Toyota Undertakes Record Risk With Unprecedented Sales Halt

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Call it the stop heard ‘round the world.

The Detroit News is reporting that federal regulators were pushing Toyota to take more decisive actions to deal with the affected vehicles.

The venerable brand’s subsequent decision to suspend sales of several recalled models until it figures out its accelerator-pedal problem – including its best-selling Camry and Corolla sedans – sends a shocking signal about just how serious the situation is and how badly the company’s top management has bungled it.

But Toyota’s halt of sales and production of eight models also comprises perhaps the biggest brand risk ever undertaken by the world’s leading automaker. Ultimately, the company decided that this move comprised less risk than simply continuing its behind-the-scenes efforts to corral the problem.

Consider that no automotive brand in recent history has ever just stopped producing and selling its most popular models for an interim because it couldn’t figure out how to make them safe. Ford ordered dealers to stop selling a handful of Ford Ranger pickups in 2002 because of an axle problem, and Nissan told dealers to stop selling its 2006 Altima for a while because of excessive consumption of oil. But the stoppages – and the stakes – were puny in those moves compared with what Toyota has done.[more]

Also consider what the Toyota brand is and has become over the last 20 years. Just recently, the company overtook the beleaguered General Motors for global sales leadership, a significant brand achievement in itself. Before that, Toyota had established an almost completely unblemished reputation for quality, safety, and overall practicality with American consumers.

At the same time, Toyota had become the most-copied manufacturer within the industry. Competing automotive OEMs openly conceded that they’ve been trying to copy the Japanese leader’s vaunted Toyota Production System. Toyota became synonymous with continual, meaningful improvement in its processes and its vehicles – and for never making a significant mistake.

True, the brand has taken a few big risks before. One of them was its decision to blaze trails in hybrid technology with Prius; that decision has paid off handsomely. The other major risk was launching the brand into nearly every segment in the US market to match the breadth of offerings of the domestic Big Three; that decision hasn’t paid off so well, as Toyota has been burdened, for example, with a slow-selling Tundra pickup truck.

But those major decisions were deliberate and long-term. By contrast, the company’s new gambit to stop the bleeding caused by its accelerator problem is abrupt. And rather than make them appear confident and determined to “protect consumers,” this move only leaves Toyota leadership looking confused, almost desperate. Remember, it was just a few weeks ago that Toyota sales executives in the US were expressing high confidence to the automotive press that they were putting the accelerator-pedal fiasco behind them.

Toyota did begin running TV ads over the weekend that explicitly addressed “safety” and “quality.” But that was like spitting into the gales that Toyota has created for its brand with its latest decision.

And once Toyota executives believe they’ve got the technical and manufacturing problems fixed, they’d better have a lot more up their marketing sleeve. American consumers may appreciate the fact that Toyota apparently has their backs in this mess, but never again will they simply assume that any vehicle bearing the “Toyota” nameplate is a safe bet.

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