Toyota bragged it saved more than $100M in '07 recall

Gee, I wonder why they didn't quote the actual wording, that they call 'bragging'.

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If you read further, Toyota saved quite a bit of money by not wasting labor on vehicles that would not benefit from a recall. Also the presentation was from a regional division, not from corporate. There needs to be a distinction.

It's just the season to kick Toyota while they're down.

 

Here's the LA Times take on that story:
http://www.latimes.com/news/la-fi-toyota-docs22-2010feb22,0,6178659.story?track=ntothtml

It sounds like the Toyota US department responsible for managing regulator relationships was trying to take credit for its accomplishments.

 

Here's a pdf file from FoxNews showing part of the meeting doc.

Interestingly, under the Impact of "Quality" context, Toyota executives were aware that NHTSA was under political pressure and the net effect will have more investigation and "forced recalls".

And under "Wins for Toyota", I don't notice any bragging nor boasting made. The content only briefly state the savings and cost involved in each safety-related issues.
This document should be seen within the context of confidential company product/operations review which any other enterprises will do.

Did I mentioned the pdf also included a class action against Prius headlamp?

 

If you have ever been to a meeting, the points under wins normally mean they are proud of it. I'm not sure how factually you can get a misreading on bragging for that, but not on "brake feel" when the brakes do not stop as fast as they should.

Inevitably, toyota's "win" turned out to be a loss. As they are now saying these win's over the years will now cost them approximately $2B in other recalls and lost sales. Mr. Toyoda has also said they will be putting the accelerator brake interlock into new cars.

Only a truly dishonest spun reading of that pdf and other news about unintended acceleration could take this as something like media hype about poor Toyota, when it did nothing wrong. This is not a smoking gun, but it is one more piece that internally to Toyota saving money was more important than honestly looking at the safety of its cars and and fixing the problems. Only recently have they started to diverge from that path. If you will note the new recalls (corolla steering, prius brake software), change in new vehicle safety systems, commitment to openness to the investigations. I hope this is a real change as ford has seemed to do, and not just temporary expensive pr until the heat goes away.

 

We should not forget that Toyota is a public corporation, and the reason for a public corporation to exist is to make money for the stockholders (despite the myth that they exist to make the CEO rich). Saving money on a recall IS reason to boast - it supports the Prime Directive of the public corporation.

That said, a corporation is expected to have some responsibility to consumers and the community, if only to ensure their image remains solid to promote sales (thus increasing profit). Additionally, it is the job of government AND the consumer to hold corporations accountable for their secondary responsibilities (in this case, things like public safety). As consumers we do this by voting with out dollars. Government does this by imposing laws and regulations when corporations fail to self-regulate to the satisfaction of the public.

Most of this I learned in classes two degrees ago, and through a lifetime of observation of contemporary corporations plus reading about past corporations. Toyota has been "caught" being a corporation, and is being "punished" for not meeting what some aspects of American society see as their civic duty. Compared to, say, Enron, what they have done is of a much lower order of magnitude. However, it can be argued that the actions of Enron's management did not directly endanger human life, so there might be those who argue that Toyota is worse than Enron from a social responsibility standpoint.

 

Keep in mind the source. It's the DETROIT news.

Also these hearings just are going to be another round of hurt for Toyota.

But so far, so what?

Every automaker on the planet doesn't want recalls. Toyota certainly is no exception. Finding 2 year old documents stating that: Negotiated 'equipment' recall on Camry/ES re SA (Sudden Acceleration); saved $100M+, w/ no defect found," Doesn't suprise me at all and really shouldn't be so shocking despite the tone inwhich it is being spun. The key words in the sentence are w/ no defect found...

At that time the defect was undiscovered. Was Toyota suppose to launch a massive recall of all their vehicles to implement an unknown fix to an undiscovered problem?

I'm not blindly defending Toyota. I'll be interested in the hearings and watching as closely as time permits for me. BUT In any information that gets revealed I think the litmus test should be "are we/they holding Toyota to realistic standards or the same standards they would hold any other automaker?".

IMO if 2 years ago Toyota was happy thinking that the problem was as simple as floor mats and communicated internally as much? I have no problem with that because under exact same circumstance I think any automaker would do/be the exact same thing.

It's Toyota's responsibilty and IS vital to their survival to produce vehicles that meet safety standards. But it's also Toyota's goal to make money and produce a profit for a healthy company. I don't care if it's Toyota, Nissan, Honda, Ford, GM...name em...all manufacturers strive to avoid recalls and if they think they can solve or avoid a recall they are going to be happy about it.

Maybe they will find a smoking gun, but IMO as much as Detroit News and a lot of the media seem to want it to be, this IS not it.

Find me a document that proves they knew 2 years ago it wasn't the floormats and then we can talk.

 

I don't think a whole lot of people would take issue with a "win" being "pushed back safety standards" because a little more research on some things can make them cheaper in the long run though early development and limited release of safety technology. However, the "avoided safety investigations" part is what really toubles most people because they were led to believe that the vehicle they purchased was engineered to a certain standard and they may feel they were lied to.

 

Nice find. Page 9 of 10 (this page is numbered 15 on the slide) is interesting as it lists Key Safety Issues from the perspective of the presenter.

I assume that the issues are listed in descending order of importance. FMVSS 305 sets standards for battery electrolyte leaking out, and shock protection in the event of an accident.
http://www.nhtsa.dot.gov/staticfiles/DOT/NHTSA/Vehicle%20Safety/Test%20Procedures/Associated%20Files/TP-305-00.pdf

In retrospect, it is amazing that item is listed above "sudden acceleration".

Also interesting is to note that Prius and other Toyota hybrids account for three out of seven items on that list.

In the context of that presentation, does "no defect found" mean that NHTSA agreed not to formally state that a defect existed, in consideration for the negotiated recall?

 

So ... if a business states, "The recall will cost $100 million" ... that equals a complaint.

and ... if a business states, "NO recall saved $100 million." ... that equals a brag.

I thought that'd be called a 'statement' ... not implying morality & emotion either way.

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I don't think that's a deal the NHTSA could even make if they wanted to. If a defect is found, I think the NHTSA is obligated to state their findings. There might of been doubts, suspicions and even fears but I think 2 years ago it was Toyota's valid contention that the problem was primarily loose floormats.

The NHTSA cannot formally state that a defect exists if it hasn't been formally defined and discovered. 2 years ago that was the case.

IMO despite the spin many want to put on this, this isn't a document revealing any business practice that exceeds what any other Automaker would do.

Might such a document come to light? Stay tuned. I'm afraid it's going to be another tough month for Toyota.

 

..and for NHTSA.

 

Safety agencies often work this way. The purpose of a safety agency is to protect public safety. Often it is better to negotiate an early settlement than to fight a protracted battle. If the settlement fixes the problem, it will save money and time, and in the case of safety, time often translates into lives.

Our court system does the same thing with plea agreements. Often a prosecutor will agree to a lesser charge in exchange for a guilty plea, saving time, money, and guaranteeing a conviction.

The question comes down to whether you agree with the negotiated settlement, and that will depend on the case by case details.

Tom

 

I agree completely with this.

I let my cynicism show through on this case. Past experience with other safety agencies and circumstantial evidence let me color the statement.

 

Toyota will survive. It's a company with a lot of employees. Some are bright, some are dim-witted. They make good cars but they aren't solely responsible for their safe operation. Highway engineers, street maintenance workers, auto mechanics and drivers all play a part.

Americans have forgotten that the VW Beetle was designed under Hitler's regime (and he apparently was pretty involved in it). Or that Mitsubishi makes cars and used to make Zero fighter planes used at Pearl Harbor. Or that Fords, GM and Chrysler have all had vehicles with major safety issues. Audis are considered cool today, even with past unintended acceleration issues (and they're being investigated again by NHTSA). People will forget the media frenzy. Hopefully, Toyota will make some changes in how they deal with safety complaints- giving them both more credence and more intense efforts to prove them invalid if appropriate.

I drive my old Blazer in the snow, not because the Prius won't go, but because of the other drivers. And I'm much more concerned with the person fiddling with their ipod, their makeup, their cell phone, or dealing with their kids than I am with the Camry or Prius behind me.

I love my Prius. It's got some quirks but that's part of the fun. I'm much more likely to buy another Toyota before I get rid of this Prius. So Toyota's troubles don't hurt my pocketbook.

 

I love it. I can see Toyota's next apology commercial. B/W photo's of families and vintage Toyota's fading in and out. With a voice over:

"Toyota, we are a big company with a lot of employees. Some are Bright, some are dim-witted. As part of our effort to improve we've identified the majority of the dim witted ones and they have now been relegated and confined to setting up the large Solar Powered Daisies at Toyota public events. The bright ones are being retained in development, design and production..

Toyota: Less Dim Witted Than Ever!

Fade to Black

 

I probably should not be responding, but lets put some facts out there.

I was looking at the information in context. Looking at it as an isolated incident does allow for certain ambiguities. The spin just does not make any sense with the other information available.

Why does there need to be a litmus test on a single document? Why a litmus test at all? What does this document say in context with the other information that has come out about this issue and toyota dating back to 2004.

I think it takes as we say here large cohones to ask for credit for a large fix, when people are upset about a long time of ignoring something and saying its not a problem. If you set a fire, let it burn for a long time, then finally put it out, would say look at me, I put that fire out? I deserve a lot of credit.

The question is what hurdle of proof do you need. What evidence is not part of a witch hunt or media hype.

I said it wasn't a smoking gun. Most large corporations are skilled enough at disposing of these. I think you are reading something into the documents that is not there. That is unless you mean relatively easy to fix means, obfuscate so that you don't need to fix them and pay a little in lawsuits.

My figure on the cost is hindsight. The rest was not. I included the toyota estimate of $2B as evidence that this practice was not good for business. Ignoring and stopping safety investigations is not a good business practice. If the dead bodies aren't enough to convince you of this (which is all the evidence I need), look at profit. There are large number of cases where the liabilities dwarfed the savings. These include many cases in automobile manufacturing and outside of it. So bad businesses from a long term profit point of view. Bad business from a PR point of view. Even if you don't agree with me that safety should be an overriding corporate value and come before increased sales and profit. That is why IMHO the short term "win" of $100M really is a long term loss of faith with a cost of $2B. The figures are hindsight, the business case was available long before 2004.