INTRODUCTION
In 2005, Lupe Lee bought a new Toyota Camry from a local
Sunnyvale, California, Toyota dealership, donating her immaculate Camry bought
in 1990 to a local charity. Going from
an older Camry model to a newer one, it was obvious that Lupe not only liked
Camry cars, but she liked Toyota and its business model. However, this was all about to change on
September 9, 2011.
On this day, Lupe and her daughter were on their way to
Berkeley for a niece’s wedding. They
planned to stop in Burlingame to pick up Lupe’s sister, Rose. They arrived at
the sister’s apartment early, so Lupe and her daughter went inside.
After visiting in the apartment for a time, the three of
them went out to get into the Camry to continue on to Berkeley. Lupe would have to make a U-turn to head back
towards the freeway. Instead, she
decided to maneuver into a nearby driveway to turn around. This is when things began to go horribly
wrong; as they started up the driveway, the car began accelerating. Rose exclaimed
“Lupe! What are you doing!? Why are you
going so fast!? Push on the brake!” Lupe
had no control of the car; she was terrified.
She tried desperately to press the brake, but nothing happened. She
quickly realized that the car mat had been lodged under the gas pedal forcing
the car to accelerate and making it impossible for her to slow down.
Her Camry crashed through the garage doors at the end of the
drive, and Lupe had to think quickly about what to do next (reference Exhibit A
for the crash visual). She knew that if
she kept going straight, she could go through the wall into someone’s
apartment, which had the potential of resulting in a serious or fatal injury to
the occupants. Seeing her sister’s
large and sturdy Toyota Land Cruiser parked nearby, Lupe decided the only way
to stop her car was to smash into it.
She hit the Land Cruiser, pulled on the emergency break, took the keys
out of the ignition, and they were finally at rest.
They got out of the wrecked car trembling and confused as to
what had happened. Lupe called the fire
department to inspect the garage, and a tow truck company to deal with the
car. While they waited for the fire
department to arrive, Rose mentioned to Lupe that she had heard something on
the news about Toyota’s cars experiencing unintended acceleration
problems. Lupe replied, “Maybe this is
the same thing, I don’t know. But all I
do know is that I am never going to drive this car or another Toyota car ever
again. My old Toyota never had any problems; I thought that they were known for
the quality of their cars. But, if more
people with Toyotas are having problems similar to what just happened to us, I
wonder what has gone wrong with Toyota and why they didn’t let me know about
the danger.”[1]
COMPANY BACKGROUND
Lupe was not alone in her perception of the quality of
Toyota cars. The automaker had become the largest automaker in the world based
on that reputation. In fact, West Virginia Senator John D. Rockefeller IV said
he had “worked very hard to bring a Toyota engine and transmission plant to
Buffalo, West Virginia, because I knew Toyota was a company built on the
philosophy of quality first.”[2] However, after Lupe’s story and many similar
incidents across the country, it became clear that, as Rockefeller noted, “Somewhere
along the way, public safety took a back seat and corporate profits drove the
company’s decisions.”[3]
In the year 2000, Toyota recalled 8,379 vehicles, which accounted for just 0.034% of
all cars recalled that year.[4] In 2010, a decade later, 4,872,583 Toyota
vehicles were recalled – more than any other auto manufacturer that year. This
made Toyota responsible for 29.7% of all vehicles recalled in 2010.[5]
TOYOTA’S INTERNAL PROBLEMS
According to Toyota’s own president, Akio
Toyoda, the company’s traditional priorities – safety first, quality second,
and volume third – became confused. “We [Toyota] pursued growth over the speed
at which we were able to develop our people and our organization,” which
“resulted in the safety issues.”[6] Internal documents from Toyota seem to back
up the president’s statement. In a document from Toyota’s Washington office,
the company’s stated goals were to “Promote
Toyota’s Agenda,” “Protect [Toyota’s]
interests,” and “Maintain receptive environment to grow [Toyota’s] business.”[7][8] Later in the same document, Toyota’s Safety
Group called the negotiated recall of the Camry/ES a “Win for Toyota” because it
saved the company more than $100 million.8
This shift in Toyota’s priorities away from quality to
quantity reveals a problem with its internal decision-making process. The
decline in quality of Toyota vehicles resulted in safety issues that affected
North American consumers.
All decisions regarding recalls, however, were made in
Japan. Not even James Lentz, President and COO of Toyota Motor Sales, North
America, had the authority to make decisions related to recalls.[9][10] This corporate structure prompted US Secretary
of Transportation Ray LaHood to note that “good professional, capable people in
North America [are] running the company without the kind of opportunity for
decision making.”[11][12] LaHood was also worried that for the North American
executives, “their issues may not have always been communicated or heard in Japan.”[13][14]
In 2006, the disconnect between the North American and
Japanese branches of the company was highlighted by Jim Press, then the
president of Toyota Motors North America, in a slideshow. In the presentation,
he gave evidence of the brand’s slipping reputation in the form of customer loyalty
graphs and excerpts from such media outlets such as the Detroit News and the Associated
Press. He followed
with a plea for more open communication between Toyota Motor
Corporation and Toyota Motors North America, noting that Toyota
Motors North America’s
“regulatory and public affairs leaders need
to know the current status of TMC’s countermeasures, so [Toyota Motors North
America] can develop appropriate messages and protect Toyota’s reputation.”[15][16]
The authority that the Japanese office had over the American
office and the lack of communication between the two was also mirrored in
Toyota’s dealing with the National Highway Traffic Safety Administration (NHTSA).
LaHood and the NHTSA met several times with – as he described them – “very good professional, capable people” at
Toyota Motors North America.[17][18] He believed, though, that the company
responded in a timely and effective way only after his visit to Japan to talk
to Toyota Motor Corporation President Akio Toyoda.[19]
Toyota’s slow reaction may have stemmed from cultural
differences between Japan and the US.
In Japan, the decision-making process is typically longer
than in the United States, because
Japanese companies like to reach a consensus for action.15
In Japan, taking the time to reach a consensus before action shows humbleness
and modesty. In America and the West more generally, on the other hand, this lack
of time sensitivity may be interpreted as a sign of apathy and indecisiveness.
In Japan, companies also have the luxury of operating in a society in which “consumer
activism is undeveloped and lawsuits uncommon.” 16 They are therefore sometimes unprepared for
and unfamiliar with having to respond quickly to public pressure.
TOYOTA AND THE NHTSA
The lack of productive communication within the Toyota
Corporation complicated and extending its dealings with United States
government and the NHTSA. The NHTSA had opened eight separate investigations
into sudden unintended acceleration since the year 2003.17 One of these investigations (labeled PE04021
by the NHTSA) focused on Lexus vehicles specifically. During this investigation, Toyota responded
by challenging the definition of sudden unintended acceleration. The company
argued that vehicle surges should only include events less than a wide-open
throttle event.
This was in an attempt to eliminate the two types of
incidents that Toyota and Lexus owners were complaining about most: surges that
occurred when the brake was pressed or when the vehicle accelerated to high
speeds.18
In March 2007, investigations were initiated into the role
of floor mats in Toyota and Lexus sudden unintended acceleration cases. The investigation focused on the use of
all-weather floor mats that could slip and get caught under the accelerator
pedal of these vehicles. In response to
this investigation, Toyota told the NHTSA it had warned drivers not to stack
these carpets on top of the original carpets in the vehicles. The NHTSA instead continued the investigation
until Toyota initiated a limited floor-mat recall months later.19 Toyota’s messages appeared to be an effort to
halt the investigation instead of admitting a problem existed.
In April 2009, Jeffrey Pepski
of Minnesota submitted a petition to the NHTSA to re-open investigations into
the floor mats of Lexus ES350 vehicles when his vehicle experienced sudden
17 Kane, Sean, Ellen Liberman,
Tony DiViesti, and Felix Click. Toyota
Sudden Unintended Acceleration, p. 14, Rep.
Safety Research and
Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
|
18 Kane, Sean, Ellen Liberman, Tony DiViesti,
and Felix Click.
Safety Research and Strategies Inc., 5 Feb.
2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
|
, p. 20,
Rep.
|
|
19 Kane, Sean, Ellen
Liberman, Tony DiViesti, and Felix Click.
|
, p. 22.
Rep.
|
Safety Research and
Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
unintended acceleration on the freeway, despite having
standard carpet mats rather than the allweather ones.
In May, Toyota interceded and attempted to kill the defect
petition by responding point by point to the allegations in the report.20 Three months after these attempts, the death
of Mark Saylor and his family occurred in San Diego in their ES350. Following this incident, “…Toyota began sending
letters to owners notifying them of an unspecified upcoming recall to fix the
unintended acceleration issue. In the letters Toyota stated no defect existed.
Soon thereafter, the NHTSA publicly rebuked Toyota, calling the company’s message
to the public “inaccurate and misleading.”21
Toyota itself experienced an incident of unintended
acceleration in April 2003 when a trim panel caught the accelerator pedal of a
Sienna undergoing dynamometer testing.
Toyota’s response to the NHTSA was that it had reviewed its
manufacturing processes and had concluded that this was an isolated incident
and did not necessitate further investigation.
Despite this message, Toyota changed the design of the trim panels in
June of the same year.22
Toyota did not want to admit a problem existed and instead fixed it
without notifying the NHTSA.
Toyota also attempted to shut down petitions to the NHTSA by
arguing that increased media attention about the sudden unintended acceleration
cases was generating unwarranted consumer concern and complaints. In response to petitions against the Toyota
Tacoma pickup, the company claimed that the petitioners’ arguments that the
truck was more dangerous than other vehicles were not valid because those vehicles
had not received the same media attention.23
In most cases of sudden unintended acceleration, the driver
attempted to press the brake pedal to slow the car. In an engineering analysis carried out by the
NHTSA, it was found that this action actually rendered the brakes useless. This finding went against statements made by
Toyota in 2005 that said the brakes would overcome any throttle
malfunction. Toyota did not move to
implement a brake-to-idle system that would overcome this problem until November
2009, when it suffered serious negative feedback.24
20 Kane, Sean, Ellen Liberman,
Tony DiViesti, and Felix Click. Toyota
Sudden Unintended Acceleration, p. 22, Rep.
Safety Research and
Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
21 Victor L. Heller, John R.
Darling, (2012) "Anatomy of crisis management: lessons from the infamous
Toyota
Case", p. 159. European Business Review, Vol. 24 Iss: 2,
pp.151 - 168
22 Kane, Sean, Ellen Liberman,
Tony DiViesti, and Felix Click. Toyota
Sudden Unintended Acceleration, p. 36-37.
Rep. Safety Research and
Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012. <http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
|
23 Kane, Sean, Ellen Liberman, Tony DiViesti,
and Felix Click.
Rep. Safety Research and Strategies Inc., 5
Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
|
, p. 37.
|
|
24 Kane, Sean, Ellen
Liberman, Tony DiViesti, and Felix Click.
|
, p. 38.
Rep.
|
Safety Research and
Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
During the Senate Commerce Committee hearing March 2, 2010,
Senator John D. Rockefeller IV pointed out that Transportation Secretary Ray
LaHood, the head of the department that oversees the National Highway Traffic
Safety Administration, had testified that Toyota was “safety deaf and didn’t
respond to [his] concerns until [he] personally called Mr. Toyoda in Japan.”[20][21]
PUBLIC RELATIONS
Toyota was afraid of experiencing the same outrage from its
customers that it had experienced from the government. Its good reputation had
been garnered from excellent customer service and top-of-the-line workmanship
resulting in unrivaled reliability. So,
in an attempt to protect itself and avoid damaging its pristine reputation,
Toyota needed to determine whether it should admit fault to customers or try to solve the
problem and keep them in the dark.
Toyota’s external communication with its
customers was questionable regarding the sudden accelerations in vehicles. It issued a statement saying that, “Toyota
does not believe that uncontrollable acceleration can occur without the driver
applying the accelerator pedal.”[22] In further attempts to discourage any belief
that Toyota was at fault, the company issued another statement regarding the
allegations that the floor mat was the culprit, saying, “No defect exists in vehicles
in which the driver’s floor mat is compatible with the vehicle and properly secured.”[23]
Finally, Toyota relented and took a minimal amount of
responsibility for the problem. First,
it addressed customers in a letter, explaining that the NHTSA conducted a very
thorough inspection and it only could conclude that the acceleration problems
were attributable to improper installation of floor mats.28 This statement faced resistance very quickly
when numerous Toyota owners stepped forward complaining that they too
experienced sudden unintended acceleration, even after they took the floor mats
out of their vehicles.29
|
28 Kane, Sean, Ellen Liberman, Tony DiViesti,
and Felix Click.
Rep. Safety Research and Strategies Inc., 5
Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
|
, p.
50.
|
|
29 Kane, Sean, Ellen
Liberman, Tony DiViesti, and Felix Click.
|
, p.
50.
|
After it had become evident that there was more to the
problem than Toyota was admitting, the company went on the defensive. The president of US sales made the audacious
statement that “we know what the problem is.
We have the fix. And we’re going
to take care of our customers.”[24] Toyota did its best to appear strong and in
control to its customers; however, the reality was that it had been slow to
solve the problem.
CONCLUSION
After Lupe consulted her insurance company, she was left
with devastating news. The insurance
company informed Lupe that the floor mat was the cause of the accident, and it
was not the car malfunctioning. Because
of this, Lupe received no insurance compensation. Still traumatized by the accident, she
refused to buy another Toyota; so, Lupe opted for a Honda Accord and has been
safe behind the wheel ever since.
DISCUSSION QUESTIONS
1.
Identify the cultural differences between Japanese
executives and American executives that may have affected the way Toyota dealt
with these issues.
2.
How should Toyota have initially handled consumer
complaints?
3.
Do you think communication between the Japanese
headquarters and the North American offices of Toyota should be restructured?
If so, how?
4.
What needs to be done to improve communications between
Toyota and government regulators?
5.
What would be the ideal communication plan for Toyota
to adopt regarding its relationship with customers?
Exhibit A
Lee, Lupe, and Sandlin, Rose. "Toyota Accident Interview."
Personal interview. 11 Mar. 2012.
REFERENCES
Kane, Sean, Ellen Liberman, Tony DiViesti, and Felix Click. Toyota Sudden Unintended Acceleration.
Rep. Safety Research and Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
Lee, Lupe, and Sandlin, Rose. "Toyota Accident Interview."
Personal interview. 11 Mar. 2012.
United States. Cong. House of Representatives. Committee on Oversight and
Government Reforms.
Toyota Gas Pedals: Is the Public at
Risk?. 111 Cong.,
2nd sess. S. Doc. U.S. Government
Printing Office, 24 Feb. 2010. Web. 19 Mar. 2012.
<http://www.gpo.gov/fdsys/pkg/CHRG-
111hhrg58346/pdf/CHRG-111hhrg58346.pdf>.
United States. Congressional House of Representatives. "Response by
Toyota and NHTSA to Incidents of
Sudden Unintended Acceleration." Response
by Toyota and NHTSA to Incidents of Sudden Unintended Acceleration.
Committee on Energy and Commerce, Subcommittee on Oversight and
Investigations, 23 Feb. 2010. Web. 19 Mar. 2012.
<http://democrats.energycommerce.house.gov/Press_111/20100223/Transcript.OI.02232010.pdf
>.
United States. Congressional Senate. Committee on Commerce, Science, and
Transportation. Toyota's
Recalls and the Government's Response. 111 Cong., 2nd sess. S. Doc. U.S.
Government Printing
Office, 2 Mar. 2010. Web. 19 Mar. 2012.
<http://www.gpo.gov/fdsys/pkg/CHRG-
111shrg66219/pdf/CHRG-111shrg66219.pdf>.
Victor L. Heller, John R. Darling, (2012) "Anatomy of crisis
management: lessons from the infamous
Toyota Case", European
Business Review, Vol. 24 Iss: 2, pp.151 – 168
[1] Lee, Lupe, and Sandlin,
Rose. "Toyota Accident Interview." Personal interview. 11 Mar. 2012.
[2] United States. Cong.
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<http://www.gpo.gov/fdsys/pkg/CHRG-111shrg66219/pdf/CHRG-111shrg66219.pdf>.
[3] United States. Cong.
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<http://www.gpo.gov/fdsys/pkg/CHRG-111shrg66219/pdf/CHRG-111shrg66219.pdf>.
[4] United States. Cong.
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[5] United States. Cong.
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<http://www.gpo.gov/fdsys/pkg/CHRG-111shrg66219/pdf/CHRG-111shrg66219.pdf>.
[6] United States. Cong. House
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2010.
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[7] United States. Cong.
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[8] Mar. 2012.
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<http://www.gpo.gov/fdsys/pkg/CHRG-111shrg66219/pdf/CHRG-111shrg66219.pdf>.
[9] United States. Cong House
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Unintended Acceleration." p.161. Response by Toyota and NHTSA to Incidents of
Sudden Unintended Acceleration.
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[10] .
<http://democrats.energycommerce.house.gov/Press_111/20100223/Transcript.OI.02232010.pdf>.
[11] United States. Cong.
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[12] Mar. 2012.
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[13] United States. Cong.
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[14] Mar. 2012.
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[15] United States. Cong.
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[16] Mar. 2012.
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[17] United States. Cong.
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[18] Mar. 2012.
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[19]
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[20] United States. Cong.
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Response, p. 27. 111 Cong., 2nd
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[21] Mar. 2012.
<http://www.gpo.gov/fdsys/pkg/CHRG-111shrg66219/pdf/CHRG-111shrg66219.pdf>.
[22]
Kane, Sean, Ellen Liberman, Tony DiViesti, and Felix Click. Toyota Sudden Unintended Acceleration,
p. 49. Rep.
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Strategies Inc., 5 Feb. 2010. Web. 10 Mar. 2012.
<http://www.safetyresearch.net/Library/ToyotaSUA020510FINAL.pdf>.
[23] Kane, Sean, Ellen
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Rep.
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[24] Kane, Sean, Ellen
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p. 50.
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