, for braking problems. That followed an apology last Friday by company president Akio Toyoda that many observers found awkward and inadequate. (Toyota recalls 437,000 hybrids)

In addition, two separate problems involving gas pedals spurred Toyota to recall some 8.1 million vehicles worldwide since last November, costing the company an estimated $2 billion in repair costs and lost sales.

D.C. muscle: Toyota has been gearing up for its appearances in Washington by beefing up its lobbying, consulting and attorney teams.

"We have added bandwidth to our communications efforts, government relations outreach and compliance efforts in an effort to ensure a successful recall," said Cindy Knight, Toyota's spokeswoman in Washington.

Among the new Washington hires is a top consulting firm, the Glover Park Group, whose founders include Joe Lockhart, a White House spokesman and adviser during the Clinton years.

In another sign of a broader focus on the federal government, Toyota president Toyoda penned a column published Tuesday in the Washington Post. He vowed, among other things, to do a better job reaching out to agencies charged with protecting the public.

"While problems with our cars have been rare over the years, the issues that Toyota is addressing today are by far the most serious we have ever faced," Toyoda wrote.

While the impending hearings could be Toyota's first potential Congressional smackdown, the company is no stranger to the D.C. power system.

In 2009, Toyota spent $5.3 million on lobbying, which was less than the $8.6 million General Motors and $7.2 million Ford spent, according to the Center for Responsive Politics. But Toyota spent more than other foreign automakers, compared with Honda's $2.5 million and Nissan's $3.6 million.

House Oversight: Toyota now has an appointment Feb. 24 before the House Oversight Committee, a hearing originally scheduled for Wednesday but postponed due to the snow in Washington. The panel plans to question the company's president of North America operations, Yoshimi Inaba, about problems with both the gas pedal and the Prius brakes.

"Consumers want to know whether their cars are safe to drive and, if not, they need to know what to do about it," said the committee's chairman, Rep. Ed Towns, D-N.Y.

The committee has asked Toyota for records documenting consumer complaints, among other things.

Rep. Darrell Issa, R-Calif., plans to ask federal transportation officials, who will also be at the hearing, why records suggest they said they didn't have the resources to investigate complaints of Toyota accelerator pads. Among those scheduled to testify is Transportation Secretary Ray LaHood and National Highway Traffic Safety Administration chief David Strickland.

"This is an investigation that stretches beyond the political confines of Washington, but rather impacts the most fundamental elements of our society and public safety," Issa wrote in a letter to Towns about the Toyota complaints.

House Energy: At a scheduled Feb. 25 hearing of the House Energy and Commerce Committee, it could get even uglier for Toyota.

Last week, a letter from the committee to Toyota's U.S. sales chief, James Lentz, accused him of telling a different story to television news media than he told committee staff at a briefing last month.

For example, according to the letter, Toyota told the committee staff that it was "unlikely" that sticking gas pedals caused "sensational stories of drivers losing control over acceleration." But then Lentz apparently said the opposite on CNBC, vowing to fix the accelerator pads.

The committee also wants to know why Toyota officials told CNBC that they became aware of accelerator complaints last October, while telling Congressional staff they learned of such complaints in the United Kingdom last April or May.

"Congress and consumers need to know exactly what the problem is, how to fix the problem, and what must be done to protect drivers of Toyota vehicles," said Rep. Bart Stupak, D-Mich., chairman of the House Energy panel's oversight subcommittee and one of the signers of the letter to Lentz.

Experts say Toyota has lost control of its message and needs to try to get it back during these Washington hearings.

Indeed, Sonnenfeld said Akio Toyoda should testify before Congress in person.

"He must come to Washington and not send partially informed lieutenants to blink in the spotlight of scrutiny," said Sonnenfeld, who wrote Firing Back: How Great Leaders Rebound After Career Disasters. "People want to learn what's going on." To top of page

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