Crisis Management at Toyota

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"The shame and embarrassment of owning up to product defects in a nation obsessed with craftsmanship and quality raises the bar on disclosure and assuming responsibility. And a high-status company like Toyota has much to lose since its corporate face is at stake. The shame of producing defective cars is supposed to be other firms' problems, not Toyota's, and the ongoing PR disaster reveals just how unprepared the company is for crisis management and how embarrassed it is."¹

- Jeff Kingston, Director of Asian Studies at Temple University, Japan, in 2010.

Failure in Crisis Management?

In April 2010, Toyota Motor Corporation (Toyota) agreed to pay a whopping US$16.4 million fine imposed on it by the National Highway Traffic Safety Administration2 (NHTSA) in the US. The fine related to sticky accelerator pedal defects in its vehicles, which resulted in the company recalling approximately 2.3 million vehicles in the US in late January 2010. According to industry observers, the fine was the largest civil penalty ever levied on an automaker by the NHTSA. Regulators said that Toyota had been penalized as it had failed to notify the NHTSA for at least four months after learning about the problems in its vehicles.

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1] Jeremy Cato, "Crisis Management Not Toyota's Strong Suit," www.theglobeandmail.com, February 25, 2010.
2] The National Highway Traffic Safety Administration (NHTSA) is an agency of the US Department of Transportation (DOT). Its objective is to save lives, prevent injuries, and reduce economic costs due to road traffic crashes through education, research, safety standards, and enforcement activity.

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