Toyota Could Have Learned from Mitsubishi, Ford

      February 13, 2010 08:35

      Toyota could have avoided the massive recall disaster that threatens to sink it if it had learned from mistakes made by Mitsubishi and Ford, experts say.

      In 2000 Mitsubishi was ordered by authorities to recall 630,000 cars after hushing up customers' complaints about defects with vehicles. In 2004, it was revealed that the company again tried to sweep many similar complaints about its trucks under the carpet since an incident in 2002, where a pedestrian was killed when a Mitsubishi truck went out of control because a wheel came off. That was the end for Mitsubishi as a major player in the car market.

      The parallels with Toyota are striking. Mitsubishi rapidly grew in the 1990s on the back of a fad for recreational vehicles. Thanks to its best-selling RV models, Mitsubishi expanded enough to overtake rival Nissan. In the process, it pursued a growth-driven and cost-saving strategy, launching a drive to save 420 billion yen in costs between 1998 and 2000 and achieving the goal one year earlier than planned. The carmaker in 2000 launched another company-wide campaign to save costs, this time by 650 billion yen. But by that time the obsession with cost saving had taken precedence over product quality.

      Staff faced disfavor if they took issue with product quality and delayed the release of new models in the company's attempt to beat rivals in a fierce competition by introducing new models. The carmaker was wrapped up in the illusion that it could maintain product quality with its good technology, although the quality of auto parts was downgraded due to Mitsubishi's excessive demands for lower supply prices. Whenever defects surfaced, the company took stopgap measures of changing the executives responsible, instead of finding fundamental solutions. And the communication channel between field workers and executives was also blocked.

      The second example is Ford's failure in public relations when a tire defect was found with the Explorer SUV in 2000. Ford was leading a boom of SUV models and recorded an enormous profit in the 1990s. In 1999, Bill Ford Jr., the great-grandson of the founder Henry Ford, took office as the executive chairman of the board, with ambition to help the automaker regain the lead in the global auto market. But the company experienced a nightmare the following year. Hundreds of people died due to a defect with the Explorer tires. Then Ford CEO Jacques Nasser pointed the finger at tire company Firestone during testimony before a House of Representatives hearing, and Bill Ford did not come forward to take responsibility. Public sentiment turned against Ford and its brand image was badly tarnished. Bill Ford had to fire Jacques Nasser and tried to save the company, but it was too late.

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