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Toyota Recall

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Toyota Recall: Five Critical Lessons
Posted by Michael Connor • January 31, 2010 • Printer-friendly

by Michael Connor

Toyota’s announcement of a technical fix for its sticky gas pedals – which can lead to sudden acceleration problems - is not likely to bring a quick end to the company’s current recall nightmare. Having already halted sales and production of eight of its top-selling cars in the U.S. - and recalled more than 9 million cars worldwide, in two separate recalls – Toyota faces the prospect of billions of dollars in charges and operating losses. The Toyota brand, once almost synonymous with top quality, has taken a heavy hit. While all the facts are not yet in, it’s clear that Toyota’s crisis didn’t emerge full-blown overnight. Fixing the problem and ensuring that something like it doesn’t happen again will require an all-out effort, from assembly line to the boardroom. Even then, there are no guarantees. Maintaining a good corporate reputation in the 21st century is tricky business indeed. Toyota’s case offers a number of valuable lessons for other business people and companies to consider. Here, for starters, are five: Aggressive growth can create unmanageable risk. Toyota’s desire to supplant General Motors as the world’s number-one car-maker pushed it to the outer limits of quality control. “The evidence that Toyota was expanding too much and too quickly started surfacing a couple of years ago. Not on the company's bottom line, but on its car-quality ratings,” writes Paul Ingrassia, a Pulitzer Prize-winning former Detroit bureau chief for The Wall Street Journal. Ingrassia, who has just authored a new book on the auto industry, notes that in 2005 Toyota recalled more cars and trucks than it sold; by 2007, Consumer Reports magazine stopped automatically recommending all Toyota models because of quality declines on three models. One wonders if, when...

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