This Toyota Recall is Different (TM)

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By Jon C. Ogg Updated Published
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After the hit to its reputation for its slow-motion recall of more than 8.5 million cars earlier this year, Toyota Motor Corp. (NYSE: TM) has apparently learned its lesson. The company has revealed a problem with the electric water pump in about 650,000 Prius models. Some 380,000 were sold in the US.  The company will replace the pumps before it receives any reports of accidents or injuries caused by the defective part. Actually, the problem is unlikely to cause an accident or injury unless a driver over-reacts when the ‘Check Engine’ light comes on.

The water pump, which cools the hybrid system, not the engine, could be slow to activate. That would raise the hybrid system’s coolant temperature and trip the car’s ‘Check Engine’ light. If the components get too hot, the Prius automatically reduces power to prevent further damage.

Toyota characterizes the recall as a “customer satisfaction campaign”, according to Agence-France Presse.  A Toyota spokesman also said the recall was voluntary, not legally required.

While Toyota’s response to this problem appears to be quick and thorough, the company needs to build its cars better the first time around. A continuing pattern of recalls, voluntary or not, could erode Toyota’s quality reputation. The company would do well to remember that its reputation for quality is what helped it pull through the earlier debacle.

Toyota is trying though. On a blog hosted by Consumer Reports magazine, a reader noted that Toyota is repaying him the $500 he spent to have this problem fixed last summer. “I am very happy,” he reports.

Toyota needs that kind of response from its customers. And what it needs even more is sharper focus on quality as its cars leave the factory.

Paul Ausick

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.

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