Introduction
Businesses recall their products when they realize the goods they sell to customers have safety concerns or have caused near misses or injuries. A recall seeks to reduce the risk of harm to users. Manufacturing entities voluntarily inform their product users of possible defects and advise them to return their products to dealers for repairs. The way a company handles this process determines its future success.
Handling recalls poorly can cause companies to incur reputational and business losses (Shaaban et al., 2019). While most recalls occur because of manufacturing defects, companies can also recall their goods due to common customer mistakes, as the case of Toyota illustrates. This paper discusses Toyota’s product recalls by focusing on why it recalls its products, how it handles its product recalls, and what it has done to prevent similar situations in the future.
Product Recalls (Toyota)
Toyota has dealt chiefly with voluntary recalls. According to Pride et al. (2023), voluntary recalls occur when a manufacturing company discovers the products it has released to the market are likely to harm the end users. The harm consumers are likely to suffer due to faulty products can range significantly from having fatal car crashes to revealing their location due to an emergency call system glitch (Pride et al., 2023).
Therefore, most manufacturers monitor their products keenly after releasing them to know if they pose any unacceptable risks to the public or end-users. They collect such information from customer feedback (Rizzi, 2022). Reports from thousands of customers who use the product daily are likely to identify any manufacturing defects that may have escaped the attention of initial quality checks. The company analyzes such reports to determine whether they meet the threshold for advertising a voluntary recall.
Product recalls can occur in other cases because a regulator has advised the company to do so. For example, the regulator may be concerned that the products in the country may cause harm if similar product recalls have occurred abroad (Perlman, 2023). However, the company must decide whether product recalls are necessary because it may have sold different manufacturing batches to different countries. In such a case, a problem in one batch may not necessarily imply the other batches have safety issues.
Car manufacturers issue product recalls due to many reasons. For example, Toyota recently issued a recall because it suspected that the bolts and nuts of some of its BZ4X electric SUVs might loosen, thus disconnecting axles and wheels (Valdes-Dapena, 2022). The reason for such a recall is to take precautionary measures to protect customers from accidents in case their wheels fall off. Other recalls can occur due to client mistakes that increase the risk of harm. Customers might misuse certain vehicle accessories that the company had yet to envision. Even though it may not be the company’s fault, Toyota has learned that issuing recalls to correct common customer mistakes can save a company’s reputation.
From 2000 to 2010, Toyota recalled products to address floor mat interference that caused accelerator malfunctions. Many customers installed winter floor mats over regular summer floor mats, thus making the accelerator jam when moving at high speeds (Brooks & Dunn, 2021). When some clients reported the incident, Toyota denied the allegations that a mechanical issue caused unintended acceleration.
The firm suspected that customers who had installed the winter and summer mats in their cars would likely experience such incidents. Although the company advised its customers to refrain from installing the two mats together, many continued to do so, leading to many reported incidences. Toyota had to issue a recall and shorten the accelerator pedal to ensure the installation of two mats could not jam the accelerating pedal (Brooks & Dunn, 2021). Therefore, recalls can occur because of manufacturing defects or customer errors that increase the risk of failure.
Handling a product recall is sensitive since it can impair a company’s brand reputation. Some customers might fear that a company that issues frequent recalls treats its quality and safety controls casually (Shaaban et al., 2019). Consequently, they might stop purchasing products from specific manufacturers who always make the headlines for recalls.
Toyota found itself in a similar situation when the media focused on sensational reports that tainted the company’s reputation. After releasing the Prius as the first commercially available hybrid, Toyota’s engineering excellence peaked tremendously, thus making it the leading car manufacturer globally. However, the company’s reputation was in tatters after it recalled millions of vehicles in 2010 (Brooks & Dunn, 2021).
Instead of acting immediately, Toyota took time to understand what was happening in the market before issuing a statement. Such lapses can be costly to a company because regulatory bodies, legislative committees, and customers will likely speculate about what is happening and jump to the wrong conclusions (Brooks & Dunn, 2021). Toyota’s case illustrates how a company handles product recalls, determining its overall market performance.
Toyota has improved its handling of product recalls by advising all its affected customers when it realizes its cars might have a problem. In 2022, it advised all owners of its BZ4X customers in the United States who had purchased the product to stop driving it immediately because it posed a risk to their safety (Valdes-Dapena, 2022). The company explained the reason for the recall without apportioning blame to anyone. It informed its customers that it was still investigating under what conditions bolts and nuts could loosen (Valdes-Dapena, 2022).
Analyzing its communication shows a shift from a decade ago when the company mismanaged product recalls by wanting to understand what was wrong with its cars before asking drivers to return them. The new approach requires the company first to recall the product and then continue to investigate why it poses certain user risks (Valdes-Dapena, 2022). It shows that a manufacturer takes the safety of its customers seriously rather than protecting its reputation and profits.
Product recalls can be expensive since the company must protect its customers from the inconveniences it has caused. After asking BZ4X owners to return them to the dealership, Toyota had to provide each affected client with free loaner vehicles (Valdes-Dapena, 2022). Such measures cushion customers from the significant inconvenience they are likely to suffer if they have only one car at that moment.
Unless a client rejects such an offer, the company must ensure its product recall leads to the least possible disruption of its clients’ lives (Rizzi, 2022). Besides, giving them another car is not a sufficient incentive, given that customers must spare some time to return the recalled product to a dealership. In the past, Toyota has offered to carry out any other necessary repairs free of charge (Valdes-Dapena, 2022). The company guarantees customers that it will return the products it delivers to its dealers in perfect condition without charging them for repairs.
How Toyota handles a particular product recall depends on many factors, such as the number of customers the recall will affect and the risk users face if they continue driving their cars. Sometimes, the company will not advise clients to stop driving their vehicles immediately if the risk is low while the number of affected customers is high (Rizzi, 2022). Toyota announced a recall of about 46,000 Tundra full-size pickups in 2022 after suspecting that the nuts on the rear axle were likely to loosen (Valdes-Dapena, 2022). Toyota feared such incidents could affect the truck’s braking and stability by disconnecting an axle sub-assembly.
It is essential to note that the pickup recall was unrelated to the BZ4X, even though it happened in the same year. The company announced its dealers would inspect the nuts of Tundra trucks and tighten them. They would also replace certain parts of these trucks without charging customers (Valdes-Dapena, 2022). However, it did not call for the immediate return of these trucks. Such an approach protects the company’s reputation by mitigating an unjustified crisis that could have occurred if the company had asked tens of thousands of customers to stop driving their vehicles immediately and return them for inspection and repair.
However, it also increases the risk of having more reported incidents, which could negatively affect Toyota’s reputation. The media has already demonstrated its ability to focus on sensational reports when several accidents occur because of suspected manufacturing defects (Brooks & Dunn, 2021). Toyota must ensure the likelihood of an accident occurring because of a reported mechanical defect is very low before allowing owners to continue driving their trucks.
A company should handle the marketing of a recall well to ensure it does not worsen the situation and turn it into a crisis. For instance, the company marketing the recall should provide all necessary information to customers and provide them with the means to seek further clarification or report their concerns (Brooks & Dunn, 2021). Toyota illustrated this in 2022 after it asked its Tundra and BZ4X owners with questions to contact its customer service (Valdes-Dapena, 2022). The company ensured every advertisement for the recall contained its customer service number to allow concerned clients to contact its personnel and get the answers they needed.
Protecting the brand during a product recall is important since it can affect the company’s future sales. Companies must remember that customers buy their products because they trust them. Therefore, they must avoid making customers mistrust them, such as passing the blame to others or appearing insensitive to customer concerns (Brooks & Dunn, 2021).
Toyota found itself in this situation in 2010 when it lost the confidence of many clients for failing to handle customer complaints appropriately. Some customers felt the company did not care much about its clients because of how it dealt with the situation. Some accused Toyota of hiding its vehicle’s acceleration problems or failing to do anything about it despite numerous reports (Shaaban et al., 2019). By the time it finished recalling the 1.1 million cars due to floor mat issues, Toyota had suffered significant reputational damage (Shaaban et al., 2019). Therefore, Toyota has learned that protecting its brand during a recall requires the company not to lie to its customers or betray their trust by blaming them or another entity for product problems.
Lastly, Toyota has taken several measures to prevent similar situations. The lessons it has learned from its previous recalls have enabled Toyota to establish a quality assurance system (Ishikawa, 2023). Specifically, the company has emphasized putting the customer and quality first to ensure it does not experience similar recalls to those of 2010. Toyota has also introduced new technology to help it with recurrence-prevention activities (Ishikawa, 2023).
Furthermore, the company has expanded its quality learning facilities globally to ensure its workers and partners have the proper knowledge to enable them to strengthen its quality assurance system (Ishikawa, 2023). Its emphasis on the quality of each process will strengthen its production system and reduce the likelihood of having defective products. However, given that recalls occur for reasons unrelated to the company’s manufacturing process, Toyota’s focus on putting the customer first will protect it from suffering reputational harm (Ishikawa, 2023; Tsuda & Manna, 2022). The company’s focus on improving its quality and handling crises will prevent costly recalls in the future.
Conclusion
Although companies recall most of their products because of manufacturing defects, common consumer errors can also lead to recalls. Toyota has initiated many voluntary product recalls to repair suspected defects. It also recalled its cars after realizing many customers were using two mats, thus jamming the acceleration pedal.
Toyota had to recall vehicles and shorten their acceleration pedals after customers failed to heed its advice not to use double floor mats simultaneously. Handling recalls appropriately protects a firm’s reputation. Toyota learned the hard way after it made a costly mistake in 2010, which made some customers lose confidence in its products.
Recent recalls show that Toyota has learned to prioritize the customer when handling product recalls. Toyota issues a statement indicating why it is recalling a product, measures to protect customers from inconveniences, and a contact for customers to get additional information. Since Toyota has demonstrated an ability to learn from its past mistakes, it will likely handle the marketing of future recalls better. In the meantime, it has taken several measures to minimize defects and reduce future recalls.
References
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Ishikawa, E. (2023). Toyota production system – From recall crisis to recovery. In P. Haghirian (ed.), Overcoming crisis: Case studies of Asian Multinational corporations (pp. 157-169). World Scientific Publishing Company.
Perlman, R.L. (2023). Regulating risk: How private information shapes global safety standards. Cambridge University Press.
Pride, M.W., Hughes, R.J., & Kapoor, J.R. (2023). Foundations of business. Cengage.
Rizzi, A. (2022). Supply chain: Fundamentals and best practices to complete by leveraging the network. Springer.
Shaaban, K., Maher, A., & Singhapakdi, A. (2019). Effect of vehicle safety recalls on the perception towards other vehicles from the same country of origin. Journal of Traffic and Transportation Engineering (English Edition), 6(5), 493-503. Web.
Tsuda, S., & Manna, S.M. (2022). Toyota production system: Comprehensive from theories to technique. BlueRose Publishers.
Valdes-Dapena, P. (2022). Toyota is recalling its first mainstream electric car because the wheels can fall off. CNN. Web.