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February 26, 2010

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Toyota faces tough road to redemption

TOYOTA Motor Corp's president apologized to United States lawmakers and ended the day in tears, marking a potential climax to his company's safety crisis but leaving it with a long road to rebuild its reputation.

Akio Toyoda, peppered with questions about its massive series of recalls, told US lawmakers that he was "deeply sorry" for accidents and injuries involving its cars and acknowledged it had lost its way in its pursuit of growth.

Investors, who have knocked about US$30 billion off its market value in the past month, appeared to view Toyoda's hearing as a small step forward in what could be a difficult task of recovering the trust of consumers.

"I think Toyoda did a good job, and its stock price shows the market shares the same view," said Kazutaka Oshima, president of Rakuten Investment Management in Tokyo.

"He should have come forward earlier, but his sincere attitude was understood by the audience. I would guess the flow of negative news on Toyota has reached a peak."

Toyota shares ended down 0.2 percent in Tokyo yesterday, failing to match the 3.9 percent rise in US-traded shares, but outperforming a fall in rivals Honda Motor and Nissan Motor, and the broader Tokyo market.

Cheered by Toyota plant workers and dealers at an event organized by the auto maker on Wednesday evening in Washington, Toyoda broke into tears under a giant display bearing the name of the company that his legendary grandfather founded.

"I believe that Toyota has always worked for the benefit of the United States," Toyoda said. "I tried to convey that message from the heart, but whether it was broadly understood or not, I don't know."

He also offered a sober assessment of the challenges still ahead: "We at Toyota are at a crossroad. We need to rethink everything about our operation."

Toyoda's appearance in Washington marked a dramatic peak in a safety crisis that broke a month ago with a series of recalls over unintended acceleration and braking problems that now include more than 8.5 million vehicles globally.

Politicians in Japan continued to express worries about the potential fallout from the crisis. Toyota, with a market value of about US$125 billion, is at the heart of a massive supplier network that is vital to the economy's health.

"It was good that the Toyota president himself appeared before the panel and testified," Prime Minister Yukio Hatoyama said in Tokyo yesterday.

"He spoke of working to make improvements. This is a matter involving cars - that affects people's lives so the important thing is to pay close attention to safety and to fulfil its aim to make improvements where they are needed."


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