BY GERRY MILES
No one really likes stories like these, at least I hope not, but Toyota has reached an agreement with the U.S. Attorney’s Office for the Southern District of New York to resolve its investigation initiated in February 2010 into the communications and decision-making processes related to the company’s 2009-2010 recalls to address potential “sticking” accelerator pedals and floor mat entrapment. As part of the agreement, Toyota will make a payment totaling $1.2 billion.
Call it what you will. The easy way out of a dire situation, check-book casualty calamity claims, or buying justice – just to name a few. In the end, if you or I were Acme Large Co., and facing all of the legal wrangling Toyota is over the alleged claims, you, too, might do the prudent thing given the deep pockets available and cut your losses. Quickly.
I’m not one to cow tow to large firms as it seems there’s always a smoking e-mail or memo from someone deep inside most Acme Large Firms to prove there had been an earlier fly in the ointments that got brushed over.
In Toyota’s case of the so-called sticking floor mats, I think otherwise. Like many folks nabbed for speeding who toss a drink on their lap to say they need a bathroom break to the state police, I tend to think that some of the claimants may have sped up and claimed similar problems. In the words of a former White House official who said “never let a tragedy escape as a teachable moment” or something similar, I think many jumped on the legal case bandwagon(s).
“At the time of these recalls, we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust,” said Christopher P. Reynolds, chief legal officer, Toyota Motor North America. “In the more than four years since these recalls, we have gone back to basics at Toyota to put our customers first.”
“Specifically, we have taken a number of steps that have enabled us to enhance quality control, respond more quickly to customer concerns, strengthen regional autonomy and speed decision-making. And, we’re committed to continued improvement in everything we do to keep building trust in our company, our people and our products. Importantly, Toyota addressed the sticky pedal and floor mat entrapment issues with effective and durable solutions, and we stand behind the safety and quality of our vehicles.
With the lack of reported incidents since then – none in the news come to mind – it seems the fury over the sticking pedals is over. Let’s hope so.
Among the substantive actions the company has voluntarily taken since the recalls are:
- • Launching rapid-response teams to investigate customer concerns quickly;
- • Committing $50 million in 2011 to launch Toyota’s Collaborative Safety Research Center in Ann Arbor, Michigan to partner with more than 16 universities and institutions across North America on safety advances that will be shared to benefit the entire auto industry and society;
- • Expanding its network of field quality offices to improve customer responsiveness;
- • Enhancing regional autonomy, including naming the first American CEO of Toyota’s North American Region as well as Chief Quality Officers for North America and other principal regions – all of whom have direct lines to President Akio Toyoda;
- • Improving its quality control process; and
- • Extending the new vehicle development cycle by four weeks to help ensure reliability and safety.
Under the agreement, the Government agrees to defer prosecution and then dismiss its case, as long as Toyota makes the required monetary payment, abides by the terms of the agreement and continues to cooperate with the Government. The agreement also provides for an independent monitor to review policies and procedures relating to Toyota’s safety communications process, its process for internally sharing vehicle accident information and its process for preparing and sharing certain technical reports.
Toyota will record $1.2 billion in after-tax charges against earnings in the fiscal year ending March 31, 2014 for costs relating to the above agreement.