Toyota Competitors, Ask Not For Whom the Bell Tolls

Last Updated Feb 23, 2010 12:24 PM EST

Toyota's competitors may be gleeful Toyota (TM) is taking its turn in the Congressional hot seat this week, but their joy should be tempered: An aroused U.S. Congress is likely to react to Toyota's problems by imposing onerous new requirements on the entire industry.

That's what happened following the Ford-Firestone Tire debacle of 2000, where Ford (F) and Firestone (BRDCY.PK) blamed each other for rollover accidents involving the Ford Explorer SUV.

The upshot was the Transportation Recall Enhancement, Accountability, and Documentation Act (TREAD) Act, which required all cars sold in the United States to have tire-pressure monitoring devices, like the one at right. The TREAD Act also launched a new and much tougher requirement for car companies to regularly report to the government problems that consumers report to the car companies.

"What did Ford and Firestone know, and when did they know it?" emerged as one of the central questions. The TREAD Act was designed in part to prevent a recurrence.

A decade later, though, Congress is asking, "What did Toyota know and when did they know it?" The National Highway Traffic Safety Administration, is likely to be on the hot seat, too.

Don't be surprised if a few years from now, all cars are required to have an "unintended acceleration" alarm, plus maybe a system aimed at arresting unintended acceleration, plus a "Super TREAD Act" reporting requirement. Toyota cars are not the only ones to have unintended acceleration problems, and it will not be Toyota alone who bears the brunt of the backlash.

Graphic: Freescale Semiconductor