More Dirt On Toyota – Another NHTSA Fine Likely
Jason Lancaster | Apr 13, 2010 | Comments 11
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.
Despite the hysteria, the cover-up of Toyota's acceleration issues is far worse than the problem itself.
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.
Mr. Peabody, do you think we can use the Wayback machine to convince Akio Toyoda to respond a little faster than 5 days?
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
I question Irv Miller’s email on January 26, 2010 and here’s why…..it’s like he planted that email as evidence or cause against Toyota. Every smart business person KNOWS that email records are kept and can be used against you in the future. So was he trying to cover his buns or bring Toyota down? Either way, it looks fishy on his part to put something of that nature into an email.
Does Toyota deserve to be fined? Definitely! Does it deserved to be fined twice? Possibly! Does the amount seem fair? Not at all! I have no problem with fines but I’m more concerned about the resolution or outcome. To this day, I’m still not sure if anything has been solved with these recalls, fines, bantering, etc. I requested they NOT do the modification to my pedal because in all honesty I’d rather not have any further mishaps until this is truly cleared and the real problem is identified. Right now this whole thing is about money and I have nothing to gain personally that I wish it would get resolved and back to the business of making reliable automobiles that consumers can feel safe about driving.
These lawsuits will be strung out for years to come. Toyota will go to admin court and probably mitigate a large portion of the NHTSA fines. In the end the lawyers win. Toyota Corporation loses tons of money and we lose resale and trade-in value on our affected vehicles. I’m with you TXTee, give me the cause of this issue so I know the right fix has been implemented! If Toyota truely couldn’t find a cause or even identified an issue, should they have notified the public. That’s like screaming bomb at the airport when there isnt a bomb. However, if the media keeps reporting it a truth then it takes on a life of its own. That’s why I agree with you Jason, when you implied Toyota PR should’ve gone into damage control ASAP!
TXTee – I think that’s a good point – a seasoned PR executive should know better than to write this type of email. Perhaps he knew he was leaving. Incidentally, these emails were ‘found’ in the 70,000 docs that congress demanded a couple of months ago.
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As for the fine, I have mixed feelings. $16 million is a pittance really, but it doesn’t stack up to previous fines and there’s not a lot of transparency. Perhaps if I wasn’t convinced Ray LaHood was out to hurt Toyota…
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Rich – Thanks! You make a great point about why Toyota waited to disclose this issue – they weren’t actually certain it was an issue (at least that’s what they’re saying). I’m guessing that someone somewhere knew that, in rare cases, this could happen. I’m also guessing that the execs decided it would be cheaper to fight the handful of court cases than it would be to issue a recall. I suspect that all auto manufacturers make the same calculation, but we don’t have to like it.
This whole gas pedal recall is nothing more than a farce. What, 50-70 or so incidents in what, over 8-9 million vehicles sold? I have a better chance of winning the lottery or getting struck by lightning than to have my corolla or tundra recalled gas pedal sticking.
Sorry to change subject, but I just got today a recall notice for a future recall in the works on my 2009 Corolla LE that says toyota is working on a solution and will notify me once a remedy to the floor mats situation is fixed. I don’t get this since my 2009 Corolla LE has the carpeted floor mats that already have the 2 clips holding the mat in place. So, why did I get the recall notification??
mk – The recall notice is probably a few weeks or a few months old. Manufacturers are notoriously slow about sending out notifications.
Toyota sent me one for the Tundra floor mat recall and I never even had floor mats.
TXTee – LOL! I used to get calls from people who got recall notices a year or two late, and they were worried because they weren’t sure if it was for their current vehicle or their old one (which they traded in). They assumed that the computer system got their info wrong instead of assuming the manufacturer was incredibly slow.
You can opt for a new pedal. I had my pedqal done and the dealer ordered me a new replacement pedal.
Mickey – Good point – I’d forgotten about that, but Toyota’s memo to dealers said that customers could demand a new pedal if they wanted one (instead of the shim).
That’s it Jason there’s no excuse in getting the fix done. You don’t want the shim order a new pedal period. Leave the drama at the movies.
LOL – good call. Thanks, btw, for being on top of so many comments the last few days. I really appreciate it.