Analysis: Toyota's Competitors Hope They Don't Face Same Fate

By: Dan Farber
Topics: Automakers

(AP Photo/Shizuo Kambayashi)

Toyota's President Akio Toyoda is about to get U.S. government is conducting a criminal investigation, and has issued subpoenas asking Toyota and its subsidiaries to produce documents related to vehicle malfunctions.

Toyota documents from July 2009 show a company proud of saving money by limiting recalls and avoiding more intense scrutiny by the National Highway Traffic Safety Administration (NHTSA) and the Office of Defects Investigation (ODI).

In other words, Toyota is in a whole lot of trouble, the kind of trouble that could potentially bring the Japanese company to its knees, which are already bowed.

The rush for global growth and profits, a secretive corporate culture and what appears to be a lax regulatory environment have all contributed to Toyota's cascading troubles.

But is Toyota that much different than other carmakers in its drive for growth, profits and avoidance of costly recalls?

It may be that Toyota will pay for the sins of its auto-manufacturing brethren, unless they experience the kind of perfect storm that has altered Toyota's public image from industry leader to the worldwide face of corporate of malfeasance if the forthcoming criminal investigation finds the company guilty.

As in many cases of corporate malfeasance, it's the cover-up and obfuscation -- such as delays in addressing serious problems reported by customers -- that sink management teams faster than the Titanic (the ship sank after hitting an iceberg in less than 3 hours).

Competitors are paying close attention, and praying that they can profit from Toyota's loss of face. But they are also looking deeply inside themselves, at their own recall policies and practices, and praying even more fiercely that they don't end up in the same sinking boat.

Daniel Farber is editor-in-chief of CBSNews.com.

Dan has more than 20 years of journalism experience. He has served as editor in chief of CBSNews.com, CNET News, ZDNet, PC Week, and MacWeek.
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by rickstas February 23, 2010 1:24 AM EST: The US government and media is unfairly trying to eliminate Toyota on behalf of US makers. There was recently a single story about a brake issue at Ford and you never heard about ir again.; Reply to this comment


by Lennart_2010 February 22, 2010 11:50 PM EST: I believe Audio had the same experience with paint many years ago...
Making their cars corrode way early.

They learned their lesson and now they have galvanized chassis.

How much it costed... how many fewer cars they sold until they had a solution...

To cut costs over and over again - will for sure sooner or later be visible in quality...

Most car makers do experience recalls and I believe one of the first things that happen to a new model is that it is recalled and SW is upgraded.

Although to not take care of it immediately is probably not advisable - sooner or later the truth comes out !

Toyota makes good cars - and will continue to make even better cars...
Although it will take time to build up customer relationship and confidence again.

Comparing to many other cars - perhaps this is a wake up call... not to let down your guard...; Reply to this comment


by ajapierce February 22, 2010 10:16 PM EST: Too bad American auto companies didn't decide to do this before they needed to be bailed out. Had they looked inside their companies and cut out the wasteful spending, wasted advertising money and focused on their product, they wouldn't of had a 10 year technology gap that got Toyota to the #1 car company.

I'm sure there is still a lot of far in the Automakers, but USA and abroad that would bring the cost of buying a car down.; Reply to this comment