Toyota Car Crisis

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Halmstad University
School of Business and Engineering Master in Management of Innovation and Business Development

Toyota Crisis: Management Ignorance?
– A Swedish Case of Consumers Perceptions

Master’s Dissertation in Management of Innovation and Business Development, 15 ECTS Final seminar 2010-05-27

Authors: Yuanyuan Feng Supervisor: Mike Danilovic

Hamlstad

University

Feng(2010)

TOYOTA CRISIS: MANAGEMENT IGNORANCE?
– A SWEDISH CASE OF CONSUMERS PERCEPTIONS
Yuanyuan Feng
School of Business and Engineering, Halmstad University, Sweden

Abstract

Since the late 2009, the famous vehicle manufacture Toyota has suffered a severe crisis due to unintended quality problems in its cars which had triggered Toyota’s largest officially recalls of its cars around the world. This crisis threatens the company’s previous reputation of good quality cars, as well as the brand image built up over time. This study aims to elaborate on the Toyota crisis in order to understand why Toyota faces this crisis and how they deal with the crisis; and investigate consumers’ perceptions of Toyota brand as the outcome of the crisis, with a focus on Swedish market. A qualitative research along with a number of face-to-face interviews with Toyota Swedish dealer and Swedish vehicle consumers is conducted. The findings reveal that the impact of the Toyota crisis in Sweden is not as serious as that in America; there remain satisfied and loyal Toyota’s customers who are not swayed by the negative publicities; While Toyota should manage the crisis even in a better way in order to retain its good reputation. Crisis, Toyota, Corporate Reputation, crisis management, consumer perception

Key Words

INTRODUCTION
“We deeply regret the inconvenience and concern caused to our customers and others by our recent recalls of multiple vehicle models across multiple regions.” – Aki Toyoda, the CEO of Toyota Motor Corporation1 (Toyota website). Since the above apologetic speech was addressed by Aki Toyoda at a press conference in February 2010, it had been highlighted at the front page of Toyota’s official website for a few months. Beside the regretful expression we can learn from this public release, it also implies that the Toyota, one of the world’s largest automakers, is suffering in their recent recalls of millions of vehicles round the globe. Safety recalls are common issues occurring in automobile industry, few may have long run impact on the automakers involved if handled correctly. However, in this case, the disaster engulfing Toyota is of a different order (The Economist, Feb.6, 2010). Toyota’s quality brand has been at a risk due to its sedans’ safety problems sequentially emerged recently.

1

Toyota Motor Corporation is the full name of the company, however, in this article the word “Toyota” will be used instead of Toyota Motor Corporation in order to make it short.

1

Hamlstad

University

Feng(2010)

In 2008 Toyota became the world’s largest carmaker when it successfully exceeded General Motors in sales and production. However, this leading position of Toyota had changed since the end of 2009. In United States, Toyota’s largest marketplace, a fatal crash of a Lexus ES 350 happening on August 28th 2009 was highly publicized, due to the gas pedal was stuck and the car was out of control (Los Angeles Times, Oct.25, 2009). Since then, Toyota’s vehicles have been largely exposed to a series of issues associated with unintended acceleration problems, which had triggered Toyota’s escalating crisis and its massive recalls of approximately 9 million vehicles globally within six months. For Toyota, this is indeed a tragedy not only related to heavy financial losses due to repairing costs, market share lost and production suspending, but also to Toyota’s reputation for matchless quality and management. The firm's reputation for quality cars, on which the business was built over time, is shattered.

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