Quality at Toyota and the huge cost of a product recall

More tough times for Japan’s flagship corporate giant, Toyota. This is the firm that gave the world lean production, an approach that was so revolutionary in its time that it prompted a five year study by MIT academics resulting in the famous book ‘Machine that Changed the World’. Just as famous was the revolutionary concept of Total Quality Management (TQM), which is also closely associated with Toyota. What has gone wrong? Toyota Motors says its massive vehicle recall due to an inbuilt fault could cost it up to $2bn (£1.25bn) in lost output and sales. And that may be looking on the bright side.

This BBC news clip outlines the technical nature of the problem.

Toyota Motor Corporation slipped past General Motors just under two years ago to become the world’s biggest carmaker. The firm’s decision to stop sales and production of some models is a substantial blow for the stumbling car giant. Toyota eased ahead of other carmakers largely because of its reputation for producing good quality, reliable cars at reasonable prices. Now it is losing market share. It is likely that Toyota’s share of the world market fell below 12% last year.

Toyota’s dash to become the biggest carmaker may have had unfortunate consequences. The pursuit of volume seems to have dented the company’s enviable record for reliability. The latest troubles can only make customers more wary of buying a Toyota. Even Toyota’s leadership in electric and hybrid vehicles is under threat as other big carmakers prepare to launch their own green models soon. So the latest news about problems with Prius brakes is pretty disastrous.

The BBC have put on some interesting clips:

Shares in Toyota slump
Toyota take extraordinary measures
Toyota apologises to customers

A previous blog includes a link to a BBC clip covering Toyota’s problems in the recession last year.