Toyota’s Troubles Self-Inflicted
Thursday, February 4, 2010
For several years, Toyota dismissed charges that many of its models are subject to sudden, unexplained acceleration. With the fatal accident last August of the Lexus driven by veteran California Highway Patrol Officer Mark Saylor, Toyota's attitude changed. We look at whether Toyota's proposed fixes are enough and what the corporation can do to regain its reputation for quality.
MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days on KPBS. Most of us have now heard the terrifying 911 call from a San Diego family minutes before their Lexus crashed in a dirt embankment in Santee. The car accelerated at 120 miles an hour, and the driver, CHP Officer Mark Saylor, could not stop the car. All four people in the Lexus were killed. Since that crash last August, Toyota has initiated the biggest recall in company history. But the reasons the company gives for the problem of sudden acceleration seem to keep changing. The National Highway Traffic Safety Administration says it will begin a background examination on whether electronic defects are part of these problems. Meanwhile, sales of Toyota vehicles in the U.S. dropped 16% in January. To help us understand the Toyota recall and its implications for the next generation of auto safety, I’d like to welcome my guests. Ken Bensinger, he is staff writer of the Los Angeles Time (sic) and, Ken, welcome to These Days.
KEN BENSINGER (Staff Writer, Los Angeles Times): Thank you very much for having me.
CAVANAUGH: And later in the program we’ll be speaking with Tom Gable, founder and CEO of Gable PR here in San Diego. Tom, good of you to come in. Thank you.
TOM GABLE (Founder/CEO, Gable Public Relations): Thank you. Glad to be here.
CAVANAUGH: Ken, every day it seems that we hear about another problem with Toyota. But let’s start with how you came to the story. Was it the accident that I referred to that killed CHP Officer Mark Saylor?
BENSINGER: Yes. Yes, it was. I was covering the auto industry for the paper and when that accident happened, actually one of the editors here called me in his office and we listened to the tape and discussed what it might mean and how that could’ve happened. We couldn’t come to a conclusion at the time and I sort of went home and thought about it for a few days. And then Toyota announced their recall, this was on September 30th, and when they announced their recall, it immediately just didn’t sound right to me and I spent over a weekend thinking about it, doing some research, doing some reading and spending some time looking at some public records and spoke to my editors and said, you know, we really better look deeper at this. There’s more here. And…
CAVANAUGH: What did you find out, Ken? How long have these concerns with sudden acceleration been floating around for Toyota?
BENSINGER: Well, they’ve definitely been around for a lot longer than Toyota’s ‘fessing up to. We found reports dating back to 2001 and on a second search we found them dating back until at least 1999. But in our most thorough searches, we see a huge increase basically in the 2001-forward period that just are skyrocketing. It’s worth noting that all automakers receive some complaints of sudden acceleration from time to time but our research show they just took off in a way that was outside the statistical norm in the last nine years.
CAVANAUGH: Now you say that what you were hearing coming from Toyota about what might be causing this problem didn’t really sit well with you. Give us an idea. Tell us what these differing excuses or reasons have been that the car company has given for the sudden acceleration.
BENSINGER: Well, they originally suggested it was a floor mat problem but the way they phrased it was that it was drivers incorrectly installing the floor mats and sort of placed the problem firmly on drivers. And then they actually went so far as to say there was no defect in the car, and that led to a review from government regulators. The National Highway Traffic Safety Administration took the extraordinary step of telling Toyota that, no, in fact there is a defect, which is something that almost never happens. That agency almost never publicly critiques an automaker like that. So then Toyota said, okay, well, there is a defect and in their additional information on the recall for floor mats they said they would be fixing pedals by modifying them or replacing them and they’d be changing some interior aspects of the car. At the time and actually up until the 20th of January, they continued to say it was only a floor mat problem. On the 21st of January, they suddenly said, oh, by the way, we also have a problem with a sticking pedal. This was a complete flip-flop because they had never said such a thing before and, in fact, we had met with them in our offices two weeks earlier and they had continued to say there was nothing except for the floor mat. Then they were saying it was the pedal. This was a revelation. And they pinned it all on this one Indiana-based part manufacturer that makes many of their pedals. But in recent days there’s a lot of questions about whether it goes beyond that, that it might be an electronics problem, that it could be some other kind of mechanical problem, that it could be design flaws, we don’t know. But a lot of that goes to the reporting we’ve been doing. We questioned back in November whether it was an electronic problem and we questioned even earlier whether it could – if the floor mat might not be an adequate explanation.
CAVANAUGH: I’m speaking with Ken Bensinger. He is staff writer for the Los Angeles Times. He’s written about this Toyota – this growing Toyota problem since at least last September. And, Ben (sic), you talk about now there’s this idea growing that this could be a deeper problem, perhaps going into the electronic makeup of the car. Tell us a little bit, who is floating that idea and why?
BENSINGER: Well, there’s a lot of people who understand automobile electronics who have felt that for some time. We got into it in November when we started to do analysis of complaints in relation to a thing called the electronic throttle system. And what that is is a system that replaces the old throttle system which was on the bottom of your pedal was a wire that was – or a cable that was connected directly to your engine and it literally manually moved – the cable moved the air flow, opened the air flow into the engine. That doesn’t exist anywhere anymore in most cars, and most cars now have what’s called an electronic throttle, which is a wire from the pedal to a computer, from the computer to the engine and so the computer’s the one that’s making the decision about how wide open to put your throttle. And that means you’re inserting software in a process that was once direct. So we looked at complaint volume and other things in relationship to the electronic throttle system. We found that it completely soars, it really skyrocketed once they started using that system. Now congress and the safety agency are starting to wonder if that might be the cause and, in fact, are sending letters to Toyota saying, you know, there’s spikes in all these cars when you put in an electronic throttle, could that be the culprit?
CAVANAUGH: I’m wondering, Ken, the sticky gas pedal explanation that Toyota has given for this huge recall last month, is that – did your paper explore the idea of other cars, other makes and models that might have gotten the same kind of gas pedal from the same manufacturer?
BENSINGER: Well, that’s an issue, actually, that federal regulators are – have opened an investigation of the parts maker to see if any of its other customers, meaning not Toyota, might have the same part. That investigation was opened last week and that parts maker, which is called CTS Corp., is supposed to respond soon. But CTS has vigorously defended itself and said that it doesn’t believe its pedals are the problem. So they seem to have been, at least their claim is, that they’ve been thrown under the bus by Toyota on this issue. Toyota has recalled all the vehicles that actually use that specific pedal because other vehicles that it sells contain a pedal made by another parts maker. So any Toyota made in Japan, for example, and many made in the U.S. and Canada contain a separate pedal. But we questioned the whole pedal theory in general. We had a story a week or two ago that looked at the pedal explanation and found, in fact, that there’s many, many, many complaints in vehicles that don’t have that pedal and that pre-date the time when that pedal maker made pedals for Toyota.
CAVANAUGH: I see. Ken, the newest report out of Toyota is the problem with the Prius’ brakes. And I’m wondering if you would tell us what that problem is as far as you know and also would this be a story if Toyota didn’t have so many other problems?
BENSINGER: Well, it’s a very good question, the second part. I’ll get to that one after I do…
BENSINGER: …the Prius brakes. The brake system only – it’s important to note, only affects the 2010 Prius, this is the brand new Prius that just came out, the new, redesigned Prius. And the – What they’re seeing is reports, they’ve gotten about 124 reports, federal regulators have, of brake hesitation, meaning you press the brakes and it takes a second or two before they engage, which obviously isn’t desirable. You want your brakes to work instantly. And it appears that that problem has to do with the fact that Prius has a very unusual braking system, as so other hybrids. And the way the braking system works is that there is regular brakes like on every car but there’s also a kind of engine braking that uses the electric motor and if you can imagine, you actually reverse the polarity—sorry to get technical on you…
CAVANAUGH: That’s okay.
BENSINGER: You reverse the polarity on the electric motor that drives the wheels and you turn it into a generator and that puts resistance on the wheels and the wheels actually turn the motor in a way to create electricity and charge the battery. And Prius owners will find that they drive thousands and thousands of miles and have very little brake wear because a big chunk of the braking on a Prius is done through electric motor braking rather than regular braking. That’s called regenerative braking. In any case, on the new Prius, which has new control software and other things, they’re finding this lag and people are wondering if it has to do with some kind of a problem in the computer to engage that brake system.
CAVANAUGH: My second question was would we have heard a lot about this if it weren’t for Toyota’s other problems?
BENSINGER: Well, and that’s a good question, too. You know, I had an interesting conversation with a Auto World insider the other day and he said, you know, these things don’t happen in a vacuum, and Toyota has a perfect image or close to it, or had a close to perfect image but the reality is that little things have been popping up with Toyota for a couple of years now. They had a terrible problem with this thing called engine sludge a few years ago, which it wasn’t a safety issue but it was a rather huge cost and inconvenience issue because it would destroy engines. And for years they resisted fixing the problem and they were sued and they finally caved and paid for some of these engines to be repaired. They also, last year, had a huge recall of trucks where the frame was rusting so badly that the spare tire, which hung underneath the frame, would fall off the truck, often when it was at speed. And you can imagine driving behind a Toyota when all of a sudden a big, giant spare wheel falls in the road in front of you. Would you rather…
CAVANAUGH: Not good. Not good.
BENSINGER: Exactly. Serious hazard. So there’s other quality issues out there. Consumer Reports, which always gave Toyota a free pass, has recently stopped giving them a free pass because they’re concerned about the quality as well. So these people are – people in the industry are thinking, well, Toyota’s problems, you know, are – come at the tail end of an increasing grade of problems that they have.
CAVANAUGH: Now, Ben, I know that – I’m sorry, excuse me, Ken. I know you have to leave us soon but I’m wondering if Toyota has been giving you a straight story about the problems that have – all these different problems that have come down. Is it that they really don’t know? Or is it that they are trying to obfuscate?
BENSINGER: I wish I had the answer to that. At times I’ve been tempted to believe it’s the second, that it’s an obfuscation thing, but I don’t really know because Toyota is pretty secretive about what they do and we don’t know what kind of conversations they’re having inside. And it is true that if this is an electronic problem, as we increasingly think it could be, those things are hard to spot and engineers there may not have really locked down the problem. But it’s also true that fixing things on cars is very expensive and fixing lots of things on cars has a very dramatic impact on a company’s reputation. And I don’t think Toyota, which is based entirely on quality and safety as a sales and marketing device, wants people to think that their cars are broken all the time. And it seems like there’s been a corporate pattern to ignore problems in the hopes that they go away and they don’t hurt their image.
CAVANAUGH: Are there more Toyota stories in the works at the LA Times? What are you working on now?
BENSINGER: Absolutely. Well, we’re taking a look at this Prius news today. We’re also looking at some of the ways that these problems developed, how Toyota handled it in recent months. And we’re looking forward to congressional hearings on this. There’s one next week, next – I think on the 10th of February. The House Oversight and Government Affairs Committee is going to hold a hearing on this, and on the 25th the House Energy and Commerce Committee, which is headed by California Congressman Henry Waxman, is going to look at this issue as well. Both of them have sent numerous letters to Toyota and to government regulators at the National Highway Traffic Safety Administration questioning their role in all this. And I might hasten to add that the role of that government agency has also come into question. They’ve investigated Toyota, we have found, eight times for sudden acceleration issues since 2003 and they never really found any significant cause of it other than two tiny things that were fixed or that were attempted to fix. And so some people are wondering where were regulators on this, were they asleep at the switch?
CAVANAUGH: Ken, thank you so much for speaking with us. I really appreciate it.
BENSINGER: Thank you very much for having me. It was a pleasure.
CAVANAUGH: Ken Bensinger is staff writer for the LA Times. And now I turn to my guest Tom Gable, in studio, founder/CEO of Gable Public Relations San Diego. And we turn to how Toyota has handled – how the company has handled the information that there’ve been problems with the cars and the recalls. Tom, you are a public relations expert, you advise business and corporations, and you have a checklist of how companies should deal with crises and it starts with three basic principles. Number one is to be honest and stick to the facts. So how is Toyota doing on that one?
GABLE: Well, as the writer just noted, not well. They’ve – he mentioned the word – you mentioned the word obfuscation. What they did is it looks like that maybe it was legal device – or advice, was they seemed to try and delay responding and they also were just responding piecemeal rather than saying, okay, we’ve got a problem, taking an immediate look at the facts, figuring out what existed behind the scenes and then how to really get out the word quickly, consistently to all their difference constituencies, and that includes consumers who were confused. Should I take my Toyota in? Should I stop driving it? What do I need to do? The dealers were confused and the advice was different whether it was – a Toyota executive speaking in the U.K. was providing one set of guidance, somebody in the U.S. was doing another. And nothing was coming out of Toyota. The Toyota CEO was quiet until he was ambushed in Davos.
CAVANAUGH: In fact, Ken’s explanation of the differing problems with perhaps the problem with the throttle, the problem with the brakes, was the most in-depth explanation that I have heard so far. Shouldn’t Toyota actually be doing more of that explaining to people what exactly the problem is even if they don’t know exactly what’s causing it?
GABLE: Yeah, absolutely. And you talked about the crisis checklist and the first thing, you know, be honest and stick to the facts…
GABLE: …which means you’ve got to delve into the facts and you want to really have a culture – if they’re talking about quality, it’s got – it can’t be just words, it’s got to be a culture of quality, and their engineers have to be involved in driving quality from the inside, from the design and how things work. It’s not an image problem, it’s a classic management operations culture problem they need to deal with. And then the communications follows.
CAVANAUGH: And the second thing on your checklist is to think strategically about the long term. How are they doing on that one?
GABLE: Terribly because if you think about how do you want to be known two years, three years, five years from now, what’s the word that’s going to pop into the frontal lobe when somebody says Toyota, is it going to be quality? Is it going to be ethics? Is it going to be trust? Are you going to trust the brand? Are you going to say, boy, these people screwed us around for years with the brakes, with the mats and everything else and they never told us the truth.
CAVANAUGH: Right, and what’s number three on the checklist?
GABLE: Well, number three is really to think about having unified and consistent communications when you implement your communications plan. And so, again, it starts with the reality of the situation. What does a company stand for? What are its core values? And you get those – a whole theory called image is a part of corporate strategy. So your strategy is designed to derive quality in everything from the way they answer the phone to the way they access their supplies to everything else, and then you communicate consistently with the same voice to all your audiences and you do it quickly. If there’s an issue, you don’t wait two weeks or three weeks until you’re pressed; you respond in hours and at least just say we’re working on it.
CAVANAUGH: You know, I’m wondering, I mentioned in the intro that sales, U.S. sales of Toyota had dropped 16% in January. And do you think that if they had handled their public relations differently that they would not have seen such a drop even though they had this massive recall?
GABLE: I think they still would’ve had the drop because they stopped manufacturing cars and they stopped delivering cars to the dealers and they, you know, they put ‘no sale’ signs on some of their cars so they had that. But if a company has really invested and an image is part of corporate strategy, its culture’s right, its values are right, a glitch like this will correct itself over a short amount of time. But if they don’t, you’re going to see a trend. The trend’ll be downward and they’re going to lose credibility and brand damage for the long term.
CAVANAUGH: So I’m speaking with Tom Gable. He’s founder and CEO of Gable PR right here in San Diego. What advice would you have given them besides those three top things on your checklist? What did you see them doing that you said, oh, my goodness, this is just – they’re going down the wrong path here.
GABLE: Well, they were using the ‘s’ word, they were being silent, they were being slow and they stonewalled. So what they needed to do was delve into the issues and have like their own internal SWAT team, a crisis team, that jumped in and really analyzed the situation and all the various parts that are in. Because as the writer from the LA Times mentioned, there are a lot of moving parts there of things that have been going wrong that Toyota tended to ignore. So throw a SWAT team on it, analyze what the issues are, and start communicating right away. And the U.S. Sales Manager from Toyota did that when they put him on “The Morning Show” as part of their PR plan where he acknowledged the issue, he empathized with, you know, their customers that, you know, things were screwed up and I’m sorry, and then three, he said, well, we have a vision for the fix. And he didn’t get specific but at least he started talking about, okay, the problem exists, we’re onto it, we’re sorry, we’ll fix it, we’re going to make it right for our customers. And they should’ve done that sooner.
CAVANAUGH: I’m wondering, a lot of people are seeing this Toyota problem in business terms, at least, as a potential bonanza for American car companies and other car companies. But I’m wondering, how do – don’t they run the risk of looking like they’re taking advantage of a situation? How do they exploit this advantage without looking – coming off bad?
GABLE: I think a couple of them are, General Motors and Chevrolet. Chevrolet has really scored well lately on the things like frequency repair, quality of their cars, which have improved dramatically. And some of the other American manufacturers are doing the same, Ford, in particular. So they’re investing in the quality of their vehicles and that’s going to speak to the public. And the public’s going to say, guy, these people are doing the right thing, they’re building better cars, they’re better designed, they’re more reliable, they’ve got better dealerships, the service people are nice. They’re really helping me.
CAVANAUGH: I see. So from your standpoint as a public relations expert, that is, Tom, you have – you’ve seen that Toyota has made a lot of mistakes in dealing with their recall situation so far. If you were advising them now, in the middle—in the middle—of this process, what could they do now in order to reclaim the Toyota brand name because it – as our staff writer for the LA Times said, I mean, it was really – that was a very strong brand, and can it come back?
GABLE: Yeah, I think they can. They’ve got a lot of good things going for them historically and he mentioned Consumer Reports gave them a free ride on giving them a Best Buy and Recommended. They can set a vision for where they want to go. They can acknowledge their problems and say we’re going to change what we’re doing in engineering or we’re going to change what we’re going to do in design and we’re going to have double check, triple check, quadruple check of everything that we do to make sure that we’re delivering the best we can. And that would get down to everything they do, service, dealers, you know, service after sale, and everything that they do and really make a commitment and so-call walk the talk. It’s not just, you know, PR and hype, you’ve got to get out there and walk the talk.
CAVANAUGH: Did you ever think about why people want to come back to brands after they’ve been tarnished so badly? We all recall, of course, Tylenol and now there are these commercials from Domino’s Pizza saying, you know, we served you up terrible pizza for years and now we’re – our pizza is better. Why would someone, after this, want to come back to the Toyota brand?
GABLE: I think in America people have a bit of a level of trust and if people are sincere, companies are sincere in what they do, people will give them a break. And there’s also been a lot of studies out of New York University, Harvard, Columbia, etcetera, that companies that invest in goodwill, a good reputation, and walk the talk, get a break. They’re allowed to have a screw up on occasion and then the people will come back to it because it’ll be a trusted brand and makes it – it makes it a little bit easier. Well, they didn’t do right this time but, you know, I’ve been with them 20 years and I think I’m going to give them another shot.
CAVANAUGH: Our staff writer for the LA Times mentioned congressional hearings that are going to be coming up and we all remember how badly the American CEOs came off when they testified before congress for the bailout. So what would you be suggesting for the Toyota executives who are going to be questioned by congress?
GABLE: They’ve got to go in there and stress the core values that they stand for, that they are going to be the best engineering company in the history of the earth, their people are going to be trained to provide the best service, they’re going to invest to make sure that nothing ever goes wrong before and if – in the future and if it does, they’ll fix it faster than ever before. So they need to go in with a plan how – what they stand for, their core values and then communicate it and be able to provide the facts of what they’re doing.
CAVANAUGH: We’ll see if they do that. Thank you, Tom.
GABLE: Yeah, thank you, Maureen.
CAVANAUGH: I’ve been speaking with Tom Gable, founder/CEO of Gable PR in San Diego. Earlier in the show I was speaking with Ken Bensinger, staff writer for the Los Angeles Times. If you’d like to comment about anything you hear on These Days, please do it online, KPBS.org/thesedays. Stay with us for hour two of These Days coming up in just a few minutes here on KPBS.