Recalls: End of the Road for Toyota?

Toyota HQ in Toyota City.

Akio Toyoda, Totota CEO (2011)

Toyota, once a stellar example of automotive reliability, has lost considerable grip on the reputation it has enjoyed for decades. The main culprit is sudden unintended acceleration (SUA).The skid actually started in 1986, when the National Highway Traffic Safety Authority (NHTSA) recalled some Toyotas for “speed control problems.” But the issue then did not attain the major proportions it has now.

The Toyota brand explained

It reared its ugly head again in 2003, when “unwanted acceleration” occurred during production testing of their Sienna minivan. Worse, they didn’t report it to the NHTSA until five years after. The worst incidents occurred in July 2007 and August 2009: In the first, Troy Edwin Johnson, sitting in his car, was killed by a Camry speeding at around 120 mph. In the second, an off-duty highway patrolman and his family were killed when their rental Lexus crashed. “Uncontrollable acceleration” was reported to be the cause of both accidents. Since 2003, the NHTSA has conducted numerous investigations of different Toyota models, mostly with reported acceleration problems. Many of these have led to recalls.

Toyota has paid nearly 50 million dollars in recall-related fines, and the bad news does not end there. They still face numerous lawsuits, for charges ranging from lost resale value to injuries and death as a result of the reported defects. These cases could drag on for many years, resulting in steadily increasing losses.

The most damage may be to their reputation. Can they rebound from such a major financial and legal disaster, or will they go down the drain? Only time will tell. This is probably the greatest challenge ever faced by an automaker, or any company, and how they handle it will be their biggest test ever. Will the company that dethroned GM as the world’s number one carmaker fall?

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