Toyota History
In 1933, the production of Toyota’s automobiles began as a division of the Toyoda Automatic Looms Works. The production of automobiles was directed by the founder’s son, Kiichiro Toyoda. Toyota’s first passenger cars were the A1 and G1, both produced in 1935. In 1937, the Toyota Motor company was established as a different company than Toyoda Automatic Looms Works. The name of the company changed due to it taking eight brush strokes, a lucky number to write in Japanese. In September 1947, Toyota came out with a vehicle named Toyopet. This vehicle was named Toyopet because of its small size and the result of a Japanese naming contest the company held. In 1957, Toyota came to the United States. The company first introduced the Toyopet Crown, but the public responded negatively towards it. The American customers did not like the Toyopet Crown’s name as they felt there was a negative connotation towards pets and toys. The name was quickly dropped within the U.S and the vehicle was was redesigned. In 1965, the updated Toyopet was released in the U.S. The updated car sold rapidly and this was soon considered Toyota’s first big success within the U.S. To save the company money on high imported tax, Toyota began building factory plants by the early 1980s. With these factory plants, the company was able to save money, and get the vehicles quickly to customers. With Toyota experiencing a large growth within the U.S, in 1989, the company decided to launch a new branch of luxury vehicles called Lexus. Throughout the 1990’s, Toyota continued to make both compact, large, and luxurious vehicles. When the recession hit the United States in 2008, Toyota’s sales dropped substantially. The company’s sales continued to decrease until the 2009-2010 recall crisis. When this crisis occurred, the company’s sales plummeted. Slowly, the company has increased their sales and are currently investing over $1 billion dollars to research artificial intelligence and robotics research.
Background of the Situation
Toyota’s problem started with a single car crash on August 28th, 2009. This car crash caused an off-duty California Highway patrol officer, Mark Saylor, and his three family members riding with them to die. They were driving in a borrowed 2009 Lexus ES350, while Saylor’s personal Lexus was being serviced. Toyota found that the crash may have been caused from having the wrong floor mats installed in the vehicle. After this horrific accident occurred, Toyota announced that they were recalling the floor mats on 4.2 million vehicles including both Lexus and Toyota models. After further investigations and another accident, involving multiple deaths occurred, Toyota found that there was also problems with the gas pedals. Toyota then recalls another 2.3 million Toyota-brand vehicles. Toyota publicly states that the new recall is unrelated to the floor mat recall. Although the company said this, 1.7 million vehicles were affected by both recalls. After two separate recalls, covering more than 7.5 million vehicles, Toyota was forced to suspend eight of their best-selling vehicles. This decision cost Toyota a minimum of $54 million dollars a day in lost sales revenue of their eight best-selling vehicles.
http://www.motortrend.com/news/toyota-recall-crisis/
The Actual Problem
Although, Toyota did not do much right, their main issue was with their response to the accidents and their response time. It took Toyota 17 days to respond after the first incident that killed a family of four. Their responses after that were delayed and confusing. Toyota first addressed the reason for the crash as faulty floor mats, and came out with a recall of 4.2 million Toyota and Lexus vehicles, that advised owners to take out the mats and put them in their trunk and for dealers to zip tie the floor mats to the vehicle. As the National Highway Traffic Safety Administration began uncovering more issues with the vehicle and started discovering over 1,200 complaints with complaints of unintended acceleration, it became more clear that the issue was with its drive-by-wire electronic throttle system. Even with this discovery, it took Toyota 3 more months to admit that that was the real issue and ultimately end up recalling over 4.2 million Toyota and Lexus models.
Timeline
Toyota’s PR crisis of 2009 and 2010 involved multiple different factors. The culmination of these many different things resulted in the major separate recalls that Toyota experienced. The newsworthiness of the crisis began with that horrible car accident involving the Saylor family. They had been driving a Lexus rental from their local Toyota dealer because the car they owned was getting worked on. Initially, the reports said the ill-fitting floor mats were only on their particular borrowed Lexus. It wasn’t until the first recall about the floor mats, and CEO Toyoda’s public apology almost two months after the accident, that people began to realize the magnitude of the issue. The floor mats were not an isolated incident, and this was a major case of dangerous unintended acceleration that could affect a ton of people. The journalistic work of the Los Angeles Times also significantly contributed to this issue coming to light. They dug up serious research and past cases that had mysteriously disappeared. Toyota then began disputing with the NHTSA over the cause of the unintended acceleration incidents. The LA Times uncovered a large amount of money set aside by Toyota to pay the NHTSA. They said that it was instead budgeted for trying to solve the issue at hand. Toyota then sent letters to the owners of their vehicles about another upcoming recall, but reassured them that “no defects existed.” Less than a month later, a Toyota Avalon carrying four people flew off the road and into a lake in Texas. It was evident the issue in the crash was not the floor mats because they were found in the trunk. Toyota then has an additional recall that affects approximately four million more vehicles. Toyota faults the length of their gas pedals as the issue, contradicting what they had said only a mere months before about the floor mats. After these major incidents, Toyota still struggled with accepting responsibility for the accidents and the death of their cars’ drivers.
PR Strategy
http://www.motortrend.com/news/toyota-recall-crisis/
Toyota handled their 2009-2010 automotive crisis terribly and provided a lot of examples of how even a massive company can really fumble a public relations situation. It is important to know how the crisis unfolded, on August 29th, 2009, off-duty California Highway Patrol officer Mark Saylor was traveling in a Lexus car with his family when they experienced automotive issues and ended up crashing and unfortunately dying. A few weeks later Toyota posted preliminary reports containing faulty information that the dealership servicing Saylors Lexus may have had installed the wrong floor mats which interfered with the gas pedal. On September 29th, 2009 Toyota announced it was recalling the floor mats on 4.2 million Toyota and Lexus vehicles. The company informed car owners to remove the floor mats and place them in the trunk and then directed dealers to use zip ties to secure the floor mats in their vehicles so they could not interfere with the gas pedal. A few days later on October 2, 2009, the newly appointed Toyota CEO, Akio Toyoda, publicly apologized to the Saylor family members killed in the car accident and to all the customers affected by the recall. Following Akio Toyoda apology during the month of October more attention was brought through the media on the string of occurrences of unintended accelerations by Toyota vehicles.
Toyota made a bad public relations decision on October 30th, 2009 when they sent out letters to their car owners notifying them of the upcoming recall to fix the acceleration issues but surprisingly makes the claim tha
t “no defect exists.” Toyota quickly came under even more fire when the Los Angeles Times claimed that Toyota had purposely ignored over 1,200 complaints of unintended accelerations over the past eight years. Even though Toyota admitted to setting aside 5.6 billion to deal with the issue they continued to put off the problem with temporary solutions. Toyota instructed their dealers to shorten the gas pedal so it could not interfere with the floor mats.
Consumers started to report that the unintended accelerations were happening even when the floor mat was removed from the car. A Los Angeles story brought these concerns to the masses along side a lot of growing distrust toward Toyota by reporting the multiple cases of unintended accelerations even without floor mats. Toyota makes another public relations blunder by writing a paper supporting their stance that the floor mats were the cause of the issues with unintended accelerations. Sadly not long after Toyota published that letter a Toyota Avalon crashed into a lake in Texas killing all four occupants, the floor mat argument is quickly ruled out due to the floor mats being in the trunk during the crash.
In January 21st, 2010 Toyota finally launched massive recall efforts to address a problem with the gas pedal itself. Toyota recalled another 2.3 million Toyota brand vehicles with gas pedal issues, on top of the 1.7 million Toyota vehicles affected by faulty floor mats. By January 26th, 2010 Toyota announced that is was stopping the sale and production of all models affected by the recall. Toyota made another terrible public relations because they never stated or provided explanation why they waited five days to stop sales and production after announcing the recall.
Across this Toyota automotive crisis the general trend that I identified with their public relations efforts is either non existent or terrible execution. They built up a lot of bad publicity and consumers lost a lot of trust in the Toyota brand. Throughout the issues and recalls they never admitted guilt and kept looking for scapegoats or temporary fixes to a massive issue. The only large positive public relations activity that I found was the public apology by the CEO to the first family that was reported to die from the faulty parts. Toyota could have responded a great deal quicker and would have addressed the real problems at hand instead of just pushing them onto temporary fixes to be handled at the dealership level.
Consequences
Considering how much the Toyota recall crisis blew up the company is bound to have some harsh consequences. To begin with, Toyota was forced to suspend eight of its best-selling vehicles including the RAV4, Corolla, Matrix, Highlander, Camry and more. This was a move that ended up costing the company a whopping $54 millions dollars a day in lost revenue. In total, Toyota was forced to recall an estimated 9 million cars worldwide between both the floor mat recall and the gas pedal recall. This ended up costing the company an estimated $2 billion in repair costs and lost sales, this is even before any settlements took place. On top of the repair costs and lost sales Toyota also had to pay for various settlement and fines, two of these being a settlement from the Justice Department that ended up being $1.2 billion and a fine from the National Highway Traffic Safety Administration that was for almost $50 million.
Along with the loss of money, Toyota also faced the consequences of being responsible for the deaths of 89 people who were killed due to unintended acceleration in the company’s vehicles. These deaths occurred during the 2009-2010 recalls and even stem from instances decade before. Having the weight of being the cause of so many deaths can really damage the image of a company, as we have seen with Toyota. This worsens significantly if you do not claim responsibility or offer condolences right away, which Toyota did not. At the end of the entire crisis Toyota also had to deal with an extremely battered image of their company. People were not happy with the way Toyota went about handling the situation and it is easy to see why. The company had to regain the trust of its customers and rebuild their brand image to what it is today, which is better but still suffers consequences from the recall in 2009/2010.
http://www.cnn.com/2014/03/19/us/toyota-settlement-justice-department/index.html
https://www.cbsnews.com/news/toyota-unintended-acceleration-has-killed-89/
http://www.autonews.com/article/20140525/OEM11/305269965/what-toyota-learned-from-its-recall-crisis
Learning Objectives/Conclusion
Toyota learned several lessons after their numerous recalls. Since Toyota watched their public relations strategies fail, they were able to see and hear the public condemning their company for how they handled the situation. From this situation, Toyota should now understand that they need to react quickly. If they want to be appealing to their audience they have to respond to the situation within 24 hours instead of waiting days or weeks to respond. They will not connect to their audience in the right way if they are not proactive about their mistakes.
Toyota also learned that they need to listen to their customers. Toyota felt the consequences of ignoring several of their customers complaints. If the problem was brought to Toyota’s attention earlier by their customers and Toyota had listened to them, they could have avoided fatal incidents and fixed the problems from the start. Toyota should now know that they need to have a 24 hour customer service system that is prompt when responding to customers concerns and they need to make sure they are taking all of the concerns seriously and addressing problems right away.
In the end, Toyota’s ultimate lesson learned was the importance of being transparent. They know now that they have to take the time to understand their customers. They also know that to do this, they need their employees to be committed to quick, necessary communication.
http://www.autonews.com/article/20140525/OEM11/305269965/what-toyota-learned-from-its-recall-crisis