More Dirt On Toyota – Another NHTSA Fine Likely
Toyota’s reputation for quality, reliability, and resale value might not be tarnished, but their image as safety conscious, consumer-oriented, and well-managed company continues to fade. Here’s the latest on “Recallmagedeon”, a.k.a. “pedal gate,” a situation where the cover-up is worse than the problem itself.
1. Recently retired Toyota USA PR head Irv Miller wrote an incredibly scathing internal email to the Toyota masters back in Japan. Here’s what Miller wrote back on January 16th, 2010, in response to a Japanese exec’s desire to keep Toyota’s acceleration problems hidden and 10 days before their sales freeze:
“(we are not) protecting our customers by keeping this quiet. The time to hide on this one is over…WE HAVE A tendency for MECHANICAL failure in accelerator pedals [emphasis used by Miller]…(we) better just hope that they (senior Toyota execs meeting with NHTSA investigators) can get NHTSA to work with us in coming to a workable solution that does not put us out of business”
Miller ‘retired’ almost immediately following this scandal. Whether Toyota leadership decided to fire him for poor performance or Miller decided to walk away, it’s even more clear that Toyota is an international company managed like a Japanese company.
2. Toyota Europe knew about sticking accelerators in June of 2009 (link), 7 months prior to informing NHTSA in the US. Considering that all recall decisions were and are made in Japan, this discrepancy in the timeline can’t be blamed on a simple miscommunication.
Here’s The Problem
If you’ve been paying attention to this whole thing, you know that Toyota really doesn’t have an unintended acceleration problem per se. Most of the people who claim to have this issue were simply pressing the wrong pedal, and when you compare Toyota’s acceleration complaints to other manufacturers on a ‘problems per 100k vehicle basis’, you come to the conclusion that Toyota’s acceleration issues are completely overblown.
HOWEVER, rather than come clean immediately, Toyota tried to hide their accelerator problems (both the sticking pedals and the floormat issues) in order to avoid embarrassment. Here’s why:
- They really didn’t think it would be a big deal. All of the data Toyota was looking at showed that any acceleration problems were (and are) pretty darn rare. More US citizens died from lightning strikes in 2003 and 2004 (75) than all of the suspected accelerator incidents put together (35-52, depending on who you ask).
- Toyota is a big company that moves slowly. It seems to be a fact of modern business – the bigger a company is, the harder it is for them to act swiftly. Note that between Irv Miller’s email and the sales freeze, 10 days passed.
- They underestimated the possibility for a major scandal. In Japan – where ALL of Toyota’s most important execs were born and raised – this little problem would have been in the back of the business section. In the USA, however, where mass media fights to grab eyeballs facts be damned, stories of runaway Prius(es?) are just too hard to resist…no matter how fake they might be.
As a result of a gross miscalculation (brought on partially by a slow-moving bureaucracy and mostly by a complete lack of cultural understanding), Toyota will likely face TWO $16.4 million dollar NHTSA fines.
These fines, by themselves, are fairly insignificant. Yet because these fines are from NHTSA and the maximum allowed, they will be exhibits ‘A’ and ‘B’ in a class-action lawsuit brought against Toyota. Toyota will likely lose billions of dollars in class-action lawsuits, and frankly they deserve to. A string of poor management decisions at Toyota – from 1) failing to incorporate an international group of execs into leadership positions to 2) placing an emphasis on growth at the expense of quality to 3) failing to respond to negative publicity in a timely fashion – has caught up with them.
What really boggles the mind is that Toyota might not be in this situation if they had one single North American on their board of directors. If we hopped into the wayback machine to January 26th, 2010 (the day Toyota announced their sales freeze) and traveled to Toyoda City, Japan, we might have been able to convince Toyota CEO Akio Toyoda to get off his ass and do some TV interviews ASAP.
Instead, all the PR ‘experts’ in Japan told him to take his time and wait 5 days before issuing a statement and buying some lame Sunday newspaper ads.
OK FINE – it’s hard to say that an American or Canadian would have made a difference for sure – but there’s no denying that Toyota can’t be successful in international markets if they don’t have a group of international execs. A bunch of ‘good old boys’ who all attended Tokyo U isn’t going to get it done.
The incredible irony here is that while Toyota struggles to overcome anti-Japan bias here in North America, they also struggle to overcome pro-Japan bias in the executive suite.
Reactions? Comments? Thoughts? Does Toyota deserve what they’re getting?
Filed Under: Auto News