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