By Micha Rivers
Overview
Toyota’s crisis was centered around safety and quality control issues that caused several fatal accidents and injuries to consumers. These safety issues ultimately led to a massive recall of Toyota vehicles between 2001 and 2009. Along with investigations by the National Highway Traffic Safety Administration (NHSTA)
Challenges Faced by Toyota During Crisis:
Root cause of unintended acceleration- In September 2007 Toyota had a recall of all-weather floor mats that had the potential to shift forward and cause the accelerator pedal to stick in a depressed position if improperly installed.
It was initially thought that the floor mats were the cause for unintended acceleration (UA), until another fatal accident occurred where no mats were present. Investigations revealed there was a possible connection between Electronic Throttle Controls (ETC) and UA. The ETC issues discovered in investigations also revealed there were brake problems.
Response to safety issues-Toyota voluntarily launched a recall urging customer to remove their mats immediately while design changes were evaluated. During the voluntary recall the NHSTA released a safety alert on Toyota vehicles due to UA incidents. However, it was evident that NHSTA and Toyota disagreed on the proper response.
Toyota released a statement that UA defects did not exist with vehicles with properly fitted floor mats. NHSTA called Toyota out and accused them of misleading consumers.
Lack of Transparency and Public Perception- Toyota’s executives in Japan were involved in a criminal investigation relating to an accident cover up that occurred in 2004. There was also an inflammatory investigative report ran by the NYT. These incidents along with a continued pattern of hiding safety defects and/or leading consumers led to a decline in consumer confidence.
Decline in profits- Sales declined for Toyota by 21 percent due to the 2008 financial crisis. The recalls only exasperated these losses.
Scalability– When the sticky pedal incident occurred, Toyota did not have an immediate solution to the sticky pedal problem because engineers had focused on developing designs for new vehicles rather than replacements for existing cars. There were also not enough replacement parts to address all affected vehicles. Eventually a work-around was created to address the sticky pedal situation.
For a more in-depth review of Toyota’s Recall Crisis visit:
Austin-Smith, D., Diermeir, D., & Zemel, E. (2012). Unintended Acceleration: Toyota’s Recall Crisis. Retrieved from https://cb.hbsp.harvard.edu/cbmp/content/51015195
Photo Credit: Designed by Freepik
MBA Help Desk 