Mr.Toyoda goes to Washington

Mr. Smith Goes to Washington is an american classic movie starring James Stewart. It is about a boy ranger who is appointed to the senate by his state's governor who wants a puppet in that post. James Stewart character named Jefferson Smith(cleverly deduced from Thomas Jefferson and Adam Smith) goes to capitol hill and ends up fighting the evil political machinery of US Senate through filibuster process. A detailed review and story of the film can be found here. This fictional movie was released(in 1939) during the great depression era.

Cut to current great recession non-fictional age. Last week, the grandson of the founder and president of Toyota was invited to the hearing of the US senate committee. Here too is a guy not familiar with the DC and it's politics. He comes to DC unwillingly and is asked several uncomfortable questions. Though Mr.Akio Toyoda is no country bumkin, a guy from Japan is as comfortable in the Capitol Hill answering to the Senate committee as Jefferson Smith was answering about his alleged profiting from the land purchase he proposes in his bill. Mr. Toyoda was appointed as President of Toyota less than 9 months ago and is faced with the daunting challenge that his company has ever faced. The similaries are very few, but it made for a good beginning for my post and I could not resist invoking the famous movie.

But getting to the actual point. I loved Toyota for several years. Infact I own a 2007 Corolla and I absolutely love it. It is a great car. I loved the fact that, unlike the US big three car makers, Toyota put reliability, safety and fuel efficiency as the primary goals and it won significant consumer following over the years. Infact they became the number one car seller in 2009 pushing GM to #2. But just within a span of few months from October 2009 to January 2010, the reputation of Toyota went downhill. The stories of the recall have been in the news for some time now. I first heard and read about the recall of Toyota vehicles at my delear during one of my 15K routine maintainance of my Corolla.

If you look at the newspapers they are filled with several articles about Toyota and the mess they are in. Here below you can find some of them that I have read just in February.

Toyota’s Blind Spot dated February 5, 2010.
Twitter Toppled Toyota? dated Wednesday, February 17, 2010.
Toyota Official Says Recall May Not Fully Solve Safety Problem dated February 23, 2010.
Back to Basics for Toyota WSJ op-ed dated FEBRUARY 23, 2010.
Toyota chief blasted by lawmakers despite apology dated 02/24/2010.
Toyota loses rank to Honda
Analysis: Cultures Collide With Toyoda Testimony dated Wednesday, 24 Feb 2010.
'Toyota defense' might rescue jailed Minnesota man dated Thursday Feb 25, 2010.

I spoke to several friends and colleagues. Surprisingly the opinion was divided on the lines of immigration status. Immigrants had the opinion that Toyota is being penalized to make way for the American Big Three to regain share. US Citizens(born and naturalized alike) felt that this is just a beginnging of a lot more recalls, that Toyota is hiding facts and domestic companies should be preferred and incentivized over international firms. (A thing to note is that recent naturalized citizens tend to think like immigrants and citizens naturalized about a decade or long tend to think like citizens.) I dont agree with either of them. I think the above two opinions are prejudiced.

Audi, Ford and GM have had recalls that caused severa damage to the reputation and market share of the makers. Only GM seems to have managed to escape recall crisis with less damage. But what we have now are different times. Audi and Ford had lot of time to fix the faulty vehicles before the actual news of the recalls became widespread by the news dispensing mechanisms-newspapers, TV and Radio of that time. In the current times, news can spread repidly and instantly to almost every corner of the world with Internet and more so with the help of social networks. In the current social networking world, one doesn't have to depend on traditional media to get the news. For eg.:The earthquake in Chile was delivered to me not by the traditional media but through my family and friends way away in India. So politics had nothing to do with the bad publicity that Toyota is getting. It is just the instant news dissemination age that is compounding the trouble for Toyota. The politicians in DC are always late to react and react only to appease their constituencies, vote banks and special interests.

A recent news mentions the call from a southern republican senator who advised the senate hearing committee to tone down on the criticism and political rhetoric against Toyota. It is not surprising given the fact that Toyota has some maufacturing facitlities mostly in the southern states and that it employs about 36,000 people in the maufacturing facilities directly and employs about 166,000 people indirectly through dealerships and suppliers in the U.S. The myth of a naive foreign company in U.S. caught in the storm like a deer in a headlight can be dispensed of when you look at the list of Toyota’s powerful friends in Washington in the linked article dated Mon., Feb. 8, 2010.

Lets get to the other side of the criticism. The criticism that this is not an end of the recalls cannot be either supported or discarded as only time can tell. Leaving speculation to speculators, we can only deal with facts at hand. The slow response of Toyota in responding to the recall and publicly accepting, apologizing for the faults has given some fuel to the critics. But this delay could as well be attributable to a different managerial style-that of a Japanese rather than to Toyota trying to hide facts. It is definitely a failure of US PR wing of Toyota. Despite this debacle, Toyota is still in top three in the recent report card from the independent and widely popular Consumer Reports. In spite of the criticism and bailout from the government, Chrysler dropped to the bottom, and GM held on to it's bottom but one position. Only Ford improved one position better than last year and that position is very far from the top three. So the Big Three are still a far distance away in quality and reliability ratings of foreign makes.

So where did Toyota go wrong. Between the highly reliable period of the 90's and the deadly late 2000's, something went wrong. Before we look up the history, I want to express my own impression of Toyota of that period. My impression is purely based on watching their promotions on TV and talking to people. I felt that Toyota cars were highly reliable, cheap and very good with mileage; infact best in the market. They were the first to bring in Hybrid vehicles with Prius. But if you watched their promos on TV, none of these aspects were highlighted. Take a look at this Toyota Tundra commercial video. More of those can be found here, here and here. Infact Tundra dominated Toyota's commercials, emphasizing power over every other positive side of thier company. Commercials for their flagship Corolla and Camry were far and in between. In fact the cost of these two models fell by a few percetage points during this period. It is as if they were trying to move into a new direction.

I looked at the history of toyota to find who led toyota during the 2000's. The president of Toyota from 2005-June 2009 before Akio Toyoda was Katsuaki Watanabe. His Wikipedia entry will tell you that he was responsible for building a full-size pick-up truck manufacturing plant in San Antonio, Texas U.S.A. It utlimately resulted in a huge loss for Toyota. He also led a rigorous effort to cut cost at every possible oppurtunity, thereby sabotaging their quailty and the Toyota Way. He and his predecessor also rigorously led toyota into nascar. On hindsight the shift from traditional emphasis on quality to quantity and getting to No.1 in a rush is conspicous. But one does not have look at history to get to that conclusion. Mr. Akio Toyoda himself has mentioned that during several press conferences.

What can Mr.Toyoda do now. With toyota death count at 56, the time for action is now. They should be frank and find a fix for all the faulty vehicles and do them quick. It is easier said than done, but that is the only way to do. Redo their commercials on TV around the fixes and reliability and give up their power dream of Tundras. Emphasis on quality and fuel economy(with oil close to $2.75 and expected to rise) will surely bring back the customers. Until then they just to wait out the media damage and not do anything stupid.

I am sure Mr. Toyoda is doing what is best for him and the company of his forefathers including public apologizing and crying. But what can we as customers do about it. Keep a watch for Toyota recalls at autoblog's ultimate toyota recall guide and at Toyota's recall site. Contact your dealer if your vehicle is on the list and get it fixed. While driving on the road, if you see a Toyota approaching you, get out of it's way if you can. I am kidding but watch out if your own toyota has problems with acceleration and braking systems. In case you are stuck in a car with unintended acceleration, here is something you can do and hope for the best.