Yesterday, Toyota announced a recall due to a fault with the window switches in 7.4 million cars – roughly the same number as their total sales for the last financial year. Has the car maker learnt some crisis management lessons from the ‘unintended acceleration’ recall crisis it faced in 2009? As crisis management experts, we take a look at both recalls and see how Toyota has fared so far.
In 2009, Toyota’s reputation took a beating when it was forced to issue a 12-million vehicle recall for problem accelerators that ostensibly caused cars to speed-up suddenly for no apparent cause. It later materialised that there was no electronic-based cause for ‘unintended acceleration’ in Toyota vehicles, but a prolonged media frenzy, a $16.4 million civil penalty for their mis-handling of the crisis, and a halt to sale and production on certain models had already damaged Toyota’s brand perception and bottom line.
The scale of last week’s announcement provides a unique opportunity to examine one company’s response to two similar events.
The 2009 Recall: A Media Firestorm
Toyota was accused of dragging its feet in its response to the 2009 issue: announcements were slow and sporadic whilst the crisis escalated over several months, with additional recalls being made. It reached a crescendo on 5th February 2010, when CEO Akio Toyoda issued a public apology, over 6 months after the problem first surfaced, when 4 people were killed in a car crash involving a Lexus ES 350 in August 2009.
A media firestorm kept the company on the back foot throughout the crisis, fanned in no small part by lack of clear and factual information. In the first week of February, the Toyota crisis was the second most reported story in America, making up 11% of all news coverage, with crashes involving Toyotas – even those without any reported accelerator problems – making headline news. Toyota dealers in the southeast US added fuel to the fire by pulling all advertising from one national US television network in protest at “excessive” reporting.
It was a classic example of the power of rumour and speculation, and the crisis management maxim that ‘a media vacuum will always be filled’. Toyota only began to give interviews in late January, and media channels filled the void with (often erroneous or irrelevant) stories of their own. Within one month, Toyota stock prices had plummeted by 20%, which amounted to a $35 billion loss of market value. True crisis communications only materialised in March 2010, in the form of a news conference disproving claims made in the press with live experiments on rival manufacturers’ cars. By this point the damage to the brand’s reputation, founded on quality and safety, had already been made.
So what do they need to do to ensure history does not repeat itself?
- Respond quickly, transparently and honestly
- Proactively send customers information on the issue and guidance on what to do
- Reassure customers and stakeholders by demonstrating that the situation is under control
- Correct mis-leading or erroneous reporting publicly as soon as possible
- Be true to the brand – ensure that safety is always their no. 1 priority
2012: Has the Car Giant Learnt From It’s Mistakes?
So far, so good. The most recent recall was announced quickly – before any accidents or injuries had occurred. The details on which models were affected in which regions have been widely publicised, along with possible implications and advice. Drivers of affected vehicles have been told they will be contacted directly by the company.
Toyota has already identified and announced a specific solution along with the recall: traditional lubricant should not be used on sticking window switches and drivers should bring their vehicles in to be checked and if faulty, they can be fixed in 40 minutes.
One area for improvement, however, would be their social media strategy. So far @Toyota has re-tweeted one media item about the recall, and @toyota_europe hasn’t mentioned it at all. Similarly, their Facebook page makes no reference to yesterday’s announcement. @ToyotaGB is doing a great job, however, replying directly to customer questions, clarifying media reports with links to statements and directing people to more information. People use social media as a news source more than ever, and Toyota would benefit greatly from learning from team GB and incorporating social media into future crisis management plans across all international teams.
Overall, Toyota have made a promising start. It seems like Toyota have over-hauled their crisis management following the 2009 episode, and although their latest recall could be financially costly, their reputation will likely emerge intact and possibly even be enhanced amongst customers.
————————— UPDATE —————————
It has since come to light that there were, in fact, 9 reported injuries in the US as a result of the faulty switch, contrary to Toyota’s initial statement. Toyota’s PR department has called this an “embarrassing but honest mistake”, highlighting another crisis management maxim – external comms is only ever as good as your internal communication, so keep your PR team in the loop!
You can read our latest analysis of the ongoing Toyota recall crisis here: https://crisisthinking.co.uk/2012/12/04/toyota-recall-reputation-update/