Breaking Down Toyota's Woes

Experts weigh-in on recall

By DANIEL MACHT

Updated 7:00 AM CDT, Thu, Feb 4, 2010

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To say Toyota has hit a bump in the road would be an understatement.

Transportation chief Ray LaHood promised to hold “Toyota’s feet to the fire” Wednesday over continued safety concerns that sparked a global recall of nearly 4.5 million vehicles. The recall has bruised Toyota’s once sterling reputation for quality and sent its stock plunging nearly 20 percent -- all this before the ailing automaker revealed new problems with this year’s Prius model.

Here’s what experts are saying about how the recall affects the Japanese carmaker in the short and long term:

“If Toyota’s image looks battered now, it could get worse,” writes Hans Greimel, Asia editor for Automotive News. Toyota bet the house on two “root causes” for the cars' acceleration woes: a bad floor mat design and a faulty part that needs to be replaced on floor pedals. Should the U.S. Department of Transportation discover that bad electronics are also to blame for the “runaway cars…it will be a disturbing strike three for Toyota,” he writes.

“I think you'd have to say this has been the worst-handled auto recall in history in terms of the consumer anxiety that persists and the mixed messages that were being sent at the outset,” PR consultant Gene Grabowski, who helped represent pet-food makers and toy manufacturers during 2007 recalls, tells Newsweek. His advice for Toyota execs: take their case to the blogosphere and social networking sites.

Toyota’s woes give American car companies an opening they can exploit, Dave Sargent, head of automotive research at J.D. Power, tells the Daily Beast. “The fact that plenty of other brands now deliver the levels of safety and reliability Toyota once stood out for only makes it easier for consumers to switch loyalties,” he says.

Los Angeles Times columnist Michael Hiltzik looks back at Toyota’s “less than proactive” response to what happened in 2002 when some Toyota and Lexus models –the reporter’s Sienna minivan among them – developed sludgy oil that ruined their engines. “Back then [Toyota] denied there was a problem, implied motorist error and acted as though it hoped the whole thing would go away,” Hiltzik writes. “Therefore, no one should be surprised to learn that the first complaints of sudden acceleration syndrome arose at least nine years ago.”
“The parable of Toyota may be that the tortoise became the hare,” writes Time Magazine’s Bill Saporito. In a quest to dominate the auto industry, the company tinkered with its “Toyota way – in which knowledge accumulated by élite cadres of engineers and assembly workers over many years is shared across the company.” Given production demands the company’s reputation for quality became “diluted,” Saporito writes. While Toyota’s crisis will pass, “restoring its reputation is going to take a lot longer.”