It turns out that Banks aren’t the only entities who have managed to corrupt the political process and end up hurting themselves and the public as a result. The world’s largest automaker has managed to make a mockery of the regulatory process as well.

Toyota North America hired several employees directly from the National Highway Traffic Safety Administration (NHTSA). These former government employees helped to end NHTSA probes into unintended acceleration occurring in some of the same vehicles that are now being massively recalled and which are apparently responsible for causing deaths. The probes were ended in 2002-03, and the employees consistently lobbied against any expanded inquiry into these issues over the past decade.

The irony is that Toyota’s regulatory lobbying effort was in pursuit of short-term gains that ended up causing long-term damage to their reputation. As with banking, special treatment given to firms at their own request has been damaging — even fatal, to their own existence. In Toyota’s case, it has led to the tarnishing of their once impeccable reputation, and regrettably to the deaths of 19 of their customers.

Other impact: Toyota has managed to charge a premium for their vehicles, due in large part to high resale value and a general perception of quality. That has now been significantly damaged, but by how much and for how long is unknown at the moment. I swung by a Honda dealer yesterday to see what fallout, if any, there has been. The biggest was that the wholesalers have been dropping bids on trade-in Toyotas quite significantly — $2000-3000 dollars at the least. (So much for that high resale value).

Other issues that come to mind include:

• Revolving door: How was someone able to leave a regulatory agency and go straight into a corporate / lobbying job of that regulated company? Shouldn’t there be a 5 year period in between?

• How often does excessive short-term focus hurt even well run corporations?

• How is it even legal to lobby regulators? Shouldn’t they be off limits to this, like courtroom trials? What’s next, lobbying judges with booze and hookers?

Bloomberg:

“Christopher Tinto, vice president of regulatory affairs in Toyota’s Washington office, and Christopher Santucci, who works for Tinto, helped persuade the National Highway Traffic Safety Administration to end probes including those of 2002-2003 Toyota Camrys and Solaras, court documents show. Both men joined Toyota directly from NHTSA, Tinto in 1994 and Santucci in 2003 . . .

In one example of the Toyota aides’ role, Santucci testified in a Michigan lawsuit that the company and NHTSA discussed limiting an examination of unintended acceleration complaints to incidents lasting less than a second.”

This is yet another example of corporations petitioning the government for special treatment — getting precisely what they requested — then impaling themselves on the favor. In the automaker’s case, the damage is limited to 19 deaths, hurting resale value of their vehicles, and damaging a hard won reputation.

The good news a) Toyota doesn’t need a bailout; and 2) they didn’t cripple the world’s economy . . .

>

Source:
Regulators Hired by Toyota Helped Halt Investigations
Bloomberg, Feb. 12 2010
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajWwH9o__irY&

Category: Bailouts, Politics, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

41 Responses to “How is Toyota Like Citigroup & Goldman Sachs?”

  1. torrie-amos says:

    doesn’t surprise me, telco’s and ute’s taught everyone else you have too court the gubment, plain and simple

    02-03, let’s not forget, bush’s buy buy buy, low rates, zero % on all cars, and they had yet to have deaths

    imho, a blip in the road for them

    gm set the tone, 20 years of headlines, union fights, shipping jobs overseas, bad jd powers report cards, this is toy’s first big blunder, whereas it’s a whopper, they are on it like stink on pooh, why?, it’s japans last big economic advantage, cars, if they don’t wrangle this problem down now, hunday and kia will eat there lunch, like china has done in cheap electronics, imho, they get the fact today is do or die for them

    jmho

  2. Moss says:

    Another example of the short term mentality.. quarterly EPS.

    It should NOT be legal to lobby regulators.. again it is not the regulations that lack but the regulators who have been infiltrated

  3. globaleyes says:

    Global Deficit Spending is the last word in short-term negativity. GDS injects a short-term focus at the expense of longterm results.

    Inflation proves it.

  4. a petit mal version of this..

    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=gm+turbine+car+1950s

    v.

    Velozzi to Integrate Capstone C65 and C30 Microturbines Into Electric Supercar and Sports Crossover Vehicle

    CHATSWORTH, Calif., Feb 4, 2010 (GlobeNewswire via COMTEX) — Capstone Turbine Corporation (www.capstoneturbine.com) (Nasdaq:CPST) today announced that Velozzi, a Los Angeles-based car designer and manufacturer, will become the first auto company to integrate Capstone’s ultra-clean C65 and C30 microturbines into a electric supercar and a crossover vehicle.
    ~~

    hey, what’s 60 years, you know, among ‘friends’ ..(?)

    or, differently, Post-WWII “Big Three” was all about ‘Regulatory Capture’, and retardation of the ignition of Innovation..

  5. inthewoods says:

    My wife and I have been in the market for a Sienna – thought there would be some good deals (Honda and Chrysler are offering good deals) – and found…..nothing. Unbelievably bad imho from an operations point of view.

  6. Mr.E. says:

    I’m having flashbacks. Anyone remember the Audi A5?

    Toyota has done exactly what every other U.S. corp has done, be they domestically based or the U.S. subsidiary of a foreign parent. The problem remains with the regulators who failed to do their job and may have capitulated to political or industry pressures (where have I heard this before?). I have no problems with U.S. corp.’s hiring former regulatory agency employees or other government officials. It makes sense to have knowledgeable experts working within the industry.

    If the facts reported are accurate, and they probably are, then both Toyota and NHTSA are criminally negligent and, in my opinion, morally bankrupt. Usually that kind of behavior will catch up with those responsible and they will pay dearly for their actions, be it via the courts or the marketplace.

  7. The Curmudgeon says:

    This is a perfect example of why government regulation–where rules are created and then enforced by bureaucrats–is always less effective than market regulation–where failing to deliver a good product means losing money.

    Toyota, with its many billions of dollars of free cash, could have bought and owned any government regulator it wanted, in any country that mattered. But it could not force people to buy its vehicles. So, even though it had plenty of government influence, it still had to face the music when it became clear that something was awry with the accelerator mechanism on many of its vehicles. Now it has to seek the blessings of the government regulators it had silenced with money, which are now awakened to the problem by the market and the howls of the public they purport to serve, such that the market will again trust Toyota.

    Alas, Toyota’s real failure lies in losing focus on the appropriate metric of success. Market share or size hardly equates to success. Success in the car business is building cars that can be profitably sold. For many years, Toyota did that by focusing on efficiently building the highest quality car for the money. Then it got greedy and decided it wanted to be big, thereby losing its focus on quality. Now it will have a tough time making any money this year. Imagine if they’d just stuck to the knitting.

  8. A says:

    It’s nice to know that in the world of politics and business, the old rules always stay in place: Power & Profit take Precedence over People.

  9. Lugnut says:

    “This is yet another example of corporations petitioning the government for special treatment — getting precisely what they requested — then impaling themselves on the favor.”

    Darwin is indeed a harsh mistress.

  10. flipspiceland says:

    The consumer holds all the cards now. They can just refuse to buy Toyotas en masse and let the chips fall where they may. There are certainly many other choices. This kind of consumer behavior is the only thing that manufacturers understand. Boycotts.

    Toyota then is made to pay in spades.

    But no, the consumer will piss away his power just as he always does.

  11. dussasr says:

    BR – I won’t defend Toyota for being slow to own up to these problems. However, it is very common and even necessary for companies to have dedicated liasons to work with the regulators. I work for a major manufacturer of diesel engines and we have dedicated liasons that work with the EPA, marine classification societies, and other governmental bodies. The main purpose of these liasons is to help decipher these extremely complex regulations and apply them to specific situations that come up frequently.

    The liasons also provide input to the rule making process. One may call this lobbying, and to some degree it is. However, it is vital to the process. Without this input the regulators would frequently come up with rules that are technically impossible or extremely burdensome to the point where no one would buy the product.

    A distinction must be made between “lobbying” that results in sensible regulations and a product that is better, safer, cheaper, etc. and underhanded behavior that skirts the rules only to the harm of users.

  12. inthewoods says:

    “This is a perfect example of why government regulation–where rules are created and then enforced by bureaucrats–is always less effective than market regulation–where failing to deliver a good product means losing money.”

    Yes, because not having market regulation over credit derivatives worked out so well, and allowing low rent mortgage sellers not have to, say, verify income really worked out well. I do get your point, but having only market regulation clearly isn’t a good solution either.

  13. jonpublic says:

    Toyota better hope that it’s the pedals and not the electronics. First it was the floor mats and now the pedals?

  14. VennData says:

    But after the Supreme Court decision to allow any corporation to say anything political…

    http://articles.latimes.com/2010/feb/09/nation/la-na-corporations-court10-2010feb10

    …Toyota can just run a bunch of “Harry and Louise” type ads…

    http://www.youtube.com/watch?v=Dt31nhleeCg

    …of made-up fantasy that sway the American TV watcher/voter/car-buyer. “Oh.. this used to be covered before the Clinton plan…” ROFL.

    I can see it now: “…We need lobbying by foreign governments, they’re the ones creating jobs…” “…Your representative wants to tax us, but we create jobs for you…”

    In fact, look for Iran, Al Qaeda, North Korea, to all win sympathetic ears from Americans. “…Those Al Qaeda are really like us, with our common sense values, Louise…” “…Iranians don’t have a special health insurance, and I respect civilian use of nuclear power…” “…Hollywood portrays North Koreans terribly, Harry…” “…Write your Congressman, Stop the Special Forces, before it’s too late…” Why even the French might move up their polling numbers.

    The Madison avenue jobs bill: if you’re unemployed, go into advertising for foreign governments.

    Voting has consequences.

  15. The Curmudgeon says:

    @inthewoods:

    There is a huge difference between these markets–automobiles and money. In automobiles, the level of price and supply is determined by more or less free markets in goods, services and labor. In money, i.e., banking in all its many forms, the price and supply of the traded commodity is determined by government fiat.

    The “market regulation” needed in banking starts with proper regulation in the political sphere of the government monopoly on money creation. All other regulations are ancillary, and will prove ineffective, if no restrictions are imposed upon the government’s determination of the commodity’s price and thereby supply.

  16. troubled times says:

    We are becoming a joke…a bad joke and it will end badly.

  17. inthewoods says:

    “There is a huge difference between these markets–automobiles and money. In automobiles, the level of price and supply is determined by more or less free markets in goods, services and labor. In money, i.e., banking in all its many forms, the price and supply of the traded commodity is determined by government fiat. ”

    So how would you classify the mortgage business? As I see it, your argument is more about whether or not a business is strictly consumer facing, and the argument is that if it is consumer facing that the consumer will make the right decision and thus control against fraud and other product quality problems.

    Unfortunately, that isn’t the case – the consumer is often abused for years by corporations because they don’t have the information, they don’t understand the complex terms that are put in front of them, or they’ve been overrun by a marketing campaign designed to make them feel good regardless of the situation. Witness credit card companies charging 35% interest rates while encouraging consumers to make minimum payments – and mortgage companies putting them into mortgages that they clearly can’t afford. And are mortgages controlled by government fiat? You can make the argument that the government encouraged the behavior by keeping interest rates low, but it is a far stretch to say that the companies (and the rest of Wall Street) didn’t keep that ball rolling until it blew up.

    Going back to autos – do you really think that Toyota would have felt the need to do such a large recall if there wasn’t pressure from the government? As I see it, the issue isn’t that government regulation doesn’t work, it is that if you want it to work, you have to fund it and respect it. Notice that many of the regulatory issues that have come up have their roots during 2000 to 2008 – a period where government essentially said “we don’t need regulators! Companies can regulate themselves.” We see it with Toyota, we see it with the FAA, we see it in consumer mortgages.

    While I agree that market regulation is an important aspect of overall regulation, to argue that it is all that is needed is, in my mind, just naive and ignores the “facts on the ground.” We’ve seen the results of companies being left to their own devices – and the results are not pretty.

  18. Dow says:

    So now it’s coming out that Toyota’s pick up truck, the Tacoma – currently NOT on the recall list – has had the acceleration problem as well. 478 complaints is not a nothingburger.

    “Toyota itself received complaints of 478 incidents involving 431 Tacomas, for model years 2004 to 2008, that allegedly increased engine speed when the accelerator pedal wasn’t pushed, according to an April 25, 2008, memo by Tinto. Of those incidents, 49 resulted in a crash and 9 had injuries, he said.”

  19. BlueRidge says:

    “Revolving door: How was someone able to leave a regulatory agency and go straight into a corporate / lobbying job of that regulated company? Shouldn’t there be a 5 year period in between?”

    I agree there should be some type of restriction in place to prevent this from happening. In the wake of Enron and Worldcom, the Sarbanes-Oxley Act was created and stipulated that an accounting firm will not be independent if a person who was a member of the firm’s audit team is employed by the audit client unless 1 full year has passed since the person had any involvement with audit engagement.

    If a regulatory agency can impose this type of rule on private firms, they should be subject to similar rules themselves. Apparently, some type of rule needs to be created to lessen the impact of influence over the regulatory agencies.

  20. The Curmudgeon says:

    @inthewoods:

    Things are not as complicated as you make them. In the mortgage business–one of the many functions that can be included under the rubric of banking– “but for” the failure of properly regulating the price, and thereby supply, of money (mortgages and all other financial products depend on the price of that most fungible of commodities), the mortgage business would not have been motivated to push mortgages to anyone with a pulse. Excess money, created by ultra-low–even negative–interest rates (i.e., price) created the environment which no manner of bureaucratic regulation would have ever been able to prevent.

    So far as Toyota goes, the free press, IMO, had far more to do with the recall than did threats from government regulators. Besides, it is logically inconsistent to claim “regulatory capture”, while at the same time attributing the recall to government regulators. Toyota knew it had a gathering public-relations nightmare on its hands that would negatively impact its ability to compete in the marketplace, and set about to try and get ahead of it. Late, perhaps, but still. Put another way, Toyota isn’t interested in repairing its reputation because the government told it to. It is interested in repairing its reputation because the market demands it if Toyota is to continue as a viable competitor.

  21. ashpelham2 says:

    Flipspiceland speaks the truth people. This is a great example for us to teach corporate America what we will and won’t stand for. Don’t buy the junk. I’ve always been a huge believer in Toyota and Honda, and currently own an Acura and a Honda, with high miles on both. Good cars, but not perfect. I’ve owned Toyotas before too, and had great, great, great experiences all around. But when the product slips, and the price doesn’t, then it’s time to make a change. MAKE THE CHANGE. The consumer inflationary period we went through from 1992 till 2008 roughly just let manufacturers of all types of products continue to make concessions to quality, and the sales just kept on going. The jobs were plentiful, and credit was super e-z. Now, we are in a different period.

    I just hope America wakes up and realizes that just because you can get MORE for your money at Wal marks or Dollar Tree, that more isn’t better.

  22. “…I work for a major manufacturer of diesel engines and we have dedicated liasons that work with the EPA, marine classification societies, and other governmental bodies. The main purpose of these liasons is to help decipher these extremely complex regulations and apply them to specific situations that come up frequently.

    The liasons also provide input to the rule making process. One may call this lobbying, and to some degree it is. However, it is vital to the process. Without this input the regulators would frequently come up with rules that are technically impossible or extremely burdensome to the point where no one would buy the product…”–dussasr, above..

    dussasr,

    would you care to comment on http://www.sae.org/technical/papers/2007-01-3447
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Diesel+Engine+Urea+injection
    http://clusty.com/search?v%3afile=viv_1157%4032%3avdsDFv&v%3aframe=list&v%3astate=root%7cN687&id=N687&action=list&sw=%7cSelective%20Catalytic%20Reduction%7c&sec=1265986512&

    namely, Urea injection, and other SCR schemas, for the reduction of NOx .s, and ‘particulate’ control..

    w/o wanting to insult Rube, these “Goldberg-esque” Engineering Grotesques–fashioned so that we may continue burning the mid-Bottom of the Catalytic Cracker’s Barrel are an unnecessary evolution of, further, Complexity, and, thereby, Fragility, no?

    you state: “…The main purpose of these liasons is to help decipher these extremely complex regulations and apply them to specific situations that come up frequently…”

    are you sure? or, is it that “these extremely complex regulations” serve to entrench old technologies and their vested interests?

    see: “…The SOLO will be a lightweight electric crossover with an on-board 30-kilowatt Capstone microturbine that will charge the crossover’s batteries and super capacitors while in operation or at rest.

    “Velozzi has included microturbines in their car designs since the company’s inception,” said Jim Crouse, Capstone’s Executive Vice President of Sales and Marketing. “It’s an extremely progressive company committed to producing environmentally friendly, powerful and practical electric vehicles. With a Capstone microturbine, they’ll ensure drivers have the range and reliability to drive a Velozzi anywhere.”

    Current plug-in electric vehicle driving ranges are extremely short between battery charges. A microturbine dramatically extends the driving range of the vehicle. According to Velozzi their cars will operate on 100 percent battery power in zero-emissions mode for a range of up to 200 miles. Then, when the batteries reach a pre-determined state of discharge, the Capstone microturbine quietly and efficiently recharges the batteries on the fly to extend the driving range up to 1,000 miles.

    The diesel-fueled Capstone microturbine produces ultra-low emissions and requires less maintenance than the traditional combustion engine found in today’s hybrid-electric vehicles. Capstone microturbines can run on diesel, bio-diesel, ethanol, methanol, jet fuel, propane and compressed natural gas. Capstone was recently awarded a Department of Energy grant to develop a flex fuel turbine that will operate on agricultural syngas and hydrogen.

    “Capstone’s fuel system gives the driver the flexibility to use a multitude of energy sources available today and in the future,” Velozzi said. “You don’t have to wait years for plug-in infrastructure or a new fuel infrastructure to be developed to charge or power Velozzi vehicles because our vehicles can use many fuels available today,” added Velozzi…”

    from small cars (or boats), to Hospitals, Apartment Complexes, and College Campuses, these things (CPST ‘s microturbines) Scale..

    maybe, your Employer should start a clean sheet of Paper (and, you know, if they’re into ‘sustainability’, tell him to make that sheet from Hemp.)

  23. bsneath says:

    The irony is that Toyota’s regulatory lobbying effort was in pursuit of short-term gains that ended up causing long-term damage to their reputation.

    Excellent observation BR.

    Once again, manipulation ultimately fails. Toyota has lost incredible goodwill. Whereas once they could command a substantial premium for quality, now they are just another auto company. They have learned a tough lesson. I suspect Korean autos will benefit the most. Why pay a premium for a Toyota (or Honda which is also having quality problems) if a less costly Kia or Hyundai is nearly as good?

  24. llandson2000 says:

    Barry, do we know who these individuals are who jumped from regulatory agency to Toyota, or at least which Toyota executives made it a policy to jeopardize the lives of their drivers? Until we hold the actual individuals responsible for their behavior, as opposed to the inanimate corporation/brand, those individuals will simply jump ship to another company and hurt people under another guise. Perhaps a running database of such people, and the companies they work for? Maybe a grassroots consumer-driven effort like this is just what the world needs to reverse the direction of ever-increasing corruption.

  25. torrie-amos says:

    fwiw, watch your pennies, xlf is teetering on not goodness

  26. Mike in Nola says:

    I’ve long thought that thee culprit in the Toyotas was the computer and has little or nothing to do with carpets or pedals. There are also likely computer problems in other makes. It is only that Toyota has so many cars on the road and that the coputer malfunction is a particularly dangerous one that has brought it attention. This doesn’t justify how Toyota sqaushed investigations.

    Most sophisticated late model cars use a fly-by-wire system. When you hit the gas, you are basically moving a game contoller which the computer detects as a desire to go faster. It’s looks at the engine speed, temp, and numerous other factors before adjusting how much gas and air to feed the engine. It all takes milliseconds.

    That there are other bugs in the Toyota computer I know from experience. Before getting my 2007 Camry I had read complaints on the Edmunds.com forums about a problem with lack of acceleration under certain conditions where you are already traveling at 40-50mph and try to merge. Sometimes nothing happens for a couple of seconds. I’ve experienced it myself a couple of times. Considering that the V6 is pretty powerful and generally accelerates wonderfully at high speeds, this is almost certainly a program bug in the computer. I don’t remember if Toyota ever acknowledged that particular problem, but it has provided software fixes on occasion.

    The problem Toyota faces is pinning down the problem. It could be a speed sensor or some small piece of computer code that acts unpredictably under only rare circumstances. My guess is that they haven’t been able to reproduce the problem reliably in order to determine it’s cause.

    As I said, other manufacturers using computer control probably have glitches in their computers, they just aren’t serious enough or haven’t klled enough people to get attention. Considering that all manufacturers are going to have to adopt computer control to implement Vehicle Stability Control/ESC, this is a problem that needs more looking at.

    As an aside, you need computer control for vehicle stability control/ESC systems that provide a significant increase in safety by having the computer take over the throttle and brakes if it detects the vehicle is starting to skid. This saving of lives by vehicle stabilty control has been documented and acknowledged by NHTSA, but its mandatory adoption was put off for several years from a few years ago when I researched it. I’m sure this was to protect certain manufacturers who didn’t have it in many cars, i.e. GM and Ford. It has been available on some cars for awhile, e.g. my 2004 Avalon has it. I was willing to consider an American alternative to th Camry back when I got mine, but no competitive American model had it available. I wouldn’t buy a car without it. It isn’t a mandatory feature until 2011. See the FMVSS
    http://www.nhtsa.dot.gov/staticfiles/DOT/NHTSA/Rulemaking/Rules/Associated%20Files/ESC_FR_03_2007.pdf

  27. bman says:

    I think one main difference is that the toyota executives don’t pay themselves billions in bonus money.
    anyone know what the compensation is for the top executives at toyota? I do know that during the last year because of the slump in sales due to the financial meltdown, they did undergo pay cuts in compensation.

  28. aramps says:

    The section of the government I work for has a one year policy – you can start working for an entity you regulated immediately, but you are prevented from having non-”public meeting” contacts with former coworkers/bosses/minions for a full year from your departure date. seems reasonable to me.

    I think it’s silly to think there should be a period of time where you can’t work for the industry – administrative rules are numbingly complex. To require companies to hire people that have no experience with the agency in question is absurd. That said, it’s completely reasonable to prevent those people hired away from exerting influence via social and political connections rather than simply relying on their knowledge of the arcane.

  29. DC says:

    To amplify torrie-amos’ cogent opening comment — look to the telcos and utilities as the models for the modern corporatism rampant in Congress and the executive branch.

    Exhibit A is the Telecom Act of 1996. The telcos had long since populated the FCC with their minions and lackeys, and Capitol Hill was awash in door-revolvers who were preparing to take the Telecom Act literally to the bank. Many of the top committee staffers went directly to AT&T and the Baby Bells once the bill became law under Clinton and Gore.

    Of course both AT&T and the Baby Bells missed the biggest prize of all: the Internet. If they had any foresight at all they would have walled off the network routing for themselves, which they could easily have accomplished with their deep pockets and insider connections. But they were too busy fighting the cable companies for “interLATA” access for long distance and by extension video signals. How’s that working out for you, AT&T and Verizon?

    The Baby Bells won the battle but lost the war — at least short term. In no time at all they re-merged into 2 behemoths (AT&T and Verizon), a duopoly that hasn’t raised a whimper from Washington. If it weren’t for their wireless businesses, which they stole fair and square in “auctions” at the FCC, the old Ma Bell would be even more hapless and hopeless.

    In this case, the greater public good was served only because the telco lobbyists were too stupid to see the future impact of an open network like the Internet. But that hasn’t stopped them from gaming the system on a round-the-clock basis. And let’s not forget how influential these companies are at every level, from the statehouse to the Rotary Club. The telcos have done you no favors, America, but they have certainly perfected the legalized corruption that has ruined our politics and government.

  30. vixensharpears says:

    Sure Toyota got greedy, saw a chance to take share from “the Big Three”, and used its deep pockets to buy regulators. That said, I keep wondering what was happening with US car companies during the same period. From what I’ve read, only the luxury makes and a few mid-market makes like Nissan have break overrides of drive-by-wire throttles. Engineers are also hypth that the rapid growth of radio, cell phone, and electronic surveillance devices of all sorts may be affecting magnetic fields and causing unintended issues for the most technology-packed automobiles.

    If this is the case, I wonder if Toyota is simply the canary in the cold mine? And I wonder what we’re not hearing about other brands, especially GM, Ford and Chrysler. It’s a real stretch to believe they’re problem free in this regard. Alas, it’s so easy to beat up on the “A” student. Personally, with a dying Subaru, I can’t wait for the sale Toyota eventually will have.

  31. inthewoods says:

    “Excess money, created by ultra-low–even negative–interest rates (i.e., price) created the environment which no manner of bureaucratic regulation would have ever been able to prevent.”

    If you believe that, power to you – the reality, in my opinion was that simple regulatory controls on how you establish a mortgage would have stopped it as well. If the government said, as it now has, that you have be able to verify income prior to getting a mortgage, the whole sordid underbelly of the mortgage business would not have been able to get as big as it did. It is the lack of regulations that allowed that business to grow. As proof, we now have the same ultra low interest rates, but not nearly the same volume of terrible mortgages – why? Because the government stopped them from being issued. That there was no regulation created the monster.

  32. [...] Unfortunately, Toyota has a thing or two in common with the banks. The good news, Barry Ritholtz notes, is the auto maker doesn’t need a bailout, and “they didn’t cripple the [...]

  33. “…administrative rules are numbingly complex…”

    aramps,

    why is that stated as a ‘Given’?

    or, differently, why are they, the ‘administrative rules’, so complex, to begin with?

    how, really, do they lead to effectiveness/efficiency?

  34. DM RTA says:

    There’s a lot of negativity towards Toyota here and I am not saying it isn’t justified. Two questions seem to be hanging: 1) How many other manufacturers also employed ex-regulators? (The article suggested they were alone but I’d sure like to see that thoroughly fact checked. 2) Has a Taurus or a Malibu really become more desirable because Camry is now “suspect”? (If you were really needing to buy that kind of car right now)

    Oh yea, the stories about people careening through intersections accelerating to warp speed hoping and praying without shifting into neutral, strains credibility. Audi lost 75% of their US sales in the very late 80′s when a similar problem became ongoing and undiagnosed in a likewise cranky environment. Audi did not employ us factory workers back then, did they? I guess my point is this: Are the bailed out companies politicking in a way that will cost more American factory jobs? I’d love to see a comparison of economic inputs of an American made Toyota versus a Ford. When you add up all the foreign input in either, it’d be interesting to compare them now to the 1990′s. How much of this is lobbyists run amok?

  35. DL says:

    “In Toyota’s case, it has led to …the deaths of 19 of their customers”.

    Of course, it may be difficult to prove… or disprove… that a faulty accelerator pedal was at fault in each case.

  36. philipat says:

    The whole US system is totally corrupt. And I’m not optimistic for change. The issue is both the Lobbyists AND the revolving door. I strongly support BR’s view that Government Officials should not be able to join Private Sector Companies with a direct interest in their field of Government work for 5 years after leaving. Even as a “Consultant”.

  37. [...] via The Big Picture » Blog Archive » How is Toyota Like Citigroup & Goldman Sachs?. [...]

  38. willymack says:

    One can’t compare Japaneese businesses with American ones.
    Speaking as one who spent a lot of time in the Pacific Basin, including Japan, I can state with some authority that Japaneese business people and their people at large possess something completely lacking in our corporate world and largely lacking in a big percentage of our population as well.
    That something is HONOR. In the Japaneese culture, doing something half-assed is dishonorable, and the doer loses FACE, which means he demeans himself, and this is intolerable in the Japaneese mind.
    Unless I’m mistaken, those Toyota models recalled were done so VOLUNTARILY. They were also assembled in the USA, which is (in) famous for making schlock cars.
    Nonetheless, Mr. Toyoda, the Toyota company’s owner, apologised for the screwup, and promised to set things RIGHT. You can bet he will and some heads will almost certainly roll, albeit very quietly.
    This is the HONORABLE way to do business; the way you’ll NEVER see done by Detroit.
    When’s the last time Detroit EVER voluntarily recalled any of its faulty clunkers, or owned up to its often fatal outcome of making crapmobiles? Remember the Corvair? This car was so bad, an entire book was written about it. For an eye opener, read “Unsafe at any speed” by Ralph Nader.

  39. [...] the least) and not three weeks after I start to come around to them I have to read articles like this.  While I don’t think that this recall issue has or should fundamentally alter anyones [...]

  40. “…A principal reason why the automobile has remained the only transportation vehicle to escape being called to meaningful public account is that the public has never been supplied the information nor offered the quality of competition to enable it to make effective demands through the marketplace and through government for a safe, nonpolluting and efficient automobile that can be produced economically. The consumer’s expectations regarding automotive innovations have been deliberately held low and mostly oriented to very gradual annual style changes. The specialists and researchers outside the industry who could have provided the leadership to stimulate this flow of information by and large chose to remain silent, as did government officials.

    The persistence of the automobile’s immunity over the years has nourished the continuance of that immunity, recalling Francis Bacon’s insight: “He that will not apply new remedies must expect new evils, for time is the greatest innovator.”

    The accumulated power of decades of effort by the automobile industry to strengthen its control over car design is reflected today in the difficulty of even beginning to bring it to justice. The time has not come to discipline the automobile for safety; that time came over four decades ago. But that is not cause to delay any longer what should have been accomplished in the nineteen-twenties…”

    Images: Book Cover scanned From the Collections of The Henry Ford. 1) NC 629.231 N135 1966

    http://www.autolife.umd.umich.edu/Design/Gartman/Books/BK_Unsafe_Any_Speed.htm