We've had runaway Lexuses and horrible accidents. We've had Priuses that wouldn't stop and Corollas that wouldn't steer. We've had smoking guns, and we might have more.

And we've had lots and lots of that special flavor of executive hubris that industry-watchers have come to associate with Toyota (NYSE: TM).

Now, car shoppers who would have been slam-dunk Toyota buyers just a few months ago are making other choices. A mid-February snapshot of the U.S. auto market by researchers at TrueCar.com showed a steep drop in Toyota's market share compared to January, with the bulk of those lost sales going to archrival Honda (NYSE: HMC) and surging Ford (NYSE: F).

Even Consumer Reports, arguably the biggest single external force behind Toyota's U.S. success in recent years, could be turning its back: The magazine's annual Top Picks list, which has routinely featured four or five Toyota products in past years, had just two for 2010. Recommendations on all of the models affected by the unintended-acceleration problems have been "suspended" until the issues are resolved.

For years, Toyota has been considered the very paragon of reliability, the maker of cars and trucks that just worked. They weren't necessarily exciting or fun to drive, but they got good mileage, did their jobs without fuss, and lasted a long time. That was an appealing formula, and it took Toyota -- briefly, at least -- to the very pinnacle of its industry.

Then everything started to fall apart. What happened? And can Toyota turn it around?

What really happened
Akio Toyoda, Toyota's CEO and the grandson of its founder, spoke to the House Oversight Committee on Wednesday. He occasionally stumbled; how can he be "absolutely certain" that the acceleration problem isn't an electronics issue, when his own engineers haven't figured it out yet? But on the whole, I think he took exactly the right tone -- emotional, serious, and contrite:

Toyota's priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused...We pursued growth over the speed at which we were able to develop our people and our organization... You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers.

As I see it, that's the whole thing in a nutshell. The company grew and grew, and one day, it got to the point where it could see the top of the mountain -- the pinnacle long occupied by General Motors, then the world's largest-selling car company. GM had been stumbling for decades, and Toyota saw an opportunity.

So the company went for it. Toyota threw massive resources into marketing, and it seemed to build new factories and launch new models as quickly as possible. The company wanted to get those sales figures up just as quickly as possible, it seemed, before GM -- which in recent years has been slowly, slowly turning itself around -- could recover its footing and start to surge ahead.

But all that emphasis on growth came with a price. Long-standing, meticulously quality-obsessed processes -- The Toyota Way, it had been dubbed -- got compressed. Corners got cut, as we're now learning. The products -- and customers -- suffered.

And until yesterday, the company's executives reacted just about as badly as a company could react, first with denials, and then with arrogance. Longtime customers started to explore alternatives, and found that they were pretty good. Sales fell. Congress got involved.

And here we are.

The only way out
Toyota isn't the first company to suffer the consequences of overexpansion. Business history brims with examples: Starbucks (Nasdaq: SBUX), Gap (NYSE: GPS), Bank of America (NYSE: BAC) ... the list goes on and on. But Toyota's problems can't be solved by closing a few stores and enduring several quarters' worth of bad numbers. We are well beyond the retrench-and-move-on stage.

So what can Toyota do? And how will this mess end? I can see events going one of two ways:

  • The steamroller returns. Toyota uses its CEO's performance as an effective PR springboard, the vehicle problems get convincingly addressed, resonant apologies are made, a few executive heads roll, and the company comes out swinging with big incentives and a massive advertising campaign. Lawsuits continue for a while, but the media turns its attention elsewhere. Within a few months, Toyota reclaims its market share, and the fuss is largely forgotten.
  • The train wreck continues. Toyota's PR efforts continue to stumble, more revelations come to light, criminal investigations gain steam ... and the company comes out swinging with big incentives and a massive advertising campaign, which falls flat. Toyota falls to perennial also-ran status in the U.S. market and loses immense prestige at home.

As you can see, I think the incentives and marketing blitz are coming either way. Well-wired Detroit pundit Peter De Lorenzo hinted on Wednesday that Toyota is preparing a $2 billion effort for this spring. I will be surprised if he's wrong -- that is exactly how I would expect Toyota to respond.

Can Toyota do it?
But will such a plan work? Toyoda's tone was a good model for the attitude his company needs to have going forward, but success will depend on how events play out from here. It's long past time for the company to seize the initiative and -- to put it in PR terms -- start driving this story instead of reacting (badly) to it. Toyota's started to do that. But there are still major pitfalls ahead.

As for Toyota stock, if the company manages to pull off the steamroller thing, there might be a nice bounce to ride. However, that will depend on what the true cause of the sudden acceleration problems turns out to be. If it's a problem with the cars' electronics, as some have theorized, that could be very expensive to fix -- easily hundreds of dollars per vehicle. Multiply by millions of affected vehicles, and that's enough to be a sizeable drag on earnings, which could mute any stock price rebound.

Of the two possibilities I outlined above, I'd say that success is a slightly more likely outcome as I write this on Thursday morning -- more likely than it was a day ago, thanks to Toyoda's as-good-as-could-be-expected performance. But personally, I'm still not anywhere near confident enough of that outcome to recommend a buy. Plenty of shoes could still drop.

Read more about Toyota's ongoing crisis:

Toyota may not be a value-priced steal just yet, but there are other great values out there now.

Fool contributor John Rosevear owns shares of Ford. Ford and Starbucks are Motley Fool Stock Advisor picks. Try any of our Foolish newsletter services free for 30 days. The Motley Fool's disclosure policy never steers you wrong.