Sunday, February 14, 2010

What has Happened to Toyota?!!!

Toyota Motor Corp, the world's most dominant and profitable automaker, was not accustomed to outsiders telling it what to do, let alone some obscure bureaucrat from the United States, whose own car industry was on taxpayer-funded life support.

But in the middle of December, on a cloudy day in the middle of the Japanese archipelago's main island, Ron Medford, the acting head of the U.S. agency that regulates auto safety, was reading Toyota executives the riot act.

Medford had been quietly dispatched by the Obama administration to deliver a firm message: Toyota, he told them, had better get its act together, according to U.S. regulators.

By the time Medford arrived in Japan, Toyota was working through a recall that would involve over 5 million vehicles in the United States. The problem was mundane but potentially lethal: floor mats were trapping the accelerator pedal.

U.S. safety regulators had tied five deaths to accidents where that seemed to be the cause, and there were growing doubts about whether the Toyota floormat and pedal design -- a relatively cheap fix -- was the only flaw that needed to be addressed.

Over the prior seven years, the number of U.S. consumer complaints about unintended acceleration in Toyota cars had been steadily climbing, hitting 400 reported cases for the 2007 model year, according to an analysis of National Highway Traffic Safety Administration (NHTSA) data.

But five previous investigations into Toyota opened by NHTSA under the Bush administration had hit a dead end, with no action taken. Two safety probes resulted in relatively cheap floormat recalls by Toyota in 2007 and early 2009. Neither attracted much notice.


GM said...

Their brand is way too strong and solid, especially when compared to American auto manufacturers. Due to their strength, owner loyalty and credibility they will rebound extremely well. Anyone who thinks that this downturn is a permanent scar on Toyota's sales or reputation doesn't understand the market nor consumer's short memory. In fact now is the time to buy their stock. I have an order in to buy 150 shares when the NYSE open on Tuesday. When the stock gets back to just what what it was a month ago (never mind future growth), I'll make $15/share. You do the math.

Rockdem said...

I agree GM. Now's the time to buy their stock, 'cause they will rebound. But it does point up a good lesson, you grow too fast, and you get growing pains...

Anonymous said...

I think they are done for. The recall isnt even covering all the cars that are broken. The SUV line has the same problems, people have brand new Toyata SUVS sitting in there driveway with gas pedal problems. Dealer wont touch them cause they arent listed in recall. This will prob force the company expand to even more a recall they cant afford. Then the lawsuits will come, this company is screwed, no gove bailout for them so GL finding the billions needed to recover.