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Will Akio Toyoda survive the Toyota debacle?

When third-generation Akio Toyoda took the helm at the world's largest automaker in June 2009, he knew he was in for a tough ride. The world was in the grips of a crippling recession, the car industry was on its knees and Toyota had just posted its first annual loss in 59 years.

Despite the difficult circumstances, the rise of Toyoda was much anticipated. As the first family head of the company in 14 years, there was much expectation placed on his 53-year-old shoulders. However, the recall crisis currently gripping Toyota Motor Corporation makes even the recession look tame.

Since November 2009, when Toyoda (pictured) was six months into his presidency, Toyota has been forced to recall more than 8 million vehicles, could face up to 30 class-action lawsuits and has dropped $35 billion in market value.

Last week Toyoda was summoned to appear before the US House of Representatives' Committee on Oversight and Government Reform to testify against allegations that the problems associated with the millions of recalls "may have been the direct cause of serious injury and even death."

There is no denying Toyoda has been dealt a very difficult hand, but criticism of his leadership has garnered almost as much attention as the problems evident with Toyota's cars. Between the beginning of the recalls in November and his first public announcement in February, it looked like the family head had simply disappeared.

Initially Toyoda let Yoshi Inaba, his top man in the US, deal with the problems. However, this played extremely badly in the US, with transport secretary Ray LeHood saying he planned to call Toyoda "and explain to him that this is a serious business." 

Many, especially the families of those who it is alleged have been injured or killed in accidents related to unintended acceleration, felt Toyoda should have been the figurehead trying to reassure and repair the damage done to a company that has built its reputation on quality and safety. Instead he was silent and remote, looking either scared, incompetent or both.

He finally broke his silence in early February, apologising to customers and announcing plans to establish a Special Committee on Global Quality that he would head up.

However, he initially declined to speak before the Committee on Oversight and Government Reform and it was not until its chairman, Edolphus Towns, summoned Toyoda to testify in mid-February that he agreed. Towns argued that the public were unclear about the degree and seriousness of the recalls and needed reassurance from the man at the top.

At the hearing, Toyoda blamed rapid expansion at the company for the recalls. "I fear the pace at which we have grown may have been too quick," he said. "I would like to point out here that Toyota's priority has traditionally been the following: first; safety, second; quality, and third; volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before.

"I am deeply sorry for any accidents that Toyota drivers have experienced," he continued.

The only thing that can be said with any certainty about this explanation is that the rapid period of growth occurred under non-family management. Would the crisis have occurred if the family been in charge? We will never know, but it may well have been more careful to follow the "traditional" priorities of the business Toyoda outlined in his statement.

A particularly revealing comment reminds us just one of the reasons family management is often more conservative than growth orientated. "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," said Toyoda. "I, more than anyone, wish for Toyota's cars to be safe, and for our customers to feel safe when they use our vehicles."

Clearly, Toyoda made an error of judgment by not taking it upon himself to explain and apologise for the company's failings from the outset – perhaps it is that old family failing of a desire to keep out of the limelight. Unfortunately, rebuilding Toyota's reputation for safety and quality will take years, if not decades. 

However, Toyoda's unbreakable ties with the business give him a greater incentive than most to ensure it does regain that reputation and it is clear he has a desire to do so. Whether he is allowed to get on with the job will depend on how the lawsuits in particular conclude.

For the founding family, it would be a terrible end to their return to the top of one of the world's biggest companies.

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