Salman presentation

Headquartered in Japan, Toyota is world’s 13th largest company in terms of the revenue it generates (Liker and Ross, 2016). Japanese company 13th largest revenue generator In 2012, it was the biggest automobiles manufacturer of the world. Leader in hybrid electric cars Toyota, or Toyota Motor Corporation is a Japanese company, which is headquartered in Aichi, Japan. In 2016, it is ranked as 13th largest revenue generating corporation in the world. In 2012, it was considered to be the largest automobile manufacturer. It suffered a set back due to massive recalls. Hybrid electric cars have been developed by Toyota. The company is leading in this type of cars (Liker and Ross, 2016). -The picture shows one of the earliest Sedans made by Toyota in 1930s. Originally, the vehicles were sold under the name Toyoda, but it was changed later on. In 1940s and 1950s, small sized vehicles were sold under the name Toyopet. In 1960s and 1970s, Toyota, like all other automobiles had to struggle against new taxes. To counter the effect, spare parts and other plants for manufacturing were developed in the US in 1980s. 1990s saw Toyota branching out. Sports cars like Camry were developed in this time too. Post 2000, not only the company spread in all parts of the world by developing operational units everywhere, the number of automobiles produced also grew a lot. In recent years, Toyota has been among the most popular automobile producers along with General Motors and Volkswagen (Liker and Ross, 2016). Between 2009 and 2014, Toyota had to undergo many recalls. It had to recall huge number of its vehicles from the market. This case has been chosen keeping the point of view of strict product liability in view. Under this doctrine, people and businesses are responsible for their acts, even if their intentions were good and outcomes were not good. It is assumed that consumers will be protected against any unsafe products. Toyota failed at that and thus had to not only face reputational damage but also legal cases (Forbes, 2010). *Forbes (2010) Toyota Recall’s legal risks. Retrieved from http://www.forbes.com/2010/02/20/toyota-recall-safety-lawsuits-business-oxford.html -First of the recall happened in 2009. 9 million cars and trucks were recalled. Operational unit in Australia was closed down. Toyota vehicles were proved to be faulty. The reason was use of some low quality spare parts. The vehicles were accelerating without the driver’s intention to accelerate. This recall was done with assistance of NHTSA or National highway traffic safety administration. These recalls were completed by 2011. -In 2012, another major recall was announced. This time 7.43 million vehicles were recalled. Power window switches were found to be faulty in this case. Toyota was fined US $1.2 billion for faulty products (Cohn, 2016). *Cohn, S. (2016) Toyota recalls about 3.4 million vehicles for air bag and fuel tank defects. The legal examiner. Retrieved from http://newyork.legalexaminer.com/automobile-accidents/toyota-recalls-about-3-4-million-vehicles-for-air-bag-and-fuel-tank-defects/ In 2014 too, Toyota had to recall 7 million vehicles. This time the mechanical fault was related to propellant devices and inflaters. This time, the vehicles which were recalled were those having Takata airbags. Free repair is being offered to the owners of these vehicles (Lawinfo, 2016). *Law info (2016) Toyota Recall Law suit. Retrieved from http://lawsuits.lawinfo.com/ToyotaRecall/index.html 2007: 55,000 Toyota Camry: Floor mat 2009: 3.8 million Toyota and Lexus recalled due to floor mat problems 2010: 2.3 million vehicles recalled due to accelerator pedals issue, 1.1 m due to floor mat, and 1.8 m accelerator pedal issue in Europe and China. Land cruisers recalled due to steering system faults. 1.13 million Corollas were recalled due to faulty engine control in 2010. 2011: Initial inquiry by NHTSA showed that Toyota acceleration issue was not due to any electronic fault, but the issue remained there. 2.17 m vehicles were recalled due to gas pedal issues (Cohn, 2016). *Cohn, S. (2016) Toyota recalls about 3.4 million vehicles for air bag and fuel tank defects. The legal examiner. Retrieved from http://newyork.legalexaminer.com/automobile-accidents/toyota-recalls-about-3-4-million-vehicles-for-air-bag-and-fuel-tank-defects/ Vehicles that got affected due to the recalls include: Toyota Avalon, Camry, Corolla, Highlander, Matrix, Prius, Tacoma, Tundra, Venza, Lexus and Pontiac Vibe. These were recalled before and in 2010. In 2010 recalls, accelerator pedal issue was the most important reason of heavy recalls. Pedal became hard to press in some cases. *Cohn, S. (2016) Toyota recalls about 3.4 million vehicles for air bag and fuel tank defects. The legal examiner. Retrieved from http://newyork.legalexaminer.com/automobile-accidents/toyota-recalls-about-3-4-million-vehicles-for-air-bag-and-fuel-tank-defects/ NHTSA in February 2010 announced that 102 drivers have launched complaints against faulty braking system of Toyota Prius of 2010 model. There were some car crashing incidents too. Stopping distance was longer than anticipated. Toyota said that through a software update they have fixed the braking issue. However a huge recall was to follow. Other recalls up till now have been due to various mechanical faults and some minor issues. *Cohn, S. (2016) Toyota recalls about 3.4 million vehicles for air bag and fuel tank defects. The legal examiner. Retrieved from http://newyork.legalexaminer.com/automobile-accidents/toyota-recalls-about-3-4-million-vehicles-for-air-bag-and-fuel-tank-defects/ After some accidents were reported, investigations were launched by various stakeholders. NHTSA and Japanese transport ministry were the first to launch investigations. In Texas, four people lost their lives due to faulty car, and as a result, US safety regulators launched an investigation into the complaints. In 2010, Norway government planned a ban on Prius but it was later called off. However, in some incidents despite the driver’s carelessness being obvious, mechanical faults also proved to be risky for the passengers (Cowan, 2014). *Cowan, J. (2014) Toyota to pay $1.3 billion for deadly defect cover up. Retrieved from http://www.abc.net.au/news/2014-03-20/toyota-pays-1-3-billion-for-defect-cover-up-statements/5332894 MLIT or Japanese Ministry of land, infrastructure, transport and tourism conducted detailed investigations. It was noted that in Japan, there were no cases of unintended acceleration. There were minor faults reported in the vehicles, but the reasons of accidents were not related to any mechanical faults in general. In 2010, congressional hearings took place for the same reason. However, social worker Rhonda Smith was not able to prove that the unintended acceleration was due to mechanical fault. Floor mats and driver negligence were bigger reasons of the problem. However, mechanical faults were identified in the vehicles, which were not proved to be the reasons of accidents. This has led to further recalls too (CNBC, 2016). *CNBC Staff (2016) Toyota recalls 320,000 vehicles for safety issue. Retrieved from http://www.cnbc.com/2016/02/02/toyota-recalls-320000-vehicles-for-safety-issue.html Most important aftermath of these issues was that in 2010, Toyota stopped production of certain models for some time. An operational unit in Australia was closed down. There was heavy reputational damage because the people who were brand loyal to Toyota were unsure about the safety level Toyota was offering (Lawinfo, 2016). *Law info (2016) Toyota Recall Law suit. Retrieved from http://lawsuits.lawinfo.com/ToyotaRecall/index.html -Due to recalls and the fines imposed on Toyota, a lot of revenue generation ability was lost. The recalls also meant new expenditures. To overcome the losses, Toyota had to figure out methods to control its expenditure and costs through operational changes. Although financial loss that Toyota has faced and the decline in sales is a serious issue, reputational loss in the eyes of its customers is the biggest loss that Toyota has faced. Competitors offered incentives to the Toyota car owners to win over as much of the Toyota market share as possible (Cowan, 2014). *Cowan, J. (2014) Toyota to pay $1.3 billion for deadly defect cover up. Retrieved from http://www.abc.net.au/news/2014-03-20/toyota-pays-1-3-billion-for-defect-cover-up-statements/5332894 Due to the mechanical faults discussed above, a lot of Toyota vehicles were recalled from the market. These recalls proved to be a major reason of reputational loss for Toyota. Due to the strict product liability doctrine, despite the fact that these mechanical faults were not proved to be the reasons of accidents, Toyota had to pay fines for the mechanical issues. For damage control to their reputation, they had to go for recalls and offer consolation. New strategy of Toyota was to go back to basics and produce better products.