The giant crumbles?

February 4, 2010

One of the largest corporations of the 20th Century, Toyota, is going to be regretting the current debacle with their “accelerator” issue for decades. What could have been a small blip on the radar (surprisingly few instances of the issue have been formally recorded – and even less deaths), will ultimately turn into the worst PR disaster in current automotive history. Toyota has (up till now) been seen as an adaptable, progressive company that employs some of the greatest brains in the automotive industry. Responsible for the implementation of one of the greatest boons of 20th century manufacturing, lean manufacturing, the revolutionary and conquering Scion brands, and even seem to be the preferred supplier of transport to everyone from the UN to Al Qaeda. In the last 50 years no Automotive company has accomplished so much, in fact, few companies have accomplished so much. It seems apparent however, that in the hunt to be the largest producer of the most expensive consumer product currently available, and relieve GM of its mantle that it has held since the dawn of time they seem to have started to make mistakes that seem more GM… than Toyota.
The thing is, GM probably wouldn’t even have made the multitude of mistakes that Toyota has recently.

Toyota has (rightly) held a reputation of being the most reliable vehicles available for sometime. They perhaps single handedly are responsible for the improving the automotive marketplace worldwide and making manufacturers more accountable to build higher quality product for consumers and providing a higher level of service, however as late their reputation seems to have come into question. Growing pains? Poor Structure? Lowering of production cost? Lost focus?
Well – Toyota has always had a very interesting management strategy. Everything comes from the top. Few vehicles of Toyota have ever been developed outside of the Japan, even if it was a vehicle only to be sold in the US market, and even the plants that are built around the world today are carbon copies of their production plants in Japan, any important management decision comes from Japan. It seems in this instance that this reliance on a “top-heavy” style management structure has caused Toyota to perhaps miss the importance (particularly in the US market) of a customer centric approach.

Up till now, the Ford Explorer recall in the 90’s was the most expensive recall to date, with 2billion lost in direct costs, and an estimated further 8billion lost in indirect costs. I would anticipate that this recall will well exceed that.

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