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Posts Tagged ‘Toyota recalls’

Silent Problems & Persistently Bad News

Monday, July 12th, 2010

One might wonder why Toyota has been consistently delivering bad news since the initial brake recall some 6-months ago? And how about the falterig economies in Europe like Greece and Spain. And what about all the stories related to the financial crisis like Lehman Brothers, Bear Stearns, Citi Group and others in recet years? Its almost as if there was pent up bad news once the initial story broke loose. Then once the floodgats opened, the torrent of bad news was overwhelming.

For instance, last week I was working with a client that had experienced a barrage of silent problems surfacing in recent months. To say the least, the many layers of bad news was taking its toll. On the surface, it felt as if the sky was falling. However in reality, there was a cleansing process underway. It was painful, yet necessary. An excellent story relating to this phenomenon is Toyota, who has experienced a multitude of quality related problems in 200. This past week they announced a 2nd recall in less than a month, this one for defective engine valve springs. A recent news story notes:

Toyota knew two years ago about the engine problem behind its latest Lexus recall, even changing the spring part to correct it, but did not think a recall was warranted until recently, a company official said Tuesday.

Toyota Motor Corp. started Monday a global recall over engine defects in its Lexus luxury models sold around the world, as well as the Crown sold in Japan, moving to repair some 270,000 vehicles to replace valve springs — crucial engine components that are flawed and could cause vehicles to stall.

In August 2008, Toyota changed that spring part, making it thicker, to prevent the problem, spokesman Hideaki Homma told The Associated Press. That is why the latest recall does not affect vehicles produced after August 2008.

What Toyota is experiencing today with the high volume of recalls is typical in many situations. What is really being exposed here is a system and culture oriented towards avoidance and neglect. And now that a new course has been set, the torrent of silent problems is being vetted all at once. However in the end, this will become positive if the problems aren’t too big to manage. Eventually this will lead to new systems, new degrees of accountability and most importantly, an integral part of their new culture.

Toyota, we’re watching you…

Wednesday, April 14th, 2010

What a difference 6-months can make in corporate positioning when someone knows everyone is watching you. Such appears to be the case surrounding Toyota. Six months ago, Toyota took a position of denial, avoidance and stonewalling when it came to quality issues relating to unintended acceleration. Since then, 8.5 million autos have been recalled. Toyota sales are being catapulted with hefty incentives that were unheard of a year ago. And Toyota is beginning to show some humility over the sitation.

What isn’t pretty however is the ongoing investigation into Toyota’s past. Now that the 100+ lawsuits have been rolled up into a single class action suit, much of Toyota’s dirty laundry will begin to surface. And from initial reports, a story that reveals a veil of secrecy and deception will unfold. For instance, the AP recently looked into Toyota’s evasive and deceptive legal tactics it has historically pursued when involved in a lawsuit.  The story states:

Toyota has routinely engaged in questionable, evasive and deceptive legal tactics when sued, frequently claiming it does not have information it is required to turn over and sometimes even ignoring court orders to produce key documents, an Associated Press investigation shows.

In a review of lawsuits filed around the country involving a wide range of complaints — not just the sudden acceleration problems that have led to millions of Toyotas being recalled — the automaker has hidden the existence of tests that would be harmful to its legal position and claimed key material was difficult to get at its headquarters in Japan. It has withheld potentially damaging documents and refused to release data stored electronically in its vehicles.

However today, I’m begining to wonder if Toyota is truly ready to change its ways. The reason being, Toyota knows everyone is watching. And if they pursue questionable legal tactics, they know they could be called out on the carpet in every major news agency around the world. In essence, Toyota’s past is now their enemy, not their friend. No longer will they receive any “get out of jail cards.” Today, I believe everyone looks at Toyota with an eye of admoration and an eye questioning their trustworthiness. For instance yesterday, Toyota had one of those “what should we do moments.” Toyota halted sales of its Lexus GX460 after Consumer Reports issued a “Don’t Buy” status on the vehicle. Would Toyota have acted similarly a year ago in a similar sitation? My guess is, the outcome would have much different. So I have to believe that Toyota’s strategy is changing as we speak.

Today, Toyota’s Silent Problems of yesterday (the problems Toyota has been avoiding, neglecting and intentionally silencing) are exerting a tremendous force on the company and the organization. These legal and quality issues will continue to be a major distraction, and will impact everything from employee turnover, to productivity, to profitability. Toyota continues to be a test case for the ideas in unleashed in my book, Without Warning.

Are Toyota’s Safe

Tuesday, March 2nd, 2010

A USA Today/Gallop poll recently asked the “Are Toyota’s Safe” question to Toyota owners and prospective buyers. Depending on how you look at the data, it’s either encouraging or discouraging.

Thirty-one percent of Americans now think Toyota and Lexus vehicles are not safe to ride, while 55 percent say the carmaker dragged its feet in responding to potential safety defects, according to a poll published on Tuesday. The USA Today/Gallup survey of 2,021 adults showed fewer doubts among current Toyota owners, with only 14 percent saying the cars are unsafe. A large majority of owners — 74 percent — say they have not lost confidence in the vehicles.

Pollsters said findings also suggest enduring loyalty to Toyota vehicles among prospective U.S. car buyers generally. While 17 percent of prospective buyers said they would no longer consider a Toyota vehicle, 53 percent said they would.

Interestingly, this closely aligns with what I projected on February 8th in the article Can You Trust Toyota? I made the following prediction.

The reason these “Can Toyota be trusted…” questions are important relates to Toyota’s future success or failure. As I read countless news articles relating to Toyota’s problems, it apparent that current Toyota customers fall into 3-categories.

  1. Faithful Toyota Followers: This group love their Toyota’s, and the many years of dependability, quality and service they have grown to love. This group likely comprises upwards of 50 - 60% of all current Toyota owners.
  2. Concerned Toyota Owners: This group loved their Toyota, but aren’t quite sure what to think now and they’re concerned. They’re asking the question, “Can Toyota be trusted…” This group likely comprises 20-30% of Toyota owners.
  3. Discouraged Toyota Owners: This group feels they’ve been betrayed. They’re reading the news reports and are concerned and possibly frightened. They don’t feel like Toyota has been true to the image they portrayed. This group comprises 10-20% of Toyota owners, and is growing.

The next couple of months is critically important for Toyota if they are to revive their brand and their business. It will not be an easy task, especially considering that new recalls are being announced (another 1.6 million autos will need to have leaky oil hoses fixed) and the potential for deepening recalls is possible (The NY Times recently completed an investigation suggesting that Camry’s prior  to 2007 might also be at risk of a recall). All of this is transpiring while worldwide auto sales is increasing and Toyota is suffering from a lapse in quality, transparency and safety.

Toyota’s silent problem (icebox variety) is now known. How the Toyota silent problem became visible is somewhat typical. The cost to the Toyota brand, cost of repairs, lost revenue from weak sales and fresh incentives to stimulate sales will likely top $50 Billion. And this is the real challenge that Toyota is facing. Its cash position is hemoraging quickly, which will make it more difficult to revive the brand and its quality position.

Can You Trust Toyota?

Monday, February 8th, 2010

This is the question millions of Toyota owners and prospective owners are asking themselves today. And this is the question that will determine how quickly or if Toyota emerges from their current image, quality and PR problem in tact, or in taters. Here are just a few of the “Can Toyota be trusted” questions people are currently asking. 

  • Can Toyota be trusted to design and build a quality car? Probably yes.
  • Can Toyota be trusted to have their customer’s interest in mind once they have purchased a Toyota? Maybe.
  • Can Toyota be trust to divulge any other quality/safety issues they may be withholding? Don’t know.
  • Can Toyota be trusted to have customer safety as their No. 1 concern going forward? Too early to tell.
  • Can Toyota be trusted to resolve this current crisis, or is there more to come? That’s a big unknown.

The reason these “Can Toyota be trusted…” questions are important relates to Toyota’s future success or failure. As I read countless news articles relating to Toyota’s problems, it apparent that current Toyota customers fall into 3-categories.

  1. Faithful Toyota Followers: This group love their Toyota’s, and the many years of dependability, quality and service they have grown to love. This group likely comprises upwards of 50 - 60% of all current Toyota owners.
  2. Concerned Toyota Owners: This group loved their Toyota, but aren’t quite sure what to think now and they’re concerned. They’re asking the question, “Can Toyota be trusted…” This group likely comprises 20-30% of Toyota owners.
  3. Discouraged Toyota Owners: This group feels they’ve been betrayed. They’re reading the news reports and are concerned and possibly frightened. They don’t feel like Toyota has been true to the image they portrayed. This group comprises 10-20% of Toyota owners, and is growing.

Toyota’s “Can you be Trusted” challenge is the one question few market analyst’s are asking relative to Toyota’s future. It is the one question that only time will tell. At the very least, 10-20% of current Toyota owners are at risk. How  Toyota addresses “Can Toyota be trusted” customer concerns going forward is critically important in the outcome. At this point however, they have given numerous reasons why “Toyota can’t be trusted.” At the curret pace of events, Toyota could easily become another GM unless they change their ways.

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