One year after federal prosecutors opened a criminal investigation into Toyota’s unintended acceleration safety issues, a ten month investigation came to the conclusion that there were no electronic flaws that led to accidents involving Toyota vehicles. The causes were attributed to driver error and sticky accelerator pedals and floor mats. These were the exact causes that Toyota pointed to when congressional leaders decided to attack the automaker at a time when General Motors was struggling to regain sales after exiting its bankruptcy.
The SEC subpoenaed documents from Toyota back in February of 2010 when the criminal investigation began. Members of Congress piled on to the assault with Rep. Henry Waxman (D-California) sending a letter to Toyota and the Department of Transportation that stated, “First, the documents appear to show that Toyota consistently dismissed the possibility that electronic failures could be responsible for incidents of sudden unintended acceleration. Second, the one report that Toyota has produced that purports to test and analyze potential electronic causes of sudden unintended acceleration was initiated just two months ago and appears to have serious flaws. Third, Toyota’s public statements about the adequacy of its recent recalls appear to be misleading.” Political theater ensued during congressional hearings with representatives lambasting Toyota’s chief executive, Akio Toyoda. A humbled Mr. Toyoda apologized for any perceived wrongdoing by Toyota. Perhaps now that the US government’s investigation exonerates Toyota, it is Mr. Toyoda that deserves an apology. The question of whether any of the damaging accusations against Toyota had an ulterior motive of benefiting General Motors also should not be ignored.
The damage caused by accusations suggesting Toyota was guilty of covering up major safety shortcomings is measurable. Of the top ten selling automakers in the US market, Toyota had the worst performance in 2010 with annual sales growth of 0%. This compares to an industry average of 11% growth. The next poorest performer in the top ten was General Motors with 7% growth. It is indisputable that the accusations levied by the US government severely damaged Toyota’s reputation. Is it just coincidental that certain members of our government that have such a vested interest in seeing GM succeed led a campaign that had such a negative impact on the largest foreign, non-unionized competitor to GM?
Regardless of whether or not ulterior motives played a part in the Toyota witch hunt, this is just another example of the conflicts that arise when our government becomes so intrusive in to the private sector. Will the SEC and Department of Transportation show favoritism to a politically powerful General Motors? The only way to be assured that such conflicts will not arise is to have our government exit the private sector and not repeat the unprecedented intrusion ever again. The market value of GM may go up or it could come down. It is not the job of the Treasury Department to market-time taxpayer investment by deciding when is the best time to exit the bailed out auto sector. Treasury should sell its stake in GM, Chrysler and Ally Financial as soon as possible and put the unseemly political process behind us.