Can Ford and GM Take Advantage Of Toyota’s Problems?

The damage to Toyota from the massive worldwide recall could become more than fixing a technical problem, and is likely to affect the image of the number one car maker in the world. Toyota’s brand stands for affordable reliability, quality and  technical innovation. But now the brand image has taken a hit, and Toyota may  have a hard time fully recovering from it.

Since the announcement of the global recall for an accelerator problem the sales have plummeted. The scale of the recall is unprecedented in the global car market. Toyota’s executive Vice President, Shinichi Sasaki, who oversees quality control at the top automaker, acknowledged yesterday that “There are perceptions Toyota was slow to respond”.

Sasaki added that the company had made “finding a fix a top priority”. Toyota’s VP also said he didn’t yet know how the massive recall was going to affect the sales, and added that generally after a recall sales drop by about 20 percent in the first month and then recover gradually. However, it is likely that the damage to the brand will be greater in this case.

“This is unprecedented in having caused this huge problem for customers,” said Sasaki.

The accelerator recall affect 4.2 million vehicles worldwide, and 2.3 million in the US alone. It includes some of Toyota’s best selling cars such as the Camry and Corolla. It took a launch of a probe by the US National Highway Traffic Safety Administration for Toyota to make the gas pedal recall. Some official were already recommending the recall in late 2009.

In a news conference held in Japan yesterday, Sasaki admitted  that Toyota had received consumer complaints as early as 2007 concerning the gas pedal of its Tundra pickup truck. The pedal would not return quickly when released. Toyota Motor Corporation is now facing at least 12 lawsuits seeking class-action status in the US and Canada connected to the sudden acceleration problem.

“Toyota has long known about the defect with their throttle control and has done too little too late to correct it,” said Attorney Robert Hilliard representing plaintiffs in a legal action against the firm filled in a Texas federal court.

Toyota could end up losing its lead in the global car market due to the massive recall, and the way they have handled the situation so far. The question is now to see which of  Toyota’s competitors will take advantage of this situation to reclaim some share of the global market. It is of course likely to benefit Honda & Nissan, but it could also put back Ford and General Motors on a much better track.

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