Saturday, February 6, 2010

How much does Toyota have to worry about?

How serious are the problems facing Toyota? Gordon Pitts at the Globe and Mail has this to say:
As a management guru-in-training, U.S. business lecturer Steven Spear embarked on pilgrimages to a shrine of industrial efficiency about 320 kilometres west of Tokyo.

His destination was Toyota City, an industrial centre of 400,000 dominated by its major employer, Toyota Motor Corp. (TM-N74.712.934.08%) From this base, the car company had spawned an industrial revolution – as well as rewriting the vocabulary of business to encompass terms like just-in-time, total quality and lean manufacturing.

As he observed the company up close, something nagged at Mr. Spear. Toyota had pledged in the late 1990s to become the biggest car company in the world. It embarked on extraordinary growth, spawning new models, entering new regions and enlisting new suppliers outside its traditional family.

But as it grew, its old system of mentorship broke down, Mr. Spear says, and the culture of quality was not extending to outposts far from Toyota City. While he admired Toyota and spent much of his career studying it, Mr. Spear sometimes worried the company was an accident waiting to happen.
That makes it sound really bad. Maybe it is bad, but it looks like those who follow these matters particularly closely aren't too worried about these problems as regards actual safety:

Insurance rates for drivers of Toyota vehicles shouldn't be going up because of the recent recall, a spokesman for the Insurance Bureau of Canada says.

Pete Karageorgos told CBC News a recall doesn't have any impact on the way rates are formulated.

"Recalls are basically issues that the manufacturers have with the vehicles, and what insurers look at over a period of time are the claims cost that a person or car model may have. How much does it cost to repair a vehicle and how often are certain vehicles involved in accidents — are they more expensive to repair?

"If there's a determination that there might be a fault with the vehicle [in an accident], then that would be investigated obviously through the use of engineering reports," Karageorgos said.

"If something is determined to be caused by a failure of product design where the manufacturer's at fault, insurance companies will typically then subrogate against that responsible party," he added.

From the CBC. Since insurance companies would no doubt grab the money if it was worth their while (can you imagine them giving anyone a break out of the kindness of their hearts?) one must conclude that they don't think it's worthwhile. Most likely, they expect the cars to be as safe as ever after this recall is dealt with. Of course, the buying public may not react the same way... but I suspect Toyota will come out of this fine in the long run.

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