Monday, February 22, 2010
Thursday, February 18, 2010
Corolla probe threatens Toyota brand
TOKYO (Reuters) – Toyota Motor Corp braced itself for further damage to its brand on Thursday, as it waited to hear if a U.S. probe into steering complaints would lead to another recall of its flagship Corolla model.
U.S. regulators launched a preliminary probe on Wednesday into reported steering problems with Toyota's second most popular vehicle in the U.S. market behind its Camry sedan.
Preliminary investigations are a common step by regulators and are often closed without leading to a recall.
Analysts said another recall would cost the company's reputation far more than it would cost directly in dollars.
So far the Corolla problem appears contained to the United States. Japan's transport ministry said there had been no complaints reported about the Corolla's steering system in Japan, adding that the model sold in Japan used different parts.
A Toyota Motor Europe spokeswoman said the version of the Corolla sold in Europe also used different steering, suspension systems and tires.
The world's biggest carmaker said it was looking into complaints about the steering systems of the 2009 and 2010 Corolla models, of which some 550,000 have been sold in North America, but that it would only recall the car if the issue were deemed a safety risk.
But analysts and investors are worried about the damage renewed scrutiny on the Corolla, which is already subject to a recall for an accelerator pedal defect announced less than a month ago, could do to Toyota's brand and sales.
Toyota's safety woes are spiraling at a time when carmakers worldwide are struggling to emerge from a deep industry crisis that led to bankruptcies and consolidation.
"Another recall of the Corolla may cost only 5 billion yen to 6 billion yen ($55 million to $66 million). But the Corolla is synonymous with the Toyota name," said Koji Endo, an auto analyst at Advanced Research Japan.
"Recalling the flagship model over and over again could damage Toyota's brand. I am afraid its customers might leave for rival cars."
Toyota's quality chief, Shinichi Sasaki, said at a briefing in Tokyo on Wednesday that internal studies had shown that drivers had complained about a change in steering response versus older Corollas, possibly due to a switch from a hydraulic power steering system to an electronic one.
He also said it was not yet clear if the problem was due to the steering, tires or another part.
In late January Toyota recalled 2.3 million vehicles in the U.S., including the 2009 and 2010 Corolla models, to fix faulty accelerator pedals. It has repaired about 500,000 cars so far, a Tokyo-based Toyota spokesman said.
Toyota is recalling about 1.7 million vehicles in Europe for problems linked to accelerator pedals as part of its wider global recalls.
A Toyota Motor Europe spokeswoman said the repairs were under way. The process may take around six months to complete but it was hard to estimate as the recall process worked differently in different countries, she added.
Shares of Toyota closed down 0.6 percent at 3,360 yen, underperforming the Nikkei average's 0.3 percent rise.
Toyota is already under intense scrutiny for its handling of the earlier safety complaints, with U.S. lawmakers seeking to establish whether it acted quickly enough to recall cars for acceleration problems.
The carmaker is gearing up for a grilling at two congressional panels next week. North America chief Yoshimi Inaba is due to testify.
Wednesday, February 10, 2010
Group 5's memo
Group 5
MEMO
To: The Toyota CEO
From: The Crisis Management Team
Re: Recall - Accelerator Pedals
Date: February 10, 2010
We have been informed about the recall problem and are advising you to further investigate the sticky accelerator issue in your defective Toyota automobiles. This shouldn't be taken lightly. Time is of the essence. Our crisis management team has put together a list of necessary steps to handle the issue and minimize legal damages as well as to prevent the tarnish of Toyota’s brand name by the media:
1. Find out which cars are affected and put a halt to production. Stopping production will genuinely reassure the public that safety is still a primary concern of the company. Toyota must ensure that not a single Toyota vehicle is manufactured that has the faulty break system.
2. Immediately run tests to figure out EXACTLY what the problem is and how Toyota is going to fix it. Assemble a team of experts on the Toyota automobile’s break system and direct them to examine the various affected Toyota vehicles through a series of thorough testing. When a solution is found, formulate an exact diagnosis so that the company may inform dealerships about how Toyota is solving the problem, and depending on what the solution is, inform the dealerships about what Toyota is doing. Or, perhaps if the problem is easily fixable by the dealerships themselves, ship them the "fix" and send a representative from our team of experts to each of the dealerships so that they may properly assist the dealerships in fixing the faulty breaks.
3. Create a 24-hour "help hotline," and then hold a press conference to respond to the issue. The press conference is an excellent way of getting our company’s voice out before the media can bombard the public with false information and stir the anxiety of our customers. At the press conference, Toyota should accept full responsibility for the problem and assure the public that our company will not hesitate to take every possible step to promptly diagnose and fix the problem. To end the press conference, inform affected vehicle owners about how they can access the 24-hour help hotline, which will provide them with real-time communication with our best Toyota personnel who are informed about the issue and are trained well in customer service.
4. Launch website delineating the findings from the diagnosis and testing of the problem and the steps Toyota car owners must to take to find out if their vehicle is affected and what to do to fix it. Create a unique website that clarifies what the problem is using colloquial explanations that can be understood by the average person. Also indicate which Toyota cars are affected and how the accelerator problem is going to be fixed. In addition to the launching of this website, Toyota should partner up with Twitter.com to create a Twitter account so that it may provide continuous updates to the public about new information pertaining to the problem and what Toyota is doing to solve it. Advertise the website through banners featured on Facebook.com that allow people to type in their VIN to see if their car is affected by the recall. Using online services such as Twitter and Facebook to alleviate damages to our brand name will help Toyota affectively communicate with users of social networking sites before the media does.
5. Send out apology letters to affected car owners. The sorry letters will help the customers feel more appreciated and feel as if their experience with Toyota is a lot more personal. Mailing apology letters will also allow our company to reach those consumers who seldom use the Internet as a source of information and news. In each letter, we will include with the formal apology, a voucher for an oil change as well as a pamphlet that explains where they can go to get additional information (a physical location, such as a dealership, or online—through our company website or through Facebook and Twitter) and how to contact the help hotline that is available to them 24 hours.
6. Create 3-D simulation on the website that shows how the problem is being fixed, and then, hold a second press conference as a follow-up. By having another press conference, Toyota can reinforce its core values and its concern for customer satisfaction and safety of its vehicles. The press conference can also be used to further inform the public about the solution to the problem and how a 3-D simulation is accessible to them on the company website. By allowing car owners to see a 3-D simulation of the problem and how it is being fixed, we can reassure them that the solution is viable and effective.
Toyota Crisis Memo
Memo Group: Greg Maehara, Drew Kootman, Dominic Demark, Kevin Fanelli, Benyamin Widjojo, and Erica Hollern
To: CEO Toyota
From: The Director of Crisis Management
Date: February 5, 2010
RE: Toyota Recall Accelerator, Pedal sticking
Hello,
Due to recent problems regarding the malfunction of the gas pedal in the following Toyota models, 2005-2010 Avalon, 2009-2010 RAV4, 2007-2010 Camry, 2008-2010 Sequoia, 2009-2010 Corolla, 2005-2010 Tacoma, 2008-2010 Highlander, 2007-2010 Tundra, 2009-2010 Matrix, 2009-2010 VENZA, and 2004-2009 Prius, we are planning on recalling and replacing the pedal and other malfunctioning parts.
The following steps are being taken to ensure customer satisfaction and increase our brand image. The first action that we will be taking is holding a press conference, addressing the issue and what we plan to do about it. In this conference we will be apologizing to the public for the error in production, while assuring them that we will be doing everything in our power to rectify this malfunction. We will be stopping production so that we can focus on fixing the current problem. This will also give us the opportunity to understand what is going wrong during the production of these vehicles. The next step will be to contact our customers who have bought the models that are listed above, offering to bring their car in to be fixed, as well as, giving out loaner cars in the mean time.
In order to increase our brand image, we will be making a commercial that explains exactly what is going on to the general public, this should eliminate any rumors that could harm our image of reliability and loyalty. To help keep in front of the media we will be setting up a blog where owners can log on and ask questions and get immediate answers in return. We will also continue to hold press conferences to keep the public informed on how the problem is going.
Once we start production again our plan is to not produce any cars with malfunctions, and to ensure this we will be running more tests on them at every step of the production line. There will also be a 30 day money back guarantee for new buyers.
Sincerely your risk managers,
Greg Maehara
Drew Kootman
Dominic Demark
Kevin Fanelli
Benyamin Widjojo
Erica Hollern
Tuesday, February 9, 2010
Toyota Memo
Justine Haga, Stephen Mariucci, Matt Parker, Anthony Vieira, Kelly Hausséguy, Annie Harrison
To: CEO Toyota
From Director Crisis Management
Date: February 5th, 2010
RE: Toyota Recall Accelerator pads
It has come to our attention that many of our products contain defective accelerator pedals. There are several aspects that we need to address in order to be prepared for the public’s imminent backlash. We propose the following crisis management plan in order to sustain our company’s reputation for high quality and ingenuity.
First and foremost we need to be truthful, take an apologetic position, and assume all responsibility. The clearer we are about the problem, the more receptive the public will be. We also need to issue information regarding a massive recall and let the general public know in detail how we are being proactive in fixing this problem.
In order to manage the media we will use various outlets such as twitter page updates, cellular phone update applications, as well as release a commercial about our company’s dedication to safety. We should also implement a permanent Toyota support website dedicated to recall information. This website will also allow the customers to input their VIN number in order to determine if their vehicle has been recalled. Additionally, if the customer discovers that their vehicle has indeed been recalled, there will also be an application for them on the support site to input their zip code. This will allow the customer to find the nearest Toyota dealership that can make the repair as well as make real time appointments. Also, we will set up a toll free number with 24-hour customer assistance regarding recall information for those customers who do not have internet access.
When customers come in to have the repair made, the following standards shall be upheld at every dealership: A step-by-step explanation of what the problem was as well as the details of the procedure. Also, a lifetime warranty should be implemented on the part replaced to ensure customer satisfaction. The mechanics must make sure that all customers’ questions are answered in full before leaving the dealership. It should also be made known that all of these repairs are covered 100% by Toyota.
In compliance with our duty to take full responsibility, we should also compensate all of those who have been the unfortunate victims of this defect. We need to release a separate public statement of apology to all of those immediately affected by these tragedies. It is important for our company to take a stance of full disclosure in order to retain customer loyalty. While these actions may seem outrageous and costly in the short run, the returns in the long run will be well worth it.
In order to prevent a similar situation from arising in the future, we should also do an internal investigation to find out how this problem went by unnoticed for so long, as well as introduce a more intensive control check. Above all, we must remember to be truthful.