Management Ignorance?

Toyota Crisis: Management Ignorance? (Yuanyuan Feng 2010.) (Amendments/additions and adjustments made by Dr Daniel Ringuet)

We deeply regret the inconvenience and concern caused to our customers and others by our recent recalls of multiple vehicle models across multiple regions.” – Aki Toyoda, the CEO of Toyota Motor Corporation1 (Toyota website). Beside the regretful expression we can learn from this public release, it also implies that Toyota, one of the world’s largest automakers, is suffering in their recent recalls of millions of vehicles round the world. Safety recalls are common issues occurring in the automobile industry, few may have long run impact on the automakers involved if handled correctly. However, in this case, the disaster engulfing Toyota is of a different order (The Economist, Feb.6, 2010). Toyota’s quality brand has been scrutinised and at risk due to its sedans’ safety problems that have sequentially emerged recently.

In 2008 Toyota became the world’s largest carmaker when it successfully exceeded General Motors in sales and production. However, this leading position of Toyota had changed since the end of 2009. In the United States, Toyota’s largest marketplace, a fatal crash of a Lexus ES 350 on August 28th 2009 was highly publicized, due to the gas pedal which was stuck and the car went out of control (Los Angeles Times, Oct.25, 2009). Since then, Toyota’s vehicles have been largely exposed to a series of issues associated with unintended acceleration problems, and these have triggered Toyota’s escalating crisis and its massive recalls of approximately 9 million vehicles globally within a six months period. For Toyota, this is indeed a tragedy that is not only related to heavy financial losses due to associated repairs costs, market share lost and production suspending, but also to Toyota’s reputation for its matchless quality and management. The firm’s reputation for quality cars, on which the business was built over time, is shattered.

Toyota has long been regarded as the pinnacle of Japanese innovation, manufacturing quality and an industrial pioneer (The Economist, Feb 13, 2010). Its vehicles are well known for economy, reliability and fuel efficiency. Its ‘lean’ manufacturing techniques and culture of continuous improvement were the envy of the business world (ibid). It is absolutely astonishing that Toyota has been embroiled in such a serious quality issues with its vehicles. Just within six months, almost 9 million cars have to be taken back for modification because of the potential problems with floor mats, acceleration pedals, and braking, all of which were related to unintended acceleration problems by drivers

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