Toyota

[Ryan]

I'm sure everyone has heard of some of Toyota's recent problems. Yesterday, WPR had a show where the host talked with a guest about these problems. I didn't get a chance to listen to the complete talk yet (one part I unfortunately missed was a discussion about the future of Toyota after these troubles) but what I did hear didn't bode well for Toyota.

A few of their problems:

• The floor mat recall that I'm sure everyone has heard of by now.
• A recall for a different problem with accelerator pedals sticking (which now has Toyota plants idled and dealers not selling many of Toyota's most popular models while they figure out what's wrong and how to fix it). I believe it was stated these two recalls account for 5.3 million vehicles in the US and 8 million worldwide, with more possibly to be added.
• A recall that apparently slid under the radar of 100,000 Tundra trucks due to rusting that the guest said was so bad there were some instances of spare tires falling off while driving down the highway (something to keep in mind if you're following a Tundra down the highway?).
• Reported problems with the braking system in the new Prius.
• At some point, I thought I heard them say there are investigations underway into another potential issue with the Matrix and either the Corolla or Camry.

After listening to what I heard of this show, I had two thoughts. First, thank goodness I didn't let Lisa's family's "Toyota is the only good car" attitude get the best of Lisa. Second, what is this going to do to Toyota as a business (hence, my disappointment in missing that segment of the show and my desire to listen to the archived audio myself when I get a chance)?

Audio archive of the show

[Andrew A.]

Honda >> Toyota 
Actually, Subaru may have caught up with and even passed Toyota, as well.  Hyundai is another make that has really stepped up its game in turning out quality product -- plus their warranty is roundly considered the best in the business.  This is based on a number of sources, but I think one can get a good gauge for this type of thing based just on what the Car Talk guys tend to recommend.  They have been high on Hyundai for several years now.  Mazda has much improved its product line and Nissan is still about as strong as ever.  So this means that, more than ever before, Toyota faces stiff competition both in Japan and abroad from automakers that are poised to take even more market share away from Toyota.  Toyota is not exactly a diversified company, like Honda, Hyundai, or Mitsubishi, either. 

[Ryan]

Well, I think you know I'm more a fan of Honda than Toyota. Personally, I don't understand Lisa's family's fear of Honda and even find it to be a bit irrational. Maybe I don't know the whole story but, other than them, I haven't been able to find anyone who will tell me a bad story about a Honda. With two Hondas in the garage right now, all I'll offer are good stories.

I actually would already put Subaru ahead of Toyota in quality based on the experiences of a family member with Subaru vehicles over the years. I've also heard good things about Nissan and anyone who is willing to stand behind their vehicles the way Hyundai does better make good vehicles or they would be out of business pretty quickly. As for Mazda, that's a line made by Ford. I've always found Ford's quality to exceed its reputation (I of course had model year 1983, 1989, and 2000 Fords) and Ford has recently been getting a lot of credit for top quality vehicles.

What's most interesting to me in this is the business side of the story. What happens to Toyota in all of this. As you mentioned, Toyota has gone almost strictly into automobiles. They have side businesses but they are very heavily reliant on automobile sales. With their main selling point over the years being their reputation for quality, reliability and safety, what happens now as that reputation takes a beating? It will be interesting to see if their sales fall off far enough that they are no longer the #1 automaker and, if so, how far they fall. It will also be interesting to see how investors react to all of this news. So far, the sky doesn't seem to be falling but they did take a hit of over 10% earlier this week, it looks like about the time they decided to halt production and sales of the lines that are affected by the latest recall.

[Andrew A.]

Right, the mention of the quality of other makes has business implications.  If other manufacturers have been gaining steadily on Toyota over the past decade or so and they have built a reputation with the public of a level of quality rivaling that of Toyota then when people hear about these recalls and are in the market for a Toyota then they are more apt to consider Honda, Hyundai, Subaru, etc.  That on top of the investor impressions and actions.  I think what you point out about Ford (along with their sound management practices) has saved them where GM and Chrysler have failed. 

[Ryan]

And the news just keeps getting better for Toyota. Yesterday morning, I heard about how the US government had to virtually force Toyota into the recall for the sticking gas pedal, which contradicts Toyota's statements that they were doing this in order to do the right thing for their customers because customer safety is their top priority.

Now, further contradicting Toyota's statements, the news I heard first yesterday evening. The Japanese government had to "warn" Toyota to take the Prius brake problems seriously. As I'm typing this, I'm getting a "breaking news" alert that the NHTSA is in fact investigating the Prius brake concerns.

[Andrew A.]

Great, I live in a town where there are about 10,000 Priuses on the road -- when I see one in the rearview mirror, I will be sure to change lanes. 

[Ryan]

Between sticking gas pedals and brake problems, I've been keeping a close eye on any Toyota behind me in traffic. Maybe I'm just paranoid but it comes across me as not all that bad of an idea, all things considered.

[Ed]

I think that their reputation has suffered immensely and we will see the effects of that in the next couple of years. 

If they would have been aggressive in re-calls and repairs it would have been a different story (Obviously) but consumers want to know a company will be there for its customers - especially in high end purchases.

[Ryan]

Now, we hear that Lexus hybrids are being checked because they have the same braking system as the about-to-be-recalled 2010 Prius.

Ed, it would have been a much different story had they been aggressive with their recalls and repairs. At the very least, they would have been viewed as living up to their statements that they are taking safety very seriously. Unfortunately, from some reports now coming out that the braking problems have been around to some extent since the mid- to late-90s, it appears they are a good 10 years too late for that.

It certainly appears that, instead of being proactive on this, they tried to hide the problem. This is a lesson that many individuals and companies have to learn. If there is a problem, hiding it only makes it worse. It will come out at some point and the sooner it does, the less damage there will be.

I'm still going to be very interested in how this will affect the automobile industry. Toyota will still be a major player but how much of the market share are they going to lose, who takes over that market share, and how successful can Toyota be 5 years from now after all of this? Questions that can only be answered with time but ones for which I'm going to be interested to see the answers develop.

[Andrew A.]

Here is a shocker: http://www.truthout.org/former-us-regulators-helped-quash-toyota-investigations56886

[ksrunner]

We bought a Toyota Sienna last year. As far as I know right now, it is not included in any of the recalls. At this point, my personal experience with this vehicle and the company has all been positive -- though the Toyota news has been disturbing.

We are particularly happy with the dealership where we purchased it. Based upon our past history, it will probably be 10 years or more or so before we purchase another vehicle. There's no telling what Toyota's image will be like by then.

I have heard some stories and interviews with Toyota owners that indicate that loyalty among Toyota customers remains high. I would have to consider myself in that number at this point -- though if I did find myself suddenly in the market for a second vehicle, I would probably give more consideration to other car makers than I would have a few months ago. Another NPR interview that I heard a portion of was with one or both of the Car Talk guys. They basically said that Toyota is a good company that will get the problems taken care of. Though I enjoy their show, I cannot help but wonder if they get some financial support from Toyota (and perhaps other car manufacturers as well).

Steve

[Ed]

I really hope that your vehical does not need to be recalled and they are just hiding it like they did with others.  Unless, I can see evidence of an attempt to change the corporate culture of sweeping it under the rug and keeping it hush hush - I will not trust Toyota.

[Andrew A.]

Right, usually what makes it to the light of day is only the tip of the iceberg.  When someone gets popped for a DUI it usually is not on their first time to drive while intoxicated, when someone gets busted for PEDs it is usually not their first time to dope, etc.  An organization as powerful as Toyota could find ways to keep things like this under wraps for a long time, though if things are bad enough for long enough then it seems likely that eventually some of it will be exposed.