The Ongoing Toyota Recall/Stop-Sale/Halt-Production Debacle

January 28th, 2010

It's not so ugly, is it (2010 Camry)? Note immense garage behind.

When a company as important as the Toyota Motor Corp. gets into big trouble, a lot of people take notice. When the issues don’t get resolved, they take more notice. We are going to break down the onrushing Toyota recall news into a few categories—and I’m doing this for my own better understanding as well as yours!

What has happened
The latest is that the November 25 recall (for possibly faulty accelerator pedal assemblies) will extend to another 1.1 million U.S. vehicles, plus 2 million in Europe (cars not specified), 75,000 in China, perhaps 99,000 Pontiac Vibes (same car basically as Toyota Matrix) which have affected pedal assemblies.

In regards to the background of recalls, at least those in the past year, we skimmed that for you yesterday and did a little cheap analysis. For those of you who want to get up to speed on Toyota’s history of problem recalls and how the crisis has unfolded, Motor Trend put together a pretty complete chronology. It documents one corporate failure after another following one recall after another.

Bertel Schmitt of TTAC provides a good overview of the whole crisis, with links, even to Al Jazeera.

Some immediate effects
Trying to remain upbeat, the dealers are getting calls from customers worried about whether to drive their cars, how to get them fixed, what to do in an “accelerating moment.” The dealers have few answers and are waiting for instructions from the factory. They can’t give much except consolation until they get suitable repair parts. Who knows when? Sales of unaffected cars are way down.

General Motors has kindly offered incentives of up to $1,000 to get worried Toyota owners to switch to new GM vehicles. It is doubtful that Ford or Chrysler will follow suit. This transparent ploy may not ultimately play well with other car buyers who view it as aggressive vulturism. Said a GM general manager, “we [just] want to provide help.”

The obvious scapegoat in all this is the pedal-maker, a U.S. company called CTS that manufactures some of Toyota’s pedal assemblies in Ontario. Toyota was quick to finger them, and CTS shot back on its website:

As Toyota stated, this recall is different from and unrelated to the “sudden, unintended acceleration issue” which was the subject of the November 2009 Toyota recall. In the November recall, the pedals in Toyota models dated back to model year 2002. CTS became a pedal supplier in 2005. Accordingly, our products are not implicated by the November 2009 recall. The products we supply to Toyota, including the pedals covered by the recent recall, have been manufactured to Toyota’s design specifications.

Toyota is a small, but important, customer of CTS, representing approximately 3% of our annual sales. CTS has been actively working with Toyota for awhile to develop a new pedal to meet tougher specifications from Toyota. The newly designed pedal is now tested and parts are beginning to ship to some Toyota factories.

2008 Tundra accelerator assembly

There will clearly be lots more to emerge here, particularly regarding those “tougher specifications.” CTS also makes pedals for Honda and Nissan. It will be interesting to see how long it takes to redesign, produce and install some 2 million pedal assemblies.

Longer-term implications
What will be the outcome for Toyota’s sterling reputation for quality and value? That’s the big question many are asking—with few knowledgeable answers proposed. James Womack, longtime Toyota observer, said what many have said, that the company moved too fast to agglomerate market share. Then, “when your whole deal was quality, every mistake is a big deal,” he said.

The other problem Womack pointed out is that Toyota’s competition has very much improved—a fact which may well pull consumers away from Toyota products. How long the damage of the recall will linger is anybody’s guess. Erich Merkle, president of Autoconomy.com, an industry analysis firm, said:

People don’t buy [Toyotas] for their good looks. They don’t buy [them] for the cash-back or financing offers. …They buy them because they have a lot of confidence in the quality and safety of the vehicle.

Seems obvious, right? Yet others think the company can and will spring back because of its forthrightness in meeting the problem. Well, there are at least two sides to that story. And, finally, what is the real underlying problem here? And where is the fix?

Car fans vs. car consumers
Deciding how to confront the PR side of all this is a major challenge because the future of the entire Toyota brand is at stake. We said yesterday that the new president should take bull by the horns and do a media blitz with a personal pitch and explanation.

So who does he aim his remarks to? There are two important audiences in the car world—consumers and influencers, buyers and car fans—and they have very different interests and concerns. (Let’s for the moment not deal with investors, who have their own concerns.)

Those of you who read blogs such as this are the ultimate car fans and demand good information. You want to know if Toyota is being honest or covering up, doing a proper investigation or fudging, how they will develop and institute a fix. You want the truth. Consumers want reassurance—that their cars are safe, that their values will hold, that they have made a sensible investment.

Akio Toyoda (or another company spokesperson) has his work cut out for him. He can run but he can’t hide. Go to the corporate website: Hard to believe, but there still isn’t one mention of the crisis!

What do you find is the most serious aspect of the Toyota crisis: cars, credibility, customers, the brand, the management/direction of the company? Or?

—jgoods

Find Used Cars in Your Area at CarGurus

Used Toyota Matrix
Used Pontiac Vibe

Be Sociable, Share!

  1. TravisG
    | #1

    Great article.
    I think if the PR was handled right from the beginning, this wouldn’t be a big problem. A problem still, yes, but not a brand-threatening one. It’s hard to believe that a company of Toyota’s size is fumbling the public relations ball like this. All the public needs is reassurance, and an outline of what is being done. Consumers are forgiving when told the truth, but ruthless when lied to.

  2. James
    | #2

    Crazy you know years ago the complaint was Toyota not wanting to allow US parts makers to make parts for their vehicles! And now “Fast Forward” to today.

    And in fact not all Toyota’s are being recalled just the ones that were made in this country!

    The cars made in Japan with the “J” in their VINN number don’t have the same problems of the cars manufactured in the US!

    So if you go to “Japans headquarters” in Japan and wonder why they aren’t talking about this problem! It is because this is a US manufacturing problem and not a Japanese manufacturing problem.

    And this “CTS emblem” as I recall is also on GM cars like Cadillac if I am not mistaken! So before you jump ship thinking GM has all or the better answers think about that!

    I am thinking much or most of this is just plain hype and pollitic’s! Any scare tactic the big 3 but especially GM can use they are going to play it to the hilt.

  3. jgoods
    | #3

    Big companies everywhere like to keep things close to the chest–from trade secrets to suppliers to (above all) problems. Japanese companies are no different, but are maybe more secretive and certainly fearful of admitting a chink in their armor. The fact that Toyota still has nothing about the crisis on the corporate website speaks volumes about their attitude. And legal departments are always at odds with the public affairs people. (I know because I’ve been there!)

    Travis is right: tell the truth, all of it, quickly and customers will understand. Stonewall or lie, and you’re dead meat. James is also right to point out how chauvinistic the corporate Japanese can be when it comes to admitting anything. The whole business of making cars is now a worldwide enterprise and has been so for years. Meaning you can’t hide any failures under a company’s political or national umbrella–or flag, for that matter. Should it come out that CTS made bad parts, it is indeed still Toyota’s responsibility in the end. If bad pedals turn up on GM cars, well, wouldn’t that be interesting?

  4. | #4

    I think this recall will probably make a dent in Toyota’s bottomline but then I applaud them for thinking of “Safety

    First before Profit”.

  5. | #5

    I think the root cause should be debated by all car makers. Why would they do away with the standard throttle return spring and steal accelerator cable that worked just fine for so long. Having computer electronics control your throttle position with no redundant back up or automatic override when you apply the brakes is not the greatest idea. I would have expect clearer thinking from the rocket scientist division at Toyota.

  6. randy
    | #6

    The real irony in this situation is that the vast majority of the accidents are the result of incompetent drivers who are unable to handle a vehicle emergency. While a few accidents might have happened because vehicles were so close that the driver had little time to react, most are because the driver panics and doesn’t turn off the engine, depress the clutch or shift the automatic trans into neutral. (Turning the key off is a last resort because that can cause loss of steering.) Of course that doesn’t let Toyota off the hook, but it’s amazing how incompetent the average driver is in an emergency situation. A moving car represents a tremendous amount of kinetic energy, and it’s amazing we let people drive without the slightest bit of training in handling routine emergencies. It’s like letting people become commercial airline pilots with a few hours of flight training for routine flight operations.

  7. Paul
    | #7

    We own two Lexus vehicles. Our 2003 ES300 was purchased at the dealership when it had 84,000 miles. We assumed the engine would go to 150,000 or even 200,000; otherwise we never would have paid $17,000 plus $1300 plus more for the 90,000 maintenance. At 111,000 our engine is all gunked up and needs to be replaced. Despite a successful class-action law suit on Lexus ES300 engines through 2002 models that involved the exact same problem, Lexus spent 12 days thinking about what to do with us, then said they weren’t going to do anything. The 2003 engine is exactly the same as the 2002 engine. We are done with Lexus and Toyota. Never again.

  1. No trackbacks yet.
You must be logged in to post a comment.