On Tuesday, Toyota Motor Corp. announced, somewhat reluctantly, that it was recalling 437,000 2010 Prius hybrid cars in Japan, Europe, and the U.S. Some plug-in Prius models, Lexus HS 250hs, and Sai hybrids are also affected. It’s the brake issue on slippery or bumpy roads that we wrote about here.
The company was reluctant because it feels the brake problem is merely a matter of “brake feel” and “customer preference,” not a true defect in its cars. So says a top company exec. The company believes that the recalled cars “meet safety standards,” but it’s going the extra mile to fulfill the spirit of these standards. These comments come from a Wall Street Journal piece this morning.
What they show is a company totally out of touch with the perceptions they have created in the marketplace and in the media. Company officials are approaching this as if they were being victimized by a screeching press and government regulators calling for them to fall on their swords. They look at the furor and think, engineers that they are, “Our cars are as safe as we can make them. Look at the numbers of them on the highway and the care we have taken to produce them.”
You know what, guys? That doesn’t matter. If you sold Tylenol and three bottles had poison in them, your only recourse would be to pull them all off the shelves. No, I am certainly not suggesting that Toyota recall every Prius, for example, but it has to deal with the fears that these disclosures have generated. Have government regulators (viz., Ray La Hood) capitalized on these fears? Oh yes, but the company must at the very least show it understands what is causing the turmoil. It hasn’t done that.
And today we learn about more problems brewing. Automotive News and Autoweek report power steering complaints, some serious, in the Corolla, but so far the numbers are relatively small. The insurance giant State Farm claims it first warned the NHTSA “on numerous occasions starting in 2007” about sudden acceleration complaints it had received, particularly frequent on 2007 Lexus ES-350 and Camry cars. Why didn’t the regulators act? Are the claims legitimate?
An AP story all over the Web today tells us that if we own a Toyota, its resale value (per Kelley Blue Book) is down 4 percent compared to a week ago ($300-750, depending on the model). If you own a Camry, you’re looking at a 4 to 6 percent hit since January 21, when the pedal recall was announced.
Finally, Honda is also worrying about the impact all this will have—perhaps on its own vehicles, which, like all cars today, use prodigious amounts and kinds of electronics, and certainly in Japan’s industrial structure, where Toyota is King Kong. The economic fallout may be severe.
No one, however, should forget what a great history Toyota has and how it single-handedly transformed the auto industry. It’s classic hubris, isn’t it? While they were constantly harping on quality and banking on the appeal of dull cars, their competitors were not only catching up but surpassing them.
Maybe these recalls and the public’s reaction will finally be the kick in the butt the company needs to get itself repurposed and reorganized.
Is there light at the end of the recall tunnel for Toyota? Or is the company’s reputation damaged beyond repair?