Toyota's Car Wreck

by John M. Curtis
(310) 204-8700

Copyright April 8, 2010
All Rights Reserved.                                

                Behind closed doors, before Toyota recalled 2.3 million vehicles for dangerous accelerator malfunctions, company executives debated whether to go public with the biggest defect in the carmaker’s history.  “We are not protecting our customers by keeping this quiet.  The time to hide on this one is over.  We need to come clean,” wrote Toyota Group Vice President Irv Miller Jan. 16, 2010.  Five days after Miller’s e-mail, Toyota announced its 2.3 million recall to fix the “sticky” accelerator problems, causing crashes, injuries and death to Toyota drivers.  Toyota’s hierarchy debated the pros and cons of “coming clean” with the worst mechanical or electronic problems associated with any multinational car company.  Built on a reputation of quality, safety and reliability, Toyota overtook GM as America’s most popular cars.  Today’s revelations give GM and Ford a way back.

            Since Sept. 2009, Toyota has recalled over 6 million cars in the U.S. and 8 million worldwide for accelerator and breaking problems.  Toyota executives reluctantly accepted that there were mechanical or electronic problems with its Camry, Corolla and Prius hybrid vehicles, leaving the line’s bestsellers vulnerable.  On the same day Miller e-mailed company executives to “come clean,” Toyota Motor Sales USA vice president of corporate communications Katsuhiko Koganei urged the company not to go public with gas pedal problems.  “Now I talked with you on the phone, we should not mention about the mechanical failures of acc. pedal because we have not clarified the real cause of the sticking acc. pedal formally, and the remedy for the matter has not been confirmed,” wrote Koganei, urging Toyota to continue covering up the worst technical breakdown in the company’s history.

            Any damage control expert will tell you to admit the mistake, apologize and talk about steps of redemption.  Had the world’s best golfer Tiger Woods followed those three easy steps he wouldn’t face the barrage of criticism practically destroying his career. Toyota faces even bigger problems rehabbing its damaged image that exposed the ugly side of the corporate underbelly, leaving loyal customers disgusted by the selfishness and greed associated with corporate politics.  “We better just hope that they can get the National Highway Traffic Safety Administration [NHTSA] to work with us in coming (up) with a workable solution that does not put us out of business,” wrote Miller in his now infamous e-mail.  Miller strongly disagreed with Koganei’s view that concealing gas pedal problems would somehow protect the public from panicking about more mechanical and electronic failures.

            Miller showed courage standing up to his corporate bosses unwilling to accept responsibility for an undeniable technical breakdown with its cars.  “Kogi, I have to break this to you but WE HAVE a tendency for MECHANICAL FAILURE in accelerator pedals of a certain manufacturer on certain models,” Miller wrote, defying company wisdom to remain silent and ignore concerns about company safety.  Toyota reacted defensively, insisting the company “does not comment on internal company communications,” refusing to remark on Miller’s e-mail.  While admitting its poor communication, Toyota deliberately covered up a mechanical breakdown, endangering millions of trusting drivers.  If that’s not a betrayal of the public’s trust then what is?  Toyota now faces a $16.4 million fine for not notifying federal authorities about the safety problems.

            Instead of fixing the accelerator problems, Toyota has been too busy offering customers unprecedented discounts and incentives to buy new models.  It just posted a  $4 billion loss in Q-4, more related to the nation’s credit crunch and recession.  Toyota hasn’t begun to feel the financial consequences of betraying its loyal customer base, now skeptical of company honesty.  “We have subsequently taken a number of important steps to improve our communications with regulators and customers on safety-related matters to ensure that this does not happen again,” said Toyota, announcing the appointment of a company chief quality officer for North America.  More fancy damage control doesn’t change the sneaky corporate culture that left U.S. customers in the dark about serious mechanical failures.  Back in September, Toyota addressed accelerator problems in their European division.

            Damage to Toyota’s brand has been devastating for the 73-year-old car company, founded in 1937, based in Toyota City, Aichi Japan.  Toyota’s founder Kiichiro Toyoda couldn’t imagine the disgrace brought to his namesake by his grandson Akio Toyoda, presiding over the humiliation caused by executives putting corporate greed over customer safety.  Faced with 138 potential class-action lawsuits and 200 personal injury and wrongful death suits, Toyota will gladly pay the measly $16.4 million fine to begin the uphill battle of winning back disillusioned customers.  Thanks to the electronic age, there’s simply too much damaging information to attempt a costly legal battle to avoid paying its $16.4 million fine and settling millions more in lawsuits.  Toyota has no one to blame but itself, not for its technical problems but for failing to address the problems in a timely and honest way.

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.