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Consumers' belief in Toyota's quality shaken by recalls

DETROIT — The problem with faulty gas pedals in its cars and trucks is rare, Toyota says, and car owners are unlikely to experience any trouble. Toyota's reputation is another matter.

Crisis-management experts say just how far Toyota's image tumbles depends on how quickly it can fix the problems and how well it communicates with hundreds of thousands of loyal customers.

They also say Toyota's growth has outpaced its management structure. The company didn't have the mechanisms in place to identify and deal with the problems before they exploded into two giant recalls, factory shutdowns and instructions to dealers to stop selling eight models.

Toyota rode a reputation for reliability to become the world's top carmaker. For more than 30 years, it won customers and market share from General Motors, Chrysler and Ford by building high-quality cars such as the midsize Camry and compact Corolla.

Americans, particularly baby boomers, frustrated with Detroit's poor quality, fell in love with Toyotas because they rarely broke down. Last year, they bought more than 356,000 Camrys, making it the top-selling car in the United States. The Corolla was second with almost 297,000 sales.

In short, drivers trusted Toyota. Now that trust is in danger.

Crisis managers say the issues with sticking accelerator pedals likely surfaced early on at lower levels of the company, but no one wanted to deliver bad news to the boss.

"Nobody wants to go upstairs and say, 'Hey, we just made 10,000 cars that have a problem and it's going to cost us millions to fix them,' " said Robert Wiseman, a professor of strategic management at Michigan State University.

In March 2007, Toyota started getting reports of gas pedals being slow to rise after being depressed for acceleration. Engineers fixed the problem in the Tundra pickup early in 2008.

But troubles persisted in other models, eventually leading to the massive recall and the plans to suspend sales and shut down six factories while Toyota tries to fix the problems.

The delay in dealing with the problem now leaves Toyota in an untenable public relations situation. It's forced to alarm customers and take vehicles off the market before the repair parts are ready, said Jim Cain, senior vice president of the Quell Group, a Troy, Mich., public relations firm and a former Ford spokesman.

He also said the company likely had the information it could have used to diagnose the problems much faster.

"There are always consumer complaints and warranty information, parts return data and other things that can indicate problems before they become of such colossal magnitude," he said.

Seeing problems early will become even more important as automakers increasingly sell the same model with common parts across the globe, Cain said. Companies want to act quickly to avoid global recalls that will only become more costly, he said.

Toyota, which is ahead of other automakers in globalization, is seeing the same gas pedal problems with vehicles elsewhere around the world, prompting it to expand its recall.

Toyota thus far has avoided Ford's mistakes from last decade when hundreds of people died or were injured in accidents involving tread separation on tires, most of which were on popular Explorer sport utility vehicles. Ford blamed tire company Bridgestone/Firestone, while Bridgestone said the Explorer's design was faulty. Both companies' reputations were tarnished.

Fast facts

Latest news

Here are the latest developments involving Toyota's gas pedal problem:

• The supplier of Toyota's faulty gas pedal systems said Thursday it is shipping newly designed replacement parts to Toyota factories for future cars and trucks. CTS Corp. is also working with the Japanese company to develop a fix for millions of Toyota vehicles currently on the road.

• Toyota said late Wednesday it will recall an additional 1.09 million vehicles in the United States due to the risk of floor mats interfering with accelerator pedals. Toyota has already recalled 4.26 million vehicles in the U.S. over the floor mat problems. CNN-Money reported that the vehicles now being added to that recall are the 2008-2010 Highlander, 2009-2010 Corolla, 2009-2010 Venza, 2009-2010 Matrix and 2009-2010 Pontiac Vibe.

• Toyota extended its recalls to China and Europe, but did not specify the number of vehicles involved.

• A House Energy and Commerce subcommittee will hold a hearing Feb. 25 to investigate Toyota's massive recalls.

Times wires

Consumers' belief in Toyota's quality shaken by recalls 01/28/10 [Last modified: Thursday, January 28, 2010 8:45pm]
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