https://www.economist.

com/banyan/2011/01/26/the-strange-thing-about-toyotas-latest-
recalls

The strange thing about Toyota's

Toyota's latest recalls

latest recalls
The Japanese carmaker's latest announcement suggests further problems in its
supply chain

Banyan
Jan 26th 2011
by K.N.C. | TOKYO

BEFORE the hue and cry, perhaps a raised eyebrow. There are a few strange
things about Toyota's worldwide recall of 1.7m vehicles, announced on January
26th.

First, the breadth: no fewer than 21 different models are affected. Second, the
dates: ranging from 2000 to 2009. Third, the problems: they include everything
from the tightness of fuel-pressure sensors in 245,000 Lexus cars in North
America to faulty spare-tyre carriers on exactly 6,175 Daihatsu mini-trucks in
Japan. Finally, the impact: no reported accidents or injuries.

Thus the oddity. If the problem is not a part, nor a specific time period, what
does it all actually mean?

One likely scenario is that the company simple chose to bundle together a gaggle
of ordinary product hiccups into a giant, omnibus pre-emptive recall. It may be
overcompensating for having under-reacted a year ago, when it was criticised for
ignoring cases of sudden acceleration in America that in some cases led to deaths
https://www.economist.com/banyan/2011/01/26/the-strange-thing-about-toyotas-latest-
recalls

(and resulted in a recall of 3.4m vehicles). It is certainly better than having small
slivers of bad news trickle out over time.

The recall comes just as Toyota retained its crown as the world's biggest
carmaker, having sold 8.4m vehicles in 2010 despite the dent to its reputation.
American sales were largely flat, at 1.8m cars, European sales dropped 11%, but
sales in Asia outside Japan roared ahead by 24%.

In Tokyo, Toyota's shares barely budged, falling a mere 1.9% on a day that the
overall market dropped 0.6%. The Japanese might be excused for feeling a bit
more uneasy. Unlike a year ago, when Toyota's recalls mostly affected cars in
America and the Japanese comforted themselves that domestically-produced
vehicles were manufactured to higher standards with Japanese parts, the latest
recall mainly involves 1.3m Japanese vehicles.

If the current problems fit any pattern, it might be the same as last year's lesson:
Toyota's growth came at the expense of proper surveillance of its supply chain.
There used to be more than 30,000 parts in a car and Toyota excelled at putting
them together; now there are around 5,000 modules from many different
suppliers.

"But the suppliers are now more important because they assemble the modules,"
notes Ulrike Schaede of the University of California in San Diego, who has
studied Toyota's production problems. "What is new is that if these were cars
made in Japan with Chinese parts and it is not working well, that's interesting.
You might as well make them in China, and give up on the pretence that you're
good at putting them together," she says.

Read on: Toyota's boss seeks inspiration from rice balls

Banyan
Jan 26th 2011
by K.N.C. | TOKYO