Anna Kozhemyakov PBRL425-F1WW (F16) Toyota Recall Crisis Anna Kozhemyakov PBRL425-F1WW (F16)

Toyota Recall Crisis Highlights: Part 1 January 2009, Toyota became the world’s number one auto brand. August 2009, the first fatal crash due to uncontrolled acceleration. Federal safety regulators were pressured to protect the public. 20% of all uncontrolled acceleration accidents 2004 to 2009 involved Toyota’s vehicles according to the NHTSA. Toyota stated that floor mats obstructing gas pedals are to blame for the accidents. October 2009 - recall of 3.8 million vehicles in order to address concerns about floor mats (Phillips, 2013).

Toyota Recall Crisis Highlights: Part 2 October 2009, an independent investigation of Toyota’s safety and quality practices was lunched. It was discovered that Toyota had received 1,200 complaints of unintended accelerations since 2002. The reports were denied by Toyota. The accidents continued: 33% of all uncontrolled acceleration complaints for 2009 year only were linked to Toyota vehicles. In January 2010, Toyota reported that the gas pedals may have a sticking effect, recalled 2.3 million cars, suspended sales of eight models, and temporarily shut down five North American assembly plants.  February 5, 2010, Toyota president Akio Toyoda appeared at a press conference, apologizing and announcing a task force involving outside experts (Phillips, 2013).

James Grunig ‘s Relationship Principle “An organization can withstand both issues and crises better if they have established good, long-term relationships with publics who are at risk from decision and behaviors of the organization” (Paine, 2002). Before the crisis of 2009, Toyota Motor was a leader in customer loyalty for several years (Kiley, 2007). After the crisis, Toyota regained customer trust and loyalty in a short time (Gorzelany, 2012). According to the 2012 Experian Automotive Loyalty and Market Trend analysis, 47.3 % of all Toyota, Lexus and Scion owners return to purchase another Toyota vehicle (Gorzelany, 2012).

James Grunig ‘s Accountability Principle “Organizations should accept responsibility for a crisis even if it was not their fault” (Paine, 2002). Toyota refused to accept responsibility for the incidents. Toyota shifted the blame to the floor mats for obstructing gas pedals, auto parts suppliers, and even incompetent drivers. October 2009 – Toyota sent letters to its customers stating that “no defect exists,” despite of the negative reports by the Los Angeles Times (Phillips, 2013). Slow Response to the public: it took Toyota seven months after the first fatal crash to hold a news conference about the problem.

James Grunig ‘s Disclosure Principle “At the time of a crisis, an organization must disclose all that it knows about the crisis or problem involved” (Paine, 2002). At the time of the first fatal accident, Toyota was well aware of quality and safety questions about unintended accelerations, yet the company refused to disclose this information, to comment on it, or to accept responsibility. Criminal fraud charge against Toyota for misleading its customers about unintended acceleration complaints in its cars (Muller, 2014). $1.2 billion fine to avoid prosecution for concealing safety problems with unintended acceleration (Muller, 2014).

James Grunig ‘s Symmetrical Communication Principle “At the time of a crisis, an organization must consider the public interest to be at least as important as its own” (Paine, 2002). According to George Venizelos, FBI Assistant Director in Charge, “Toyota put sales over safety and profit over principle” (Criminal Charge Against Toyota Motor Corporation, 2014). Not only did Toyota fail to recall vehicles with problem parts, they continued to manufacture new vehicles with the same parts they knew were deadly (Criminal Charge Against Toyota Motor Corporation, 2014). When reports arose of Toyota hiding defects, the company denied what they knew was correct, assuring the public that their cars were safe and reliable (Criminal Charge Against Toyota Motor Corporation, 2014).

Three Elements to Measuring Effectiveness During a Crisis The crisis had a very negative impact on Toyota’s reputation. However, the company managed to regain its customer loyalty and confidence in the brand (Paine, 2002). Measuring Outcomes Toyota’s original responses to the media and the public were either late, or vague. Their messages did not have the desired affect and were not believed by the public because media reports and facts were conflicting with Toyota’s statements. Measuring Impact It does not appear that Toyota was interested in monitoring the media or in determining if their key messages were being communicated and to whom. Measuring Outputs and the Effectiveness of the Process

Checking the Volume and Content “A well-managed crisis gets all the bad news over with up front by aggressively dealing with a problem. A poorly handled one can drag on for months” (Paine, 2002). Toyota denied their fault in the incidents for too long, sending mixed messages to the public which only created anxiety. Two recalls in a row mean that Toyota was responding to events rather than following a careful crisis management plan. Toyota 2009 crisis was poorly handled resulting in serious loses for the company and its customers.

References: Criminal Charge Against Toyota Motor Corporation and Deferred Prosecution Agreement with $1.2 Billion Financial Penalty. (2014, March 19). Retrieved October 1, 2016, from the FBI Archives: https://archives.fbi.gov/archives/newyork/p ress-releases/2014/criminal-charge-against- toyota-motor-corporation-and-deferred- prosecution-agreement-with-1.2-billion- financial-penalty Gorzelany, J. (2012, October 10). Cars with the Most Brand-Loyalty Buyers. Retrieved October 1, 2016, from: http://www.forbes.com/sites/jimgorzelany/ 2012/10/10/cars-delivering-the-most-brand- loyal-buyers/#3cfc56dd4306 Kiley, D. (2007, December 6). Toyota Leads in Customer Loyalty. Retrieved October 1, 2016, from: http://www.bloomberg.com/news/articles/2 007-12-06/toyota-leads-in-customer- loyaltybusinessweek-business-news-stock- market-and-financial-advice Muller, J. (2014, March 19). Toyota Admits Misleading Customers; Agrees To $1.2 Billion Criminal Fine. Retrieved October 1, 201, from: http://www.forbes.com/sites/joannmuller/ 2014/03/19/toyota-admits-misleading- customers-agrees-to-1-2-billion-criminal- fine/#744a9c5c6273 Paine, K.D. (2002). How to Measure Your Results in a Crisis. Published by the Institute for Public Relations. Berlin: KDPaine & Partners. Phillips, B. (2013, February 6). Case Study: How Toyota Crashed Its Brand. Retrieved October 1, 2016, from: http://www.mrmediatraining.com/2013/02 /06/case-study-how-toyota-crashed-its- brand/