Auto Quality and Recalls

In this past week Toyota recalled 1.8 million vehicles in North America to correct a gas pedal problem. The recall was widened to include an additional 2.3 million vehicles worldwide. This is the second recall in recent months for many of the same vehicles. Yesterday, Honda too announced a recall of 640,000 vehicles worldwide.

While a recall if handled swiftly and correctly can indicate that a company is concerned about its customers, Toyota has somewhat stumbled on the gas pedal problem. Though the company has been aware of the problem for some time, they issued the recall only after weeks of conversations with the US government and with the knowledge that the government was moving toward issuing a mandated recalls. Their slow response is a repetition of the errors American manufacturers were making twenty years ago.

Toyota made a further misstep when word came out that the replacement parts were being shipped to factories and that they would not be sent to dealers for some time yet. This decision shows that Toyota is more focused upon selling new vehicles first and then dealing with existing customers. Toyota should have sent 55 to 65% of the first parts to dealers so that they can get the repair pipeline going.

Recalls are not new to the Japanese automakers, it is just that they have not received the news coverage in the past as they are now or as American automaker recalls. When one has a small share of market, recalls take place with little notice by the press or public. Now that Toyota and Honda have such a large share of the market place, they will have to get use to the increased press coverage.

The larger the company, the more media attention you receive and the greater the chance that there will be a problem with a part. In an effort to keep manufacturing costs down and maximize profits, problems with the manufacturing of a part or a design flaw will be increased.

The recalls do not indicate that the Japanese vehicles are inferior vehicles. Rather they indicate that they have flaws just like their American competitors. For though for last ten years Ford and GM have made quality vehicles across many of their lines that are at or near the level of the Japanese, the perception of Ford and GM of the past has continued to impact public perception. With increased attention of the Japanese recalls and their problems, Ford and GM will be viewed in a fresh light.