Rep. John Dingell (D-Mich.), a powerful ally of the U.S. auto industry, announced Wednesday that he will investigate Japanese auto maker Toyota on allegations that it skirted quotas on imported cars, coerced U.S. dealers and falsified sales and customer-satisfaction reports.
Torrance-based Toyota Motor Sales U.S.A. and Southeast Toyota Distributors Inc., a large Florida-based distributorship that is the focus of the charges, denied the allegations Wednesday.
A Toyota spokesman called it Japan-bashing, while officials at Southeast Toyota Distributors said the charges were manufactured by several disgruntled ex-dealers who owe the privately owned distributorship $4.4 million.
What Dingell described as “massive circumvention” of the import quotas would apparently not be illegal because the quotas are technically voluntary and were imposed by the Japanese government on its own companies. However, such behavior could poison the U.S. political climate for Japanese auto makers.
The charges have been aired in about 12 lawsuits filed during the past year against wealthy dealer James Moran, owner of Southeast Toyota Distributors of Pompano Beach, Fla. The suits accuse Moran’s company and, in some cases, Toyota Motor Sales, of a litany of illegal or unethical practices.
Dingell, chairman of the House Committee on Energy and Commerce, said his information came from attorneys who filed the lawsuits on behalf of various ex-Toyota dealers.
“If these allegations are correct, it means the import quotas are a sham, that dealers were exploited, that perjury was committed, that documents were falsified or destroyed,” Dingell told a Washington news conference, where he handed out court papers from the lawsuits.
“The ultimate question is whether this cost America jobs,” Dingell said. “I intend to pursue it. There is a high probability there will be hearings.”
Dingell’s investigation comes amid escalating trade tensions and deteriorating relations between the United States and Japan. Much of the friction stems from the success of Japanese-based auto firms and the damage they are doing to the Big Three U.S. firms and their workers.
“There are interests in Washington who will seize any opportunity to bash Japan,” said James Olson, Toyota’s vice president for external affairs. “The issue should be settled in the courts, not in Washington. We are an intensely law-abiding company.”
Detroit newspapers said the information disseminated by Dingell was prepared by attorneys for former Toyota dealer Guy Beatty, one of the plaintiffs against Moran. Beatty blames Southeast Toyota for putting him out of business in Atlanta and Hendersonville, N.C. Beatty and his attorneys couldn’t be reached for comment.
Moran, 73, whose net worth is estimated by Forbes magazine at $700 million, is a longtime car dealer who also owns one of the two independent distributorships that supply Toyota dealers in 10 Southern states. Toyota Motor Sales directly supplies the rest of the country.
Moran pleaded guilty to income-tax evasion in the mid-1980s, an aide confirmed.
A Moran spokesman said the lawsuits against him and Toyota were filed in response to his suits against several “disgruntled” ex-dealers to collect $4.4 million they owed Southeast Toyota.
Dingell cited sworn testimony and other documentation that:
- Toyota systematically inflated the number of cars it sold, using the false information to win higher allocations of cars from Japan as well as to bolster advertising campaigns. The company even created fictitious buyers of cars, and when routine “customer satisfaction” surveys were mailed to such “buyers,” dealers themselves would fill them out, presumably in glowing terms.
* In the mid-1980s, when demand for Japanese cars exceeded the number that could be imported under the Japanese government’s “voluntary restraint agreement” negotiated by the White House, Toyota shipped tens of thousands of cars to Guam and Puerto Rico, knowing that they would make their way into the United States.
* Toyota and its distributors ordered the destruction of evidence and encouraged perjury in court cases to cover up such wrongdoing.
Toyota’s Olson said that a “gray market” in Toyotas developed in the mid-1980s and that brokers acting independently bought the cars, shipped them through Puerto Rico and Guam and peddled them to car-short U.S. dealers. The company tried unsuccessfully to stop the practice, he said.
Times staff writer Robert Rosenblatt in Washington contributed to this story.