In 2000,1 Toyota had a strong and growing reputation for quality. Its engineering excellence was peaking with the worldwide introduction of the first successful commercially available hybrid, the Prius, in 2001. But by 2010, over 10 million individual recalls2—including multiple recalls of some models—had left Toyota’s reputation in tatters, allowing other manufacturers to regain their momentum and even the leadership in sales. Ultimately, Akio Toyoda, the president of Toyota Motor Corporation, journeyed from Japan to testify before the U.S. House Oversight and Government Reform Committee on February 24, 2010. How this change of fortune transpired is a complex and interesting story.

Toyota’s own website reports seventeen specific recalls beginning in 2000 and ending in 2010.3 These recalls were all related to floor mat interference with the accelerator pedal or with accelerator malfunctions from other causes. Numerous accidents were reported where the installation of a winter floor mat over the regular summer floor mat caused the accelerator to jam at high speeds so that the car would race uncontrollably and sometimes crash. To remedy this, Toyota contacted current owners and explained the problem. They told customers that two mats were not to be installed on top of one another. The company also shortened the accelerator pedal so that two mats could not jam the pedal. The second set of reported problems related to a suspected flaw in the accelerator linkage, or the acceleration control software, that also caused the car to accelerate suddenly and race uncontrollably. The remedy for this problem was to install a small metal chip in the pedal linkage to remove the possibility that the mechanism would stick.

Toyota maintained that the braking system in the car would bring it to a stop in either case, but it installed a brake override system in some cars to further facilitate this.

Toyota’s recall problems were exacerbated by several sensational news stories about runaway cars where drivers reportedly could only hang on and hope for salvation.

In California, a Prius driver had to stand on his brake pedal and, as directed by a highway patrol policeman who caught up and drove alongside, pull on the emergency brake to get the car to slow down.4 One 911 call from a driver of a Lexus whose accelerator was reportedly jammed was broadcast on some media outlets right up to the crash that killed all four members of his family.5 Other interviews were aired on TV stations with individuals who claimed that jammed accelerator pedals led to similar incidents. Pressure mounted dramatically as Toyota seemed to be facing a wall of criticism. To many observers, Toyota was slow to react empathetically to what seemed to be evident problems. In addition, there were charges that the company knew of the problems long before any recalls were initiated or information was shared with car owners.

There were also claims that Toyota was unconcerned about or ignored the problems in an effort to reduce expected legal costs. Toyota was later fined \($16.4\) million because the company did not report potential difficulties on a timely basis. The company knew about the sticking pedals on September 29, 2009, but did not report this until January 2010 even though the National Highway Traffic Safety Association (NHTSA) required reporting this problem within five days......

Questions:-

1. Did Toyota handle its recalls ethically?
Why and why not?
2. What changes would you recommend to Toyota’s crisis management approach?
Why?
3. Do you think that Mr. Toyoda’s testimony on February 24, 2010, was effective? How might it be improved?
4. Toyota did not immediately disclose that each car carried an airplane style “black box” that recorded details on how the car was functioning. Was this timing appropriate?
5. What possible reasons could account for Toyota’s delay in advising the NHTSA of the problems known on September 29, 2009?
6. Can Toyota recover from these recall problems? If so, how long will that take? What would Toyota have to do to recover fully?