Toyota May Recall All Of Its Cars

Toyota Motor (NYSE: TM) announced that it will recall 1.7 million cars, most of them in Japan. The vehicles may suffer from fuel leaks.

The new recall can be added to another set of large ones about a year ago. Across the globe these totaled nearly 8.1 million vehicles. Most were for gas-pedal problems. Toyota has had several other recalls since then, but none match the size of the one made today.

Toyota, by some miracle, has kept its No.1 spot among car companies for worldwide sales. It has held that position for three years, having taken it from the floundering GM (NYSE: GM). GM has moved back into contention for first place, and VW says it will takeover the spot before the end of the decade.

Some experts claim that Toyota has been able to hold on to customers and get new ones because of “brand equity.” Toyota developed its reputation for quality cars over a period of three decades. That reputation cannot be torn down in a year. And, Toyota remains one of the leading innovators in the industry. Its hybrid Prius is so popular that it is the top-selling alternative energy vehicle in the world.

Toyota sold 8.4 million vehicles last year, up 8% from 2009. Last year was a rough one for car sales in the US, EU and Japan, so the success of the company is extraordinary.

Toyota cannot seem to get out from under the problem that the quality of its cars has become spotty. Too many things go wrong with too many models. That may be due to the rapid expansion of its manufacturing facilities around the world. Toyota needed more and more plants as demand for its vehicles rose. The firm admits that it could not make sure each of these facilities could match the rigorous standards of its facilities in Japan and the US.

Toyota’s expansion and the manufacturing problems that have accompanied it will not go away soon. What it took years to break will take years to put back together.

With Toyota recalls now above 11 million in the last 12 months, and more likely to come soon, the world’s No.1 car company might as well recall all the vehicles it has made in the last five years and inspect them. It would allow Toyota to get out in front of inevitable future problems

Douglas A. McIntyre