Toyota Destroys Customers’ Trust and Potentially Billions in Market Value as Well

Update 4-14-10:

Toyota will now be halting sales of one of its Lexus SUVs due to rollover concerns raised by Consumer Reports, according to the Wall Street Journal:

Toyota Motor Corp. said Tuesday it will temporarily halt the sale of a Lexus sport-utility vehicle after Consumer Reports magazine raised safety concerns about it.

The move was another blow for the Japanese car maker, which is trying to repair its image after a series of safety recalls. Consumer Reports issued a rare “don’t buy” recommendation for the Lexus GX 460, saying the SUV could roll over in certain situations.

The influential nonprofit magazine already had suspended its recommendations for eight Toyota models recalled in January for sticky-accelerator concerns. In certain conditions, the gas pedal in those models is slow to return to idle.

Update 4-13-10:

Now a feud between family and non-family executives has emerged at Toyota, as individuals blame one another for the quality and safety debacle, according to the Wall Street Journal.

Update 3-11-10:

Human error may contribute to a large percentage of unintended acceleration incidents, according to this op-ed in today’s New York Times by Richard Schmidt:

I looked into more than 150 cases of unintended acceleration in the 1980s, many of which became the subject of lawsuits against automakers. In those days, Audi, like Toyota today, received by far the most complaints. (I testified in court for Audi on many occasions. I have not worked for Toyota on unintended acceleration, though I did consult for the company seven years ago on another matter.)

In these cases, the problem typically happened when the driver first got into the car and started it. After turning on the ignition, the driver would intend to press lightly on the brake pedal while shifting from park to drive (or reverse), and suddenly the car would leap forward (or backward). Drivers said that continued pressing on the brake would not stop the car; it would keep going until it crashed. Drivers believed that something had gone wrong in the acceleration system, and that the brakes had failed.

But when engineers examined these vehicles post-crash, they found nothing that could account for what the drivers had reported.

By the way, we finally received our own recall notice late last week for our 2009 Toyota Camry Hybrid.

Update 2-24/10:

For a different take on the Toyota crisis, which compares it to the Audi unintended acceleration fiasco of the late 1980s, which turned out not to be a defect at all, here is Holman Jenkins of the Wall Street Journal editorial.

Update 2-9-10:

The bad news keeps on coming for Toyota, including the newly announced recall of 2010 Priuses and some Lexus models.  Last weekend’s Wall Street Journal had a terrific feature story, too, on how Japan’s national culture contributes to the secretive corporate cultures of firms such as Toyota.

Update 2-2-10

Here’s the latest on this total fiasco as reported by the Wall Street Journal:  all Toyota hybrids are now being investigated.

We can hardly be considered biased against the Japanese automakers, even though we both used to work for GM.  We’ve put our money where our mouths are over the years, and own a 2006 Honda Civic Hybrid and lease a 2009 Toyota Camry Hybrid.  I love my Honda (Karen doesn’t like it).  Karen likes her Camry, and it’s been a good sedan to transport our kids and take on vacations.  Nonetheless, I’m darn glad we leased the Camry, as we’ll be turn it back to Toyota when the lease is up based on the company’s horrific response to its defective brake system/electronics.  The news gets worse every day for the largest automaker in the world, and it’s not over yet, according to the Wall Street Journal:

Toyota Motor Corp.’s quality crisis deepened Tuesday, as U.S. regulators accused the company of dragging its feet on fixing defective gas pedals and threatened civil penalties and further reviews of Toyota products.

The move means that Toyota’s efforts to address its biggest-ever safety and public-relations mess are far from over. Last week, the administration indicated it had no issues with how Toyota had responded to the sudden-acceleration reports, which led the company to recall about six million vehicles and have been linked to at least five fatalities.

“While Toyota is taking responsible action now, it unfortunately took an enormous effort to get to this point,” Secretary of Transportation Ray LaHood said Tuesday in a statement. “We’re not finished with Toyota and are continuing to review possible defects and monitor the implementation of the recalls.”

Mr. LaHood said Transportation Department officials flew to Japan in December to meet with Toyota executives and remind the company “about its legal obligations.” The agency, he said, “followed up with a meeting at DOT headquarters in January to insist they address the accelerator pedal issue.”

The  highly respected journalist, Forbes magazine columnist, and one of my favorite writers on the automotive industry, Jerry Flint, had this to say:

Toyota‘s accelerator problem is the costliest car safety issue–and corporate disaster–in automotive history. It certainly dwarfs the sudden acceleration issue that hit Audi long ago, or the Firestone tire problem that destroyed the sales of Ford’s Explorer or those long-ago issues that created Ralph Nader’s book, Unsafe at Any Speed.

And there will be a great cost: incentives to get customers buying Toyota’s again when the problems have been solved at the factory; money to keep the wounded dealers alive, and money to pay for the recall work. We’re probably talking about a cost in the billions–not millions–counting those incentives. That’s money that won’t go to developing new models, new hybrids, new electric cars. And we’re not talking about the lawsuits, which will go on for years.

I may be wrong, and I do prefer my Honda over Karen’s Toyota, but I can’t believe that Honda would act in the same poor manner in which Toyota has.  Honda in my opinion is a nicer, and in this case, definitely more trustworthy car maker.