Tuesday, February 9, 2010

What lessons can be learned from Toyota crisis

With the announcement that Toyota will globally recall over 400,000 hybrid vehicles, including its popular Prius hybrid, because of problems with the braking system, is just one more blow to the automaker's reputation and bottom line. This comes in the wake of weakening sales for the month of January, loss of consumer confidence and increasing litigation and calls for government investigation of the automaker.
Many are blaming Toyota management for the mess. Earlier this week, company's Japanese management, including Akio Toyoda, stepped forward and publically admitted to having failed to effectively manage the problems at the company and putting the global automaker in a crisis. Mr. Toyoda, grandson of the founder of the company, said a committe would be set up to look at quality issues and recently accounced he will come to the United States to get a better handle of the recall crisis.
I've been following commentary on Toyota for a number of days, but the only one that seemed to get to the heart of the matter was an op-ed piece by Matthew DeBond at the New York Times (http://www.nytimes.com/2010/02/06/opinion/06debord.html?ref=opinion).
DeBond points out that while Toyota worked hard to become the largest car manufacturer in the world, it did not know what to do when it got that coveted spot. The company's vaunted management culture, which allowed it to grow and overcome its competitors, could not deal with the problems that come with rapid growth, outsourcing of production and parts and to move quickly to fix problems with its products. Instead, problems were ignored until they became too obvious to be dismissed, and then it was too late.
Now we see the result. While mechanical issues can be fixed quickly, management problems will take much longer and may be much harder to deal with.

Tuesday, February 2, 2010

Sticking Points - A Word on the Toyota Recall

By David Halpert, assistant editor

It seems you can't turn on your television without hearing about Toyota and their latest woes regarding the recall. At the time I'm writing this North American recalls have totaled one million while worldwide recalls have estimated figures of around over two million. While it's difficult to determine the estimated fallout from this recalls--which can range anywhere from Toyota losing customers, to civil suit, to vehicles careening out of control on the highway--I side with Toyota on taking swift action to alert its customers of the problem and doing their best to 'contain' the situation.

Of course I say this with a huge grain of salt. For one, I don't drive a Toyota model (I drive a Pontiac), so I can't even imagine what it must be like to hear about this recall over the radio while driving on the Don Valley Parkway in Toronto in the middle of winter at 80km/h. I'm also aware that it's a serious issue when a product malfunction can lead to severe injury or even death. However, I'm still daunted by the enormity of this recall, and how I can't go two minutes on a busy street without seeing an affected model driving past me.

But recalls don't come cheap either, especially ones that include redesigned floor mats, reconfigured accelerator pedals, and a brake override feature on all vehicles built before 2010.

I'm sure there are technicians (and customers) that will disagree with me on this issue, but if anything I think other companies (not just in the automotive sector either) should take the Toyota recall as a case study when it comes to how a company takes care of their customers and their safety. Others will argue that the problem should never have happened in the first place, but once again I can't offer any answers other than to say "these things happen" and no amount of product research and development can predict how these vehicles will operate months, or even years, down the road.

Monday, February 1, 2010

Don't expect Detroit to gain from Toyota's troubles

Can the Detroit Three make inroads in the wake of Toyota Motor Corp.'s recent troubles? That is a question that has occupied some in the automotive industry, with Jack Fisher, senior automotive engineer at Consumer Reports, writing that Toyota's troubles with its faulty accelerator pedal design opens a "huge opportunity for Detroit." Fisher, along with several other analysts and automotive industry watchers, suggest Toyota's accelerator pedal troubles strikes at the heart of the company's much-vaunted reputation for quality. The accelerator pedal problem, along with the possibility of class-action lawsuits being filed in the United States to an earlier recall with problem-plagued floor mats, could open the door to rivals as Ford and General Motors. Both North American car makers have offered rebates to Toyota and Honda owners.
While all of this makes for some great and entertaining speculation, I'm not so sure Detroit's automakers will be able to make significant gains against Toyota. One reason is that the Detroit Three have a long history for many North American car buyers of poor quality, starting from the 1970s. The Japanese brands have a solid reputation amongst many car buyers of quality and reliability.
Certainly Toyota's troubles have given the company a black eye, and it has been suffering quality issues for several years, but there has not been a mass exodus of Toyota buyers to other brands. That could change with the lawsuits or if the acceleration troubles involve something more serious, say the vehicle electronics. However, if car buyers do switch, it will likely be to other Asian car makers, such as Honda or Nissan. Detroit still has a long way to go with its own quality issues and with the lingering effects of bankruptcy for two of the three auto giants before it can begin to significantly take away major auto sales from its foreign competitors.