Toyota: Cracks in the Empire?

Toyota has recalled nearly 8.5 million vehicles around the globe since November 2009 but such incidents are not exclusive to Toyota alone.

Anil Kumar Satapathy

It was the arrogance of Japanese car makers that brought them down, says an auto website as the world’s number one carmaker decided to recall its most celebrated hybrid car Prius due to faulty brakes and problems with the accelerator. One blogger on a news agency website has a more interesting question to ask his readers: “Would you buy a Toyota?” These remarks indicate the prevailing concerns of car lovers about Toyota, particularly after the Japanese car giant admitted its mistake. Since November, the world’s largest carmaker has recalled nearly 8.5 million vehicles around the globe for problems including floor mats that can get tangled with the gas pedal, and gas pedals that can stick, causing cars to accelerate suddenly. Toyota has also decided to recall Prius, its top-selling hybrid, for braking problem. The recalls have prompted a flurry of lawsuits on behalf of drivers, who say they were injured in accidents while driving Toyota vehicles. The recalls have drawn interest from the US Congress as well, where lawmakers are looking into how the company handled the recalls and whether the government properly investigated numerous complaints. However, the recalls are not confined to Toyota only. Another car giant Volkswagen said it was recalling some 20,000 cars in Mexico, days after it announced the recall of nearly 200,000 cars in Brazil over potential wheel malfunctions. Honda Motor Co, Japan`s second largest automaker, has already recalled close to 950,000 vehicles for airbag problems, linked to one fatality and a total of 11 injuries in the US. Who is to blame? There is a section of people who has blamed the drastic cost cutting measures by the carmakers for the present crisis. Toyota, which has toppled General Motors as the No. 1 global carmaker in 2008, has adopted a series of cost-cutting measures during the first major economic crisis since the Second World War. It had also reaped huge dividends for that. Toyota reported a quarterly net profit of 153.2 billion yen (USD 1.7 billion) in the October-December quarter. But the company has been accused of becoming too aggressive and complacent in terms of focus on quality. In fact, the recent crisis of the automaker put the spotlight on the part suppliers also. There were also speculations on flawed software. Vehicle recalls uncommon? Absolutely not! Ford has encountered a similar problem way back in 2000, when it recalled close to 13 million vehicles owing to dangerous Firestone tyres that caused at least 174 traffic deaths and 700 injuries in the US. German carmaker Audi went on a series of recalls of its Audi 5000 models after users complained of sudden unintended acceleration. Mercedes-Benz was forced to upgrade its A-class cars after it failed a vehicle test – popularly known as “Elk Test”. However, unlike other car makers, Toyota has drawn unprecedented media glare, which in fact multiplied its plight. Rivals March Someone’s loss is another’s gain. “In a few short weeks, Toyota has done what General Motors, Ford and other automakers have failed to accomplish for decades: Erase the perception that the Japanese automaker`s cars are of much higher quality than those of its rivals,” a news report on Associated Press said. Quoting an executive of vehicle information company Kelley Blue Book, it said: “Twenty-seven percent of new car shoppers who were considering a Toyota before the recall are no longer contemplating the brand. Nearly half of the buyers who have defected from Toyota say they may never consider the brand again.” Reportedly, immediately after Toyota announced the recall of 2.3 million US vehicles to address sticking accelerators, General Motors, Ford, Hyundai and some Honda dealers began offering incentives of $1,000 or more to drivers who traded in Toyotas. Ford, in fact, released a new television ad saying: "Ford quality can`t be beat by Honda or Toyota." GM was not far behind in this moment. It carried an advertisement that went on to say "May the Best Car Win" campaign. Beginning of the End? It’s undoubtedly clear that the recalls have hit Toyota’s goodwill in a highly competitive global auto market. In a recent survey in the US, only 27 percent participants said they were considering buying Toyota. As the company has also announced that it would recall 8,000 Tacoma pickups due to possible cracks in a common drive shaft, the big question arises. Is it the beginning of the end of the Toyota empire? And the crisis comes at a time when the global auto industry is struggling to recover from the worst economic crisis in decades. If the Japanese car giant fails to come up new strategies to win over the consumers, it will suffer badly. It is remaining to be seen how Toyota is going to overcome the current crisis.