Take the Hit Now. It'll Hurt Less Than It will Later.

I wrote last month (here) about GM's recall of vehicles with a faulty ignition switch, basically asking "Why would you wait to work on a fix if your product demonstrates a significant flaw?" It shouldn't be necessary for people to die.

GM, of course, is not the only company -- not even the only car company -- to deal with the question of recalls. Today's New York Times reports that Toyota has been fined $1.2 billion for hiding safety defects (full article, by Bill Vlasic and Matt Apuzzo, here).

The article includes a quote from US Attorney General Eric Holder that perfectly encapsulates why you should do the right thing as soon as possible:

A recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.

Thank you.

The fine, the largest criminal penalty ever for an automaker in the United States, is related to a 2004-2010 problem of "unintended acceleration" in many of the most popular Toyota and Lexus models. As reported in the Times,

Toyota recalled more than 10 million vehicles in 2009 and 2010 for problems related to unintended acceleration. The company modified gas pedals and floor mats and made brake-override systems standard on new models.

The company has already paid more than $60 million in civil penalties related to the gas-pedal problems, and will still have to deal with numerous wrongful-death and personal-injury lawsuits. Of course, when you have more than $60 billion in cash reserves, even these penalties will not do lasting financial damage. And Toyota's market share has largely recovered. But:

There has been a growing sense among [Toyota] executives that a prolonged investigation would ultimately do more damage to the automaker’s image in the United States than a settlement, people with knowledge of the company’s thinking say.

I'd like to say, Think about that long-term damage before you embark on a cover-up. 

But I know that "long-term" is a concept we all have trouble with.