JAPAN: FEATURE - Toyota recall debacle hightlights dangers of being No.1.

Record ID: 463491

  • Title: JAPAN: FEATURE - Toyota recall debacle hightlights dangers of being No.1.
  • Date: 10th February 2010
  • Summary: TOKYO, JAPAN (FEBRUARY 09, 2010) (REUTERS) (SOUNDBITE) (English) MANAGING DIRECTOR OF ADVANCED RESEARCH JAPAN, KOJI ENDO, SAYING: "Average person especially in the United States, how they think of a hybrid technology, how they think of Toyota's brand...then we could have or they could have some problem for medium to long-term in the corporate strategy of hybrid, that's the question mark."
  • Embargoed: 25th February 2010 12:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Industry,Transport
  • Reuters ID: LVA37UURZLX0JV360G1GZ6Q4J5CL
  • Story Text: Toyota continues in a whirlwind of public relation nightmares as the number one car maker prepares for more recalls.
    When Toyota Motor Corp was on the brink of overtaking General Motors as the world's biggest automaker in 2008, executives were busy sending out warning signals about the dangers of being No.1.
    Toyota's history dates back in 1924 when Japanese founder Sakichi Toyoda invented a Toyoda Model G Automatic Loom.
    Toyoda first established the company as Toyota Motor Co. in 1937 - a year after the company's production of its first AA Sedan model.
    The historic Japanese automaker is now witnessing the fears of being at the top, caught in a mushrooming recall debacle affecting as many as 8 million cars -- a development many say underscores the difficulty of maintaining top-notch quality in a hasty expansion.
    It may also be the manifestation of the "big-company disease" that current Toyota President Akio Toyoda has vowed to quash since taking the helm last June, aiming to restore the company's solid foundation that he said was lost during a decade of rapid global growth.
    Toyota's troubles deepened on Tuesday (February 9) as the carmaker recalled nearly half a million of its flagship Prius and other hybrid cars for brake problems, one day before a top executive was to testify in front of the U.S. Congressional House Oversight Committee in Washington DC.
    U.S. safety authorities and members of the administration have accused Toyota of responding too slowly to problems related to uncontrolled acceleration that have been linked to up to 19 deaths in the United States over the past decade.
    Analysts say the massive recall could have been the result of Toyota's ability to oversee every aspect of the company.
    "The speed of the expansion was so so rapid so that probably in the quality, or on the quality maintenance front maybe there was kind of limited resources to monitor all the quality in all the regions and probably they had a number of new technologies and new cars and new models, probably there was kind of a limit, so to speak, on the ability of monitoring all those quality side," Koji Endo, Managing Director of Advanced Research Japan, told Reuters on Tuesday.
    The level of attention on Toyota's woes -- from consumer groups, to media and the government -- is also the manifestation of another major fear that Toyota has harboured: that public opinion could be unkind to those at the top.
    Analyst Endo says Toyota's reputation has taken a deserved hit from the accelerator problems.
    "Average person especially in the United States, how they think of a hybrid technology, how they think of Toyota's brand...then we could have or they could have some problem for medium to long-term in the corporate strategy of hybrid, that's the question mark," he said.
    U.S. politics look to be playing a role in Washington's harsh response to safety problems battering Toyota's reputation, but no one expects a replay of the bitter trade wars that frayed ties and jolted currencies decades ago.
    "This is kind of show sort of speak. Probably all the politicians will try to take advantage of the situation and tries to promote their own States or U.S. products or the Big Three. I'm sure Toyota will receive a number of very difficult hard questions," said Endo.
    Tough talk by U.S. Transportation Secretary Ray LaHood last week, including a pledge to "hold Toyota's feet to the fire", also fanned speculation that U.S. regulators were trying to deflect criticism that they, too, had dropped the ball.
    Some analysts warn that assumptions of politically motivated Toyota bashing are overdone.
    "Secretary of Transportation LaHood's inappropriate comments created an adversarial political climate that will take time to recede," said Michael Auslin at the American Enterprise Institute in Washington.
    Many in Japan do see more than a hint of U.S. domestic dynamics at work -- from last year's bankruptcies of General Motors and Chrysler and charges that lax bank regulation led to the financial crisis, to the tough spot President Barack Obama's Democrats are in ahead of November mid-term elections.
    Toyota, Japan's largest company with a market capitalisation of around 141 billion U.S. dollars, produces dozens of models around the world and has more than 500 subsidiary companies.
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