Toyota

How Toyota’s woes spun out of control

Marketplace Staff Feb 9, 2010
HTML EMBED:
COPY
Toyota

How Toyota’s woes spun out of control

Marketplace Staff Feb 9, 2010
HTML EMBED:
COPY

TEXT OF INTERVIEW

Kai Ryssdal: For all its recent problems, Toyota did catch a small break today. The threat of another snowstorm in Washington has put congressional business on hold. So the hearing the House was going to have tomorrow into Toyota’s recalls has been put off for a couple of weeks. Still, this is a story that only seems to be growing, no matter how much apologizing the company does. Jeremy Anwyl is the CEO of the auto information site Edmunds.com. Jeremy, good to have you with us.

Jeremy Anwyl: Oh, my pleasure.

Ryssdal: Let me ask you this subjective question first, which is why do you think this particular recall — because it is by no means the first auto recall ever — why has this one risen to such a level?

ANWYL: Well, I think the big issue is this really goes to the heart of the Toyota brand promise. For years, they’ve stood for durability, equality, reliability, safety, and now we hear one thing after the other. And I gotta believe that for many of these owners, they’re feeling maybe angry and perhaps even a sense of betrayal.

Ryssdal: On that point, though, Toyota engineers and executives — when they make a product and test it and then put it out on the market — they do certain calculations about what I imagine a failure rate would be. How many times a given thing is going to break or go bad, and based on the scale of what we know about this recall, is it safe to say that this is probably within the margin of error of what the company was expecting in terms of problems with any given design?

ANWYL: I think what you’re getting at actually is a very important issue. You could say in a broad sense that driving is inherently risky. I mean there’s 42,000 people that die every year driving a vehicle on America’s highways, and most of those deaths had nothing to do with a vehicle fault. But I think the other thing that’s happening is that the nature of cars today is that they’re getting very complicated, and what’s bedeviled Toyota through all this is that the complaints that they’re getting are very hard to replicate. So I’m not saying that consumers didn’t actually experience something unexpected, but replicating it in a way that is predictable and therefore fixable, if that’s the right word, gets to be very, very difficult. Because of that Toyota appeared to kind of dither, or perhaps not be as open as we would expect in the marketplace. I think the truth of the matter is they just don’t really know in many cases what was the problem and therefore how to fix it.

Ryssdal: I was thinking the other day of how every time you wake up nowadays it’s Toyota has another problem with this and another problem with that, right? And it seems to me that every problem now for them is going to be a huge one because of their track record on handling these.

ANWYL: I think that’s true, and I think the risk actually is an industry risk. Because there’s different players here. Obviously we’re talking a lot about Toyota, but there’s also a government agency — the National Highway Traffic and Safety Administration — that is tasked with sort of monitoring the industry and holding the industry’s feet to the fire in the area of safety. And they collect complaints from consumers going back years and years and years. There’s about 250,000 complaints on file with that agency for the last 10 model years. And so what’s happening now is that they’re actually being criticized, so that creates a sort of self-preservation reaction on the part of NHTSA, where they start to investigate these complaints perhaps where they wouldn’t have done otherwise. We could start to see a blizzard of these investigations and frankly it’s not going to be just Toyota.

Ryssdal: So if you’re Alan Mulally at Ford, or the guys running GM and Chrysler, are you paying real close attention to this?

ANWYL: Yeah, you know, we even saw that last week where Ford announced sort of proactively what they’re calling a customer satisfaction program on their Fusion Hybrid. We actually have a Fusion Hybrid in our fleet, and they’re not going to like me telling you this, but we took it into the dealer to get the fix, and on the dealer paperwork it’s talking about the recall, but they don’t want to call it that, so it’s a customer satisfaction program.

Ryssdal: What could Toyota have done in retrospect, to ameliorate this in some way?

ANWYL: What Toyota needs to recognize is that we’re in a new world, where every consumer has a megaphone. They can blog about it. You can’t deal with the marketplace in a way that might have been appropriate 10 or 15 years ago. You need to be out in the marketplace telling your side of the story, if you don’t have the answers you need to say you don’t then explain why you don’t. And that’s what we haven’t seen. We’ve seen sort of the absence of communication and the implication is that perhaps they’re trying to hide something. And my suspicion is that that’s not the case, because that’s not really going to help anybody, but it seems that way.

Ryssdal: Jeremy Anwyl. He’s the CEO of Edmunds.com. Jeremy, thanks a lot.

ANWYL: My pleasure.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.