Toyota (TM) should never have had a chance to be the No.1 car company in the world. It began as one of the small corporations built during the industrialization of post-WWII Japan. It eventually became the pride of the nation’s manufacturing business along with Sony (SNE). But, to be the top car company in the world meant being first place in the US market–by far the world’s largest. That distinction belonged to GM for almost the entire 20th Century, and Ford and Chrysler were also large hurdles to foreign auto firms.
Toyota began to make inroads into the US market in the 1970s and was helped by the Arab Oil Embargo in 1973, a reaction to America’s decision to support Israel during the Yom Kippur war. It suddenly occurred to US citizens that cheap oil and gasoline were not their birthright. The American interest in small, fuel-efficient cars grew
The general impression of Japanese cars forty years ago was that they were made of cheap parts and metal, and were very little more than toys for commuters. Toyota spent the seventies, eighties, and much of the nineties establishing a reputation as the highest-quality car company in America. Toyota was the No.1 car company in Japan already and rapidly passed Chrysler in US market share nearly a decade ago. Then two years ago Toyoto began to match Ford in US monthly unit sales volume. Because of Toyota’s success in Europe, it moved ahead of GM as the top car company in the world in 2008.
A great deal of what it took Toyota four decades to build has been ruined by the recalls of eight of its models, a total of over eight million vehicles worldwide. The company’s flagship Prius hybrid, a remarkable blend of green technology, performance, and driver comfort features has also been recalled with a total of nearly half a million 2009 and 2010 models on their way back to dealers for brake problems. Toyota will probably have to recall its Camry model for steering trouble.
Toyota might have been able to fall back on its years of JD Power trophies, unprecedented product quality, and dealer service to offset its recall woes while it had time to fix the broken cars, apologize, and reclaim its footing. It would have been difficult, but it would not have been impossible. The Japanese company might have had enough goodwill among American consumers. Toyota would have had to convince customers that its cars were safe and that it has done everything it could have to protect the safety of its customers. Product liability suits are likely to continue for years so Toyota would have to convince the public to largely ignore them as problems caused strictly by manufacturing issues in the past. It is not unlike the image problem Merck had to overcome after pain drug Vioxx was found to cause heart problems in some patients. Merck had almost 10,000 legal actions pending against it involving Vioxx at one point, but the company was able to keep that, for the most part, from affecting the public’s view of its other drugs.
Unlike Merck, Toyota’s name is visible on all of its products. That makes the company’s ability to reclaim its quality image more difficult. But, Toyota still had a chance to convince consumers that it would improve quality control so that it could slowly win back customers.
Toyota has lost that chance, the chance to make things right with consumers, now that a Congressional committee has found that the company misled customers, and perhaps the government. The New York Times writes “Leading Democrats on the House Energy and Commerce Committee said Monday that Toyota relied on a flawed study in dismissing the notion that computer issues could be at fault for sticking accelerator pedals, and then made misleading statements about the repairs.” This is not the only accusation of this type. A former in-house attorney has charged that Toyota covered up information about product problems and the documents he says prove his case have been subpoenaed by same Congressional committee
It has only taken a few days for Toyota’s image to change from a car company which lost its way as the paragon of quality control to a firm that actively deceived its customers and the public. Honest mistake are one thing; dishonesty comes with different consequences. Most large companies that become involved in scandals in which some person or small group of people did not tell the truth try to keep the focus of any press, government, or legal investigations on those people and not the company. Toyota will not be able to do that. There have been too many instances already that show the company is not open to any examination of its business and manufacturing practices unless it is forced to do so. There is too much evidence that Toyota’s culture did not aggressively put customer needs before the company’s needs. The firm’s CEO, Akio Toyoda, would not have come to the US to testify before Congress without a direct and somewhat menacing invitation. That made many people ask why he did not come willingly.
Toyota has passed a point of no return because the growing public impression that it did whatever was necessary to protect its financial interests and image even if that came at the cost of customer safety. Toyota stood for something, with all of its record sales numbers and all its JD Power and Consumer Reports trophies. It is now just a symbol of the worst behavior of big companies—those who make mistakes and then do what they can to cover them up.
Douglas A. McIntyre