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Product Recall

Product Recall. What: Toyota Sticking Accelerator Pedals Recall Date: January 21, 2010 [1]

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Product Recall

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  1. Product Recall • What: Toyota Sticking Accelerator Pedals • Recall Date: January 21, 2010 [1] • Why: A friction device in the electronic accelerator pedals could become worn and cause the accelerator to be slow to return to its idle position once foot pressure was removed. In extreme cases the pedal could become stuck in an open throttle position. • Incidents: This recall followed another recall in October of 2009 for floor mat pedal entrapment. At the time of the recall, there were no known injuries or deaths related to this specific issue, but Toyota had received complaints of unintended acceleration in cars without floor mats, an issue that had led to the deaths of four people.[1] [2] • Number of Units Sold:2.3 million US cars and trucks [1] • When Sold:Model years 2005 to 2010

  2. Management Issues • Recognition of Problem: Toyota made a “remedy repair” available at the time of the recall, and they also designed new pedals for the affected vehicles. Anyone who chose to have the remedy repair could also have the new pedal installed once it was available. [2] • Speed of Response:The sticking pedals first came to light in Europe in 2008, where, in 2009, distributors were directed to replace the pedals if customers complained. Toyota knew of the sticking pedal issue in US vehicles months before issuing the recall and had made plans to address it without alerting safety officials. The plans were verbally canceled before more incidents forced Toyota to issue a recall. After the recall Toyota submitted a false timeline to make their response seem quicker than it had been. [3] • Responsibility: At the time of the recall, Toyota claimed to take full responsibility for the issue. Since then they say they have instituted fundamental changes across all of their operations in an attempt to be a more responsive company, “put [their] customers first,” and regain the trust of the public. [4]

  3. Impact of Recall • Legal Consequences: As part a recent agreement with the government, Toyota has been fined $1.2 billion. The agreement stipulates that Toyota must “acknowledge the facts of the government’s case and have an independent monitor review its safety practices,” but no employees will serve time in prison. Toyota has to settle hundreds of wrongful-death and personal-injury lawsuits. [3] Also, Kuoa Fong Lee was released from prison after serving 2 years once it was suggested that his vehicular manslaughter case could have been the result of the accelerator issues. [4] • Reputation: Toyota’s reputation suffered in the immediate wake of the recall as its reputation was built largely upon safety and quality. The year of the recall, Toyota was one of only a few major automakers not to have financial gains. However, Toyota was already regaining its market share by 2012 with projections indicating it could regain its sales figures, as well as it reputation, prior to the recalls.[5] • Sales: In 2010, after the recall, Toyota’s sales fell flat ending its “30-year unbroken run of market-share increases in the U.S.” Toyota estimated that the costs of the recalls and the lost sales would be around $2 billion excluding any settlements and any other legal fees. In the years since the recall, sales have begun to recover. [5]

  4. References [1] Bunkley, N. (2010, January 21). Toyota Issues a 2nd Recall. New York Times. Retrieved November 30, 2014, from http://www.nytimes.com/2010/01/22/business/22toyota.html?_r=0 [2] Aldana, K. (2010, February 1). Consumer Advisory: Toyota Owners Advised of Actions to Take Regarding Two Separate Recalls. National Highway Traffic Safety Administration. Retrieved November 30, 2014, from http://www.nhtsa.gov/CA/02-02-2010 [3] Douglas, D., & Fletcher, M. (2014, March 19). Toyota reaches $1.2 billion settlement to end probe of accelerator problems. The Washington Post. Retrieved November 30, 2014, from http://www.washingtonpost.com/business/economy/toyota-reaches-12-billion-settlement-to-end-criminal-probe/2014/03/19/5738a3c4-af69-11e3-9627-c65021d6d572_story.html [4] Ross, B., Rhee, J., Hill, A., Chuchmach, M., & Katersky, A. (2014, March 19). Toyota to Pay $1.2B for Hiding Deadly 'Unintended Acceleration.' ABC News Network. Retrieved November 30, 2014, from http://abcnews.go.com/Blotter/toyota-pay-12b-hiding-deadly-unintended-acceleration/story?id=22972214&singlePage=true [5] Ramsey, M. (2012, December 27). Toyota in $1.1 Billion Gas-Pedal Settlement. The Wall Street Journal. Retrieved November 30, 2014, from http://online.wsj.com/articles/SB10001424127887324669104578203440990704994

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