Does the Government Pose a Bigger Threat to Toyota Than its Sticky Pedals?
Nicolas Loris /
Toyota’s bad press has been for its sticky pedal incident certainly isn’t surprising, but is all the negative attention warranted? When asked about the Toyota recalls, Transportation Secretary Ray LaHood responded by saying, “My advice to anyone who owns one of these vehicles is stop driving it, and take it to the Toyota dealership because they believe they have the fix for it” and that “we’re not finished with Toyota.” Hood later toned down his remarks but immediately after his “stop driving” comment, Toyota’s stocks plummeted. Even after recovering some, the stock closed down 6% that day.
Much like Vice President Biden’s comments not to use public transportation or ride an airplane because of swine flu, LaHood’s comments were a bit over the top and have caused some to question the government’s motive. We don’t speculate motives at The Heritage Foundation, but it’s easy to understand why a government that now owns a major stake in General Motors would want to put continuous bad press on a rival automaker. In fact, GM’s sales were up 14 percent in January while Toyota’s fell 16 percent. Ford, which refused government bailout cash, had sales figures increase 25 percent. This could simply be a market response to a bad product; profits and losses are a telling sign in the economy, but the government shouldn’t be holding Toyota’s head under the water. Toyota handled the problem quickly by recognizing the problem as well as recalling and guaranteeing a fix for all 2.3 million potentially affected owners.