Toyota Botches Accelerator Recall and Braking Problem

Toyota Motor Corporation has done just about everything wrong in dealing with a couple of serious problems with several models of their cars. In some of its vehicles, the accelerator can stick, and as many as 19 deaths in the US in the last decade may be linked to the defect. The company has also just announced that the hybrid Prius has a problem with shifting between its two braking systems. As bad as these are, management's approach to the problem has been even worse.

Naturally, the company would prefer not to recall 8 million vehicles. It is going to cost Toyota $2 billion or so. However, the damage done to the books is small compared to the damage done to Toyota's reputation for quality engineering. Some industry analysts believe Toyota will lose 100,000 sales or so in the immediate future, and there is no telling what the longer-term future holds.

In the case of the accelerator problem, Toyota's first response was to do nothing. When confronted with a problem like this, doing nothing is the worst possible move. Then, the company blamed the stuck accelerator on the floor mats. This turned to be incorrect, and now, the company has said a part needs to be added to the accelerator assembly. The company comes off looking either deceitful or stupid; neither is a positive business characteristic.

With regard to the Prius brake problem, the company today announced that cars sold since late January have been fixed. That means that Toyota knew of the problem weeks, if not months, ago but didn't tell anyone. The Prius has been on the road for a couple of years, so there are quite a few that need fixing still. An early warning to customers would have been appropriate. Even now, Toyota has yet to issue a recall for the Prius. It appears that there is a computer system that is not working correctly, which suggests a flaw in the design of the basic technology. So now, Toyota looks incompetent as well as deceitful or stupid.

To their credit, some of the Toyota dealers are out ahead of the sararimen in Tokyo. CNN reports "Michael Ianelli, general manager of Bay Ridge Toyota in Brooklyn, NY said his telephones are ringing constantly with customer calls. He sent a letter to his customers, a copy of which is posted at the dealership's Web site. 'Please know that this current news, however troubling, will be handled with the swiftness, precision and care that you have become accustomed to as a Toyota owner,' the letter reads."

The Tylenol case is taught to business students as the gold standard in crisis management. One expects, once the dust settles, that the Toyota case will be taught as the polar opposite.

© Copyright 2010 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

Kensington Review Home