TodayApril 16, 2022

Toyota: Take two tylenol and call me next month

How bad is this for Toyota?

Roughly 2.3 million recalls in the United States, another 2 million in Europe, for a faulty pedal. Eight of Toyota’s most popular products are not allowed to be sold. Toyota is scheduled for a Congressional hearing on February 25, 2010, Consumer Reports has come out saying they would not recommend consumers buy those 8 Toyota products.

All of this is of serious concern for Toyota

How about financially, how will this affect Toyota & their dealerships?

Bloomberg newspaper says that it will cost Toyota’s 1,234 car dealerships $2.47 billion a month in sales to halt the sale of those cars. The dealerships will make some of it back because they will be the only ones that can replace the parts on the recalled cars. Toyota Motor Corp will have to pay the Toyota dealerships to fix the customer’s cars. The customer will not be the one paying for the fix.

Attorneys from the Corpus Christi, Texas-based law firm of Hilliard Munoz Guerra LLP are announcing a federal class-action lawsuit against Toyota Motor Corp. (Sylvia Pena et al. v. Toyota Motor Corporation, et al., No. 2:10-cv-00037)on behalf of a Texas family and all Texas residents who have purchased Toyota and Lexus vehicles with faulty throttle control systems. Attorneys for the Penas allege that the faulty ETCs have led to hundreds of accidents, 16 deaths, and 243 injuries.

What about our economy?

If you look at our economy, halting the sale of these 8 vehicles sold by Toyota would represent almost 1 million cars last year. We would have sold less than 10 million cars last year if we take those Toyota sales away! That’s money to your cities budget for sales tax and registration. It’s employment in dealerships and manufacturing plants and engine plants. If consumers decide to wait out the fix for a Toyota that means a bigger downturn in an economy that is tenuous at best.

What about other car manufacturers, who will benefit?

It is known that many Toyota buyer’s number one reason for buying a Toyota is reliability. Toyotas have been called bland, but reliable. If Toyota loses its reliability rating consumers will look somewhere else.

If you look at California, Toyota owns 24.5% percent of 2009 California sales. Who are the big competitors in California?

Behind Toyota are sales in California are:
Honda at 13.4%
and then Ford at 12.4%
General Motors 11.7%

2009 saw Subaru and Hyundai sales increase, so they are on a roll as well and people will look at them.

General Motors, Ford, Hyundai, and Kia are offering $1,000 to any Toyota customer that wants to turn in their car for a new vehicle.

Is offering a $1,000 incentive by other car companies a good idea?

It’s a great idea! Toyota has a great resale value. If someone buys another car from a dealer the dealer will pay less because the car has a defect, but the dealer will get the car fixed for free by Toyota and be able to sell it on their used car lot.

What does Toyota do for damage control?

Today Toyota Motor Corp. said they developed a remedy to fix faulty accelerator pedals in the 2.3 million recalled vehicles. Toyota will ship the pedals to the car dealers and train them on how to conduct the fix. The remedy involves reinforcing the pedal assembly to eliminate the excess friction that allows the pedals to stick. Visit Toyota recall for more information.

Toyota needs to do more than put an apology in the newspaper and on television. They also need to find a way to reward the old customers that stick with them and even possibly give incentives to new customers on a short-term basis.

This is not the first time a product has been taken off the market. Ford Firestone had problems with their tires. In 2009 Ford made a $2.7 billion profit and is gaining in marketshare.

Back in 1982 Tylenol had a cyanide problem in its product. They were told they should discontinue the product, or name it something else. They said no, that the product was good. Today Tylenol owns 35% of its market.

Toyota needs to do act swiftly. Toyota car dealers are talking about staying open 24/7, even driving to the people’s homes if necessary. These are all good things.

Lou Ann Hammond

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a founding member of the Women's World Car of the Year #WWCOTY, and board member of the Women in Automotive.