Cornered Toyota Begins To Battle Back

It probably should have not gotten to this point, but the Toyota Motor Corporation now finds itself battling its critics in order to salvage its once golden reputation.

Toyota Responds

After weeks of relentless government and media pounding, Toyota has been responding to these complaints by showing statistical proof that its cars are well within safety guidelines and that is has responded aggressively by temporarily removing from the market eight affected models and making repairs to customer vehicles.

In the Feb. 22, 2010 issue of “Automotive News,” Toyota division chief Bob Carter explained that it took just 13 complaints about sticky accelerators to lead Toyota to recall 2.3 million vehicles, suggesting that the criticism far exceeded what was warranted.

At the same time Carter made no mention of some 2200 other cases of vehicle acceleration dating back at least a decade. Research by consumer advocates including Sean Kane reveal at least two hundred Toyota wrecks over that time leading to as many as 19 fatalities.

Toyoda Testifies

Toyota President Akio Toyoda is set to testify this week before a House Oversight and Government Reform Committee this week about the recall which has now reached some 8.5 million vehicles globally.

Perhaps most damning for Toyota is an internal document submitted to the oversight committee where the company boasted that it saved itself $100 million by negotiating “an “equipment recall” of floor mats involving 55,000 Toyota Camry and Lexus ES350 vehicles in September 2007.” (see ABC News: Documents: Toyota Boasted Saving $100M on Recall) Critics have fastened on that memorandum as proof that Toyota placed profit ahead of customer safety.

Social Bomb

Toyota’s unfolding crisis points to a weakness that goes beyond safety. And that is the company’s handling of a response in the face of withering criticism. Ever since the runaway Lexus story erupted last August, killing a California family of four, the automaker has been playing defense if responding at all. That poor response and lack of preparation has fueled criticism as Toyota has given people the impression that they are above the law or simply do not care.

While some of the criticism suggests opponents are piling it on, Toyota waited months while their critics mounted a serious challenge to the way the automaker goes about doing its business. Twitter became the launching ground for attacks against Toyota with Toyota’s PR team offering a tepid response or watching silently as a handful of tweets soon became a torrent.

Photo Credit: Wikipedia Commons

Cash For Clunkers Doesn’t Go Far Enough

I am not one for seeing the federal government create endless taxpayer assistance programs, believing that the consumer is the best party to determine what he or she should buy. However, I’ve resigned myself to seeing Congress and the Obama administration spend money like no administration before it, supposedly in a bid to rescue us from the current economic slump or to pass new programs designed to expand government control.

Older models like the Ford Bronco may qualify under the federal government's Cash For Clunkers law. However, your old ride must be scrapped or recycled and you'll get just $3500 to $4500 toward a trade in.

Cash For Clunkers is one program that I want the federal government to spend money on for the simple reason they have been spending money everywhere else, but with little impact on the economy. Any program that actually puts cash in the consumer’s hand is better than tossing those funds at bankrupt financial institutions, car companies and other larger businesses who have failed. At least with the consumer you have someone who isn’t as likely to squander their monies, carefully choosing what they want to buy and how much they’ll pay.

House Bill Doesn’t Go Far Enough

However, I am disappointed by the Cash For Clunkers bill (H.R. 2751) that was passed by the US House of Representatives yesterday, one that will barely have an effect on the auto industry. True, eligible buyers will be able to use a voucher worth $3500 to $4500 toward the purchase of a new, fuel efficient vehicle, but the vehicle they must trade in has to get under 18 mpg.

Consider this — over the past decade or so, there have been only a handful of vehicles that return such awful gas mileage. Heck, even some editions of the Corvette get up to 28 mpg on the highway! Sure, a few newer models like the Ford Excursion and Hummer H2 qualify, but if you think that someone will trade these vehicles in for a paltry credit, that’s crazy.  After all, qualifying vehicles must be scrapped or recycled and no additional monies will be given even if the book value is well above $4500 as it is for some newer versions of these models.

Your Dead Clunker Doesn’t Qualify

Lest you think that you can take that beater sitting in your back yard and trade it in, you’ll need to think again.  An important requirement with this program is that vehicles must have been registered and insured for the past year to avoid having people push in inoperable cars for credit.  Congress may have set aside four billion dollars for this program, but they’re not about to let unregistered and uninsured junkers qualify which is actually a good thing.

There is a chance that as the U.S. Senate takes up this bill, that some of the parameters will be changed. I believe sales would be stimulated if just about any older vehicle, let’s say eight or ten years or older was included in this program. As it stands right now, the law will provide a little bit of help, but nowhere the results that Germany and other European countries have experienced since launching their own scrappage programs earlier this year.

Cash For Clunkers is one of the better ideas floated in some time. I only wish that our elected representatives planned to offer one that would truly stimulate the economy as this version of the bill will have little or no effect.

Source: Detroit Free Press

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