Do you have a Toyota?

Do you remember the Toyota recall in Bahrain? Have you ever thought what really went wrong and why Toyota is recalling those vehicles?

I’ve read an interesting paper What Really Happened to Toyota?  that was analyzing the different recall acts of Toyota which took place in USA due to quality and safety issues. The paper analyzed the main reasons behind such issues as the brand image and sales revenue were severely impacted.

 Toyota and its chain of suppliers had always pioneered quality management methodologies of total quality control since they believed that quality, customer satisfaction and profits are deeply connected. Quality is a major component of Toyota’s strategy and production system, and was always looked at as a role model by other competitors, such as Ford, GE and Honda.

So what really happened that made “Quality” suffer?

The paper states that there are two main reasons behind the quality issues:

  1. Toyota executive management always believed that quality should have a high priority, however, when the new management came in, their focus has changed. The new focus was on rapid growth rather than quality. As Toyota expanded in new markets, from 2003 onward their sales grew faster than the company can manage, and therefore, growth had taken priority over the traditional focus on quality. The decisions were made in favor of meeting sales, cost cutting and profit target while sacrificing product development, supplier management and production.
  2.  The second reason is a result of the increasing complexity of car products due to technological changes. Government regulations on safety, emissions and fuel consumption and the rising customer demands for environment friendly cars with luxury features have all added to the complexity level. This point applies to other car manufacturer as well, but due to the continuous demand and market expansion, Toyota was faced with the challenge of changing its production process to meet the demand of safe, clean, fuel-efficient and comfortable cars.


Some of the process change decisions were to compress the lead time between exterior design approval and start of sales to less than 20 months. Another change in process was to introduce an accelerated design cycles that have stressed the development and production systems which have created conditions for quality failure.

 Toyota’s supplier management and its performance were also affected by the above two points. To meet the rapid demand and product complexity, Toyota had to outsource engineers and contract with new suppliers because the current engineers and suppliers were not sufficient. Most of those contract engineers and suppliers were inexperienced with Toyota’s standards and practices, and they were overseas (none Japanese speakers) contacts which had lead to coordination and communication problems.

I think that for any company, risk assessment should be conducted before moving with growth and expansion decision. With Toyota, the quality has suffered because they banded their core values of quality and focused on growth.

In your opinion, what went wrong with Toyota?

15 thoughts on “Do you have a Toyota?

  1. Toyota has the biggest market share in the middle east, ‘Land Cruiser’ has the highest sales volume in the world in Qatar. When the recall happened it was a shocker for everyone since these cars have been seen as the most reliable and durable in the whole region. it is interesting to see how this happened, especially how suppliers were affected. Toyota’s competitive advantage is their quality standards therefore it is very important for them to stay focused on this if they wish to remain successful.

  2. Very interesting post Bashayer.
    I believe Toyota has the biggest market share in Bahrain, I even drive a Toyota and my family have been loyal to this car brand for years, therefore in my opinion compromising on the quality for growth is Toyota’s biggest mistake and yes by all mean conducting comprehensive risk assessment is a must before taking decisions on growth and expansion.

  3. Toyota has recently been the subject of corporate scandal news and crisis management lessons all over the Internet. Searching for “Toyota” on Google reveals news articles on the Toyota recalls, the number of deaths the car brand has been associated with, and public apologies from Toyota top managers and spokespeople. Why has Toyota’s reputation suffered so drastically?

    This is not the first recall by a corporation. Few business management students have not heard of the Tylenol recall by Johnson & Johnson when it was discovered that tampering of the medicine bottles had caused the death of seven individuals. Instead of losing its reputation to this scandal, J&J was able to win the public’s hearts by showing its dedication to its customers. The company honestly revealed the problem and immediately recalled 31 million bottles from the market, losing an estimated revenue of $1.2 million. The loss was only short-term though; the gain in reputation and public respect in the long-term was much greater.

    1. I can relate to this to what happened to Ford/Firestone tire failures in 2000 and 2001. Ford like Toyota received enormous media attention and they managed to fix the problem quickly by changing tier supplier and redesigning the model. The damage to its market was costly and long lasting. However, Toyota manufacturing system still represents state of the art. I believed their problem was a poor management decision problem rather than a faulty production one.

  4. I totally agree with you about what went wrong in Toyota as they lost sight of what really matters somewhere in the middle of their journey. When they shifted their focus from quality to quantity, Toyota has kind of deviated from their core competence which is producing highly reliable cars. They became so focused on trying to adapt to the different trends in the market in order to cater to almost all market segments, which resulted in a negative effect on the quality of their cars as they didn’t have enough quality tests on some models before launching them in the market.

    In fact, nowadays, some other competitors who are trying to be among the top automotive producers are trying to learn from Toyota’s mistake. For instance, Hyundai which is considered as one of the fastest growing car manufacturers in the world, has decided to increase their production capacity to have more focus on quality tests to make sure that their products passes these tests and have almost zero quality issues.

    At the end, each organization should always understand its core competency and stick to it in order to retain its position as a market leader or at least competitive unless that core competency is no longer valid.

  5. Well I believe you’ve mentioned exactly the two reasons that had a major effect on Toyota performance, I recall our class activity the sky’s the limit , we faced a similar dilemma where we had to choose between Quality , Cost , Time . The new management believed that increasing sales and growth is more important than quality , this choice had its tradeoff which was performance.

  6. I enjoyed reading this post. Toyota car is well-known in the reliability among the general public. Toyota Hilux is the highest selling vehicle in Saudi Arabia. I agree with you that Toyota is very important to implement a risk assessment system before taking decision on growth and expansion. I believe that the issue has occurred due to an erroneous management decision.

  7. Great article! Here in the U.S., Toyota is still near the top despite the decline in quality and the debacle in 2009 / 2010. We have two Toyota’s in our family and both have been great. To better their reputation, Toyota will have to regain the trust of consumers that quality is still important to them. A second article, ‘How to Save Your Brand in the Face of Crisis’, talks about how Toyota didn’t respond fast enough by not admitting the accelerator pedal problem, hoping that the public would eventually forget about the problems, and when Toyota finally did come forward, they had the wrong people sending the message. If only they had a plan for a crisis like this, it probably wouldn’t have gone as badly. Fortunately for Toyota, customers still consider their vehicles of decent quality and it appears they are on the rebound.

    I was not able to determine how to make a link in a comment, so I’ve placed the website address for ‘How to Save Your Brand in the Face of Crisis’ below for those interested.

  8. I used to own a Lexus which is manufactured by Toyota, and to be honest I was surprised how Toyota handeld the recall situation. I have received a letter explaining the issue with recall and I was scheduled to bring in my car to have it checked. It turned out that everything was fine with my car, but it was good to know that they do care about their customers. Toyota wants to keep their customers safe and by acting so quickly they earned customers trust in my opinion. I believe that now Toyota is back at quality rather than quantity because they don’t want to risk loosing customers trust.

  9. I too was impressed by Toyota’s handling of what could have been a massive disaster in the brand’s consumer confidence. While I currently drive a Honda, I’ve owned a Toyota in the past and loved its reliability. When I bought the Toyota new I felt very comfortable about the company’s track record so after becoming aware of the widespread safety recalls it concerned me a great deal. Toyota’s handling of the recalls in my opinion hasn’t shaken my confidence in buying another Toyota.

  10. I agree with that something must be sacrificed when a company increases production without increasing other related capital expenditures and expenses. If Toyota build new plants, hire more workers, install more manufacturing machinery, etc., then their products’ quality may not have suffered. But apparently some executives at Toyota, with all their calculated figures, decided that the cost of investment in long-term assets was not worth the return, despite Toyota’s increase in market shares. Was this logical? or did someone got too greedy?

    It must also be said that even thought there was a decline in quality, Toyota was, and still is, one of the top auto manufactures in the world. Kind of makes you wonder just how much competitive advantage they have.

  11. I believed they could not keep up with demand and regulations that happen when their quality went down when they try just pushing out for demand unlike high quality cars where they have limited relase of a certain car for the year. they were not prepared for the output and demand and was looking at how much they were going to make and not what they were building casued for concerns which resulted with recalls gives them a bad rep but they try to fix it with reclass to hopefully regain the confidence of consumer. The demand increas casued for their supply chan and operation which they did not really prepared for until now which their market sales has steadily decreased and stabled ut with new introduction of new cars.

  12. This post made me think about my trip to the Toyota plant just outside of Prague in the Czech Republic. While I was in Europe, I also had the opportunity to visit another car manufacturer named Skoda. One of the major differences I noticed between the two car companies was their use of manual labor versus heightened technology. Skoda utilized more workers in the production of their cars, while Toyota had many more machines used in production. I believe Toyota’s demise came from deviating from their mission to provide quality cars and instead focused on growth. From my experience, it appears Toyota has been able to keep up with technological advances.

  13. As someone who is a fan of Toyota, I feel that I have to agree with many of the comments above. The transitioning stage from old to new management is always risky. The consistency and the balance of the company has changed and since Toyota had to outsource that created lack of communication-a significant problem. However, I believe that Toyota has certainly picked up from turn around time in production to making sure they provide the best vehicles to their customers as much as possible.

  14. After one of our last class exercises, we spent a substantial amount of time reiterating the idea that in project management you cannot only focus solely either on the speed of the building in a project or solely on the planning component. As described in this discussion the three most important aspects of project are cost, schedule, and scope and she describes their precedence as a three legged chair, if you focus to much concentration on just one components any of the projects outcomes can collapse. As management switched, so did the precedence of these three components, moving from quality to rapid growth. This is why they saw such a deterioration in their product which eventually led to a recall of their product.

Leave a Reply

Your email address will not be published. Required fields are marked *