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'Broken Government'; Toyota Chief Testifies on Capitol Hill

Aired February 24, 2010 - 14:02   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ALI VELSHI, CNN ANCHOR: OK. Here is what we've got "On the Rundown."

A global company with global reach now under a global microscope. Toyota's top man, he's not there yet, but he is testifying to Congress, to the American people and to everyone.

You're looking at Ray LaHood right now. He's the transportation secretary, still on the hot seat, but he's going to yield it to the head of Toyota very shortly.

We know about the safety problems and we know about the recalls and the apologies. Now we need to know what Toyota is going to do about it, whether they even have the right fix in hand.

Also "On the Rundown," and perhaps right outside your home, it's not just cold weather. It might just be wet, dangerous, and there is more misery coming. A blizzard working its way through the Midwest is going to hit the Northeast again. Chad's going to break that down for us and tell us what a nor'easter is all about.

All right. One of the things we are covering in depth this week on CNN, "Broken Government." Is government broken? And if it is, what specifically can we do to solve that?

A CNN/Opinion Research poll showed overwhelmingly that Americans feel government is broken, but they are optimistic that it can be fixed. So how do we fix it?

We're looking into that and we have a great panel joining me in just a moment.

I want to kick it off with a comment from Facebook. We have invited you to give us specific solutions to how to fix government.

Paul has written in, "Remove complex rules created by our Congress, Senate, et cetera, and enforce the good simple rules in place. It creates efficiency, focus and better overall operations."

Let's bring in the panel to talk about this: Christine Romans, my co-host on "YOUR $$$$$," which you can see on CNN on weekends; Roland Martin, CNN political analyst and the author of "President Barack Obama's Road to the White House"; Bay Buchanan, former national treasurer under President Reagan and a CNN contributor; and Karen Tumulty. She is the national correspondent for "TIME." Karen, I'm going to ask you first. We actually have a jobs bill that passed the Senate today with bipartisan support. Tomorrow, we've got a summit that the president is holding to try and deal with the logjam on health care.

Do you think that Washington is getting the message of how concerned Americans are about this freeze, the inability to get anything done? Are they really looking at changing things?

KAREN TUMULTY, NATIONAL POLITICAL CORRESPONDENT, "TIME": Well, I think those examples you cited are a split decision. I think the jobs bill was one where both senators from both parties looked at it and they thought, you know, our constituents back home want us to be getting the problem solved. They don't want us just to be here scoring points off of each other.

The health care summit I'm a little bit less optimistic about it. I do think what we're going to see is more stagecraft and almost theater tomorrow than we see actual negotiations or any true effort to reach across the divide.

VELSHI: What do you think, Roland?

ROLAND MARTIN, CNN CONTRIBUTOR: The health care summit -- first of all, she is right when it comes to jobs, but even with the health care summit, when you talk about Washington gridlock -- and Bay talked about this a couple of days ago -- it is about leading. And that is, when you have Democrats -- all of a sudden, more are warming up to the notion of reconciliation, which, of course, Republicans used 17 times under a Republican president, and all of a sudden, you have an 18-vote majority in the Senate, 78 in the House, that's why you're there.

If you're in charge, stand up to lead and stop whining and complaining. And so maybe the Democrats will recognize that, look, we need to get our differences out of the way, because the votes are there for them to pass it, as if they have the backbone and the willingness to do it.

VELSHI: Bay?

BAY BUCHANAN, FMR. NATIONAL TREASURER: Well, the pressure on the Democrats right now -- Roland is absolutely correct and I agree that they're in charge here. So, where are they taking us? That's what we want to know, and that's where they should move it.

But the real problem that they are having is the congressmen out there, especially Democratic congressmen, are hearing from the people, and they don't like what they are trying to do. So they are trying to stop it, and they are very nervous about that. It's an election year.

So, that's where it's difficult for the Democrats. Do they want to risk their own personal job and throw that to the wolves in order to do what they think is right for the country and risk being re- elected, or are they going to make certain that they are re-elected first? That's what we're going to see in the next couple of weeks.

VELSHI: Well, it is -- it does --

MARTIN: Well, Bay, that's what happens when you're gutless.

VELSHI: Hang on.

It does speak to what Paul was talking about though in terms of complex rules. You talk about reconciliation, and we talked about who has got majorities.

I mean, Paul, Christine, does say -- and you can see this. You can see the appeal of somebody saying, let's remove the complex rules. People say it about taxes, they say it about Wall Street. Let's remove the complex rules and go back to basics.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Oh yes. You know, and it's interesting, the parallels between the Toyota hearing today. A Toyota car has, what, the equivalent of four high-end PCs? And we're not even quite sure how this thing runs.

It's kind of like Washington. It's gotten so complex when you look at the tax code or you look at our legal code or you look at any number of things, it's so impenetrable, almost, that it has run ahead of the American people. And the American people are starting to say, wait a second, I understand that I can't live beyond my means indefinitely, and I understand how I have to behave in my own household, but what is going on?

I also think -- you know, we've all touched on this all week, but if the economy weren't broken, or people didn't feel that the economy weren't broken, the normally healthy American skepticism for power and the powerful in Washington --

VELSHI: Would be there.

ROMANS: -- that's normal. But when you layer on this economy being broken, it really magnifies it.

VELSHI: Everybody hold your thoughts for a second. We've got to get paid.

(CROSSTALK)

VELSHI: I don't know if they pay you guys. They pay me, so I've got to get paid. Hold on a second. We've got to take a break.

We're going to take a quick look -- on the right of your screen, they're taking a 10-minute break at Congress. That's the testimony about Toyota. We're watching that very closely.

That's the testimony at the House on Capitol Hill. Ray LaHood, I don't know if he's coming back in 10 minutes, but we're watching it carefully. We're also waiting for the arrival of the worldwide head of Toyota.

Stay with . We're talking about broken government when we come back. (COMMERCIAL BREAK)

VELSHI: All right. We're following very closely the testimony on Capitol Hill. Ray LaHood, the transportation secretary, is done. They're in a break right now. They're going to come back. We expect the president of Toyota Worldwide to be testifying.

I want to get back to "Broken Government."

Our panel, Christine Romans, Roland Martin, Karen Tumulty, Bay Buchanan and you. We have asked very specifically on Facebook -- and you can go to my Facebook page, Facebook.com/AliVelshiCNN, and you can post your comments.

You've got to listen to this one. Darlene from Canada says, "How about putting all members of Congress and the Senate in a locked room with only bread, water, a pillow, a thin mat and a blanket? There, they are forced to negotiate and come to agreements on the issues that really affect American citizens."

Roland?

MARTIN: Ali, actually, that's how the filibuster used to work. The filibuster used to work where you actually had to stand up there. You couldn't eat. You couldn't -- I mean, you'd be at the podium, so you couldn't just throw something as a whole and go back to your office.

And so, folks, remember those days of people sitting along the lines of Congress -- or the halls of Congress with cots and all kind of stuff? Those were real filibusters.

But don't steam roll over something Bay said earlier. Bay said you have Democratic members of Congress who either believe in the health care bill or they want to protect their jobs.

That's what happens when you have gutless politicians. When you have Arlen Specter, who said, Republicans said, hey, great job voting for the stimulus, he said, but you voted against it. Yes, I really couldn't because I didn't want to tick the people off. I know it's the right thing to do, but I didn't want to do it.

You have too many gutless politicians on both sides who have no principles. They only want to protect their jobs. That's also a point of broken government.

VELSHI: Karen?

TUMULTY: Well, I think the only thing I might add to that suggestion is you would have to make sure there were no sharp objects in that room as well. But can I say something?

I mean, I think Roland gets is to a point here. We're looking at the process right now. If somehow they managed to get this health care bill passed, people are not going to care how it happened, just like they don't care that COBRA happened under reconciliation. They're going to care about, does this work or does it not? Did this make my life better or did it not? So, in some ways, we're kind of looking at this whole exercise right in the middle of it, and that's one of the reasons it does look so ugly.

VELSHI: But Bay, let me ask you about that. That's an important point that Karen makes.

Most of us don't care. If we have jobs, if something gets done with health care, if something gets done with the deficit, we'll be happy and we'll congratulate them for doing it. How do we get out of worrying too much about process and just sitting these folks down and saying, just do it?

BUCHANAN: Well, the problem right now is both sides want to see America put back to work. There's no question in that, but they have two different approaches.

One side says cut taxes, and the Democrats say, no, we're not cutting taxes, that's not how we're going to do this. And the Democrats say, no, we've got to spend more. And Republicans say, no, no, we can't spend anymore, we're way out of budget as it is.

And so, you have a conflict, a philosophical conflict. Neither of them are going to come together and say, well, we'll agree to this.

So, I think where the real problem is here is we're in kind of the situation where the American people are saying one thing, Republicans feel that they are with the American people, that they'll support their idea. So they're going to block everything --

(CROSSTALK)

MARTIN: Some Americans.

BUCHANAN: -- until November. That's how it is for right now. We're in a holding pattern.

ROMANS: Christine, the --

MARTIN: Some Americans. Not all. Some.

BUCHANAN: A majority.

VELSHI: Eric Schmidt from Google didn't really say it, but the president has said it, and that is that we -- look, Roland and Bay are just going to keep on going on this one. But we, in the media, may be encouraging this business about not allowing things to be tried, not allowing innovation to take place and take root, because some innovation will fail. Much of innovation will fail, and many of our long-term problems are not sexy today TV problems, including the national debt.

ROMANS: Yes. Well, especially the national debt. I mean, that's more like a TV horror story, right? I mean, when you get up and try to tell people what that's going to be like and what it's going to mean for ever declining American living standards, and great for your grandchildren, I mean, it's really depressing stuff. And we expect -- we elect these people to make these tough decisions, but if they make the tough decisions to fix the problems longer term, they won't get elected again. And in the end, they do want to get elected again because they think they're doing some good in the very near term.

Look, sometimes these people -- sometimes they do do the right thing. And sometimes, believe it or not, they are in a room with no cameras and with no aides and no BlackBerrys, and with a yellow legal pad and with a pizza. I mean, this happened during immigration that failed, frankly. It's happened during this health care process.

I mean, they get in there, senators and congressmen, without aides, without staff, and they try to come to some common ground. This does happen. There just aren't cameras there. And sometimes they don't get progress, but at least they are actually in that room.

There's no pillows.

VELSHI: All right.

Well, listen, folks.

BUCHANAN: Ali?

VELSHI: Yes, Bay. Last word to you.

BUCHANAN: I would like to go back -- real quickly, I would like to go back to the theme basically going through many of these comments from our viewers. And that is, let's make it simple.

VELSHI: Right.

BUCHANAN: And, you know, I think we're all saying it's so complicated, everything is so complicated, government is so difficult. It's not. Not in their minds.

They're running a household. They're running businesses.

VELSHI: Right.

BUCHANAN: They understand regulations are too much, you've got to give us a break here. We're having to hire people just to fill out forms. We can't afford this. And we all know we have to balance our budget.

It's very simple to the American people, so they at Washington and say, you guys have it all screwed up, you don't know what you're doing back there. It's very easy. Here's how you do it. And I think we get too tied up with trying to make it more and more complicated to please too many people.

VELSHI: Right. Excellent -- MARTIN: You win, you leave.

VELSHI: I told her she was getting the last word. You got the last word in again. You are something else.

You guys are excellent. These are --

MARTIN: It's like a boxing match.

VELSHI: -- tough conversation and you make them a lot of fun.

Our championship heavyweight boxer, Roland Martin, Christine Romans, Bay Buchanan, Karen Tumulty from "TIME."

Thanks for being with us. We're going to continue this conversation all week.

We're going to take a break, but take a look at the pictures we've got from Washington, from Capitol Hill. That is the room in which Akio Toyoda, the worldwide president of Toyota, is going to be in just a few minutes. And he's going to start testifying about what Toyota knew, when they knew it, and are they on the case of fixing these accelerators that make cars move when you don't want them to.

Stay with us.

(COMMERCIAL BREAK)

(NEWSBREAK)

VELSHI: All right. We're going to take a look at the Toyota situation. This is a camera that is on the congressional testimony room, and we are going -- we are awaiting the arrival of the president of Toyota, the global president of Toyota.

There he is. You're seeing him now.

He is the grandson -- Akio Toyoda is the grandson of Kiichiro Toyoda, who was the founder of the Toyota Motor Corporation. He's 53 years old. He has an MBA from Babson College in Massachusetts.

He's being seated right now. He's been with Toyota for 26 years, been the CEO and president since 2009.

They are just getting together. You're seeing that everybody is seated.

Let's listen in to the president of Toyota.

(JOINED IN PROGRESS)

REP. EDOLPHUS TOWNS (D-NY), CHAIRMAN, OVERSIGHT COMMITTEE: Our second panel -- I would like to introduce our second panel.

Testifying on this panel is Mr. Akio Toyoda, president and CEO of Toyota Motor Corporation, and Mr. Inaba, president and CEO of Toyota Motors North America.

Gentlemen, it is the committee's longstanding policy that all witnesses are sworn in. Please stand and raise your right hand as I administer the oath.

Do you solemnly swear to tell the truth, the whole truth and nothing but the truth? If so, answer in the affirmative.

Let the record reflect that the witnesses answered in the affirmative.

You may be seated.

Let me begin by first welcoming you. I really appreciate the fact that you have come to testify. And that, Mr. Toyoda, that you actually volunteered to come and to testify. That, I want you to know, we're very impressed with that.

That shows your commitment, of course, to safety as well. And we want to appreciate the fact that you volunteered to come.

Mr. Inaba, we welcome you here as well, and we've had conversations with you over the past few weeks and months.

So, at this time, we would ask you to -- actually, we will give you additional time. We generally give five minutes, but you being he is all of the way from Japan, we give him more time.

So, Mr. Toyoda, yes, you may begin.

AKIO TOYODA, PRESIDENT & CEO, TOYOTA MOTOR CORPORATION: Thank you, Chairman Towns.

I'm Akio Toyoda of Toyota Motor Corporation.

I would first like to state that I love cars as much as anyone. And I love Toyota as much as anyone.

I am here with my Toyota family of dealers, front team members and friends. I take that most pleasure in offering vehicles that our customers love, and I know that Toyota's 200,000 team members, dealers and suppliers across America, feel the same way. However, in the past few months, our customers have started to feel uncertain about the safety of Toyota's vehicles, and I take full responsibility for that.

Today, I would like to explain to the American people, as well as our customers in the U.S. and around the world, how seriously Toyota takes the quality.

TOWNS: We ask, Mr. Toyoda, can you just pull the mike a little closer to you? Thank you.

TOYODA: Today, I would like to explain to the American people, as well as the customers in the U.S. and around the world, how seriously Toyota takes the quality and safety of its vehicles. I would like to express my appreciation to Chairman Towns and Ranking Member Issa, as well as the members of the House Oversight and Government Reform Committee, for giving me this opportunity to express my thoughts today.

I would like to focus my comments on three topics: Toyota's basic philosophy regarding quality control, the cause of the recalls, and how we will manage quality control going forward.

First, I want to discuss the philosophy of Toyota's quality control.

I, myself, as well as Toyota, am not perfect. At times, we do find defects. But in such situations, we always strive to understand the problem and make changes to improve farther.

In the name of the company, its longstanding tradition and pride, we never run away from our problems or pretend we don't notice them. By making continuous improvements, we aim to continue offering even better products for society. That is a core value we have kept closest to our hearts since the founding days of the company.

At Toyota, we believe the key to making quality product is to develop quality people. Each employee thinks about what he or she should do, continuously making improvements. And by doing so, makes even better cars. We have been actively engaged in developing people who share and can execute on this core value.

It has been over 50 years since we began selling in this great country, and over 25 years since we started production here. And in the process, we have been able to share this core value with the 200,000 people at Toyota operations, dealers and suppliers in this country. That is what I am most proud of.

Second, I would like to discuss what caused the recall issues we are facing now.

Toyota has, for the past few years, been expanding its business rapidly. Quite frankly, I fear the pace of which we have grown may have been too quick.

I would like to point out here that Toyota's priority has traditionally been the following: first, safety; second, quality; third, volume. These priorities became confused, and we are not able to stop, think and make improvements as much as we were able to before, and a basic stance to listen to customers' voices to make better product has weakened somewhat.

We pursued gross over the speed at which we are able to deliver (ph) our people and our organization, and we should sincerely be mindful of that. I regret that this has resulted in the safety issue described in the recalls we face today, and I am deeply sorry for any accident that Toyota drivers have experienced.

Especially, I would like to extend my condolences to the members of the Saylor family for the accident in San Diego. I would like to send my prayers again, and I will do everything in my power to ensure that such a tragedy never happens again. Since last June, when I took office, I have personally placed the highest priority on improving quality over quantity. And I have shared that reaction with our stakeholders.

As you well know, I am the grandson of the founder, and all the Toyota vehicles bear my name. For me, when the cars are damaged, it is as though I am as well.

I, more than anyone, wish for Toyota's cars to be safe and for our customers to feel safe when they use our vehicles. Under my leadership, I would like to reaffirm a value of placing safety and quality the highest on our list of priorities which we have held firmly from the time we were founded. I will also strive to devise a system in which we can surely execute what we value.

Third, I would like to discuss how we plan to manage quality control as we go forward.

Up to now, any decision on conducting recalls have been made by the customer quality engineer division at Toyota Motor Corporation in Japan. This division confirms whether there are technical problems and makes decisions on the necessity of recall.

However, reflecting on the issues today, what we lacked was the customer perspective. To make improvements on this, we will make the following changes to the recall decision-making process.

When a recall decision is made, a step will be added in the process to ensure that management will make responsible decision from the perspective of customer safety first.

To do that, we will devise a system of which customers voice around the world will reach our management in a timely manner. And also assist them in which each region will be able to make decision as necessary.

Further, we will form a quality advisory group, and composed of outside respected experts from North America and around the world to ensure that we do not make misguided decision.

Finally, we will invest heavily in quality in the U.S. through the establishment of an automobile center of quality excellence, and the introduction of new position, product safety executive, and the sharing of more information and responsibility within the company for product quality decisions, including defects and recalls.

Even more importantly, I will ensure that members of the management team actually drive the cars, and that they check for themselves where the problem lies as well as the severity.

I, myself, am a trained test driver. As a professional, I am able to check the problem in a car and can understand how severe the safety concern is in a car. I drove the vehicle in the accelerator pedal recall as well as the Prius, comparing the vehicles before and after the remedy in various environmental setting. I believe that only by examining the problems on site can one make decisions from the customer perspective. One cannot rely on reports or data in the meeting room.

Through the measures I have just discussed and with whatever results we obtain from the investigation we are conducting in cooperation with NHTSA, I intend to further improve on the quality of the Toyota vehicles and the fulfill our principle of putting the customer first.

My name is on every car. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers.

Thank you.

TOWNS: Thank you very much, Mr. Toyoda.

Mr. Inaba.

YOSHIMI INABA, COO TOYOTA MOTOR NORTH AMERICA & CEO TOYOTA SALES USA: Chairman Towns and Ranking Member Issa, members of the committee, thank you for inviting me to testify. My name is Yoshimi Inaba and I am the president and COO of Toyota Motor North America and Chairman and CEO of Toyota Sales USA.

As you heard today from Toyota President Akio Toyoda as and the Subcommittee on Oversight and Investigation heard yesterday from Jim Lentz, president and chief operating officer of Toyota Sales USA, Toyota is taking decisive steps to restore the trust of the tens of millions of Americans who have purchased and drive our vehicles. Our 172 team members and dealers across North America are making extraordinary efforts to complete our current recalls as quickly and conveniently as possible. We have rigorously tested our solutions and are confident that with these repairs, Toyota vehicle will remain among the safest on the road today.

We also going further, by installing advanced-brake override systems in all of our new North American vehicles before the end of 2010 and in an expanded range of existing models as a customer confidence measure, and taking comprehensive steps to ensure strict quality control and increased responsiveness to our customers and regulators in the future.

As you have heard, Mr. Toyoda is leading a top-to-bottom review of our quality control processes, and will seek input from independent safety experts to ensure that our processes meet or exceed industry standards. As head of Toyota's North American operation, I will be closely involved in this review, working with a new chief quality officer for North America. I also will take responsibility for ensuring that we improve our dialogue with U.S. safety regulators and that we take prompt action on any issue we identify to ensure the safety of American drivers.

In inviting me to testify today, the committee asked me to address several issues with regard to our recent recalls. Let me summarize my answers here.

Our recent recalls address five separate issues that we have identified with certain Toyota vehicles. In total, some 5.3 million vehicles across 14 models are affected by one or more of these recalls in the United States. The biggest recalls are for solutions our engineers have developed with regard to two specific mechanical causes of unintended acceleration. One involves all-weather or inappropriate accessory floor mats that when loose or improperly fitted can entrap the accelerator pedal. The other concerns accelerating pedals that can over time can grow sticky with wear in rare instances. The solutions we have developed for both of these issues are effective and durable.

With respect to possible accelerator pedal entrapment by the floor map, Toyota recently designed a vehicle-based change that directly addressed -- addresses the problem and announces the solution to the public in November 2009 as part of the safety campaign, announced on September 29th, 2009. Owners of affected vehicles can, in the meantime, drive safely by ensuring that they use only properly secured, appropriate floor mats.

With respect to sticking accelerator pedals, Toyota announced a safety recall in the United States in January to address this issue. The sticking situation does not occur suddenly, and if it does, the vehicle can be controlled with firm and steady application of the brakes. We are confident that vehicles whose drivers have not experienced any issues with the accelerator pedal are safe to drive, and Toyota dealers are rapidly completing the repairs on our customers' vehicles.

In both of these cases, Toyota thoroughly and carefully evaluated the technical aspect of these issues, however, we now understand that we must think more from a customer-first perspective rather than a technical perspective in investigating complaints and that we must communicate faster, better and more effectively with our customers and our regulators. Our recent small and voluntary recalls of certain 2010 Prius and Lexus HS hybrids for software update to a braking system, certain 2000 Camry cars to inspect the power steering hoses, and certain 2010 Tacoma trucks to inspect the front driveshaft all illustrate this new approach.

Chairman Towns, Ranking Member Issa, and members of the committee, I assure you that nothing matters more to Toyota than the safety and reliability of the vehicles our customers drive. We are committed to not only fixing vehicles on the road and ensuring they are safe, but to making our new vehicles better and even more reliable through our redoubled focus on putting our customers first.

Thank you.

TOWNS: Thank you very much, and let me thank both of you for your testimony.

Let me begin by saying, have you told NHTSA everything you know about sudden acceleration problems? Have you told NHTSA?

INABA: It is to me?

TOWNS: Both. TOYODA (through translator): According to my understanding --

TOWNS: Pull the mike close.

TOYODA (through translator): According to my understanding, we fully shared all of the information with the authorities.

INABA: Our Washington office has been in touch with NHTSA and we are fully requiring with NHTSA with any information they require.

TOWNS: Has Toyota disclosed all other potential safety defects with your vehicles to the regulators? Have you done that?

TOYODA (through translator): I do not know the specifics, however, as I mentioned earlier, I do understand that all of the information that we have are shared with authorities.

TOWNS: Let me ask this question.

Today, Attorney General Andrew Cuomo of New York announced an agreement with Toyota, and this agreement provides that if a customer is afraid to drive his or her car subject to a recall, the dealer will come pick up their cars, fix them, and return them to the customers. Now the customer then will be reimbursed for any taxi or rental car expense that they might incur.

Will you commit to doing this for customers nationwide?

I repeat, if you want me to repeat it, I will do so.

INABA: It is being translates.

Chairman, let me address that questions, because I am more local here.

TOWNS: Delighted. Be delighted.

INABA: I have heard number of instances when this recall news came out, I think a number of customers who were very afraid and our dealers are fully behind it, and the dealers took care of the customers very well, in many instances they went to have dealers go pick up their car and then also gave them a Toyota rent-a-car for the time that they are not able to do.

And this recall process is rigorously going on. I think there is a good understanding now on the part of the customers that the cars are being fixed well, and they are confident about that.

TOWNS: I guess my question is, are you just doing this in New York, or is this something that you are going to do nationwide.

INABA: No, this is happening all over the world -- I mean, all over the nation. Nationwide, yes.

TOWNS: So, I want to make certain that we have that understanding, because I understand that it is going on in New York. And the last question that I have for you is that, Mr. Toyoda, you have offered a brake override feature for some recalled vehicles. Why haven't you offered that feature for all Toyota vehicles?

TOYODA (through translator): Allow me to explain the situation a little bit.

TOWNS: You have to pull the mike closer.

TOYODA (through translator): The factors contributing to the unexpected acceleration can be roughly classified into four categories.

First, problem with the electronic throttle system; secondly, the way in which a car is used or misusage of the car; and thirdly, the structural aspect of the vehicle; and fourthly, the structural aspect of the parts used in the vehicle. So, these, I understand, are four major factors contributing to unexpected acceleration.

And of that, the electronic throttle control system is designed based upon the concept of safety first, and therefore, whenever there is any abnormality or anomaly there in the system, the fuel supplied to the system is cut off. And even under a very vigorous testing conducted internally or by NHTSA, no problem and malfunction was identified, and therefore I'm absolutely confident that there is no problem with the design of the ABS system.

However, placing emphasis upon the fact that customers do have concern as to the possibility of unexpected acceleration which may result from the remaining three reasons, in order to offer extra measure of confidence, as chairman has just mentioned, we decided to add brake override system.

TOWNS: Is that a yes or no? I mean, that is what aim trying to -- that is what I am trying to get to, yes or no, because I am on Congressman Issa's time.

I yield to Congressman Issa, but I am trying to find out, is that a yes or no?

INABA: Let me address in a different perspective. We are, just for the record, we are putting brake override system on all of the models for North America coming off of the line by the end of this year. And now, probably your question is retroactively, what about the existing models, we have already announced Camry --

TOWNS: That is it. That's my question.

INABA: -- Avalon and then ES 300 and then Prius (ph). Those are already included in as an additional measure when we do the recalls.

Now, we have recently announced Tacoma, which has a very high complain rate, and then added to Venzia and Sequoia. This covers probably about, if my recollection is correct, 72 percent of the recall population, and any older one technically it is not possible. And therefore, we think we have it covered. But we do not, you know, stop it there. We carefully monitor the situation by the next year with this new model with BOS coming in with these retroactive actions, I think we are quite sure, we'll be quite sure that we will be very much lower than the industry average.

TOWNS: I yield to the gentleman from California.

REP. DARRELL ISSA (R-CA), RANKING MEMBER, OVERSIGHT COMMITTEE: Thank you, Mr. Chairman.

The chairman has proven that he can ask a question so complex as to even be difficult for people of your great knowledge, and it doesn't surprise me. Let me ask in a different way, the same question, so that we all on the dais have clarity. And, Mr. Inaba, I will put this one to you.

In order -- isn't it true, in order to use a advanced brake override system like this, your cars depend on electronic systems. They depend on microprocessors and they depend on engine control modules that can actually simultaneously reduce fuel when sensing through the data bus that the brake has been pushed.

Isn't that correct?

INABA: You are much better technically, savvy, than I am. I think I believe so.

ISSA: So I think that for all of us here who are concerned, of course, about fail safe and acceleration caused by electronics, I think -- I'm asking you -- isn't it fair to say that although electronics could at times be a problem, and your people have not eliminated that, the solution is in fact electronics in this case, and that is what is going to give the higher level of safety?

INABA: Well, I can only say that this is an added measure of to customer confidence. And of course, I do not mean to say it solved all of the problems.

ISSA: Yes.

I understand that in the early testimony there were some discrepancies perhaps between how Secretary LaHood would explain certain technical occurrences and how you would. Is that correct that you would like to be able to correct the record on some areas of Secretary LaHood's testimony?

INABA: I am not quite understand what specific comment you are referring to?

ISSA: Well, I guess I would welcome that if you would like to we would offer you the opportunity to submit for the record any technical clarifications in what Secretary LaHood's questions and answers were during the earlier testimony.

INABA: Well, we would be glad to for the record.

ISSA: Thank you.

And then I would ask that we put up the unintended acceleration exhibit that I showed earlier. And I put this up for both of you, because in your current advertisement on TV, you said something which I thought was extremely profound and a high goal. You said that good companies fix their mistakes and great companies learn from them.

In the case of the unattended acceleration, in 2007, there was a problem in the United States for which the floor mats were changed. There was a problem in Japan with a different model but similar in floor pedal in which the Toyota pedal itself was shortened. And now in the case of all of these models, there is an electronic upgrade additionally to prevent an accident like we had in 2009.

Would that be the outcome today, the outcome of the recall including the electronics upgrade to advance brake override, is that the type of learn from your mistake that we can expect in the future on any problem that develops?

TOYODA (through translator): I do not know this situation you refer to about 2007, but generally speaking, whenever a problem occurs, Toyota addresses those problems in a most sincere manner and attitude.

INABA: May I make a comment?

ISSA: Yes, please.

INABA: I came to know this Japan's problem to be shameful only in the previous hearing you mentioned, and that was the first time I ever heard. And therefore let me look into that, if it is correct or not.

But at the same time, I think we are the company that we learn great lessons, for me, from this instance and we try to do more. So, I think this is -- we are committed that we tried to remain as great company, not just a good company. So I think we have a full commitment of our president, and then he has just said, and we have many, many measures already taking place. I don't want to go through them all.

ISSA: No, I appreciate that and I have a copy of documents that you have provided to us concerning the Toyota Blade, which is the Japanese-only vehicle, and we'll deliver that to you for your further update.

My second and only other question, Secretary LaHood talked about wanting to but not necessarily having the transparency of worldwide sales and problems. Will you agree, Mr. Toyoda, to be the company that leads by providing the U.S. NHTSA with full transparency of your worldwide observations and help set a model for all of the major companies here in the U.S.?

TOYODA (through translator): To that question, I clearly say yes. In the past cases of recall or problem has solution, in making decisions we based our decision on two issues. The technical consideration and also whether or not the regulations and statutes of different parts of the world are complied with. And in that sense, going forward, we intend to exchange and share information more timely throughout the world, and we are now setting up the system for that purpose.

And for that specific purpose, we are going to establish this special committee on global quality, which I personally will be heading, and that very first meeting of that will be held on March 30th. And for that purpose, we are setting up the structure where the United States and other parts of the world will be represented in the meeting of that special meeting for global quality. And we are now introducing this system so that we really face up to this problem openly and transparently.

ISSA: Thank you, and thank you, Mr. Chairman, for your indulgence.

TOWNS: Thank you.