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Toyota recalls millions of unsafe vehicles. The Toyota massive quagmire most likely won't take down this Goliath in the car industry, but it will hurt the company. It's going to be a long time for this Japanese car manufacturer to re-gain our trust again.
It looks like 2010 just isn’t going to be Toyota’s year. In less than a month, the Japanese mega-giant car manufacturer has been humbled, a mighty goliath brought down by a tiny stone. Well, maybe that’s how some might see it. However, the stone isn’t quite so tiny. When important parts of a vehicle, like the gas pedal and brakes, begin to malfunction, it cannot be taken likely.
The worst is far from over. Millions of vehicles have been returned; the company CEO is offering mea culpa’s to the driving public and Congress is holding hearings over the company’s behaviour leading up to the recall. Sales are down 10 per cent at least. Resale values of the models included in the recall have plummeted. How did this all start? It was one phone call to 9-1-1.
In August 2009, a driver in a Lexus ES 350 called the emergency line, reporting that the accelerator on the car was stuck. The call ended shortly after with a crash. The four people in the car were killed. In September, Toyota announced a recall to 3.8 million vehicles, saying that the floor mat under the pedals could cause the accelerator to get stuck. At the time, Toyota claimed there was no “vehicle-based cause” for the acceleration issues.
In November 2005, Toyota it was looking at redesigning the floor mats, reconfiguring the acceleration system and putting in a brake override system. But on January 21st, 2010, Toyota went ahead and recalled several of their top models, admitting there was a problem with the accelerator pedal that was not a result of the floor mat. The recall included some of Toyota’s most popular models, like the RAV4, Corolla, Highlander and Camry, one of the best-selling cars in the world. On the 26th, Toyota announced they would be suspending sales and production of the models affected by the recall. The next day, the 27th, the recall involving the floor mat problem is widened and includes models like the Toyota Matrix/Pontiac Vibe. Lexus is not immune from the problem either. Several models, including the ES 350 are on the list of vehicles Toyota believes have a faulty accelerator.
By February 1st, Toyota had a solution to the problem and sent out replacement parts to dealerships. It seemed the worst has past, even with members of the US government making critical statements in the media. On Feb. 5th, Akio Toyoda, president and CEO of Toyota, apologized to the world at a press conference. He vowed the company would improve.
Then the other shoe fell. On February 9th, Toyota recalled the Prius, citing problems with the braking system. The number of vehicles recalled by the company now stands at a staggering 8.5 million. Given that the Prius is the most popular hybrid vehicle in the world, that’s a lot of cars going back to the dealership. Three days later, Toyota announced another recall, this time regarding the 2010 Tacoma. This recall is minor, with only 8,000 vehicles included. The problem this time was a problem with the front propeller shaft that could cause the vehicle to lose control.
The most recent recall came on Feb. 17th, with the company announcing that there was problem with the steering system in the 2008 and 2009 Scion XD and the 2009 and 2010 Corolla.
While the fact that Toyota has had to recall a sizeable chunk of the cars they’ve sold in the last five years, what has bother many people has been the perceived lack of distress from the company regarding the many safety issues that have come to light regarding their vehicles. When news investigators began uncovering cases of unexplained acceleration that were in no way related to floor mats, Toyota seemed to scoff and laugh it off. Only when the problem became too big to ignore did the company begin to act. Aside from announcing a recall, Toyota tried to pass the blame onto the manufacturer of the accelerator pedal, an America company called CTS, based in Elkhart, Indiana. The company immediately denied being at fault.
What’s more, it appears that the company waited on announcing the first recalls in a bid to save money. Recently released documents reveal that the company negotiated with US regulators to delay and limit the initial recall made in November, 2009. Doing this saved the company close to $100 million.
At least three class-action lawsuits have been filed in US courts regarding the sudden acceleration problem. None have reached any decision regarding Toyota’s culpability in the matter. The behaviour of the company has raised the ire of US lawmakers and the company now faces hearing before Congress and potential criminal charges. When asked if he would appear at the hearing to address the concerns of lawmakers, CEO Toyoda initially said he would send a subordinate in his place, but as the situation has become graver, he has said he will appear himself.
What does this mean for Toyota? It is no longer the golden boy of the automotive industry. Its reputation has taken a severe hit as people can no longer accept the safety of their cars at a glance. Instead, a lot of penance will have to be made. However, the company is nothing if not resilient. It will most likely come through this episode having to pay a small fortune in damages to the members of the class-action suits. It will probably have to pay several fines in restitution for its lackadaisical reaction to the complaints made about their cars. Sales will suffer for a time but will rebound as Toyota proves it is a safe, reliable car manufacturer.
Will Toyota achieve the heights it was at prior to the recall? It is possible. The company is an innovator and leader amongst car manufacturers around the world. Investments in green technology will make in attractive to eco-conscious buyers. The obvious investments into safety technology and design will also help rebuild consumer confidence in the brand. The recall has knocked Toyota down, but it is far from out.