Toyota in Reverse

Making money is always job one for car manufacturers, but the nature of the product they bring to market entails special ethical responsibility. Protecting profit margins and preserving brand reputation can never be morally justified when people’s lives and safety are at stake; but the developing story of Toyota and its secretive, and at times possibly obstructionist, handling of a widespread problem with its vehicles’ uncontrolled acceleration shows that poor priorities are also simply bad business.

When Toyota Motors recruited two high-level bureaucrats from the National Highway Traffic Safety Administration to help manage its relationship with that federal oversight agency, it may have had an eye on cost-savings related to automobile recalls, not laying the groundwork for a great case study for a business ethics textbook. But just a few years later, that strategy has resulted not in corporate savings but in a historic recall of as many as 10 million cars, along with frozen sales and assembly lines for the international automotive giant. Hundreds of accidents and 52 deaths so far have been attributed to the unexplained acceleration now implicated in incidents involving Prius, Camry, Lexus and other Toyota models.

Prominent Toyota executives blame the carmaker’s woes on too-rapid expansion, which distracted its attention from quality control, but the role played by former employees of the U.S. traffic safety department cannot be ignored and warrants further scrutiny. Other car manufacturers also employ onetime N.H.S.T.A. staff members, but it appears that only Toyota has gone so far as to use such employees specifically to work on managing the company’s relations with the agency.

As early as 2004 the agency was looking carefully at accelerator problems experienced by Toyota Camry owners. A lawsuit in 2008 stemming from an unintended acceleration-related death revealed an agency decision to limit the scope of its investigation. That crucial decision came right after a former N.H.T.S.A. employee took a job with Toyota and essentially began negotiating for the company with his previous co-workers. In fact Bloomberg News reports that at least four investigations by the agency into unintended acceleration by Toyota models were favorably reduced or thwarted completely with the help of the former regulators hired by the automaker. Those aborted investigations succeeded in warding off expensive recalls, but they apparently did not do anything to make the cars safer.

Consumers expect that all reasonable efforts will be made to protect their safety, particularly when accumulating evidence suggests there is a problem. Toyota has much to do to win back public esteem for its previously highly regarded products, and the federal government and the N.H.T.S.A. also need to take a time-out for an examination of institutional conscience. The safety administration needs to determine precisely how influential former agency employees working at Toyota were on recall decisions and whether a stronger firewall needs to be established between industry and government safety investigators. Congress needs to assess whether the comparatively small staff of the N.H.S.T.A. is adequate for the job and able to keep up with rapidly changing automobile technology. Out of a total number of 635 agency employees, only 57 are in enforcement, and only 21 of these are investigators.

Federal regulators serve the common good. Most do so with integrity and dedication. Their reliability should be beyond reproach. Federal bureaucracies cannot be allowed to evolve into training facilities for future corporate corner-cutters. The public trust and people’s lives are too much to risk. A too cozy relationship between corporate managers and federal regulators can lead to dangerous conflicts of interest. This may be one revolving door between government and industry worth jamming permanently.

Even as those structural problems are addressed, the basic question of the accelerator safety needs to be answered. A similar problem has now been reported among a number of other car manufacturers. It could be that our computer-reliant autos may be too sophisticated for our own good. Though Toyota executives emphatically deny there is a design flaw in Toyota’s electronic throttle control system, a senior Toyota sales manager testifying before Congress in February admitted that the recall, which replaces floor mats and alters a gas pedal assembly, had responded satisfactorily to as few as 30 percent of the acceleration complaints. Owners of some allegedly repaired cars are reporting that the acceleration problem persists.

That is not good news for Toyota or its current customers, but it may be for future car buyers. Toyota’s woes offer a powerful cautionary tale for corporate executives tempted to prop up profit margins by discounting safety with a strategy designed to elude government oversight.

This article appears in March 22 2010.