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#77 – A Defining Moment

by | Feb 2, 2017



Dick Chitty commented, “Well, I guess we are going to find out if that Lexus Covenant we all signed means anything.” We decided to craft our response to the recall around that commitment. We and the dealers had all signed the Lexus Covenant agreeing to exceed our customers’ expectations and treat them as guests in our home. It was time to stand up and deliver on that promise.


The Washington, D.C. office was to call the Lexus office in California as soon as the recall notification was delivered to the NHTSA on Monday morning of December 4, 1989. The expensive data-video communication system I reluctantly agreed to implement was about to save the day.


Mandatory conference calls with all the dealers and field organizations were set up immediately after the delivery of the notification to NHTSA. Dick Chitty, Don Esmond, and I divided up the conference calls. These calls were followed up with a video presentation shown to all dealership and field office personnel during which we emphazied the Lexus Covenant and its meaning.


One hour after the NHTSA was notified of the recall, every dealer, every field office, and all the Lexus associates knew about the recall and could explain the problem and how it was to be fixed. Lexus service technical specialists were present in every Lexus field office that Monday morning to answer any associate, dealer, or customer questions.


All the LS400 owners were to be called by the dealers within 24 hours to insure they were told about the recall before they heard or read about it in the news. Loaner cars were to be made available to all customers. If customers lived more than 100 miles from their dealership, a technician would be sent to their homes. All the cars were to be returned to the owners, washed and filled with a full tank of complimentary gas. Replacement parts were being airfreighted out from Japan every day. The goal was to have every car fixed before Christmas in 21 days.


The headlines for the next day were predictable. USA Today’s headline noted dryly, “Perfectionist’s brainchild Lexus not so perfect.” I was quoted saying, “We’re pursuing perfection; we’re not perfect.” Toyota spokesman Jim Olson took the embarrassing part of the recall head-on with a refreshingly blunt quote: “You bet it’s embarrassing. This is our walk-on-water car.”


Jerry Hirsch of the Associated Press reported, “Glitches mar debut of Lexus.” He went on to write, “Lexus’ advertised ‘Relentless Pursuit of Perfection’ has some imperfections.”


By December 23, all the repairs had been completed except for several hundred cars that had been shipped out of the country or bought by competitors and disassembled for research. Thankfully, there were no more cruise control failures or accidents.


Over the Christmas holidays, I sat at the dinning room table and personally signed approximately 7,500 letters of apology to each of our guests who had purchased one of the first LS400s and thanked them for their patience.


During the cruise control recall crisis, the Lexus Covenant seemed to create a bond between the dealer body, the Lexus field office, and national headquarters personnel in an undergirded effort to overcome the challenge and emerge with an enhanced reputation.


In his book The Tipping Point, Malcolm Gladwell explains what happened. “The tipping point is that magic moment when an idea crosses a threshold, tips and spreads like wildfire.”


Gladwell went on to write, “You could argue that Lexus overreacted…but the company emerged from what could have been a disaster with a reputation for customer service that continues to this day. One automotive publication called it ‘the perfect recall.’”


The Lexus Covenant is still taught in Lexus training classes and on display at the national headquarters and some dealerships.


“God is our refuge and strength, always ready to help in times of trouble.” Psalm 46:1 (NLT)
God’s love for us helps us overcome all our challenges. Learn more about His perfect plan for our lives in the God of Hope book.


The year wasn’t quite over yet. We still had to hit the 16,000 sales objective set for the year. Could the LS400 maintain its sales pace despite the negative press surrounding the recall? Would the ES250 sales finally get going? Would I have to sing a solo to all the associates?


(To be continued in “1989 in the Rear View Mirror”)