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Backseat Driver: Toyota struggles with crisis

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February 1, 2010 1:18 pm
By Peter C. T. Elsworth

If the head of Toyota's North American sales intended to put consumers' minds at rest by appearing on NBC's Today Show this morning, he did not convince me.

Jim Lentz, president and CEO of Toyota Motor Sales, who appeared to be on his back foot most of the time, was surprisingly unanimated, parrying host Matt Lauer's questions with boilerplate answers.

He insisted that the company had been investigating the problem of unintended acceleration "for a long time" and was in the process of fixing it. No acknowledgement of responsibility other than to admit that it was possible that an emphasis on growth could have impacted quality.

Meanwhile, The New York Times has a crackerjack story today noting that Toyota had received more than 2,000 complaints resulting in a number of government investigations going back to 2002.

It said Toyota continually fudged its way through, thinking it had come up with the solution. But a fatal accident in San Diego in August involving a 2009 Lexus ES 350 sedan apparently set the current crisis off, with Toyota determining that the problem was floor mats getting stuck under the accelerator pedal.

But then another fatal accident in Dallas the day after Christmas involving a 2008 Toyota Avalon renewed fears after the floor mats were found in the trunk. Now the problem was sticking accelerator pedals.

Now the company, which built its reputation on reliability, is floundering as the problem has set off a domino effect of millions of vehicles being recalled.

In addition, the National Highway Transportation Safety Administration told Toyota to halt production and sales of the affected vehicles.

You would not have known this from the announcements that Toyota made; it sounded like the company was taking the responsible action itself. But apparently not, which to me is as telling as any other aspect of this story.

But if Lentz is anything to go by, it's not that surprising. Where was the passion? Is he just another bean counting MBA like some of the late unlamented honchos at General Motors?

What Lentz and his ilk seem to ignore is the emotional relationship consumers have with products, especially big ticket ones like cars and trucks, especially cars and trucks.

People buy Toyotas because they trust them through and through. That's a reputation earned over decades of producing vehicles worthy of that trust during a time when the Detroit Three seemed to have forgotten about maintaining its reputation.

Now Toyota seems to have lost its way just as Ford and to a certain extent GM have found theirs again. Toyota is losing sales as fast as it is losing its reputation. How could a company that seemingly did everything right make such a hash out of this?

The two great examples of corporate crisis management are the Johnson & Johnson Tylenol scare of 1982 - good - and the Exxon Valdez oil leak of 1989 - bad.

The former involved seven deaths from cyanide-laced Tylenol capsules. Johnson & Johnson chairman James Burke took full responsibility, pulled the product from every shelf in every market and went on an advertising and public relations campaign to inform the public. Tylenol was reintroduced months later tripled sealed and in caplet form.

The latter involved the spill of 10.8 million gallons of crude oil when the tanker Exxon Valdez ran aground on rocks in Prince William Sound, Alaska. Instead of rushing to the scene and taking responsibility, Exxon CEO Lawrence Rawl kept a low profile and remained at the company's headquarters in New York.

The delay translated as an evasion of responsibility for the biggest spill in U.S. history in particularly pristine environment and things only got worse when it was discovered that the captain, Joseph Hazelwood, had a history of alcoholism.

Watching Jim Lentz's uncomfortable and evasive performance on TV this morning, I confess I was more reminded of Exxon's dubious Rawl than Johnson & Johnson's admirable Burke.

Peter C.T. Elsworth

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