'We need to come clean': e-mails could further damage Toyota

Internal e-mails at Toyota suggest a reluctance to address sudden acceleration. The documents come to light at a time when Toyota is trying to rebuild its image.

By , Staff writer

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    Hisao Nikabayashi, head of Toyota Korea, offers an apology to South Korean customers for the recall of the Japanese carmaker's three models -- Lexus, Camry, and Camry Hybrid -- during a news conference at a Seoul hotel on April 6.
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If Toyota didn't already have enough safety-related challenges, now there's more – internal e-mails that paint the company as reluctant to address the problem of so-called sudden acceleration in its cars.

The e-mails could deal another damaging blow to the firm's once-stellar reputation and raise questions about whether the carmaker is moving decisively enough to put the crisis behind it.

In one Jan. 16 e-mail, Irv Miller, then Toyota's vice president for public affairs, said: "We are not protecting our customers by keeping this quiet. The time to hide on this one is over. We need to come clean."

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Five days later, the company issued a recall to fix gas-pedal problems on 2.3 million US cars. The e-mail by Mr. Miller, and other documents obtained by news organizations this week, bolster the view that some officials within the company wanted to delay disclosure or downplay the accelerator problems.

Millions of cars recalled

By January, the relatively high number of Toyota drivers filing complaints about unintended acceleration had become a big issue for the company. Toyota had already recalled several million cars to address the risk that floor mats could trap accelerators in an open position.

Some business experts say the e-mails confirm that the days of Toyota enjoying a squeaky clean reputation are over.

"It's horrible" for Toyota's reputation, says Michal Ann Strahilevitz, a marketing professor at Golden Gate University in San Francisco.

She sees it as evidence that a company long praised for building customer loyalty was reluctant to put customers first – pursuing fixes "not because it's the right thing to do, but because we got caught."

Other experts on brand management say the newly public e-mails – which were among documents Toyota released to US government investigators – don't add significantly to Toyota's challenges.

"The safety issue has [already] been a big hit" to the company, says Partha Krishnamurthy of the University of Houston, who has also been following the accelerator saga. "The likelihood that an additional story about Toyota will change peoples' minds [pro or con] is not very high right now."

Miller, who sent the "come clean" e-mail, had in December announced plans to retire from Toyota. His employment ended in February, according to the Associated Press.

Navigating lawsuits, rebuilding brand image

Whatever the e-mails' impact, Toyota faces significant tests ahead. One is to conclusively fix the pedal-related problems. (While dangerous incidents have not been widespread, it's not clear that responses developed so far are working.) Other hurdles include navigating related lawsuits and rebuilding the firm's brand image.

To some extent, the impact of the recalls on Toyota has been muted.

Its sales revived in March on an incentive campaign. And many current Toyota owners still think highly of the company and its cars. Partly, that reflects positive experiences with their cars, Mr. Krishnamurthy says. It also reflects a psychological tendency to want to like a product when you've already invested in it.

But even for loyal customers, a wave of bad news can eventually take a toll.

"There's a breaking point" to that bond of loyalty, Ms. Strahilevitz says. If that point is reached, drivers who might otherwise have replaced one Toyota with another will opt for other brands.

Earlier this week, the US Transportation Department announced a record $16.4 million fine on Toyota for being slow to alert the government about the acceleration problems.

Toyota has issued a statement saying it "cannot comment on Mr. Miller’s e-mail, [but] we have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls. We have subsequently taken a number of important steps to improve our communications."

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