As many of you may have heard and seen in the news, Toyota recently found that many of their most popular models produced within the last few years had a major defect. The defect is related to the accelerator sticking and is something that they have been researching for a few years now. This defect has resulted in Toyota having to recall over 2.3 million vehicles. For years Toyota has been a name synonymous with quality and safety. With this detrimental blow to their reputation Toyota is likely to continue to see a major drop in sales and shareholder value.

What’s my point you ask? As the article’s title indicates, “Toyota’s reputation takes a huge hit”. Reputations in business are crucial to succeeding no matter what the industry. Lifelong Toyota supporters may be inclined to think twice about repeat purchases and those considering the brand for the first time might just reconsider. Mistakes like this inflict a domino effect of problems for the organization involved. Look at the recall of the arthritis drug Vioxx from Merck and the effect that had on sales for the company. Merck is still facing lawsuits and settlements related to the 2004 removal of the drug from the market. Merck will have to continue to defend its reputation for years to come, just as Toyota will need to rebuild their reputation.

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Jennifer Ulrich

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4 comments so far,Add yours

  1. Toyota has a brand name that is above reproach. The recent recall will be overcome and it will again be the flagship of the automobile industry.

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  2. I disagree that Toyota is above reproach...
    Reports of other issues are now starting to surface about Toyotas. Mainly, bad brakes on the Prius and the fact that the U.S. Government had to put pressure on Toyota for the first recall to even take place. Now that the illusion that Toyotas are perfect is gone, expect to see more and more consumers coming forward with complaints about their vehicles.

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  3. I didn't see a big government outcry when the big three auto makers had recalls. The federal government has a huge stake in GM and is trying to scare people into buying "American". Check out where your "Foreign" Toyota is made. In the good old USA.

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  4. I think you are missing the point about the "government outcry". The difference between these Toyota recalls and recalls that have happened with other manufacturers is; these recalls are being investigated to see if they were first "covered up" by Toyota (ie. lobbying to have the "floor mats" issue be the culprit instead of faulty accelerators). They are also investigating why it took so long to do the recall, since issues have been reported for a decade now.

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