Toyota earning mixed grades for handling crisis; shipping new parts to plants angers customers, dealers

How well is Toyota handling its massive crisis?

The automaker begun this week with decisive action that earned it a strong grade. But it already appears to be backsliding. And that is very worrisome.

Toyota stepped up in a huge way earlier this week to stop production — and sales — of most of its vehicles in North America. The action will cost Toyota more than $100 million each week – and may cost its dealers collectively as much as $2.5 billion a month. (Widely praised as an extraordinary "voluntary" action, shutting down production and sales was, in fact, a legal requirement after it recalled millions of vehicles with an undeterminded defect, says NHTSA chief Ray LaHood.)

But last night Toyota confirmed an AP report that it had begun shipping new accelerator pedals to its assembly plants, rather than to its dealers who face the daunting task of fixing 6 million Toyota customers' vehicles in the U.S. (and at least 8 million world wide).

Toyota says it is still trying to determine if the faulty accelerator pedals in customer hands can be fixed or need to be replaced. But Toyota hasn't yet identified the root cause of the problem, so it is unlikely to quickly identify a fix. And so the new parts must go to customers first, not Toyota assembly pants. (And even that assumes that the new pedal assemblies are immune to the problem and that Toyota isn't just swapping out bad parts for newer bad parts.)

The two fundamentals to handling a crisis with integrity are:

  • Move quickly to do the right thing for customer safety.
  • Communicate clearly and often.

As I told Canadian news network CBC Thursday, communicating fast and clearly in a crisis isn't enough if you aren't also Doing the Right Things.

Elkhart, Indiana-based CTS is rushing to build millions of new accelerator pedal assemblies to replace the bad ones in customers' cars, trucks and SUVs. But Toyota acknowledges that it hasn't identified the root cause of the "sudden speed-up" problem, nor identified a fix. 

The lack of a definitive root cause in failing Firestone tires was a key factor in keeping the Ford-Firestone tire crisis front-page news for months and months.

One can only hope Toyota quickly finds the source of the trouble — and that it acts consistently to put its customers' safety first. If fixing the defect in customers' vehicles requires new pedal assemblies, Toyota and CTS must build and ship 8 million new parts to dealers before it resumes production. That will be massively expensive. But anything less will unleash the anger of the American public–along with NHTSA, the Congress and, of course, the trial lawyers–who have displayed remarkable patience to date.

- Jon Harmon   

Speak Your Mind

*