Toyota's PR Nightmare

by John M. Curtis
(310) 204-8700

Copyright Feb.27, 2010
All Rights Reserved.                                

           Chile’s Feb. 27, 8.8-magnitude earthquake pales into insignificance in comparison to the avalanche of bad publicity from Toyota Motor Co. Ltd’s accelerator and brake problems, prompting company CEO Akio Toyoda, the founder’s grandson, to apologize before the House Government Reform and Oversight Committee.  Admitting the company has grown too fast, Toyoda said that safety and quality should be placed over quantity.  “We need to rethink everything about our operations,” Toyoda told 100 autoworkers at its North American plant.  Facing a probe into accelerator and brake problems by the National Highway Traffic Safety Administration, federal prosecutors in New York and the Securities and Exchange Commission, Toyota’s nightmare has just begun.  Already seeing a 16% drop in January sales, Toyota expect a 20%-30% drop in  February.

            For the company that built its reputation of quality, recalling 8.5 million vehicles in North America seriously damaged Toyota’s brand.  Recent reports about sticky accelerators being fixed in Europe in 2008 raised questions about Toyota covering up the problems in the world’s biggest car market.  Growing numbers of deaths have been attributed to Toyota’s sticky accelerators, prompting an apology from Mr. Toyoda.  “I extend my condolences from the deepest part of my heart,” said Yoshimi Inaba, head of Toyota’s North American division.  Transportation Secretary Ray LaHood offered surprising testimony that, despite the recalls, Toyotas were not safe.  Under questioning, Inaba acknowledged a disconnect between its Japanese, North American and European divisions.  LaHood shocked the committee disclosing that Toyota repaired accelerators in Europe last year.

            Under questioning, Mr. Inaba, Toyota’s highest ranking executive in North America, admitted that Toyota completed European production changes in accelerators and brakes by January 2009, weeks before the bad news hit in the U.S.  “We did not hide it,” said Inaba.  “But it was not properly shared.  We need to do a much better job sharing what we knew in Europe with the United States to see if there is any danger to American consumers,” admitting that “communication” failures exposed U.S. drivers to greater risks.  Inaba indicated that he did not know of the corrections made to European Toyota vehicles.  North American Toyota “was not aware or not informed of” problems or corrections in its European division.  Inaba’s admissions raise more liability to the world’s biggest automaker, already facing a slew of product liability and wrongful death suits in the United States.

            Testifying before the House committee, Toyota CEO Toyoda promised swift action to fix accelerator and break problems.  “I have personally placed the highest priority on improving quality over quality,” said Toyoda, admitting that high volume contributed to the current mess.  “Why should we believe that things are going to get better,” said Rep. Elijah E. Cummings (D-Md.), questioning Toyoda’s promises about correcting the problem.  Despite the weak economy, General Motors, Ford and Chrysler have all benefited from Toyota’s misery.  “Toyota cars are safe,” said Toyoda, seeking to reassure American consumers that the company stands behind its products, despite reported injuries and deaths from unexpected acceleration and brake problems.  Questions remain that the “fix” is not so simple, perhaps a software flaw in the car’s computer acceleration and braking modules.

            Blaming the sudden acceleration problems on “floor-mats” or pedal problems, James E. Lentz III, president of Toyota Motor Sales U.S.A., admitted that the proposed repairs might “not totally” fix the accelerator and braking problems.  He admitted that electronic or computer problems might also contribute to the sudden acceleration—a problem sometimes seen with faulty cruise-control systems.  Rep. John L. Mica (R-Fl.) questioned a Toyota memo saying, “Toyota safety wins,” after a federal agency permitted Toyota to recall 55,000 sets of floor-mats for Toyota Camry and ES350 Lexus sedans.  “It’s one of the most embarrassing documents I’ve ever seen,” said Mica, questioning Toyota’s commitment to fixing the problem.  Mica was especially troubled over revelations that Toyota’s European division fixed the accelerator problems before they surfaced in America.

            Toyota’s credibility problems headed south with the revelation its European division fixed the problems before hitting the headlines in the U.S.   Blaming the sudden acceleration problem on faulty “floor-mats,” proved that the carmaker wasn’t serious about taking responsibility for a more dangerous electronic problem--a far more complicated and costly fix.  Toyota’s peddle manufacturer denied any problems with its part, pointing toward a computer module problem.  Toyota’s lack of “communication” among its North American, European and Japanese divisions says more about saving money than safety.  Now that lawsuits are flying, the company finally took notice.  For the time being, American consumers will think twice about buying Toyotas.  Feeble apologies don’t undo a corporate culture more obsessed with the bottom line than consumer safety.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.