By now, most analysts thought Toyota’s problems would be behind them, and nothing but open road in front. This is not the case, as many challenges continue to face the once mighty, Toyota. As I’ve discussed in previous blogs, Toyota’s silent problems are an endemic challenge they would face and one that would not go away easily. Therefore, it’s not surprising that fresh recalls are occuring, including the recent recall of 17,000 Lexus sedans with a fuel problem. Two, Toyota’s stock price is now at its lowest level in over a year. And in recent weeks, I’ve noticed an uptick in news reports where crashes involving Toyotas’ (outside the recall spectrum) with unintended acceleration problems occurring. Plus, none of this even begins to address the multitude of legal challenges now on their plate. To say the least, Toyota is a company with many challenges, and an unpredictable future.
What is the reason for Toyota’s ongoing problems? On March 17 I addressed this issue head-on, and is worth repeating:
Today, cost estimates for Toyota’s silent problems are ranging from $2 Billion on the low side, to $5.5 Billion on the top side. My research suggests a factor of 2X to 4X is reasonable from these numbers, because none of these estimates factor in elements such as:
- Reduced organizational focus
- A shift from strategic to tactical activity
- Negative impact on team and individual performance
- Negative impact on accountability
- Negative impact on innovation…
These factors and others can break a high performance organization. They can increase employee turnover. They can impact financial and organizational performance for years to come. This is why betting on Toyota’s return to dominance is such a risky bet. Simply because we don’t fully understand the full impact on Toyota. However if history proves itself, this event will impact Toyota many years. Just ask GM,Ford and others…
Today, Toyota is facing increasing competition from companies like Ford & GM, Hyundai & Kia, and of course VW, Audi, BMW and others. Each of these have picked up their game in recent years and are willing to take Toyota head-on. However what is killing Toyota slowly and quietly is not competion. To the contrary, Toyota’s brand and reputation have eroded in areas where it was prviously strong like quality, engineering, dependibility, value and safety. In essence, very few proudly state, “I drive a Toyota” today. From my perspective, Toyota will continue to be a company in turmoil, with an eroding value proposition.
