FEATURE: Toyota's car troubles

The president of Toyota has made an unreserved apology for the string of embarrassing recalls plaguing the carmaker.

The company says more than 400,000 of the current model Prius hybrids, sold in 60 countries, will have go back to the dealer to have a brake problem rectified.

The Prius recall has further damaged the Japanese company's reputation for quality and comes after Toyota recalled more than 8 million other vehicles because of slipping floor-mats and sticky accelerator pedals.

Scott Alle

Last Updated: Thu, 11 Feb 2010 11:48:00 +1100

Japan's Transport Minister Seiji Maehara has berated Toyota's president in front of reporters, saying the car-maker should have listened to its customers earlier and respected their complaints

The president of Toyota, Akio Toyoda, says he is ashamed, but has asked for patience while the company fixes the problems.

"Let me assure everyone that we will redouble our commitment to quality as a lifeline of our company," he said.

"All of us at Toyota will tackle the issue in close cooperation with our dealers and with our suppliers, together we will do everything in our power to regain the confidence of our customers."

But with lawsuits hanging over its head, the company faces billions of dollars in costs and it's carefully cultivated reputation for reliability and quality may never be the same.

Toby Hagon, editor of website drive.com.au says the recall has been a disater for the car-maker.

"Everyone seems to be wrestling for information and trying to come up with some sort of answer and work out what's going on," he said.

Rated the most valuable brand in the car industry, Toyota is struggling to contain the damage from the worst safety and quality control crisis in its long 73 year history.

What's happening, according to industry analysts, is that the company's growth has outpaced its management structure.

It didn't have in place the mechanisms to identify and deal with the problems before they developed into recalls.

The most recent of these affects the flagship hybrid, the Prius, which helped establish Toyota as the market leader in new greener technology, and 400,000 of which will need an upgrade to their braking systems.

Company President Akio Toyoda apologised profusely to customers and said its engineers needed more time to iron-out the problem.

Complaints started surfacing two weeks ago but now at least one lawsuit is underway, from a Californian woman who alleges her Prius is dangerous to drive.

Motoring expert Toby Hagon says the fact that quality control issues have affected the hybrid is major blow.

"The Prius is the environmental hero car for Toyota, and this is a car that you know particularly appeals to that younger generation as well and it obviously does no good for the image and particularly the image of hybrid cars," he said.

The cost of rectifying all the faults across nearly a dozen models including the luxury Lexus marque is esitmated to be as much as $US2 billion, but Mr Hagon says the damage to Toyota's reputation could potentially be even greater.

"For a brand like Toyota's that's literally built its reputation on quality and reliability, you know, the potential this has to unravel a lot of that is enormous," he said.

"So that's why I think its crucial that they start to kick themselves into gear and really start to handle this thing properly rather than let it flounder the way it has."

With crisis management firmly in place, analyst Ian McGowan, from Ibisworld, expects Toyota to re-build trust with its millions of loyal customers.

"Toyota's probably a little bit surprised by the reaction to this but they'll work diligently over the next few years to sort of rebuild that reputation," he said.

Billions have been wiped-off the value of company, and Ian McGowan says, even though he's the grandson of the founder, Akio Toyoda may not be at wheel when the repairs are completed.

"The shareholders are definitely concerned about this," he said.

"There's been a significant impact on the share price already and unless the company starts to make solid moves in managing the problem you'd expect to see that share price come down even further.

"And the lower the share price gets, the more pressure there's going to be from, particularly from, institutional shareholders for there to be some significant action at the top."

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