Toyota Crash Data Suggest Driver Error

The Wall Street Journal

 

The U.S. Department of Transportation has analyzed dozens of data recorders from Toyota Motor Corp. vehicles involved in accidents blamed on sudden acceleration and found that the throttles were wide open and the brakes weren't engaged at the time of the crash, people familiar with the findings said.

The early results suggest that some drivers who said their Toyotas and Lexuses surged out of control were mistakenly flooring the accelerator when they intended to jam on the brakes.

But the findings—part of a broad, ongoing federal investigation into Toyota's recalls—don't exonerate the car maker from two known issues blamed for sudden acceleration in its vehicles: "sticky" accelerator pedals that don't return to idle and floor mats that can trap accelerators to the floor.

The findings by the National Highway Traffic Safety Administration involve a sample of the reports in which a driver of a Toyota vehicle said the brakes were depressed but failed to stop the car from accelerating and ultimately crashing.

A NHTSA spokeswoman declined to comment on the findings, which haven't been released by the agency.

The data recorders analyzed by NHTSA were selected by the agency, not Toyota, based on complaints the drivers had filed with the government. Toyota hasn't been involved in interpreting the data.

The initial findings are consistent with a 1989 government-sponsored study that blamed similar driver mistakes for a rash of sudden-acceleration reports involving Audi 5000 sedans.

The Toyota findings appear to support Toyota's position that sudden-acceleration reports involving its vehicles weren't caused by electronic glitches in computer-controlled throttle systems, as some safety advocates and plaintiffs' attorneys have alleged. More than 100 people have hired attorneys and sued the car maker over crashes they claim were the result of faulty electronics.

It is unknown how many data recorders NHTSA has read so far. The agency's investigators have been reading the data only since Toyota provided the agency with 10 reading devices in March.

Since then, investigators have responded to accidents involving sudden acceleration when the driver claims to have been stepping on the brakes.

Because the data recorders can lose their information if disconnected from the car's battery or if the battery dies—as could happen after a crash—the agency is focusing only on recent accidents, said a person familiar with the situation.

NHTSA has received more than 3,000 complaints of sudden acceleration in Toyotas and Lexuses, including some dating to early last decade, according to a report the agency compiled in March. The incidents include 75 fatal crashes involving 93 deaths.

However, NHTSA has been able to verify that only one of those fatal crashes was caused by a problem with the vehicle, according to information the agency provided to the National Academy of Sciences. That accident last Aug. 28, which killed a California highway patrolman and three passengers in a Lexus, was traced to a floor mat that trapped the gas pedal in the depressed position.

Toyota has since recalled more than eight million cars globally to fix floor mats and sticky accelerators.

The NHTSA spokeswoman said the agency wouldn't comment on its Toyota probe until a broader study is completed in conjunction with NASA, which is expected to take months.

Daniel Smith, NHTSA's associate administrator for enforcement, told a panel of the National Academy of Sciences last month that the agency's sudden-acceleration probe had yet to find any car defects beyond those identified by the company: pedals entrapped by floor mats, and accelerator pedals that are slow to return to idle.

"In spite of our investigations, we have not actually been able yet to find a defect" in electronic throttle-control systems, Mr. Smith told the scientific panel, which is looking into potential causes of sudden acceleration.

"We're bound and determined that if it exists, we're going to find it," he added. "But as yet, we haven't found it."

Some Toyota officials say they are informally aware of the NHTSA data-recorder results. Toyota officials haven't been briefed on the findings, but they corroborate its own tests, said Mike Michels, the chief spokesman for Toyota Motor Sales.

Toyota says its own downloads of data recorders have found evidence of sticky pedals and pedal entrapment as well as driver error, which is characterized by no evidence of the brakes being depressed during impact.

Still, since the start of Toyota's troubles late last summer, the Japanese company hasn't blamed drivers for any of the sudden-acceleration incidents, though in many cases the company couldn't find another cause. Toyota President Akio Toyoda has said the company won't pin the blame on customers for its problems as part of its public-relations response.

A product liability lawyer who represents four drivers who sued Toyota in state courts over sudden acceleration said the NHTSA finding doesn't mean much for his litigation. "Toyota has always taken the position that the electronic data recorder system is not reliable," said Tab Turner, the Little Rock, Ark., lawyer.

A Toyota spokesman said the company considers the device "a prototype tool. It wasn't designed to tell us exactly what happened in an accident. It was designed to tell us whether our systems were operating properly."

One case studied by U.S. regulators involves Myrna Marseille of Kohler, Wis., who reported in March that her 2009 Toyota Camry accelerated out of control and crashed into a building.

Ms. Marseille said in an interview Tuesday that she was entering a parking space near a library when she heard the engine roar. "I looked down and my foot was still on the brake, so I did not have my foot on the gas pedal," she said.

Police in Sheboygan Falls, Wis., investigated and believe driver error was to blame, Chief Steven Riffel said Tuesday. He said surveillance video showed that the brake lights didn't illuminate until after the crash. But Mr. Riffel said that determination is preliminary and that his agency has turned over the investigation to NHTSA.

Based on the black box data, NHTSA investigators found that the brake was not engaged and the throttle was wide open, according to a person familiar with the matter.

Ms. Marseille sticks by her story. "It makes me very angry when someone tells me, 'She probably hit the gas pedal instead,' because I think it's a sexist comment, an ageist comment," she said.

Toyota Buying Tesla Stake for Electric Car Tie-Up

Bloomberg / Business Week

 

Toyota Motor Corp., the world’s largest automaker, is buying a $50 million stake in the Californian electric-car maker Tesla Motors Inc. as automakers compete to offer low-polluting models in the U.S.

Tesla will also buy a closed Toyota joint-venture factory in California to build its Model S and other vehicles, Tesla Chief Executive Officer Elon Musk said yesterday. The companies said they’ll cooperate in developing electric cars, parts, production systems and engineering support.

The deal may help Toyota, the world’s biggest carmaker, compete with Nissan Motor Co. and General Motors Co. in selling electric cars in the U.S., where regulations on greenhouse gas emissions and fuel efficiency are pushing them to offer advanced vehicles. It may also help the Toyota City, Japan-based company’s image, battered by recalls, by reviving the New United Motor Manufacturing Inc. plant in Fremont, California, known as NUMMI.

“This seems like a good deal for both parties, especially Toyota, from being able to avoid the political fallout from shutting NUMMI down to being able to offer a new electric vehicle with just a low initial investment cost,” said Jeremy Anwyl, Chief Executive Officer at auto industry researcher Edmunds.com in Santa Monica, California.

Joining Daimler

The size of Toyota’s stake in Tesla hasn’t been fixed ahead of a share sale by Tesla, Musk said in an interview. Daimler AG in May 2009 invested about $50 million in Tesla, which is supplying battery packs to the Stuttgart, Germany-based company for a test fleet of electric Smart minicars.

In July, Daimler sold a portion of its share of Tesla to the German automaker’s largest investor, Aabar Investments PJSC, reducing its stake to about 5 percent.

Daimler “welcomed” Tesla’s partnership with Toyota, which “likewise has the goal of advancing electric vehicles,” said Brigitte Bertram, a Daimler spokeswoman for the automaker in Stuttgart, Germany. The Toyota-Tesla linkup “doesn’t impede” Daimler’s cooperation with the California automaker.

Toyota fell 1.9 percent to 3,355 yen in Tokyo, while Nissan dropped 3.4 percent and Honda Motor Co., Japan’s second-largest carmaker, declined 2.5 percent.

The tie-up brings Toyota, the world’s biggest seller of hybrid autos, together with Tesla, the only company now selling U.S. highway-legal battery-powered cars. Electric-car technology has been supported by U.S. policy makers including President Barack Obama as a way to reduce the nation’s oil use and dependence on foreign energy sources.

Obama set a goal of getting 1 million plug-in hybrids and electric cars on U.S. roads by 2015.

Nissan, GM

Nissan is preparing to introduce its Leaf electric hatchback, powered by a lithium-ion battery pack, in Japan and the U.S. this year. Nissan Chief Executive Officer Carlos Ghosn has set a goal of leading sales of rechargeable vehicles, which he estimates may make up 10 percent of global auto demand by 2020, and is spending more than 500 billion yen ($5.5 billion) developing electric cars.

GM plans to introduce its Volt plug-in car in October. The car will initially be marketed to drivers in California, which requires large automakers to offer some vehicles that emit little or no tailpipe pollution.

Toyota intends to offer a short-range, “urban commuter” electric car in the U.S. in 2012 and begin retail sales of a plug-in Prius hybrid the same year.

Toyota, which will continue to develop its own electric vehicle, said Tesla’s long-distance models give the Japanese automaker more options. Toyota said hybrids should remain a more practical option for most customers until electric cars become more popular.

Share Sale

Palo Alto, California-based Tesla has 2,000 reservations for the Model S sedan and intends to begin “volume” production of the car in 2012, with a projected annual output of as much as 20,000 a year. The company has delivered about 1,000 of its $109,000 Roadster electric sports cars, while losing more than $230 million.

Tesla hasn’t posted a profit in the six years since it was founded. The company plans to use proceeds from an initial share sale and a $465 million government loan to help produce the Model S, an electric car that is to cost less than $50,000 after a federal tax credit.

Fund Raising

Tesla aims to raise about $100 million from its share sale and has said it may use proceeds to pay for factories and equipment estimated to cost as much as $125 million this year, and for acquisitions.

“I’ve felt an infinite possibility about Tesla’s technology,” said Akio Toyoda, chief executive officer of Toyota, founded by his grandfather. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.”

The company is backed by investors including Mountain View, California-based Google Inc.’s co-founders Larry Page and Sergey Brin, and the government of Abu Dhabi. Daimler, the world’s second-biggest maker of luxury vehicles, invested last May. Tesla said Musk told Daimler about the Toyota partnership on May 19.

The revival of NUMMI, for 25 years a joint venture between Toyota and the former General Motors Co., will create 1,000 jobs, California Governor Arnold Schwarzenegger said. The plant closed in April.

Toyota Looking to Increase New Car Types in China

The Wall Street Journal

 

 

Toyota Motor Corp. (TM) plans to test launch its plug-in hybrid vehicle in China soon and is also considering a new model aimed at the country's small-sized, low-priced market segment within five years.

The plans, disclosed Friday by Toyota officials at the Beijing Auto Show, come as the Japanese carmaker works to regain customer trust after it recalled millions of cars globally due to safety concerns and defects.

China, the world's largest auto market, is a growth area for Toyota's sales.

The Japanese company sold 709,000 vehicles in 2009 in China, up 21% on year. For 2010, it is targeting a 13% growth in sales to 800,000 vehicles. Sales in the first two months of this year grew 43% on year to 117,000 vehicles.

Takeshi Uchiyamada, Toyota's executive vice president, said the company wants to introduce its plug-in hybrid cars on a trial basis to the Chinese market as soon as possible.

Gas emission regulations are expected to become stricter in China, which last year toppled the U.S. to become the world's biggest auto market.

Meanwhile, Masahiro Kato, president of Toyota Motor (China) Investment Co., said the Japanese automaker is considering a new, small, low-priced car for the Chinese market. He hopes to bring it to market in five years.

In January, the automaker issued a recall notice for 75,552 RAV4 sport-utility vehicles in China due to faulty gas pedals.

Toyota has said that this month's fresh recall of SUVs due to problems with the stability control system doesn't affect the Chinese market.

Toyota is striving to regain customer trust by fixing problems with 8.5 million vehicles in China, the U.S., Europe, Japan and other regions as early as possible and enhancing quality control.

Lawyers Circle Toyota

LA Times

In San Diego, 150 attorneys gather to plot strategy for what could be a deluge of lawsuits to come against the automaker.

Reporting from San Diego — First came the reports of sudden acceleration, then the recalls. And now, inevitably, the lawyers. Lots of them.

With Toyota Motor Corp. already facing scores of lawsuits stemming from alleged sudden acceleration incidents, about 150 lawyers gathered Wednesday for an all-day event to discuss litigation strategy over claims of deaths and injuries in accidents as well as the loss of resale value of used Toyota vehicles.

 Those attending, including veterans of class-action litigation, didn't shy away from portraying the situation as an opportunity of historic proportions.

"We've got a wonderful opportunity to fight a multifront war," said W. Mark Lanier of the Lanier law firm of Houston, flashing on a screen a map suggesting the Allies' assault on Nazi Germany during World War II.

How much money is involved?

"A hell of a lot," said San Diego lawyer Kerry Steigerwalt, whose firm already has Toyota clients.

Indeed several law firms represented at the event, hosted by HarrisMartin Publishing, a Pennsylvania-based publisher and website operator specializing in the legal and insurance industries, have clients suing Toyota. Others there were hoping to attract such clients.

A seven-judge panel known as the U.S. Judicial Panel on Multidistrict Litigation is currently weighing whether to combine the disparate class-action suits and, if so, where to send the mega-case. But other suits will fall outside that category, raising a raft of issues.

Toyota declined to comment on the lawyer event.

"It regards pending litigation," spokesman Mike Michels said.

One of the themes of the event, held at the Westin Hotel in downtown San Diego, was that Toyota has erred repeatedly in dealing with the situation. Among the claimed missteps: stalling on fixing problems, stonewalling customers seeking help, and issuing a late and unsatisfying apology.

Toyota's strategy, said Jimmy Faircloth of the Faircloth law group in Alexandria, La., was classic old-school: hope the bad news goes away. When it didn't, a carefully parsed apology followed.

"I don't care if it's Tiger Woods, Bernie Madoff, or Toyota, if an apology comes late it's going to be seen as phony," Faircloth said.

Toyota's approach, said Ken Seeger of the Seeger, Salvas law firm in San Francisco, has been "purely market-driven, cold-hearted, insincere."

"They tried to declare they had the problem solved when they really didn't know what the problem was," he said.

If the engineering issues involved in the Toyota cases are complex, so too are the legal ones. Lawsuits have been filed in at least 19 legal jurisdictions.

The lawyers weighed whether or not the cases should be lumped together and if so, where and with what judge?

 Different states have different takes on damage limits, statutes of limitations, and warranties.

"That's going to be a hot issue," said Elizabeth J. Cabraser of Lieff, Cabraser, Heimann and Bernstein of San Francisco, a veteran of numerous major cases, including litigation over breast implants.

Not every judge has the time or the skills to deal with a case of such complexity that involves multiple jurisdictions and mountains of technical and legal documents, the attorneys agreed.

"This needs a smart, creative judge to do this, preferably one who has done it before," said Shawn G. Foster of Davis, Bethune and Jones of Kansas City, Mo.

Lanier, who recently won $54-million jury verdict for a paralyzed heavy-equipment operator, said he already has a former Toyota employee ready to testify that the corporation lies as a matter of strategy "and he's got documents to back it up."

He charged that Toyota didn't put enough back-up systems in its vehicles.

"The commode in my home has more redundancy than their cars," he said.

With the possibility looming of hundreds of lawsuits, one tactic might be what is called a bellwether approach -- several cases bundled together. The verdict can goad litigants to settle other cases without trial.

"I'm a major fan of bellwether cases because I think it leads to global settlements," said Dawn Barrios of Barrios, Kingsdorf, and Casteix of New Orleans.

The session was held just a few miles from where two of the most highly publicized incidents involving Toyota vehicles occurred: the deaths of an off-duty CHP officer and his family in the crash of a speeding Lexus, and the case of a driver who said he had to struggle to stop his runaway Prius on Interstate 8.

Toyota has issued more than 10 million recall notices recently because of supposed accelerator pedal and floor mat problems and other safety issues. The conference "will help us all be on the same page," said Steigerwalt. "What we don't want is all of us fighting different battles with Toyota."

Although the session was open to all, no Toyota lawyers were known to have attended. Some of the lawyers who were there felt that Toyota, after an initial case or so, would settle other cases. But other lawyers predicted years of litigation, with Toyota concerned about how losing or settling cases will affect its stock price.

"It's not going to be just resolved," Lanier said. "It's going to be tried, tried and tried."

The Humbling of Toyota

Business Week

A combination of high-speed global growth and ambitious cost cuts led to the quality lapses that have tarnished the once-mighty brand. How it all went wrong

Toyota Motor has always been fanatical about frugality, and for many years that was good for both the company and its customers. This is a Japanese carmaker that routinely turned down the heat at its employee dormitories during working hours and labeled photocopy machines with the cost per copy to discourage overuse. Its engineers collaborated with suppliers to extract cost-savings without compromising quality. Yet by the middle of the last decade Toyota's virtue had become a vice.

So say current and former auto executives who are trying to grasp how Toyota, with its gold-plated reputation for engineering excellence, slipped up on such a scale, with 8 million cars recalled due to mechanical failures linked by U.S. regulators to 51 deaths. Before company officials knew that runaway acceleration was causing crashes, one of these executives says, a simple manufacturing process would sometimes ignite small fires in a component as a direct result of corner-cutting. It was just one early sign that the focus on cost reduction had gone too far.

Those production mishaps occurred in 2006, a year after company President Katsuaki Watanabe boasted about having squeezed more than $10 billion from global operating costs in the previous six years—this despite an impressive run of profit growth and global market share gains in the middle of the last decade. Then Toyota pushed even harder for more cuts. It asked suppliers to design parts for its Camry midsize sedan that were 10% cheaper and 10% lighter. The company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping, according to a slide presentation U.S. Senate investigators unearthed in their sudden-acceleration probe. But his warning had no apparent effect.

The redesigned Camry brought out in 2006 had an embarrassing flaw in its headliner, the fabric and composite lining that covers the inside roof of the car. Under pressure to cut costs, the lead Camry supplier, Toyota-affiliated Toyota Boshoku, chose a carbon fiber material that hadn't been approved by Toyota engineers, according to an executive who worked on the redesign. The headliner is made by compressing layers of materials together using a certain amount of heat to mold it. In this case, the carbon fiber required so much heat that the headliner would catch fire.

Toyota fixed that problem, but when a North American parts supplier interested in working with the automaker did a teardown of a 2007 Camry, its engineers were surprised by how much the traditional Toyota craftsmanship had been watered down by years of nips and tucks. The padding in the ceiling of the car, though compliant with safety regulations, had been thinned out to save money. A tray for sunglasses used a flimsier type of plastic than previous models. "It was a bare-bones car at that point," says one executive who declined to be identified for fear of harming business ties with Toyota.

Toyota insists its focus on cost hasn't hurt consumers. "It's not true that by reducing cost you automatically reduce quality," said Jim Wiseman, Toyota's vice-president for North American corporate communications. "Every automaker has to stay competitive relative to price."

True, but probably not with the intensity Toyota brought to cost-cutting and rapid expansion under three successive presidents: Hiroshi Okuda (1995-1999), Fujio Cho (1999-2005), and Watanabe (2005 to 2009). Toyota executives will spend years mopping up after their mess.

At last count, the company faced 109 class actions and 32 individual cases filed in courts in the U.S. and Canada. (In a well-publicized incident on Mar. 8, the owner of a 2008 Prius lost control of his car on a California interstate highway and had to be rescued by police.)

As grave as the current troubles are, they are symptomatic of a larger problem at Toyota: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture.

"The root cause of their problems is that the company was hijacked, some years ago, by anti-[Toyoda] family, financially oriented pirates," Press charged in a recent interview with Bloomberg News. Once the highest-ranking American at the company, with a seat on the board of directors, Press left in 2007 to join Chrysler as vice-chairman and president, but departed from there after last year's bankruptcy. The financial pirates, he said, "didn't have the character necessary to maintain a customer-first focus."

The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. With a handful of other executives during the 1950s, Ohno developed a set of in-house precepts on carmaking efficiency that later evolved into such concepts as lean manufacturing and just-in-time inventory management. Ohno's ideas not only changed the auto industry, they changed late-20th-century manufacturing. At their core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost.

The traditions of the company began to change in 1995 when family elders, led by then-Chairman Shoichiro Toyoda, tapped Okuda to take over the company from 68-year-old Tatsuro Toyoda, who had been waylaid by a stroke. The company was widely thought to have lost its edge, and Okuda (a black belt in judo) was just the sort of hard-charger to help get it back.

In jobs ranging from accounting and purchasing to international and domestic sales, he was a nonstop manager who liked to test-drive every Toyota under development. He also could be impolitic. In 1995, Okuda called his Detroit rivals "stupid" for trying to import bulky cars ill suited to Japan's narrow side streets.

Toyota needed Okuda's in-your-face approach. Glacial decision-making and poor execution were resulting in major mistakes. Toyota stuck with conservatively styled sedans when everybody in the U.S. and Japan wanted the more daring, off-road stuff. It also botched some key product launches. It introduced the T100 truck in the U.S. with an underpowered engine, and a 1995 redesign of the Corolla for the Japanese market fell flat.

Okuda and his team started turning things around on the product front while embarking on one of the most aggressive overseas expansions in automotive history. Between 1995 and the end of 2009, Toyota roughly doubled, to 50, the number of overseas plants and manufacturing facilities in North America, Asia, and Europe in a bid to improve its market responsiveness and sidestep potential trade disputes about car exports from Japan. This coincided with a massive product rollout that penetrated new categories ranging from the boxy Scion xB to the one-ton Tundra pickup to the hybrid Prius compact. In the U.S., Toyota gained market share at "a kind of speed no other carmaker has ever experienced in the past," said Koji Endo, an analyst with Advanced Research Japan in Tokyo.

By the late 1990s the Corolla sedan and the 4Runner and RAV4 sport-utility offerings were all selling well, and plans were under way to invade Detroit's cash-cow minivan and large pickup truck categories. In the all-important North American market, Okuda spent big to double total vehicle capacity, to 1.2 million units, by 1998. To launch the Sienna minivan, he expanded capacity at Toyota's Georgetown (Ky.) plant, already the production base for its Camry and Avalon sedans.

Early in Okuda's tenure as president there was a lot of talk about grabbing a 10% share of the global auto market. By the time he moved up to the chairman's job in 1999 to make way for Cho, the goal was 15%. Cho was less flamboyant than Okuda and studied law at the prestigious University of Tokyo. Yet early in his career Cho became fascinated with the Toyota Production System and mastered its best practices. (He put that knowledge to use in 1988, supervising the launch of the Georgetown plant.) Cho often talked about the "criticality of speed" in product development cycles and the importance of responding to changes in the marketplace. Ohno's precepts were beginning to morph into something he might not have recognized.

By 2003 a lot of things were going right at Toyota. Profits were booming, and in November of that year it enjoyed a market capitalization of $110 billion—more than that of GM, Ford, and DaimlerChrysler combined. (Today, despite its troubles, Toyota is valued at $132 billion.) In the U.S. it had finally pieced together a strong lineup of high-margin SUVs, once the profit sanctuary of U.S. automakers, ranging from the $19,000 RAV4 to the $65,000 Lexus LX470. Meanwhile, the Prius was starting to take off, creating mass market interest in eco-friendly cars.

At the same time, Cho, Okuda, and other top executives were pushing ahead with a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century") that had been started in 1998. In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts to five from 34, which helped cut procurement costs by 40%. The change slashed the time needed for installation by 75%—to three seconds. "The pressure is on to cut costs at every stage," Takashi Araki, a project manager at parts maker and Toyota affiliate Aisin Seiki, told BusinessWeek at the time.

By mid-decade, when Watanabe, a trained economist, became president, Toyota had incredible numbers to share with Wall Street analysts. On the job as Toyota's chief executive for less than three months, Watanabe told New York's financial community at a Sept. 12, 2005, meeting in Manhattan that CCC21 had wrung out more than $10 billion in savings over six years. "Under CCC21 activities, which I led, Toyota realized cost reductions of more than 200 billion yen ($2.2 billion) a year on a consolidated basis," he said.

It wasn't enough. Next up was what he called an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. Toyota had managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months.

A credit bubble and soaring home prices in the U.S. had Americans buying Camrys and Lexus SUVs in droves. Toyota raked in $55 billion in operating income during its fiscal years running from 2006 to 2008. Shares traded in Tokyo (Toyota also has stock listed in New York and London) shot up 112% from mid-2005 to February of 2007.

Yet during these hyperspeed growth years there were signs of trouble. That's when Press, Toyota Motor's top U.S. executive, warned his bosses that quality was slipping and that regulators were stepping up scrutiny.

Reports of more serious problems started to get the attention of U.S. regulators far earlier in the decade. The National Highway Traffic Safety Administration opened eight investigations of unintended acceleration of Toyota vehicles from 2003 to 2010, according to Safety Research & Strategies, a Rehoboth (Mass.) group that gathers data from NHTSA and other sources for plaintiff's attorneys and consumers, though the carmaker's problems only became widely known to the public this year.

Toyota's fortunes, and that of the entire industry, took a nasty turn starting in late 2007 as the financial crisis hit and oil prices spiked to $145 per barrel in July of 2008—a combination that brought on the global recession that later pushed GM and Chrysler into bankruptcy. Last September, at a meeting with Toyota investors in Tokyo, Akio Toyoda, who succeeded Watanabe in June 2009, said an annual goal had been to boost global sales by as many as 700,000 vehicles a year, more than three times the previous increase, according to a former executive who attended the gathering. The accelerated production had outstripped the abilities of company engineers and led Toyota to outsource more development work to suppliers.

On Feb. 24 of this year, the grandson of company founder Kiichiro Toyoda said during testimony before a congressional committee: "I fear the pace at which we have grown may have been too quick....Priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before."

Toyoda and other top executives have vowed to fix the sudden-acceleration problems and other quality lapses that have surfaced in so many of its models. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which may reignite sales. Still, Toyoda and his team will be spending many months trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition.

FBI Raids Offices of Three Toyota Parts Suppliers

The Wall Street Journal

Three Japanese automotive parts suppliers, tightly tied to Toyota Motor Corp., were raided Tuesday by the Detroit office of the FBI over allegations of price-fixing.

Warrants were carried out on the Michigan offices of Yazaki North America in Canton, Denso International America Inc., in Southfield, and Tokai Rika, also known as Tram, in Plymouth, an FBI spokeswoman confirmed Wednesday.

"The antitrust division is investigating the possibility of anticompetitive cartel conduct of automotive electronic components suppliers," said Department of Justice spokeswoman Gina Talamona. "We are coordinating with the European Commission and other foreign competition authorities."

The department is looking at possible anticompetitive behavior of these companies, not at the parts themselves, a person familiar with the investigation said. Toyota has ownership stakes in Denso and Tokai Rika. There is also no connection between the investigation and Toyota's recall problems.

U.S.-based auto parts makers have for years cited frustration in attempting to win new contracts from Toyota when bidding against one of Toyota's "captive suppliers."

Denso confirmed it was inspected by the FBI and said the investigation was based on allegations of violations of antitrust laws.

"We are fully cooperating with the investigation," said a Denso spokeswoman, who added that the investigation wasn't linked to Toyota's recent recalls.

The two other companies couldn't immediately be reached for comment.

Toyota spokeswoman Cindy Knight said the company is still trying to determine why the FBI is investigating Denso, Yazaki and Tokai Rika.

"Toyota is aware that certain suppliers have been contacted by government officials, but we have limited information about the scope of the investigation," Ms. Knight said. "Toyota has not been contacted by authorities."

The raid comes as Toyota and federal automobile-safety regulators are appearing in Congress Wednesday to testify about problems of unintended acceleration in some Toyota vehicles.

Yazaki supplies several electronic components, while Denso makes a variety of parts including accelerator pedals that Toyota has used in its vehicles. Those pedals weren't involved in the recent recalls of Toyota vehicles based on complaints of unintended acceleration.

Tokai Rika makes a variety of safety products including seat belts, door mirrors, power windows and steering switches.