Thursday, January 28, 2010

American supplier let Toyota down

The world's largest carmaker Toyota (yes, they left GM behind in 2008) is in trouble in the US after some of its models were found to have faulty accelerator pedals. Last week, the problem forced Toyota to recall 2.1 million vehicles in the US market. The carmaker has also suspended sales of eight models in the US which used these pedals. It has halted production in five plants in the US for a week to fix the problem.

Last year, Totota had to recall 4.2 million vehicles due to a risk of pedals getting trapped in lose floor mats.

The interesting bit here is that the faulty accelerator pedals were produced by an Indiana-based US company called CTS Corp, a key supplier to Toyota since 2005. Wondering what would have been the reaction if the faulty part had been produced by a Chinese manufacturer in China? But as the fact of this case is, the crazy pedal (it tends to accelerate on its own!) was produced in the US by a US company. So, everyone is now blaming Toyota for quality and safety failure. See, this is what happens when you stop buying GM and run after the Japanese cars, they seem to be saying.

Toyota shares are down on stock markets and so are the stocks of its partner suppliers. While Toyota nurses its wounds, GM, Volkswagen and Honda Motors are likely to benefit.

A market growth at break neck speed may have caused quality lapses at Toyota. But now they have hit the speed breaker. This episode has only added to an already growing belief that quality of Japanese products is not the same what it used to be. Japanese companies will have to work harder to protect their image. Their market-share leadership will be short-lived if they ignore safety, quality, and business responsibility (yes, they are mostly laggards in CR).

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