After reams of bad publicity involving unintended acceleration and flood of recalls totaling to nearly 9 million vehicles in the past 12 months, Toyota is again under National Highway Traffic and Safety Administration (NHTSA) investigation for another potential safety issue: sudden-stalling problems on its Corolla and Matrix models.
This investigation is the latest blow to the company’s reputation. But Toyota execs admit that this is more than just a battle for reputation. Toyota also faces 200 lawsuits involving faulty throttles and other types of problems, including liability claims for 79 deaths and hundreds of crashes.
The automaker is already addressing the problem on several fronts. Toyota has repaired 48% of the 5.4 million recalled cars due to potential pedal entrapment by an unsecured or incompatible floor mat, which Toyota defends as the root cause for the unintended acceleration. 80% of the 2.6 million cars in a separate recall aimed at fixing potentially faulty or sticking accelerator pedals have also been fixed. Analysts estimate that the cost of all of these measures is to exceed $2 billion.
Those estimates do not include a significant cost that Toyota spends for aggressive sales incentives such as, cash rebates, 0% financing, etc. It’s the automaker’s way to keep its older baby-boomers customers happy, since recent buyers haven’t had much good experience to speak of. Toyota’s incentive spending has jumped from $1,400 per vehicle in January to more than $2,200 today.
It has taken Ford nearly a decade to overcome awful publicity for its faulty Firestone tires on the Ford Explorer. Audi took almost 20 years to rebuild its reputation for its own unintended-acceleration controversy in the late 1980s. Despite richer incentives, Toyota’s market sales have only increased a meager 2.8% so far this year. It’s going to be hard to convince back consumers that their cars are safe. And with the NHTSA spotlight still on the automaker, can Toyota ever bounce back?
