Posts Tagged ‘Toyota’

Almost a year ago I wrote a post about Toyota and the troubles they were having with recalls and sudden acceleration problems.  The post and ensuing comments almost entirely dealt with the issue as a proxy for capitalism in general.  The Wall Street Journal reports today that the NHTSA has released its findings from a 10-month study (completed jointly with NASA) and what was its key conclusion?

The NASA/NHTSA study highlighted a delicate issue for auto makers and regulators: The vast majority of sudden acceleration incidents studied were determined to be the result of driver mistakes. The NHTSA said it will continue to study measures aimed at reducing the risks of unintended acceleration caused by drivers mistaking one pedal for another. (emphasis added)

I would be curious to know what that number or percentage is, because the article is clear to point out that sticking pedals and sliding floor mats were still responsible for some – but “vast majority” is pretty heavy language that would indicate that maybe Toyota was not the evil scourge of capitalist greed that people feared, and that maybe there was a bit of a witch-hunt put on for the media.  How about this from the Transportation Secretary in the same article:

At a Congressional hearing last year, Transportation Secretary Ray LaHood had suggested that consumers should stop driving their Toyotas. On Tuesday, he said: “We feel that Toyotas are safe to drive.”

That’s a convenient swing.  Meanwhile Toyota has been dealt huge losses from the lost consumer confidence, that turns out to have been misguided by runaway stories and a deluge of what must be frivolous lawsuits.  To be fair, the article states that there are groups that reject the findings in the report… so there is the possibility that this story could come back again full circle.  I don’t pretend to have a solution (or even to want a solution) to this day and ages immediate news spread – perhaps that is just a cost of doing business.  But I would be amazed if somehow the news spreads as quickly or furiously about the results of the findings?  And that is the point of this post – who will apologize?  The people who sued when they knew (or at least later learned) that they were at fault?  Will the newspapers print bold headlines declaring Toyota safe?  Will the congressional members who called for Toyota executives to be grilled on national television say sorry on that same stage?  Don’t hold your breath.

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YO In Trouble

This means I'm cool

When I was growing up it seemed that everyone thought it was cool to scrap off the “to” and “ta” on the back of their Toyota pickups so that they drivers behind them saw just a YO.  Needless to say it was about as cool as putting a NOTW sticker on your car – according to some.

Well now a couple decades later and Toyota is not a tiny little maker of cheap pickups, but the largest auto manufacturer in the world.  And in case you haven’t been reading or watching the news, they are in a bit of a pickle.  They are recalling vehicles faster than a UAW worker will threaten strike over missing a break Lindsey Vonn on a downhill slope.  There is no shortage of discussion in business schools and papers about what went wrong at Toyota, and what management needs to do to correct the damage done.  Well, my brother Greg wants to know, “How come CAI has no reporting on the Toyota fiasco? Doesn’t this have something to do with the free-market and capitalism and all that?”  As any reader of CAI will know, I am fierce defender of capitalism and the free market.  But what needs commenting?  The market is acting.

Toyota’s stock has dropped $20 in one month, as investor confidence is shaken and stockholders foresee huge revenue losses amidst lawsuits and recall costs.  And it will take a while for it to recover (though I think through this all, consumers will still prefer Toyota over Ford) but eventually with their business skill it will recover.

But more than share price the point is, or that I think maybe Greg was inferring is… is this a failure of capitalism?  Did greed outweigh the need for safety?  Proof that the free market can’t police itself?  I don’t think so.  I don’t believe there is a grand conspiracy behind this, but if there is it will come out and punishment will be handed down.  Capitalism isn’t perfect, as I’ve stated many times, I just believe it is the best of the options out there.  Toyota as a private company is no more immune to failure than the IRS.  The special aspect of the free market is choice.  Toyota made a mistake or failed in some way and I have choice of whether to trust them again, or not.  If a government institution or nationalized company makes a mistake, what is my choice?  Where do I turn to?

An economic treatise may provide little solace to those affected by the deaths reported in this debacle.  But they will get their day in court and sue for wrongful death, which is a sad somber fact of business.  You can try to sue the government if they allow you, but does it cause less pain to sue one over the other?

As I’ve quoted before, “…the trouble with capitalism is capitalists”, but the problems with other systems are the systems themselves.  So I suppose you could correctly view this as a failure in capitalism, as long as you viewed the results provided by other systems as bigger failures.  If Toyota was remiss in anyway we will see the results in how people respond, and they are responding in lawsuits galore.  But the market is working.  Capitalism is functioning.  I hear lots of questions and complaints, but I’ve yet to be offered a better alternative.

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