Toyota Recall Fallout Continues; Solution May be Coming

We’ve already published several articles on the topic, but Toyota’s massive recall and its related public-relations debacle continues to gain momentum.  In addition to the recent stop-sale order, many entities are now taking the recall a step further.  Perhaps this is out of genuine concern for the welfare of Toyota drivers, perhaps it is out of concern of being sued if something happened before the affected vehicle was fixed.  My sometimes-jaded viewpoint says that it’s the latter, but perhaps it’s the former, or a combination of the two.

Today, several different entities reacted similarly to Toyota’s recall:

• Manheim Auction Group, the country’s largest auction group and which comprises over 50% of the wholesale auction market, recommended today that its member auctions immediately cease sale of Toyota cars and trucks affected by the recalls
• Hertz, Enterprise, Avis, Dollar, and Thrifty rental car outfits all stopped renting the recalled Toyotas to the public
• CarMax suspended sales of all recalled Toyotas, new and used (CarMax owns one Toyota franchise and over 100 used-car dealerships)

Toyota seems to be standing behind the supplier of the sticking accelerator pedals, CTS, Inc. of Elkhart, Indiana, as the companies are testing a redesigned accelerator pedal design that eliminates the apparent sticking problem that potentially occurs in the recalled vehicles.  CTS is ramping up production at its three US plants to get the replacement pedals to the factory as soon as possible, and is also working with Toyota to develop a solution for in-service cars, which will likely not involve full pedal/mechanism replacement for the new part.

The recall has spread from North America to Europe and China as well.  The company has not yet determined the number of affected vehicles, but it could top 2 million.  In China, the company submitted an application to recall 75,000 RAV4 crossovers.  All of the affected vehicles in Europe and China have pedals made by CTS.  Japanese-built Toyotas do not have the same issue, apparently, as their accelerator pedals are of a slightly different design and are manufactured by Denso.

Toyota has not done a good job of communicating the details of the problem and its solution to dealers or customers.  Aside from the press release that we included in the last article we had on the subject, there has been very little public word from the company.  Many were ready to praise Toyota’s extreme action of stopping all sale and production of affected models, which certainly sounded to many (myself included) as moving toward doing the right thing.  However, today the NHTSA told Automotive News that Toyota is legally forbidden from delivering new cars with a known safety defect.  So, the dealers could still legally sell the cars, but couldn’t deliver them to customers until the defect has been addressed.  Also, with potentially upwards of 8 million vehicles affected worldwide by this series of recalls, it will take months – if not longer – for Toyota and its suppliers and dealers to produce enough replacement parts and to schedule service visits to repair the defective parts.

My wife drives a Toyota, but it’s not one of the affected models (it’s a Sienna), so my household has not been personally impacted by the recall.  Nonetheless, a concerned friend at church asked me how our van has been (she drives a 2009 Corolla, by the way), and I didn’t know what she was talking about until she reminded me to just put it in neutral if the pedal sticks.  I have a coworker who is understandably anxious about driving her 2007 Camry until the safety issue is resolved.  Lunch conversation today kept detouring back to the sudden quality and safety problems that Toyota is experiencing.

Great companies are often defined not by their successes, but in the way they deal with adversity and problems.  Look no further than Johnson & Johnson’s reaction to the 1982 Tylenol cyanide poisonings for an example of proper crisis management, thanks to its famous credo.  More recently, when the just-launched Lexus LS400’s 8,000-car recall in 1989 was another example of taking a terrible situation, doing the right thing, and coming out of the crisis stronger.

The Lexus recall that “old Toyota” handled so deftly 21 years ago was far, far smaller in scope than this current monster is, but the company could certainly learn some lessons from itself.  Paying for rental cars for its affected customers while their vehicles are repaired is the least of what it can do, and it should also come up with a solid plan to communicate its next steps to all stakeholders, especially dealers and consumers, and also come up with a plan to somehow compensate its customers for their lost time and the fear that many suddenly have in driving their previously-safe transportation appliances.  Toyota has a lot to lose in this situation, but could come out of this problem – if its response is managed properly – without too big of a black eye.