Lawmakers’ Ties to Toyota Questioned at Start of Inquiries

As I've mentioned before, in many ways the Toyota crisis is similar to what befell Audi in the 80's, as its sales tanked after publicity about sudden acceleration. However, Audi was essentially driven from the US market for nearly ten years. While Toyota's sales and reputation are suffering, it seems highly unlikely that it will suffer Audi's fate.

Asking why raises some interesting issues. First, unlike Audi, which to this day is an upscale niche brand, Toyota sells cars at all price points, from the entry-level Yaris (less than $13,000) to the Lexus LFA ($375,000). Millions of ordinary Americans own Toyotas - even my parents, who drove American cars most of their lives, drive a Camry.

Second, the sheer volume of Toyota's sales and manufacturing have made them an "American" car maker. Toyota is one of the United States' largest private employers, with 172,000 employees, working in every state of the US. The scale and breadth of their operations means that they have natural allies among their suppliers, and local, state, and federal political leaders who value the sales, jobs, and tax revenues that Toyota generates.

Third, and somewhat controversially, Toyota has built up a huge lobbying organization that existed well before this crisis broke. According a recent New York Times article, Toyota had 31 full time DC lobbyists in 2009, a number that has almost certainly increased this year, and "has spent nearly $25 million on federal regulatory and legislative lobbying matters in the last five years, far more than any other foreign automaker."

Indeed, Toyota's long term position may benefit from a huge network of political contacts that it has built up in its decades in the US. To take just one example, U.S. Representative Darrell Issa (R-California), the ranking Republican on the House oversight committe that called Toyota chair Akido Toyoda to testify earlier this year, made his fortune selling alarms for Toyotas as well as other brands. Many Democratic lawmakers have similar financial ties to Toyotas.

Many of these lawmakers have, while acknowledging Toyota's faults, cautioned the public and the media not to come down too hard on a large American employer during a severe recession: “ 'Toyota has unquestionably placed the safety of its customers above profits,' Gov. Steve Beshear of Kentucky, which is home to a Toyota manufacturing plant, said in a letter to Congress this month that was signed by three other governors.
'At the same time, they have not laid off a single employee, despite the impact these concerns have had on sales,' the letter said. 'All of these actions are representative of the valuable friend we have in Toyota.' "

All of these factors may in many ways insulate Toyota from the worst effects of this crisis. Audi was a small carmaker, making all of its cars in Germany, and with a limited dealer network. It crumbled under the onslaught of bad press. Toyota is in many ways a thoroughly American company (in all senses of the word): learning from criticism that was unfairly competing against US automakers in the early 80s, since then it has directly engaged the US political system, and in many ways made itself an integral part of that system.

http://www.nytimes.com/2010/02/23/business/23donate.html