Image: Toyota Motor Corp President Toyoda soeaks before the Prius V is revealed during the North American International Auto show in Detroit
Mark Blinch  /  Reuters
Toyota’s President Akio Toyoda speaks before the Prius V is revealed during the media event for the North American International Auto Show in Detroit earlier this month.
Image: Paul A. Eisenstein, msnbc.com contributor
By
msnbc.com contributor
updated 1/19/2011 1:24:25 PM ET 2011-01-19T18:24:25

Safety sells — or so Toyota hopes. The carmaker will invest $50 million in what it has dubbed the Collaborative Safety Research Center, in Ann Arbor, Mich. — a facility the company says will work to improve vehicle design and address the much-discussed issue of driver distraction.

The timing of the announcement is less than coincidental. The Japanese giant, the world’s largest car manufacturer, is desperately struggling to reverse a series of setbacks related to the safety scandal that led it to recall more than 11 million vehicles in 2010, most of them in the United States. That has not only led to record fines but also a slump in sales that last year saw Toyota slip behind rival Ford in the U.S.for the first time in several years.

The question is whether “the worst is over,” as one auto analyst suggests, or whether Toyota runs into more problems in 2011, a year in which the courts will be asked to rule on a flood of lawsuits arising from allegedly defective Toyota products.

“Toyota did receive damage” from last year’s safety scandal, Akio Toyoda, the carmaker’s CEO and grandson of its founder, acknowledged this month during his first visit to the North American International Auto Show in Detroit. At the event, the 54-year-old executive had hoped to focus on Toyota’s new Prius brand-within-a-brand — a new “family” of vehicles sharing the name of the world’s best-selling hybrid — but found he couldn’t dodge the safety issue as he met with the media.

The past year has been a tough one for Toyoda. Last winter he was summoned to Washington for a Capitol Hill hearing shortly after the carmaker announced a second recall of vehicles for so-called unintended acceleration.

Toyoda promised Congress the company would redouble efforts to bring quality under control, and since then the maker has taken a number of steps, including the appointment of a North American safety “czar” and now the creation of the new Michigan safety research center.

“The worst is over” for Toyota, suggested Jim Hall, senior analyst with the Detroit automotive consulting firm 2953 Analytics. That is, at least, “until something else comes up,” he added.

Still, from the point of view of the public, it’s hard to see what’s changed at Toyota.

Just a month ago the automaker announced the recall of nearly 100,000 of its new Sienna minivans. Days later, it agreed to pay a record $32.4 million fine levied by the National Highway Traffic Safety Administration — the largest ever in the U.S. — over investigations into its response to a pair of vehicle recalls.

And before the year was over came word that Toyota had paid a $10 million to settle a wrongful death suit brought by the heirs of a California state trooper and three members of his family who died in the fiery crash of a runaway Lexus.

It’s no surprise that the automaker’s once-sterling image has taken a beating. In a striking letdown for Toyota, the carmaker’s public perception took a severe dive in Consumer Reports' latest Car Brand Perception Survey. The influential magazine found Toyota’s score slipped by 46 points to 147, only three better than Ford, which rose 35 points to a score of 144. The brands, the magazine reported, are in a “statistical dead heat,” but momentum favors the domestic carmaker.

What that means might be read through U.S. vehicle sales numbers for the final quarter of 2010. Toyota was the only major automaker to suffer a decline as industry sales were soaring to their highest levels since the start of the recession.

Part of the problem for Toyota is that the carmaker must now “overreact,” notes analyst Hall. In years past, a number of the more recent vehicle recalls, he believes, might have been handled as less embarrassing "technical service bulletins." But these days Toyota officials don’t want to risk being accused of soft-pedaling safety problems.

That said, Jim Lentz, Toyota's top American executive, insists things are looking up for the carmaker. During an industry conference this month, Lentz said that while internal consumer research showed the carmaker took a beating last year, Toyota has regained ground, “so our [scores] are leading in many categories” once again.

The head of Toyota’s U.S. sales subsidiary has noted that complaints about unintended acceleration “have fallen off the map,” reflecting the company’s contention that the vast majority of problems were the result of driver error, rather than product defects.

Story: Auto industry rebound trickling down to workers

That position could get a boost this year when a NHTSA-sponsored study is expected to reach a similar conclusion. But the wild card is what happens in court, where hundreds of lawsuits against Toyota are being argued. The decision to pay off the family of the California trooper is likely to only embolden plaintiffs to push their cases — and use the media to try to force a settlement with the automaker.

Toyota officials also insist their sales slump isn’t quite as bad as it seems. They note that a number of key products have reached the end of their lifecycle, including the midsize Camry, which saw sales decline 10 percent last month, and the compact Corolla, which saw sales fall 35 percent. Both vehicles are facing stiff new competition, especially the Corolla, with the launch of well-reviewed new compacts from Ford, Chrysler, Chevrolet, Hyundai and Toyota’s traditional rival, Honda.

So the coming months will remain difficult for Toyota. The carmaker has a dearth of new products to bring to market for the rest of the 2011 model year. And at a time when it is struggling to rebuild both its image and its momentum, that will only complicate matters.

But don’t write the company off, warns analyst Hall. He believes “they’re going to fight like the devil” to turn things around. And if past is prologue, you can bet on Toyota’s determination to maintain its leadership no matter how tough the competition gets.

© 2013 msnbc.com.  Reprints

Photos: Production models

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  1. Volvo’s C30 electric crash test display is shown during the media preview of the 2011 North American International Auto Show at the Cobo Arena in Detroit. Volvo is hoping to burnish its reputation for car safety at the event, which features over 30 debuts of vehicles made by automakers from around the world. The show is open to the public from January 15 to 23. (Paul Sancya / AP) Back to slideshow navigation
  2. A model poses in front of an Audi A7 during the media previewfor the show. (Mark Blinch / Reuters) Back to slideshow navigation
  3. The 2011 Jeep Compass is unveiled. Chrysler Jeep is celebrating its 70th year in 2011. (Mark Blinch / Reuters) Back to slideshow navigation
  4. A Chevrolet Corvette, right, and a 2011 Corvette ZR1 sit on display. (Kamil Krzaczynski / EPA) Back to slideshow navigation
  5. The 2011 Ford Explorer, winner of the 2011 North American Truck of the Year award, on display at the 2011 North American International Auto Show. (Rebecca Cook / Reuters) Back to slideshow navigation
  6. Volvo’s Electric C30 car is powered by a lithium-ion battery and can be charged from a household power socket. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  7. Venturi’s high-voltage buggy concept includes a 300-horsepower engine. (Paul Sancya / AP) Back to slideshow navigation
  8. The new Dodge Ram 3500 truck is equipped with a powerful 350-horsepower engine. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  9. The 2011 Camaro RS convertible. (Rebecca Cook / Reuters) Back to slideshow navigation
  10. A model poses next to a Dodge Charger Hemi. (Tannen Maury / EPA) Back to slideshow navigation
  11. The 2011 Dodge Challenger SRT8 392. (Rebecca Cook / Reuters) Back to slideshow navigation
  12. The new Chevrolet Sonic small car will go into production later this year for the 2012 model year. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  13. Porsche returns to the 2011 North American International Auto Show with the Cayman R sports car. (Paul Sancya / AP) Back to slideshow navigation
  14. The new Bentley Continental GT will launch from standstill to 60mph in just 4.6 seconds and has a top speed of 197 mph. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  15. Toyota Executive Bob Carter introduces the Prius V midsize hybrid-electric vehicle, left, and the Prius C concept, right. (Paul Sancya / AP) Back to slideshow navigation
  16. Ford's Mark Fields introduces the Ford C-MAX electric vehicle. (Tannen Maury / EPA) Back to slideshow navigation
  17. Dr. Martin Winterkorn, Chairman of Volkswagen Management Group, introduces the new Volkswagen Passat. (Bill Pugliano / Getty Images) Back to slideshow navigation
  18. The Porsche 918 RSR sports car Has a V8 engine that delivers 563 horsepower and can jump to 767 horsepower with the push of a button. (Friso Gentsch / EPA) Back to slideshow navigation
  19. Audi introduces the new A6 Hybrid. (Scott Olson / Getty Images) Back to slideshow navigation
  20. A model poses next to the Ferrari 458 Italia. (Kamil Krzaczynski / EPA) Back to slideshow navigation
  21. The BMW 650i convertible is unveiled. (Mark Blinch / Reuters) Back to slideshow navigation
  22. The Mercedes Benz SLS AMG E-Cell has four electric motors (one for each wheel) and can accelerate to 60 mph in 4 seconds. (Paul Sancya / AP) Back to slideshow navigation
  23. Ford’s President and CEO Alan Mulally presents the Ford Focus ST. (Tannen Maury / EPA) Back to slideshow navigation
  24. Ford’s Executive Chairman Bill Ford introduces Ford’s electric lineup: (Left to right) the C-MAX electric car, the Transit Connect electric truck, the Focus electric car and the C-MAX hybrid. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  25. The interior of the Buick Verano, GM’s first upscale compact car for a luxury brand, is shown. The Verano is GM’s only new model to debut at the event. (Geoff Robins / AFP - Getty Images) Back to slideshow navigation
  26. The Chrysler 300, once a hot-selling sedan, is redesigned with a sleeker look. (Tony Ding / AP) Back to slideshow navigation
  27. Tom Stephens, vice chairman of General Motors, holds up the 2011 North American International Auto Show Car of the Year trophy, which this year was awarded to the Chevrolet Volt. (Paul Sancya / AP) Back to slideshow navigation
  28. Two of the new Mercedes Benz C Class vehicles are shown at a Mercedes Benz event the night before the official start of the media preview event. (Bill Pugliano / Getty Images) Back to slideshow navigation
  29. Michael Price cleans a Cadillac CTS-V coupe race car on the show floor. (Rebecca Cook / Reuters) Back to slideshow navigation
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    Above: Slideshow (29) On the catwalk in Detroit - Production models
  2. Image: GMC Sierra All Terrain HD Concept
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    Slideshow (12) On the catwalk in Detroit - Concept cars

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