Toyota Fears Dent Reputation

by : Glady Reign

The Toyota Motor Corp., the second largest automaker around the globe, is now in hot water along with other auto giants. The situation has been triggered by the increasing number of recalls and customer service campaigns.

Seiichi Sudo, the president of Toyota's North American engineering and manufacturing unit, said "the increasing recall trend" is the key risk about the latest challenges encountered by the automaker. During the presentation, Sudo showed a chart about recalls and less-formal customer service campaigns or CSCs. The chart revealed a dramatic increase in recalls and CSCs in 2005 and 2006. Said occurrences are pointing to "design issues" and "high project workload" as the culprits.

Another chart showed that warranty claims have decreased. This is a positive indication that quality is being maintained. However, one commentary stated, "chronic issues still exist." A particular "planning document" that covers Toyota's challenges in the next five years is now held by the Free Press. According to the automaker's spokesman, "It is unfortunate that a confidential and proprietary Toyota document was released outside the company."

Lately, Toyota has been receiving affirmative predictions from analysts in the industry. These analysts have even predicted that the automaker will dethrone GM as the world's largest automaker. And the said prediction is expected to transform into reality any time this year. The prediction was anchored on the increasing global production and demands. In 2006, Toyota produced 9 million vehicles which is an increase by 9.5 percent from the previous year's production. In the same year, GM produced 9.18 million vehicles. This year, Toyota is working on the margin.

Despite the concerns that the automaker is facing, Toyota has fewer 2006 recalls in the United States than GM, Ford, Chrysler, Nissan, Honda or Volkswagen. As reported by the National Highway Traffic Safety Administration (NHTSA), Toyota recalls dropped by about two-thirds to 814,507 vehicles in 2006.

Before the launch production of the new Toyota Tundra, Gary Convis, senior vice president of manufacturing in North America for Toyota, said maintaining quality is critical to Toyota's success. "The quality has got to be perfect. Every truck has got to be perfect." The aim to perfect quality is common among automakers. Ford engines, and GM radiators as well as other auto parts are all aimed at quality.

However, Toyota had a series of high-profile quality issues in the previous year. As a fact, it has conducted a worldwide recall in May covering approximately 1 million vehicles that include two-thirds of the Prius hybrids sold in the United States. In January, Toyota recalled 533,000 Tundra pickups and Sequoia SUVs manufactured at Indiana factory due to a flaw that causes difficulty in steering.

Toyota has settled a class action, which has started in the late 1990s, for potential sludge damage in some of its vehicles including the Camry. Analysts and critics alike are studying closely the moves of the automaker including its manner of solving problems. Toyota Way plan formulated by the automaker ensures that each year is stretched further to expand and improve.

According to Neal Oddes, the director of product research and analysis for J.D. Power and Associates, "Redesigns and new vehicle launches often lead to a higher number of quality issues, but expansion has not affected Toyota's overall quality so far." The Lexus brand ranked second and the Toyota brand fourth in the previous year's J.D. Power Initial Quality Study for fewest problems per vehicle after three months on the road. Porsche and Hyundai were first and third, respectively.

Oddes added, "The competition has closed the gap, but Toyota has continued to improve to keep its position at or near the top of the rankings. We haven't seen any dip in quality. They continue to perform the same, if not better, than what they've previously done. Toyota stays at the top because it has an obsession with quality. Their whole culture is built around reliability."