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Toyota Hearings Raise Fears of US Clampdown

Source: Financial Times

Posted on 22 Feb 2010

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Fears are rife in the automotive industry that US Congressional hearings into Toyota's quality problems, starting this week, could result in a potentially costly tightening of safety standards for all automakers in North America. Some lobbyists have nicknamed the hearings "Son of Tread" and "Tread Two", a reference to the Transportation Recall Enhancement Accountability and Documentation (Tread) Act that was rushed on to the statute book in 2000 after similar probes into fatal accidents involving Firestone tires fitted to Ford Explorer sport-utility vehicles.

The House energy and commerce committee is due to hold a hearing on Tuesday into the recall of millions of Toyota vehicles with potentially defective accelerators and brakes. The oversight committee will hold a similar hearing on Wednesday, at which Akio Toyoda, Toyota’s chief executive, will be among the witnesses. The Senate commerce committee has scheduled a Toyota hearing for March 2.

“We’re concerned that this doesn’t blow out of proportion”, one auto industry lobbyist said. Another expressed concern that the committees would compete to come up with the toughest new rules.

The 2000 Tread Act ushered in an “early warning” requirement for automakers that enables the National Highway Traffic Safety Administration (NHTSA) to collect data and warn consumers of potential vehicle defects. The law also holds automakers criminally liable if they intentionally violate the reporting requirements and a safety defect causes death or serious injury.

NHTSA is currently conducting four formal investigations into defects in Toyota vehicles. Both the agency and the automaker are likely to face sharp questioning at this week’s hearings about when they became aware of the problems, and when they acted on them.

Several people familiar with the committees’ work described the outcome as unpredictable. The hearings could result in proposals to raise NHTSA’s budget, tighten reporting requirements or impose tougher safety standards.

An official at one big automaker expressed confidence that, unlike the Ford-Firestone hearings 10 years ago, the industry would have adequate opportunity to help shape proposals for tighter safety standards.

He noted that the government had consulted widely on several regulatory issues over the past year, such as a new national fuel-economy standard.