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Toyota loses its way

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Toyota loses its way

For years, warning signs have clashed with its touted high standards

Christine Tierney / The Detroit News

Five years ago, Yoshi Inaba, then president of Toyota Motor Corp.'s U.S. sales operations, disclosed his biggest fear. It was that someday, some flaw in Toyota vehicles might go undetected and cause injuries, or worse, to the company's customers.

Inaba was perhaps thinking of a huge scandal that had just engulfed Mitsubishi Motors Corp., a smaller Japanese carmaker accused of covering up defects for years. Top Mitsubishi executives, including its former president, had been arrested and charged.

Such a nightmare seemed unimaginable at Toyota. It was making the most reliable cars in the industry, and its quality control methods and other elements of the legendary "Toyota Way" were being adopted by its rivals.

But now Inaba, chairman of Toyota Motor Sales and the company's highest-ranking executive in the United States, is confronting a crisis over the safety of Toyota's vehicles and its handling of complaints from customers.

Toyota already has recalled more than 8 million vehicles since September to fix defects that can make it very hard for the driver to stop the car. And American lawmakers are scheduling hearings this month where Inaba will face tough questions.

It's difficult at this stage to determine exactly how Toyota went astray. But it's safe to say Toyota lost its way -- and the warning signs started flashing in recent years.

Even to outsiders, there were actions and decisions that didn't square with Toyota's lofty standards as the company expanded.

Perhaps Toyota will be shown to be just another car company, no better or worse than others that weigh safety and cost considerations daily and don't always make the right choice.

Divining from steering rods

The congressional investigations mark the first time that Toyota's handling of possible vehicle defects has been called into question in the United States. But it's not the first time that Toyota has come under close scrutiny. In 2004 and 2005, the automaker recalled more than 1 million vehicles globally to replace steering relay rods that could crack.

While most accounts focused on the size of those recalls, news reports out of Japan suggested something more damaging. Japanese authorities seemed to be questioning whether Toyota knew about the defects in the rods and downplayed the risks.

After a 2004 accident involving a Toyota truck on the southern Japanese island of Kyushu, local police pursued three Toyota quality control managers for being negligent in their response to reports of defects.

Toyota maintained that it had acted appropriately. But in July 2006, Japan's Transport Ministry ordered Toyota to review its recall procedures and report back to the ministry.

That same week, Toyota President Katsuaki Watanabe bowed deeply at a news conference to apologize for the company's quality lapses.

That scene was replayed last Friday, when Toyota's new president, Akio Toyoda, the grandson of the automaker's founder, bowed and expressed his regrets before the cameras.

These rituals are painful to watch. The executives seem crushed under the weight of something -- is it shame, discomfort or disgrace? And does the prospect of such a scene make it harder to own up to errors in Japan?

Executives at Daimler AG, the German automaker that was a part owner of Mitsubishi Motors when vehicle defects were being uncovered, thought there was a cultural factor. They were convinced that the practice of hiding defects wasn't limited to Mitsubishi.

The consequences of mistakes are so extreme and the sanctions so severe that the Japanese way of doing things doesn't provide a way for people to admit to errors, a Daimler executive familiar with the Mitsubishi operations said.

Cultural explanations may seem simplistic, but also may contain a grain of truth. In a similar vein, people are questioning whether America's high tolerance for risk-taking contributed to the near-meltdown of the global financial system.

In October 2005, Toyota invited some American reporters who were in Tokyo for the motor show to a party in a luxury hotel with Akio Toyoda, then the heir apparent.

When asked if Toyota was trying to pass General Motors to become No. 1, Toyoda recounted a cheery anecdote about three dentists, one seeking to be the biggest, the second the richest and the third the best loved in town. Toyota, he said, wanted to be like the third dentist.

Although executives insisted that the company was still humble at heart, ever fearful of slipping up and focused primarily on consumers' wants, they weren't entirely convincing.

Chasing many goals

Toyota still had the highest loyalty and satisfaction rates in the industry, but the company was chasing so many goals that it risked becoming distracted.

Toyota had set industry records for sales, profits, market capitalization and other metrics, and was setting itself ever higher targets: to build more plants in more countries, cut costs further, reduce vehicle development times and pay bigger dividends to shareholders.

Its relations with suppliers, which had been the best in the business, began to show strains.

Toyota started to make sloppy errors. In 2007, early buyers of its new full-size Tundra pickups reported cracks in the camshaft of their 5.7-liter engines.

During this time, U.S. safety data show Toyota drivers were already reporting unintended acceleration of their vehicles.

Toyota says the issue is complex -- and it's right. Volkswagen AG's Audi brand had a similar problem in the late 1970s, and, to this day, there's no consensus about what went wrong.

National Highway Traffic Safety Administration officials say no defect was ever identified in the Audi cars. Audi said its cars were fine, but some safety advocates still say they had a problem.

In Toyota's case, the number of fatalities linked to reports of unintended acceleration -- 19 in the United States during more than five years -- wasn't considered alarming in light of the many vehicles on the road.

But the number of acceleration-related complaints -- about 2,000 since 2002 -- was considerably higher than any other automaker had received.

The only problem Toyota had identified was the possibility that a loose or ill-fitting floor mat or torn trim could jam the gas pedal.

But there was another, more comprehensive solution.

Around 10 years ago, Audi and other German luxury carmakers introduced an electronic fail-safe system in their cars that would respond to pressure on the brake pedal, even if the gas pedal were depressed and the throttle in an open position.

With prodding from NHTSA, Toyota is now installing an electronic "brake override" not only in recalled vehicles, but also across the entire model range.

A senior U.S.-based Toyota executive suggested such a remedy years ago. It's puzzling that, given the number of complaints, cash-rich Toyota didn't take such a step earlier. The software fix is expected to cost $1 billion -- not a big sum for a company that had more than $30 billion in cash at the end of the last fiscal year.

"I'm sure, in retrospect, they wish they had," says Metro Detroit Toyota dealer Bob Page. The Toyota that won over the American market in the 1970s and 1980s probably would have.

From The Detroit News: http://detnews.com/article/20100211/OPINION01/2110340/1148/auto01/Toyota-loses-its-way#ixzz0fF61QwUJ

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