Toyota: Giving Credit Where Credit is Due

Toyota is halting sales of vehicles until it can resolve a serious safety issue related to gas pedals.  The Associated Press covers this with the headline, “Toyota US sales halt deals blow to image, earnings.”  A better headline might be, “Toyota Demonstrates Courageous Leadership by Putting Safety Before Profits.”   As the article points out, this will be an extremely costly move for Toyota, at a time when no automaker can easily afford it.  That’s why we need to support the company’s clear-headed, socially responsible leadership.

Business students throughout the U.S. have long studied “The Ford Pinto Case,” which contemplates whether Ford should have recalled the car based on a propensity for gas tank fires and explosions in collisions.  The problem:  a cost-benefit analysis revealed that not doing so, even in light of predicted injuries or deaths, was cost effective.   It is heartening to know that, whatever the outcomes of their contemporary analysis, Toyota’s leaders made the decision to avoid putting unreasonably dangerous vehicles out on the road.  This is especially true in these tough times, which tends to amplify the message: Toyota’s leaders care about the safety of customers and communities.

I am sure that critics will point out that Toyota might have identified this problem more quickly or solved it before the units were in the distribution channel.  Fair enough.   However, building cars is complex business at best, and innovation of any kind carries additional risks.  We cannot expect companies to avoid all errors, engineering or otherwise.  We ought to expect them to own the errors, up front and without coercion, and to bear the costs of keeping customers and the broader communities as safe as reasonably possible. 

I’m grateful to my friend Sam Richter for bringing this to my attention (as I recall, Sam drives a Toyota, no doubt very carefully). I’ll certainly think more favorably of Toyota, rather than less, as a result of this decision.  Let us hope that the broader markets – for vehicles and for company stock - ultimately reward the company for its actions.

Let’s be careful out there!

CAW