How Toyota Recall Hurt Its 2010 Profit
Toyota, the biggest car manufacturer in the world, have recently recalled millions of its vehicles because of faulty accelerator pedals to avoid potential and further accidents.
The massive recall Toyota announced came on Tuesday 26th of January as some 2.3 million Toyota-made cars involving eight models have been discovered to uncontrollably accelerate with no warning because of defective gas pedal parts.
Among the Toyota models affected and placed on sales suspension are:
Camry (2007-2010)
Matrix (2009-2010)
Corolla (2009-2010)
Sequoia (2008-2010)
Tundra (2007-2010)
Highlander (2010)
Avalon (2005-2010)
RAV4 (2009-2010)
The same gas pedal problem was not found on several Camry models like the Camry Hybrid. Other models such as the Yaris, Land Cruiser, Tacoma, Prius, etc. are deemed safe and will continue to be on sale.
Because of this, Toyota has decided to put on hold the manufacture of these particular models on six assembly plants around North America.
This has costed Toyota Motors Corp. both considerable profit loss and their reputation as a reliable car manufacturer. General Motors used to be the number 1 car manufacturer in the world but that all changed as Toyota overtook worldwide sales, giving them the number one spot. However, due to this impediment, the future of Toyota seems bleak and it needs to redeem itself if it wishes to regain the market’s trust again.
Toyota’s European market can also undergo a same recall given that several parts of the gas pedals that are used in North America are also used on some Toyota models in Europe. It is said that only one supplier from the US was the only one that supplies the defective part.
An earlier incident in Japan back in 2006 involving Toyota is also being associated to the current recall. The incident involved the Japanese government conducting a criminal investigation on Toyota because of several accidents that took place and being traced to manufacturing problems. Charges were never filed against any of Toyota’s executives and staff but this incident has come back to haunt the company in a certain way.
After the recall, Toyota’s shares fell 4.3 percent.
In a previous statement, Toyota declared a forecast sale of 2.19 million cars in the US and Canada and over 8 million car sales worldwide for 2010. Because of this recent embarrassment, however, that sales forecast could dramatically plummet or could even cost Toyota huge in their sales profit.
Toyota’s recent problem related to its manufacturing is also being blamed on the growth strategy which was spearheaded by its previous president Katsuaki Watanabe. One specific aspect of the strategy involved increased and fast production which is said to have contributed to poor quality control. In 2009, Watanabe was succeeded by the grandson of Toyota’s founder, Akio Toyoda.
Information from numerous safety organizations stated that more than 2,000 incidents of sudden acceleration involving Toyota vehicles and at least six fatality were also reported.
It is still uncertain what kind of effect this would bring Toyota but the important thing for it is to render the right changes to its manufacturing and quality-control processes as soon as possible.