Toyota, Ethics and Compliance

Toyota Logo

With Toyota’s problems all over the news, I started to think about whether compliance and ethics professionals could learn anything from these problems.

To begin, I don’t think there is a systemic problem with their vehicles or with the company. I think the sudden acceleration problem is bunk.

Yes, I own a Toyota, but my Tundra has not been implicated.

Numbers

It is unfortunate that people have died in Toyotas. About 56 people have died in accidents involving Toyotas that allegedly accelerated out of control. That anyone has died or been hurt is difficult to face.

But lets put that number in perspective.  Over 34,000 people died in car crashes in 2008 and over 2 million people were injured.

Over 10,000 of those deadly crashes in 2008 involved alcohol impaired driving. That means you were at least 100 times more likely to be killed by a drunk driver than sudden acceleration.

From an ethics perspective, you obviously don’t want to sell a product that is defective or even a little more likely to injure your customers. Of course, that assumes there is a defect in the product and it’s not just a big pile of media hype.

Look back at Audi

We have seen this situation before. Twenty years ago it was Audi. The reports on Audi suffering from sudden acceleration nearly destroyed the automaker in the late 80s.

They never did find a problem with the Audi cars. Audi was never able to counter the outcry against their cars.

Is there really a problem with the cars?

Surely, the throttle of a car could get stuck open and cause the car to accelerate. Cars are increasingly run through electronics that control the fuel levels and throttle of the car. Floor mats can get stuck on the gas pedals. Cruise controls can malfunction. For any number of reasons, a car could accelerate without the driver’s input. (With Audi, the assumption is that the driver stepped on the gas pedal instead of  the brake pedal.)

But what about the brakes?

Car and Driver ran some tests for unintended acceleration. Even with the throttle held wide open, if you stepped on the brakes your car would stop in roughly the same distance.  In a normal situation, they stopped a Toyota Camry from 70 mph to 0 in 174 feet. With the throttle held open it took 190 feet to stop from 70 mph.

The brakes were not as successful for the hugely powerful Roush Stage 3 Mustang with 540 horsepower. It required an extra 80 feet to stop with all extra horsepower was fighting the brakes.

Even if the engine in most cars suddenly accelerates, the brakes should stop in it roughly the same distance.

However, if you pump the brakes, you may lose the vacuum boost needed for the power assist and have a hard time stopping the car. Prior to anti-lock braking systems, we were taught to pump the brakes in slippery conditions.

Another possibility is that the car could have suffered a brake failure at the same time the throttle failed.

Driver error

One way to deal with sudden acceleration is to disconnect the engine. With a manual transmission you step on the clutch and with an automatic you shift into neutral. (I’m not sure that I would have thought to do that if my throttle got stuck.  I would now.)

With Audi, they main theory was that people were stepping on the gas when they thought they were stepping on the brake.

As for the runaway Prius a few days ago, he could have pumped the brakes and lost the power assist needed to stop the car, or had a simultaneous failure of the brakes and the throttle. (Or he could have faked it.)

Systemic failure

What Toyota needs is a way to avoid systemic failure. It’s really bad to have the throttle and the brakes fail at the same time.

What Toyota needs is a throttle kill switch. When you step on the brakes, the electronic throttle control will cut the throttle and cut the power. In the Car and Driver test, they tried an Infiniti G37 that had the throttle kill and its braking distance barely changed. Many cars have this throttle kill mechanism, but not all.

Having a safeguard for a systemic failure is good thing from a compliance and risk management perspective. By having a throttle kill, it’s easier to point to operator error. (“If you had stepped on the brakes, the engine throttle would have released.”)

What about the conflict of interest?

One problem with a government investigation of Toyota is the inherent conflict of interest the United States government and the taxpayers have in the automobile industry. We own a competitor to Toyota. It would be good for the U.S. ownership in General Motors for Toyota vehicles to be less popular.

I was very disappointed to see Mr. Toyoda flogged in front of a Congressional panel. To some extent, he was being yelled at by the board of directors of GM.

Lessons

In the end, I believe the Toyota story is one of a failure of crisis management and not one of ethics or compliance. It seems like Toyota was not able to quickly gather the facts and act on the facts. They keep announcing recalls, without explaining the problem or the fix.

Every company action made in error is magnified under the white hot lights of the media looking for stories. We the taxpayers and our government has a big conflict of interest in attacking the company without a good set of facts.

The failure of crisis management is going to cost them. There will be shareholder class action lawsuits, driver lawsuits, owner class action lawsuits, the cost of recalls and the long term damage to the company’s image.

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6 Responses to Toyota, Ethics and Compliance

  1. John Rahie March 15, 2010 at 10:22 am #

    Doug:
    It is not just a lesson on failed crisis management, but also a lesson in the lack of ethical behavior. All manufacturers have quality issues. It is how you deal with those issues both as a consumer relations requirement and as a legal requirement. Toyota’s arrogance and disregard for the Highway Safety Laws are at issue here. Evidence of a potential problem showed up years ago. But there was more time spent by Toyota dancing around NHTSA and hiring their former employees then tackling the real problem. Delays in providing information about the accidents has been more important than addressing the issues. I wonder how many more defects are dealt with in this manner. Could their former staff product liability attorney be correct? Do they hide evidence? Do they destroy documents? So far, the way they have dealt with this crisis would indicate that an ethical Tone at the Top is sorely lacking.

    I am sure that the families of those that died in the accidents (56 are all we know about today) do not share your same compassion for Mr. Toyoda’s treatment before Congress.

    • Doug Cornelius March 15, 2010 at 11:49 am #

      John –

      The big issue that bothers me is that there is not clearly a defect in the cars.

      NPR put together a database of complaints for sudden acceleration. http://www.npr.org/templates/story/story.php?storyId=124235858

      Toyota does have the highest number of complaints in most years. But given their huge market share, that’s not a surprise. If you look at the complaints per car sold, there is no obvious problem. In recent years, Volkswagen-Audi had more complaints per vehicle sold.

      I think it’s hard to vilify a company for a defective product if the product is not actually defective. I fear that Toyota is being accused of something that’s not true.

      From the compliance and ethics profession, one of the important lessons is to learn the facts quickly so that you can decide on a course of action. That’s where Toyota failed.

      It’s horrible that people died in their vehicles. Toyota has clearly done a poor job of dealing with the situation. In particular, Mr. Toyoda failed to address the situation early and effectively.

      The question I have is whether it’s a failure of ethics or failure of crisis management. If Toyota had done a better job of dealing with the crisis, I don’t think people would be questioning the company’s ethics. Instead, the company is under a microscope and every imperfection is being magnified.

  2. RHONDA GREEN July 30, 2010 at 7:11 am #

    I’M TRYING TO MAKE AN ETHICAL COMPLAINT AGAINST A TOYOTA DEALERSHIP IN GEORGIA. MY HUSBAND AND I WENT TO UNION CITY TOYOTA TO PURCHASE A CAR ON SAT JULY 24 2010. WE TOLD THE SALESMAN WHAT WE COULD AFFORD. WHEN WE WENT INTO THE DEALERSHIP TO MAKE THE DEAL THE FINANCE MANAGER PRESENTED US WITH ANOTHER DEAL. WHEN WE TOLD HIM WE COULD NOT AFFORD THAT PARTICLULAR DEAL HE JUMP FROM BEHIND THE DESK AND TOLD US WE WERE STUPID BLACK PEOPLE. HE CALLED US THIS THREE TIMES AND TOLD US TO “GET OUT OF HIS DEALERSHIP” I’M TRYING TO GET SOME SORT OF HELP WITH THIS SITUATION BEFORE PRESENTING IT TO AN ATTORNEY.

  3. Dolores Bozeman July 9, 2013 at 1:47 pm #

    I Want to file a ethics complaint about Lagrange Toyota, I purchased a car in 2008. I purchased a extended warranty with the belief that the warranty would begin the day I purchased it, I even questioned the finance man and he stated yes you will have this warrantry beggining now. The car already had 44,000 miles on it. I was told after being rushed through the paper work that my warranty would be good until my car reached 144,000. miles or 7 years from the dat of purchase. I took his word fot the truth, but buyer beware the dealership will tell you anything to sell to you. even make up lies. now my car needs a warranty repair, it has 117,000 miles on it and I go to have the repair made and they say oh, but your warreanty expired in Jan 2013. They told be that the repair would eventually have to be made last year. Do I look Stupid to you. I would have already had the repair made under the warranty if I had not been lied to by the person who sold me the extended warranty. I normally think that extended warranties are a waste of time and money but was convinced to purchase this one because it gave me the added protection of 100,000 miles or 7 years from date of purchase. which was a complete fabrication. Buyer beware. This to me was a very unethical business practice and I will never again purchase a car from Toyota center. anyone reading this that has had the same experinces join me in the boycott of toyota . Shame on you Toyota Center for Taking advantage of a Woman.

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  2. Revisiting Toyota, Ethics and Compliance | Compliance Building - July 15, 2010

    […] Back in March, I pointed out that we saw the same situation with Audi back in the late 1980s. People claimed that the car suddenly accelerated when they applied the brakes. It turns out they were stepping on the gas pedal, not the brake pedal. […]