Analysis of Toyota’s crisis public relations!

Toyota is a national brand of Japan and a world-renowned automobile brand. The cars it produces and sells are the world's best-selling cars, and its production management system, the Toyota Production Model, is also a well-known world-class corporate management standard. Its sales markets are spread all over the world, and China is also an important market. The company once borrowed a Chinese folk proverb as its advertising slogan: "There must be a road before a car reaches a mountain, and there must be a Toyota car on the road." This made Toyota brand cars a household name in China and its sales volume very impressive.

Although Toyota's global development is remarkable, it has not been smooth sailing. In the past decade, it has encountered many crises and major setbacks. In addition to the "recall gate" problems related to automobile quality and safety, Toyota's crisis public relations have always been in a passive and inactive situation amid the tense atmosphere between Japan and its neighboring countries.

1. Toyota's global recall incident in 2009-2010

From November 25, 2009 to January 27, 2010, Toyota recalled 5.55 million vehicles in North America, including 13 models of Lexus ES350 and Camry, due to the serious safety hazard of "slipping of the accelerator pedal due to the foot pad".

On January 21, 2010, Toyota recalled eight models of its Corolla, Camry, etc. in North America and Europe due to "problems with the return of the accelerator pedal", posing serious safety hazards. A total of 2.48 million vehicles in North America and 1.71 million vehicles in Europe were recalled. On the same day, 80,000 RAV4 vehicles in the Chinese market were recalled due to the same safety hazard, and 180,000 RAV4 vehicles in other regions were recalled.

On February 9, 2010, a total of 430,000 vehicles were recalled worldwide, including four models of Prius, due to serious safety hazards in the "hybrid vehicle brake control system";

On March 2, 2010, a total of 934,000 vehicles were recalled worldwide, including four models including Camry and RAV4, due to serious quality and safety issues such as "small holes in the rubber oil pipes of the engine."

Event Overview

From August 2009 to the end of January 2010, a Toyota Lexus car in California, USA, caused a major accident due to "sudden acceleration", resulting in a total of four deaths. By then, media from across the United States flocked to the car company to question the brake quality issues of Toyota Lexus and conducted continuous follow-up reports on the problems, which aroused great public concern. At the same time, the incident also attracted the attention of the US government, which began to put strong pressure on Toyota, causing it to admit that its cars had problems with floor mats and accelerator pedals. This triggered a series of crisis events and attracted long-time competitors to take the opportunity to participate in the competition for market share vacuum, further exacerbating the impact of Toyota's crisis in the global market and causing it to suffer unprecedented economic losses.

In February 2010, Toyota Motor's best-selling model, the new hybrid car "Prius", was exposed by media in the United States, Japan and other countries due to problems with the brake system. On February 5, Japanese media reported that Toyota Motor Corporation decided to recall 270,000 of this new car in the US and Japanese markets. However, the spread of the incident developed far beyond expectations, and the crisis fermented to the world in a short period of time, resulting in a total recall of 430,000 vehicles. This incident was called the "brake gate" incident.

In March of the same year, Japan's Toyota Motor Corporation announced that it would recall a total of 934,000 vehicles for several products sold in the U.S. market due to the risk of oil leakage from the engine oil hoses, which would cause engine damage and other problems. This incident was also called the "oil pipe gate" incident.

Global Quality Control Conference

On March 30, 2010, Toyota held its first Global Quality Special Committee meeting, with more than 50 managers from China, Europe, the United States and other regions attending. During the meeting, it was announced that six technical offices would be added in North America to allow more engineers to monitor vehicle failures. Related technical offices would also be established in Europe, China and other countries. Safety managers at the Japanese headquarters would work together with safety managers in various regions around the world to resolve and deal with quality issues. Market quality managers in each region would be responsible for sharing customer complaint information in their region. The original headquarters-coordinated market model for various regions would be transformed to form a new working mechanism.

The meeting also announced plans to strengthen quality control measures, including plans to open customer service training centers in major regions around the world by July. It also plans to invite third-party experts from each regional market to evaluate quality improvement measures. At the same time, four external experts will be invited to evaluate the measures developed by the special committee and announce the first evaluation results in June.

The spokesman also said Toyota will hold another special committee meeting in September of the same year.

Reactions to the “Recall Gate”

1. Competitors

General Motors

As a giant in the American auto industry, General Motors has launched a series of preferential measures for Toyota owners, such as car purchase discounts and interest-free loans, and claimed that the help was provided at the request of Toyota owners.

Ford Motor

As an American giant comparable to General Motors, Ford Motor Company announced to used Toyota owners and car leasing users that their old Toyota cars can be used to offset the cost of purchasing a Ford car.

2. Dealer

Reuters has reported that Toyota dealers across the United States replaced defective parts in a timely manner, accelerated processing, replaced lubricants for free, and provided car rental services in an effort to provide additional services to car owners in an effort to reverse the damage to the company's reputation caused by the crisis.

3. Consumers

Consumers around the world show different attitudes, but generally remain skeptical. For example, Toyota may recall more vehicles due to loopholes in its review and failure to conduct a comprehensive investigation into the issues that caused the accidents. According to the survey information at the time, its supporters were less than 40%, and among them, only about 37% of the respondents still believed that Toyota was a responsible brand enterprise.

4. International Government

After the incident broke out, governments around the world, led by the US government, urged Toyota to recall the problematic models and began a step-by-step pressure strategy in all aspects.

Members of the U.S. House of Representatives pointed out that Toyota deliberately concealed the truth about the loss of control of the problem model. They used different words to describe the cause of the incident on different occasions and said that Toyota was suspected of concealing the truth.

Agence France-Presse reported that the US government's National Highway Traffic Safety Administration will impose civil penalties on Toyota due to large-scale safety hazards;

Senior officials from the U.S. Department of Transportation singled out Toyota for its slow response to the recall scandal, saying that the so-called recall was agreed upon only after pressure from the U.S. government. They also said that even though Toyota was already carrying out the recall, it was the result of a lot of effort from the U.S. government.

5. In Japan

Japan's Ministry of Transport requested and ordered Toyota to conduct a detailed investigation into the complaints. A spokesman for the Ministry of Transport said that all fourteen complaints were related to the new Prius hybrid vehicle, and that the intensive complaints in a short period of time were abnormal.

Toyota's headquarters' suspension of sales and efforts to address product defects have heightened consumer concerns, and news media said Toyota's crisis may affect the international reputation of Japan's manufacturing industry, which relies on quality and reputation to survive. Other media outlets are very worried, believing that the Toyota incident will recreate the situation in US-Japan trade in the 1980s, and that Americans will once again become hostile to Japanese companies. If Toyota handles the situation improperly or measures are ineffective, the situation may become even more serious.

6. Former employee reveals "quality scandal"

While the "recall gate" incident has not yet subsided, Japan's Toyota has once again been caught in the vortex of the "quality gate" incident. The deception involved is even serious enough to completely overturn Toyota's credibility in the hearts of global consumers. A 75-page indictment accuses Toyota of concealing and destroying information on more than 300 rollover deaths and injuries, saying the tragedies were caused by violations in vehicle engineering design and safety testing.

The person who filed the indictment was Dimitris Biller, a former employee of Toyota North America. He joined Toyota in April 2003 as a national management committee member involved in the investigation of Toyota rollover accidents and worked there until 2007. The indictment was actually filed with the U.S. District Court for the Central District of California in July 2009, and Toyota's U.S. legal team responded by stating that "Bieler had no right to disclose such a high-level trade secret."

7. Chinese Market

Toyota's quality control was once the standard for the world's automobile manufacturing industry, and it was hailed as the "rich businessman" among global automakers. In the Chinese regional market, Toyota cooperates with FAW and GAC. Vehicles produced by the two factories are also included in the recall, with a total of about 688,000 vehicles recalled. However, the recall notice issued by China's State Administration of Quality Supervision, Inspection and Quarantine stated that Toyota cars in China are two "joint venture manufacturers."

On the other hand, in an interview with the media, a supplier of FAW Toyota speculated and revealed that the problem in Toyota's "recall gate" incident should be a problem of parts suppliers. Some modules were ordered as a whole from outside, and the grease of these modules had been applied when they arrived, rather than a quality problem of Toyota's factory. Although this news was able to reduce concerns about production problems at car manufacturers, it also exposed serious problems at car manufacturers in product external inspection and implementation of relevant standards.

Analysis of the pros and cons of the "recall gate" incident

After some investigation, it was concluded that Toyota's internal management system and the suppliers in the Toyota system are actually controlled by Toyota, and the main customers of these suppliers are Toyota, which leads them to find ways to ensure the profitability of the suppliers, so these suppliers will hardly face market competition. As the profits of complete vehicles continue to decline, the supplier system can only expand "economy of scale" to reduce costs and thus achieve profitability, making Toyota's control strategy meaningless.

In the Chinese market, sales of models such as Camry and Reiz have declined significantly due to the incident, and large models launched later have also been hit. Under such circumstances, Toyota's production model has once again been questioned. This model, as Toyota's business philosophy, has been exposed to serious defects and drawbacks in cost control and market decision-making under the influence of the financial crisis and large-scale public relations crisis. The reflection on Toyota's supply chain triggered by this shows that, while profits and scale are important, product quality should receive more attention from Toyota. The problematic parts in the cars recalled in China are precisely the products provided by Toyota's Japanese core component suppliers.

1. Toyota’s “gain”

Repair image

After the crisis broke out, Toyota published advertisements and special pages on its official website and in the media to declare its position, and promptly announced the progress of crisis management on its official website. It used online media to establish communication channels with consumers to answer public concerns, and disseminated apology statements and explanations of recall issues on well-known websites.

At a hearing in the U.S. Congress, Toyota President Akio Toyoda promised to properly repair the recalled vehicles, strictly implement the product concept of safety first and customer first, and gave a plan of improvement measures that Toyota will implement. At the hearing in China, Toyota's president announced three major problems with Toyota cars and gave three measures to protect the rights of Chinese consumers. He also formally apologized for the recall incident on the spot and promised to avoid similar incidents from happening again.

Crisis Cutting

Toyota's president accepted all the criticisms at the hearing in the United States, but insisted that the sudden acceleration of Toyota cars was due to problems with the floor mats and accelerators, which had nothing to do with Toyota's electronic control system. This is an obvious way to effectively separate the core technology from the flaws in the automobile production process, limiting the core problem of the incident to individual components rather than spreading it to the core technology part of the entire vehicle. It also repeatedly emphasizes that the problem only occurs in specific Toyota models, not all cars. This is also a crisis management strategy that limits the problem to a specific model and avoids further expansion of the problem.

Crisis transformation

When the source of the crisis was confirmed, Toyota began to improve product quality based on this as a starting point and took corresponding measures. Among them, the establishment of a global quality special committee to promptly understand the opinions of customers in various regional markets was an effective solution. The subsequent large-scale promotional activities also led to a significant recovery in Toyota's sales in the US market. This recall incident not only made Toyota realize its own serious defects, but also gave it an opportunity to re-examine itself from the halo of the "altar" in the industry. Perhaps it is precisely because of this pattern that the world's super companies with strong vitality can still handle crises with ease and get the opportunity to regroup under such a fatal blow.

2. Toyota’s “failure”

Compared with what Toyota gained, its losses are more worthy of attention. Since the millennium, Toyota has begun to cut the costs of more than a hundred core components, resulting in frequent traffic accidents and constant complaints and disputes. However, these have not been taken seriously by the company's senior management and decision-makers until the incident evolved into official intervention by the US government. Toyota, which has long been hailed as an industry leader but neglected its sense of crisis, turned a blind eye to frequent quality problems and ignored crisis warnings and responses. This led to the "recall gate" incident being placed in such a serious situation in front of Toyota, causing it to be in a panic and overwhelmed for a while, and also gave rise to more hidden dangers in the crisis incident.

Toyota's lack of awareness of crisis was also reflected in the early stages of the incident. When the U.S. Congress announced an investigation into Toyota, it still hadn't taken any crisis public relations action eight days later. In addition, its apologies and handling of the incident in all subsequent stages were slower than the expectations of the media and the public. In the early days of the incident, the company denied its own problems, and although its president answered reporters' questions in a gentle manner at a briefing in China, his answers were always brief and to the point, without any attitude of truly solving the problem. In the process of handling recalls, there is also a public relations attitude of not treating everyone equally. The recall in the United States adopts door-to-door service and is based on corresponding compensation. If American consumers drive back to the factory by themselves, there are transportation subsidies, and there are also vehicles of the same model for consumers to use temporarily during the repair process. However, Chinese consumers have no treatment at all. Although this differential treatment of Chinese and American consumers has not fundamentally affected the purchasing enthusiasm of Chinese consumers, it has planted serious hidden dangers at the social and public level.

2. Follow-up of Toyota's crisis public relations in China

The Toyota recall scandal has not yet completely cooled down. In September 2010, Sino-Japanese relations entered a tense state due to the Diaoyu Islands incident. The Chinese people's sentiments against "anti-Japan and anti-Japanese goods" were once very high. At this time, Toyota Motor Corporation, like other Japanese car companies, suffered a "car smashing" incident caused by the rising anti-Japanese sentiment.

On September 20, Toyota's president said at a regular press conference in Japan, "China's large-scale anti-Japanese movement has indeed had a certain impact on automobile sales. If the losses had been anticipated in advance, we might not have suffered such losses. Now we just hope to return to normal as soon as possible." During the meeting, Akio Toyoda also said, "Seeing Japanese vehicles being destroyed is as painful as a whipping."

On October 10, FAW Toyota and GAC Toyota successively launched compensation actions for the smashed vehicles. However, when media reporters interviewed them, they reported that FAW Toyota’s public relations department reported that the company’s after-sales service department had provided a "special customer care activity" for the smashed FAW Toyota vehicles. The main content was "zero burden on consumers" support, rather than the so-called "compensation plan" rumored on the Internet, because the car owner’s losses in this incident were not caused by the company’s mistakes or errors. The plan is that the car owner provides the corresponding evidence of the smashed car to the insurance company for compensation, and FAW Toyota 4S store will bear the part of the repair cost that the insurance company does not pay, thereby realizing the so-called "zero burden on consumers" or "special customer care interaction". Subsequently, there were both praises and criticisms for this handling method on the Internet, but later "auto experts" said that insurance companies were avoiding after such incidents, and they expressed their approval of FAW Toyota's attitude of standing up and taking part of the responsibility. GAC Toyota adopts the standard of "estimated value before damage + maximum 20,000 yuan" for replacement, or provides financial support to car owners according to their wishes, and provides replacement vehicles and corresponding subsidies during the processing period.

Actual situation analysis

According to a report by an editor of a certain automobile website who called the GAC Toyota 4S store for consultation, the after-sales staff said that the store does have a compensation plan for the smashed "Guangfeng" vehicles, which is "choose to scrap or replace", "get a maximum subsidy of 20,000 yuan in addition to insurance", "the specific subsidy received needs to be determined based on the damage to the vehicle", and "customers who choose repairs will not receive additional subsidies, but will receive a gift worth 500 yuan from the manufacturer, and will be provided with a replacement vehicle, and the gas money is at the consumer's own expense." The feedback from FAW Toyota dealers was basically the same as that from GAC Toyota, but they were required to provide relevant certificates of the police report, insurance claim documents, damage description documents, construction orders, settlement orders, parts delivery orders and other documents.

There are obviously slight discrepancies between the implementation of this solution and the official statement. Perhaps it is a game of words, or because the 4S stores are not directly affiliated with the brand manufacturers and are unable to implement it. Although the actual equity of the two Toyota automakers in China is greater than that of Toyota Japan, Toyota Japan, as a brand merchant, did not take any actual support actions for Chinese consumers in this incident. Apart from Akio Toyoda's "care for Japanese vehicles" expressed at the press conference, it did not have any attitude towards Chinese consumers or any comfort actions for the car owners who suffered losses.

Due to the extremely long-lasting "recall gate" incident and the impact of the "car door smashing" incident, Toyota's sales in China have fallen from the top ten brands in sales for a long time to 29th place. It has to be said that due to special circumstances, FAW Toyota and GAC Toyota in China actually belong to two Chinese companies, FAW and GAC. Although the Toyota models they produce are restricted by the Japanese Toyota Company, they are only maintained at the technical and some standard levels. Therefore, in the "car door smashing" incident, it was actually FAW and GAC Group that innocently paid the price for Japan's Toyota Corporation's failed public relations history.

Until July 2019, when trade tensions between Japan and South Korea broke out again in South Korea, causing Toyota's sales in Japan to plummet by more than 32%. After its sales in South Korea were severely hit and anti-Japanese sentiment was seen in South Korea and its people, Toyota has not yet made any clear statements or announcements.

Author:Leon360k

Source: PR Home