US: Toyota needs more local control, panel finds
Toyota recalled millions of vehicles worldwide to check for 'sticky' accelerator pedals
Toyota Motor Corporation (TMC) has erred too much on the side of global centralisation and “needs to shift the balance somewhat toward greater local authority and control”, according to a report by the Toyota North American Quality Advisory Panel released on Monday night.
The automaker has recalled over 12m vehicles since 2009 and paid US authorities almost $50million in penalties. One of its responses was to commission the panel, chaired by a former US Secretary of Transportation, Rodney Slater, to examine its quality and safety processes and procedures and to make recommendations.
The report said that, while globally centralised operations bring greater economies of scale, tighter operational control, and greater consistency while more locally-driven, decentralised operations, “generates better adaptation to local markets, more flexibility, and quicker responsiveness to quality and safety problems”.
It said Toyota had traditionally maximised control by making decisions on everything from recalls, communications, marketing, and vehicle design and development centrally in Japan, structuring global operations around functional 'silos', each of which reports separately to TMC.
It noted that, in North America, Toyota does not have one chief executive in charge of all its divisions, instead, individual heads of each report directly to TMC in Japan.
This, structure, the panel said, “contributed to several of Toyota’s quality and safety issues in North America” by hindering information sharing and contributed to miscommunication and delayed response time to quality and safety issues, fueling criticism that the automaker “was being unresponsive to regulators and customers”.
It recommended Toyota “continue to adjust its balance between global and local control giving weight to local control in order to improve its communication and speed in responding to quality and safety issues”; ensure it “listens and responds as positively to negative external feedback as it does to negative internal feedback” and “must persist in more clearly distinguishing safety from quality and continue its efforts to enhance its safety practices and procedures.”
The panel suggested Toyota further break down the regional 'silo' structure in North America and consider appointing one chief executive for North American operations with responsibility for all regional organisations.
When responding to critical and emerging safety issues, some other method than “inefficient and time-consuming” decision making by committee should be used.
The panel also recommended better communication between the global regions, especially regarding reports of vehicle safety issues in vehicles that may share parts across regions.
It also suggested “clearer lines of communication, authority, and decision making between North America and TMC” and an “increase in North American involvement in the product development and design process for vehicles in North American markets”.
The panel suggested Toyota pay more attention to external sources of quality and safety data and create an independent 'Customer Representative Team', reporting directly to the president, “responsible for seeking out and reviewing all possible sources of information regarding the outside world’s positive and negative views, experiences, and preferences regarding Toyota vehicles. Such sources should include complaint and accident data collected by regulatory agencies, complaints made to dealers and to Toyota’s customer service numbers, warranty data, reports from consumer rating agencies, automotive enthusiast web sites and blogs, etc.
“The group would act as an independent conduit and analyse the information it collects and look for trends, set priorities, identify early-warning signs, and make its work available to upper management for consideration in developing future vehicles,” the panel recommended.
It also suggested Toyota executives in Japan learn more about the US regulatory system and processes.
“Instead of viewing NHTSA proposals and defect investigations as adversarial processes, and rather than considering delayed or blocked regulations and minimised recalls as 'wins', Toyota, at all levels, should recognise and understand that NHTSA’s mission is to improve vehicle safety.
"Thus, a strong and competent NHTSA is good for Toyota and the industry because it will be less likely to propose poor regulations or push for inappropriate recalls. In this regard, Toyota should be more willing to show leadership in vehicle safety and take positions that differ from the Alliance of Automobile Manufacturers when appropriate,” the report said.
TMC president Akio Toyoda said in a statement: “We appreciate the panel’s efforts to help us further strengthen our processes, and we thank this distinguished group for their recommendations. Over the past year, Toyota has learned a great deal from listening to the panel’s valuable counsel. Their advice has been reflected in the meaningful steps we’ve taken to give our North American operations more autonomy and become an even more safety-focused and responsive company.”
"The report makes a pretty good case that Toyota let quality lapse. Also, it confirms our view that Toyota's culture - one that works well in times of stability - left it uniquely vulnerable to a fast-moving crisis, such as the safety issues that enveloped the company last year," said Edmunds.com CEO Jeremy Anwyl. ”But anyone hoping that this report would help settle the debate around causes of unintended acceleration will be disappointed.”
While the document provides worthwhile recommendations for Toyota going forward, it did not shed new light on the causes of unintended acceleration that occurred in Toyota models, Edmunds said.
“As we have noted before, in the absence of a definitive resolution consumers are left to speculate,” said Anwyl, who wrote in an op-ed for the Washington Post last year that “it is impossible to rule out any possibilities: electrical, mechanical, design or driver-related.”
Edmunds.com will announce at its safety conference in Washington today (24 May) that there is no winner of the 'Unintended Acceleration Contest' it launched early in 2010 after the safety of Toyota vehicles came into question.
“Evidence has been piling up that unintended acceleration is not caused by a vehicle defect, and our contest result seems to be the final piece. Even with US$1m motivating the best and brightest thinkers to study the issue, no one could demonstrate any novel and plausible cause for unintended acceleration,” said Anwyl.
“This leaves the blame at the foot of the driver, literally. Culturally, we have an aversion to blaming the driver, but to improve the safety on our roads we need to recognise the role of the driver and engage the driver more fully.”