Provide your answer questions 1, 2, 3, 4 and 5 presented in the attached case study. To earn full credit you must present a correct and thoughtful answer to all 5 questions (1-5) at the end of the case.
W Foster School of Business Accounting for Toyota's Recalls "According to the U.S. Transportation Department, over the past decade through the end of February the nurnber of deaths linked to sudden acceleration in Toyota vehicles has increased to 52,"1 Despite a long-term strategy of building quality into their vehicles (Exhibit 1), Toyota ended the first decade of the twenty-first century mired in controversy and legal claims related to allegations of unintended sudden acceleration. In mid-September 2009, Toyota Motor Sales USA ordered its dealers in the United States to inspect floormats in all of their cars after a high- speed traffic accident in late August 2009 killed a California Highway Patrol Officer and three members of his family (Exhibit 2). Unintended acceleration caused by an incorrect or misaligned floormat was suspected. Exhibit 3 summarizes subsequent events. By late September, Toyota urged approximately 4 million Toyota and Lexus owners to remove the driver's side floor mat. About a month later, investigators turned their attention to the design of the accelerator pedal. In a press briefing on November 2, 2009 Toyota Group Vice President and General Manager Bob Carter "categorically denied claims like those in [an] ABC News investigation into the situation wherein owners are claiming electrical or mechanical faults led to unintended acceleration. On November 16, 2009, Japanese media reported that Toyota had made a deal with the U.S National Highway Traffic Safety Administration (NHTSA) over a recall. Toyota denied any agreement had been reached, but the company admitted it had already "set aside" S5.6 billion to deal with the issue. By late November 2009, Toyota had recalled over four million vehicles in the U.S. to address the risk that floormats could come loose and trap the accelerator pedal (Exhibit 4) On January 16, 2010, Toyota notified the NHTSA that accelerator pedals made by its supplier CTS Corp might have a dangerous "sticking" defect. Five days later, Toyota announced a recall of over 2 million vehicles related to sticking pedals (Exhibit 5). Days later, at the urging of the NTHSA, Toyota (i) halted U.S. sales of eight models involved in the recall, including its best selling Camry and Corolla sedans, and (ii) recalled an additional 1.1 million vehicles due to the W Foster School of Business Accounting for Toyota's Recalls "According to the U.S. Transportation Department, over the past decade through the end of February the nurnber of deaths linked to sudden acceleration in Toyota vehicles has increased to 52,"1 Despite a long-term strategy of building quality into their vehicles (Exhibit 1), Toyota ended the first decade of the twenty-first century mired in controversy and legal claims related to allegations of unintended sudden acceleration. In mid-September 2009, Toyota Motor Sales USA ordered its dealers in the United States to inspect floormats in all of their cars after a high- speed traffic accident in late August 2009 killed a California Highway Patrol Officer and three members of his family (Exhibit 2). Unintended acceleration caused by an incorrect or misaligned floormat was suspected. Exhibit 3 summarizes subsequent events. By late September, Toyota urged approximately 4 million Toyota and Lexus owners to remove the driver's side floor mat. About a month later, investigators turned their attention to the design of the accelerator pedal. In a press briefing on November 2, 2009 Toyota Group Vice President and General Manager Bob Carter "categorically denied claims like those in [an] ABC News investigation into the situation wherein owners are claiming electrical or mechanical faults led to unintended acceleration. On November 16, 2009, Japanese media reported that Toyota had made a deal with the U.S National Highway Traffic Safety Administration (NHTSA) over a recall. Toyota denied any agreement had been reached, but the company admitted it had already "set aside" S5.6 billion to deal with the issue. By late November 2009, Toyota had recalled over four million vehicles in the U.S. to address the risk that floormats could come loose and trap the accelerator pedal (Exhibit 4) On January 16, 2010, Toyota notified the NHTSA that accelerator pedals made by its supplier CTS Corp might have a dangerous "sticking" defect. Five days later, Toyota announced a recall of over 2 million vehicles related to sticking pedals (Exhibit 5). Days later, at the urging of the NTHSA, Toyota (i) halted U.S. sales of eight models involved in the recall, including its best selling Camry and Corolla sedans, and (ii) recalled an additional 1.1 million vehicles due to the
