The Year of the Tiger has been tough for Toyota. The mountainous failures are hitting Toyota like a Century Storm. To say that Toyota is in a free fall and experiencing the crisis of a century would not be an overstatement. Toyota has recalled more than 8.5 million vehicles—more than its total annual sales volume. Its sales in the United States dove to a 5-year low in February, and its stock dropped 20 percent.
Toyota CEO Akio Toyoda’s bow and apology to Congress during recent hearings and his tears during his tour at the manufacturing facility could not remotely eliminate questions and investigations from the American public, Congress, and the media.
Toyota is no doubt facing the biggest crisis in its history, and automobile consumers are definitely paying attention to whether Toyota will ever recover from the crisis.
Americans have complicated feelings toward Toyota. Toyota learned its management style from Ford. Mr. Toyoda has an MBA from America. Toyota flourished in America, but Toyota also slipped in America. Toyota has offered middle class Americans economical, fuel-efficient, and durable vehicles and has built its reputation accordingly.
The latest Gallup poll indicated that despite the circumstances, 74 percent of current Toyota owners “have not lost confidence in Toyota vehicles, and 82 percent think they are safe to ride in.” About 79 percent of them would still buy or lease a Toyota.
According to a CBS News poll, 81 percent of Americans “think the company will be able to fix all the problems,” and 78 percent still think it’s safe to drive a Toyota car.
However, Americans disliked Toyota’s initial stalling on the issue and its attempt to cover up problems. The CBS poll also showed that 60 percent of Americans believe Toyota management is either hiding something or lying. The Gallup poll also indicated that 55 percent of Americans believe Toyota “did not move quickly enough to respond to safety issues with its vehicles.”
These polls reveal that the most fundamental and critical issue Toyota is facing is trust.
A Tough Credibility Crisis
Toyota, founded in 1933, entered the U.S. market in 1957. Its technology and research have been quite noteworthy. However, the basic safety issue has been relaxed with Toyota’s focus on exploring new technology and expansion.
Accelerator issues are seen in other automakers’ products as well, but current data shows Toyota has the highest failure rate. Had Toyota seriously investigated the issue early on, a solution could have been identified, and a difficult situation such as this could have been avoided.
Unfortunately, for nearly 10 years, Toyota has repeatedly missed opportunities by casually denying the problems, by “negotiating” with federal regulators, and by ignoring consumers’ complaints. Ultimately, the complaints increased as accidents and fatalities increased.
Obviously, Toyota would want to reduce costs, handle cases individually to smooth over the problems, and avoid recalls on a large scale; quietly correcting mistakes in the meantime to minimize damage to its reputation. However, the outcome indicated that the problem is growing bigger, and Toyota is caught in a tough credibility crisis.
The credibility issue Toyota is facing is that it’s very hard for Toyota to explain clearly exactly what has caused the sudden acceleration problems. On the one hand, models before 2007 (not recalled) also experienced sudden acceleration problems. On the other hand, sudden accelerations still occur to the recalled cars after repair.
Toyota also insisted that the electronic system functions as intended. Consequently, people can either interpret that Toyota has not actually been able to identify the cause and thus, has tried to get around it by installing a piece of metal, or suspect that Toyota is not telling the real story for the sake of saving cost. Either way, Toyota is risking its credibility and the consumers’ trust. This trust and credibility issue tends to make people wary at the time of purchase.
A Fundamental Difference Between Americans and Chinese
In China, a similar poll was conducted, and the result was somewhat similar but interesting. In a survey report from TNS Automotive: China, 75 percent of Chinese car owners and 85 percent of Toyota car owners did not believe the recall would seriously reduce their confidence in Toyota. However, “the large majority of car consumers (76 percent) agree with the decision to recall its cars. Toyota demonstrates itself to be a responsible enterprise that reacts quickly and with a sincere attitude to the difficulties.”
Klaus Paur, Regional Director of TNS Automotive in North Asia, commented on the survey. “This lets us think that Toyota is doing the right thing to be able to contain the damage caused by the various defaults recently uncovered.” It means the majority of Chinese car owners did not believe that Toyota delayed or engaged in a cover-up, and Toyota has done a good job handling the issue. Therefore, Toyota’s trust and credibility issue does not exist in China. This is a much different attitude from that of American consumers.
Is the Chinese consumers’ attitude due to lack of an understanding of Toyota’s recall? The TNS poll showed that “the large majority of Chinese car owners (74 percent) are aware of Toyota’s present difficulties.” Blockage of this particular news does not exist in China based on the Chinese Communist Party’s media reports and overseas discussion initiated by pro-Communist Chinese-language media. It indicates that the different attitudes reflect a fundamental difference between Americans and Chinese.
First, Toyota’s recalls are less than satisfactory to the majority of Americans, but very satisfactory with sufficient effort and honesty to the majority of Chinese. The overall quality and safety factor of China-made vehicles are surely less than that of Toyota.
Let’s take 2007 as an example. Only a total of 847 cars were recalled from China’s auto manufacturers—practically nothing compared to the annual production of 10 million China-made vehicles.
China Business Journal commented, “The very few recalls in China-made vehicles does not mean the number of vehicles that need to be recalled is few; the few problems exposed does not mean the problems that existed are few.”
The Communist Regime Protects Toyota
One of the major reasons for the few recalls is that the Chinese communist regime regulation encourages manufacturers to cheat and to not recall.
According to “China’s Recall of Defective Automotive Products Regulations,” for manufacturers that conceal serious defects, the maximum fine is 30,000 yuan (approximately US$3,624). With such a low fine, Chinese manufacturers would rather pay the fine than recall.
By contrast, Toyota recalled more than its annual production volume; this type of honesty is unheard of under the regime. Therefore, for the Chinese public, there is no credibility issue.
Second, because of the prevailing corruption and collusion among Chinese Communist officials, the recall system in China exists in name only. In the United States, even though there’s a “revolving door” relationship between Toyota and the National Highway Traffic Safety Administration, Toyota is under the strict supervision of the American Congress and the scrutiny of the American media.
In China, auto recalls are governed by the General Administration of Quality Supervision, Inspection, and Quarantine, which also issues certificates for auto exports. The hidden corruption is obvious and hardly hidden. Former director Li Changjiang was forced to resign due to a serious dereliction over the Sanlu poisoned milk-formula incident.
Chinese people are also concerned with the relationship that exists between the “expert committee” conducting the tests and the manufacturers. Consequently, Chinese people have zero confidence in the recall system.
Third, Chinese consumers are not protected by the communist regime. The communist officials are the support and protection for the fraudulent manufacturers. The consumer’s interest is essentially in conflict with the communist official’s interest.
In China, when Akio Toyoda apologized, protesting Toyota owners were taken away on the spot. Many car owners and bloggers would like to question that the way Toyota apologized in China is different from how it apologized in America but could not. It was because the communist regime protects Toyota.
This is the reason why, in China, Toyota easily found the reprieve which is hard to get in America. In China, Toyota is not subject to being questioned, not subject to making promises to recall any model other than the RAV4, let alone having to deny that “only third-class cars are shipped to China.”
Read the original Chinese article.
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