Toyota’s ‘prince’ struggles to steer automaker his grandfather founded through worst crisis

Toyota president battles crisis in family company

TOKYO — Toyota President Akio Toyoda, known as “the prince” in Japan, was groomed for years to head the automaker his grandfather founded.

His appointment in 2009 was full of promise — a morale booster for the rank and file who expected that a youthful Toyoda in the hot seat would help steer the carmaker through a brutal slump in the global auto market.

Half a year later, he’s slammed as slow and indecisive as Toyota Motor Corp. grapples with the worst crisis in its 70-year history — massive global recalls ballooning to 8.5 million vehicles in a matter of weeks and its once-sterling reputation for quality in tatters.

Critics are questioning whether Toyoda is up to the challenges he now faces. It’s one thing to lead a company at its peak and another to pull it through such a dire crisis.

Toyoda, 53, said Friday that he plans to testify at a U.S. congressional hearing next week about the automaker’s recalls in the United States.

That announcement came just two days after he said he wasn’t going and follows an onslaught of criticism from both the Western and Japanese media about his reluctance to go to Washington.

The chairman of the U.S. House of Representatives Oversight and Government Reform Committee issued the invitation Thursday for the Feb. 24 hearing, and he received Toyoda’s acceptance the same day. By issuing the invitation, the committee had essentially forced Toyoda to testify or face a subpoena.

“I am hoping our commitment to the United States and our customers will be understood,” Toyoda told reporters. He said he intended to explain the measures the company has adopted recently to beef up safety controls, which includes a special committee he is heading.

Whether Toyoda — or the chief of any Japanese company — can deftly handle a hostile grilling by U.S. lawmakers is in doubt.

The U.S. government has opened a fresh investigation into Corolla compacts over potential steering problems. Toyota’s earlier recalls have been over sticky gas pedals, floor mats that ensnare accelerators and faulty braking programming.

Toyoda’s earlier decision to send in his place Yoshi Inaba, the head of Toyota’s U.S. operations, to the congressional hearings, as the best person to deal with the questions, was a clear outrage to some Western-style crisis-management experts.

“This is the place where you want to have your top guy,” Paul Argenti, Professor of Corporate Communication at Tuck School of Business at Dartmouth, said of the congressional hearings.

“If you have a leader who isn’t capable of handling global issues of this magnitude, he probably shouldn’t be in the driver’s seat,” he said.

Approachable in person, Toyoda is vocal about his love for sportscars and racing. He has appeared in racing outfits and zipped around test-drive courses in prototype vehicles.

An active blogger until the recent crisis, he spearheaded a Web campaign in Japan in the mid-1990s to build the Toyota brand on the Internet, when such moves were relatively novel here.

Many thought he got away with the bold measure because he was founder Kiichiro Toyoda’s grandson.

The company name is spelled and pronounced differently from the founding family name because Toyota is written in Japanese script with eight brush strokes, considered luckier than the 10 required for the family name.

Toyoda has headed Toyota’s operations in China, and has also served as head of Toyota’s joint venture with General Motors Co., the New United Motor Manufacturing, or NUMMI, plant in Fremont, California, which was ended last year.

He has always voiced a humility about his position and played down his influence even as his rise to presidency became imminent. That kind of unpretentious behavior is valued in Japanese corporate culture.

Toyoda will have to respond to quite different, and much tougher, expectations in the U.S., said Ulrike Schaede, professor of Japanese Business at the University of California, San Diego.

She said Toyota may not have been equipped to handle its overly quick rise to the top of the global auto market, and its quality controls failed to keep up with expansion.

“America is funny in that we apply different standards to the largest company,” she said. “This is not an assignment anybody would want. But he has to do it. He is the man.”

Some Japanese companies, like Sony Corp. and Nissan Motor Co., have become relatively more Westernized in recent years. But Toyota has remained largely insular, with a tight-knit board of directors that includes no foreigners.

Heads of Japanese companies are chosen for their skills at team decision-making, ensuring harmony and stability. They are typically in their 60s or older and have made the rounds of the company’s divisions without rocking the boat.

Toyoda’s role is even greater because he was chosen, at a relatively young age for a Japanese president, for the charisma that came from family ties and associations with history in one of Japan’s most passionate corporate cultures.

He owns less than 1 percent of Toyota stock, minuscule compared to other family owners like the Ford family, but he is still widely perceived as having a stake in salvaging Toyota’s reputation.

A graduate of Japan’s prestigious Keio University, Toyoda holds a master’s degree in business administration from Babson College in Massachusetts.

Toyoda was initially criticized for being absent as the recalls surfaced in the U.S. in October, until he was cornered by a Japanese TV crew in Davos, Switzerland.

But he has become more vocal lately, holding three news conferences this month. He gave answers in faltering English at his first news conference, but he has been more prepared in the last two appearances and has read from an English statement.

“Perhaps he can walk the tightrope between global and Japanese expectations and demands,” said Roland Kelts, author of “Japanamerica: How Japanese Pop Culture Has Invaded the U.S.” and a lecturer at the University of Tokyo. “I say give him time.”