What's really behind the Toyota debacle

Interesting read, a lot of things that I didn't know....
(Fortune) -- At 77, Hiroshi Okuda, chairman of Toyota, is still causing trouble for the automaker.

He is being painted, most recently in Wednesday's Wall Street Journal, as both the architect of a global expansion that proved ruinous and an enemy of the Toyoda family.

But blaming Okuda for what has gone wrong at Toyota (TM) recently hardly gets to the root cause of the company's problems.

For that, Toyota executives will have to look deeper into themselves. If they are diligent, they will find an anachronistic management structure that has proved inefficient and counterproductive, and could be potentially ruinous.

Toyota is basically organized the same way it was half-a-century ago when it first began selling cars in the U.S. None of its operations are functionally integrated -- and all report back to Japan.

It is a caricature of a chimneyed company with vertical structures and no coordination.
While it may have suited the much smaller company of a generation ago, it no longer does. Toyota has expanded its presence in the U.S. significantly.

Indeed, if Toyota's North American operations were pushed together, the company would resemble one of the Detroit Three, with engineering, manufacturing, purchasing, and sales all housed under one roof. If any of those functions detected, say, a quality problem with an accelerator pedal, it could quickly relay the news and work with the others until a solution was found.

That kind of functional integration is one of the big reasons for the current success at Ford (F, Fortune 500). CEO Alan Mulally holds a meeting on Thursdays at which all of his top managers attend and at which they share information.

At Toyota, by comparison, engineering, manufacturing, purchasing, and sales report back to headquarters in Japan. Only there is the information disseminated among regions and functions.

It is an organizational scheme more befitting of a tiny manufacturer from a developing country than a global behemoth with aspirations to dominate the industry.

So when Jim Lentz, the American head of Toyota Motor Sales, testified that he had no power to order the recall of a vehicle, he was merely stating a longstanding fact of life at Toyota. He had neither the necessary information nor the authority to do so.

Executives at other automakers were stunned. As one competitor said, "Jim Lentz saying the American management team had no say in recalls was the thing that surprised me most. There was not a lot of cross divisional communication."

Toyota's archaic management structure has been an issue with its American executives for at least two decades.

According to one insider, action has been delayed in part because of a power struggle that pits the powerful U.S. sales arm against other divisions of the company.

Most recently that friction has been reflected by a dispute over the role of Toyota Motor North America, the New York-based holding company for North American operations.

In an effort to speed integration, a respected executive, Jim Press was moved from his job as head of Toyota Motor Sales to head of Toyota Motor North America.

In September 2006, Press made a presentation to Toyota's corporate board asking that his North American organization be kept informed of quality efforts by strengthening communication with Toyota Motor Sales, Toyota Engineering and Manufacturing, and company headquarters in Japan.

Presciently, Press was worried about safety. He detected a steady rise in Toyota's safety recalls, which, he warned, were denting customer loyalty.

To improve the company's relationship with NHTSA, the government's car safety agency, Press argued for better communication between North America and the company's technical side: "We need faster information flow, and more technical support when hot issues arrive."

Press's plea fell on deaf ears and Press became frustrated. Feeling he had been made into a "window worker," a Japanese term for an older employee with no responsibilities, Press left Toyota to join Chrysler a year later.

Belatedly, Toyota has shifted more power to Toyota Motor North America by appointing a popular executive, Yoshimi Inaba, to oversee both it and Toyota Motor Sales.

Inaba is said to have the ear of Toyota President Akio Toyoda. So far, however, any reforms he has put in place have been overwhelmed by the sudden acceleration recall crisis.

Toyota seems to have learned one lesson from all this: it now moves faster when controversies arise. It halted sales of the Lexus GX 460 within hours after Consumer Reports labeled it a safety risk.

Now it needs to move just as fast to fix its dysfunctional management structure.

Source;
http://money.cnn.com/2010/04/14/autos/toyota_management.fortune/

Will Toyota's problems hurt Honda?

NEW YORK (CNNMoney.com) -- Toyota's recall problems could hurt more than its own reputation. It may have damaged the valuable image of quality and dependability American buyers attribute to most Japanese car brands.

Many assumed that Honda Motor (HMC) and Nissan (NSANY) would be two of the bigger winners from Toyota's well-publicized recall issues because many Toyota (TM) owners are used to looking at other Japanese brands before they buy.

While Edmunds.com forecasts that Toyota's February sales will be down 10% from a year ago, Honda, No. 4 in terms of U.S. sales, is forecast to be up 24% while sales at No. 6 Nissan are expected to rise 38%.

But those comparisons are to last February -- the worst month for auto sales since 1981. And most experts believe that potential Toyota customers are sitting on the sidelines rather than shifting brands.

But Honda and Nissan could suffer collateral damage if consumers no longer give Japanese cars the same deference as in the past. It's one of the reasons that many experts think domestic automakers such as Ford Motor (F, Fortune 500) and General Motors and Korean automaker Hyundai Motor could be the biggest winners when the dust settles.

"Toyota is the flagship for products from Japan," said Jeff Schuster, director of global forecasting at J.D. Power & Associates. "It's hard to document how much it could hurt the other Japanese brands, but clearly it has potential to ripple through."

Figures from surveys conducted by Kelley Blue Book in recent weeks suggest that while current owners of Hondas and Nissans are staying loyal to those companies, fewer owners of other makes of cars would consider making a shift to Toyota's Japanese rivals now than before the crisis.

Hwei-Lin Oetken, vice president of market intelligence at Kelley Blue Book said there have also been small declines in how consumers rate the safety of Honda and Nissan in the latest survey.
Adding to the reputation risk for Honda is its own safety recall of 438,000 cars in February related to problems in airbags, although that was far less extensive than the more than 8 million Toyotas that have been recalled. Honda's problems also received far less media attention.

Honda spokeswoman Christina Ra said Honda hasn't changed its sales forecast due the problems with Toyota. She said all Honda can do is deal with its own recall and not worry about how it will be affected by problems at Toyota. But she conceded it could have a negative impact.
"Something like this in the news would undoubtedly cause questions and concern among customers," she said. "Only time will tell how that will shake out."

Nissan spokesman Fred Standish said he hadn't seen the Kelley Blue Book survey results so he couldn't comment on them, but he pointed out Nissan had record U.S. market share in January and is poised to report strong February sales.

"That's where the proof is, not in survey results," he said.

What makes the risk for the Japanese automakers greater is that the actual quality of the vehicles is now roughly the same as the quality of the two leading domestic brands, Chevrolet and Ford. That wasn't true a decade ago.

The J.D. Power initial quality survey found that for 2000 model year vehicles, Ford and Chevrolet vehicles had between 29% to 42% more problems than Toyotas and Hondas. But for 2009 model vehicles, the gap is down to between 1% and 4%.

The recall crisis has the chance to "level the playing field a little bit more in perception," said Schuster.

David Cole, chairman of the Center for Automotive Research, said without the recall crisis, many Americans would have gone on believing that this quality gap was still in place. But the recalls took away much of the edge the Japanese brands had in the eyes of potential consumers.

"The perception-reality gap is now gone," Cole said. "When you lose that aura, the whole deck gets reshuffled."

But others don't believe Japan's reputation for quality has been permanently damaged by Toyota's recalls.

"We don't think this is going to create a negative halo over the Japanese brands," said Lonnie Miller, vice president of industry analysis for R.L. Polk. "This is a big event right now, but I still believe that consumers have a short-term memory. Only if this keeps going and going could I see the perception gap closing."

Source;
http://money.cnn.com/2010/03/01/news/companies/toyota_honda/

Toyota adds another 1.1 million cars to floor mat recall.

The accelerator pedal, right, in a 2010 Toyota Camry is seen on the show room floor of Bobby Rahal Toyota in Mechanicsburg, Pa., Wednesday, Nov. 25, 2009. Toyota Motor Corp. said Wednesday it will replace accelerator pedals on about 4 million recalled vehicles in the United States because the pedals can get stuck in the floor mats.

Tonight Toyota has added another 1.1 million cars to its floor mat recall in September.

That recall now includes the these additional models:

2008-2010 Highlander;
2009-2010 Corolla
2009-2010 Venza;
2009-2010 Matrix;
And the 2009-2010 Pontiac Vibe.

This is in addition to the 4.2 million cars recalled in September for floor mat issues.
Here’s how Toyota plans to fix these cars:

“Toyota's remedy plan is to modify or replace the accelerator pedals on the subject vehicles to address the risk of floor mat entrapment, even when an older-design all weather floor mat or other inappropriate mat is improperly attached, or is placed on top of another floor mat. Floor surface modifications are also being considered and will be included in the remedy plan for any model for which it is deemed appropriate.

Initially, dealers will be instructed on how to reshape the accelerator pedal for the repair. As replacement parts with the same shape as the modified pedal become available, they will be made available to the dealers for the repair. Customers who have had the pedal reshape remedy completed will have the opportunity to receive a new pedal if they desire, after replacement pedals become available.

In addition, Toyota will replace any Toyota all-weather floor mat in a subject vehicle with a newly designed mat, free of charge. For those customers who have the previous design all-weather floor mat but do not need or want the newly designed all-weather floor mat, Toyota will recover the previous design all-weather floor mat and reimburse its price.”

Toyota gas pedal problem blogs since last year
Floor mat warning issued- September 29, 2009
Gas pedal sticking update- October 29, 2009
ABC News investigates gas pedal problem- November 3, 2009
Toyota announces fix for gas pedal problem- November 25, 2009
More gas pedal problems prompt recall of 2.3 million Toyota cars- January 21, 2010
Pontiac Vibe part of recall- January 24, 2010

Toyota halts sales of 8 models with gas pedal problems - January 26, 2010

Source;
http://www.kvue.com/news/consumer/Toyota-adds-another-11-million-cars-to-floor-mat-recall-82856627.html