Toyota Pulls General Motors

 

Consider this: Over the past decade Toyota has gone against longstanding traditional mores governing parent company/parts supplier relationships by putting the screws to their suppliers even in the best of times in order to milk the most profit out of each part. In addition to abusing their suppliers, Toyota has put international growth above all else (even by their own admission). After the first indications that this growth strategy was taking its toll on vehicle reliability (sludging problems and other issues in the early 2000s), they responded not by becoming more proactive about emphasizing reliability, but instead spent tens of millions lobbying to either kill or postpone new safety regulations and limit the scope of their mandatory recalls.

When their efforts to skirt around other costly recalls finally began to catch up to them, they relented and issued a massive recall that still omitted some of the cars the NHTSA has received complaints about (i.e., the pre-2007 Camry). This recall was quickly "resolved" with a fix that not everyone is certain even solved the main problem in the first place. In response to the sales numbers lagging from the recall, Toyota then created incentives the likes of which they have never before imagined, which will certainly lead to a further devaluation of the other Toyotas on the road and the erosion of one of their biggest selling-points, resale value.

It doesn't take a historian to see the General Motors-esque pattern developing here: Profit Above All Else -> Short Term Thinking -> Negative Results from Short Term Thinking (unreliability) -> More Short Term Thinking (lobbying to avoid repair costs rather than simply recalling the product and fixing future models) -> More Negative Results (increasing numbers of complaints and/or deaths) -> More Short Term Thinking (hastily executed recall that may not have even solved the problem entirely) -> Product Devaluation -> More Short Thinking (incentives) -> Further Product Devaluation.

Heck, GM got it down to a science in the 1970s and ‘80s, right before they were forced to pay the price. One has to wonder how long Toyota will play the old-school GM game, and what kind of impact this will have on them in the long term. As anyone familiar with the history of the domestic auto manufacturers knows, you can only mortgage against public goodwill and favorable opinions about your company for so long before your company's reputation is upside down and your credit is damaged irrevocably.