“The Real Scandal Behind the Toyota Recall”

by Walter Olson on February 23, 2010

Some views you probably won’t be hearing during today’s highly orchestrated Capitol Hill events [Ed Wallace, Business Week] Regarding that “declining quality at Toyota” meme ["The Truth About NHTSA Complaints," TTAC] Sudden runup in count of deaths “linked to” possible Toyota acceleration is from newly filed reports on old cases [Fumento/CEI] Commentary from Richard Epstein [Forbes.com via Damon Root, Reason "Hit and Run"] Former trial lawyer lobbyist David Strickland, now helping lead charge against Toyota as NHTSA administrator, was principal author of ghastly CPSIA law [Amend The CPSIA] Also: links to ongoing Point of Law coverage.

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PointOfLaw Forum
02.23.10 at 9:02 am

{ 11 comments }

1 Tom T. 02.23.10 at 11:11 am

It doesn’t strike me as unreasonable to go back to earlier events that were presumably written off as anomalies at the time, to see if they fit any pattern that may have emerged based on facts discovered later. I can’t defend going back to 1992, but given how much trouble Toyota is having identifying the source of its problems, there doesn’t seem to be a firm basis for excluding incidents from 2003-09.

2 Todd Rogers 02.23.10 at 4:00 pm

When one of your major shareholders has the omnipotence to write, execute, and adjudicate all the laws both on and off the playing field, none of this should be a surprise. If I was an executive at Honda, Nissan, or any other free-agent auto player, I would be battening down the hatches and getting ready to pony-up to the shake-down cartel.

3 TC 02.23.10 at 7:01 pm

I find it “strange” that if a ford dodge or GM product so much as farted it was major headlines and instant court room action against them for the last 30 plus years!

During the same time frame tonka toyota has reaped nothing but praise, adulation and awards, not to mention sales figures to match.

Now in mere months, it seems, that tonka is being taken to the dirt pile. I’m not even suggesting such is without merit, but why did it take so long or possibly is there another wolf in the woods?

4 gitarcarver 02.23.10 at 9:48 pm

There is some talk that the “wolf in the woods” is who makes the vehicles, or rather what organizations the people belong to.

Toyotas are made in the US by non-union workers. Fords, GM’s and Dodges are made by union workers.

5 kimsch 02.23.10 at 10:37 pm

gitar

I believe that Toyota workers are unionized, but their contracts and work rules are not as debilitating as those of Detroit.

6 gitarcarver 02.23.10 at 11:29 pm

kimsch,

You are correct and I knew that.

I spoke in error. Please accept my apology.

7 kimsch 02.24.10 at 4:50 pm

gitar, apology not needed, but accepted with pleasure.

8 CarLitGuy 02.24.10 at 9:18 pm

Speaing as someone *close* to the industry, I’ll volunteer an opinion only. While Toyota may have gotten a *pass* from various consumer groups for many years, they haven’t gotten a *pass* from plaintiff counsel. Years ago, their quality probably was higher than steel coming out of Detroit, and they built on that reputation. Over time, in many (but not all) cases, that situation has reversed, and they’ve coasted on past laurels, just as Detroit has suffered from past (and, in some cases, well earned) reputations.

Toyota, and some of the other foriegns, also reaped advantage from avoiding the truck market for many years, keeping their CAFE numbers down, and avoiding what has become a green advertiser’s marketplace.

All that aside, the “Lemon Lawyers” of the world brought claims against Toyota, Honda, and the like as readily as they brought claims against GM, Ford, and Chrysler. Tellingly, in my mind, most of those same lawyers don’t drive Toyota product. When opinion matters (as it does on perceptions of “quality”), the source of the opinion matters. I won’t volunteer which brands most Lemon Lawyers do buy, but I do consider their opinion more valuable than Consumer Reports when it comes to what to buy.

BTW, if you think “you get what you pay for” is a hard and fast rule, you should read “Doppes v Bentley” out of CA. Or the recent decisions against MBUSA (Mercedes Benz) in the same venue. Ugly case in Washington (more Discovery violations) against another import vehicle manufacturer, Hyundai, in Washington, as part of a products lit matter. More expensive does not always mean better customer service, or more reliable transportation. The US Space Shuttle program, unfortunately, illustrates that point quite well. As did the Appolo project, and its predecessors.

Toyota, if anything, just entered the field American players have been faced with for years. Its election year politics, driven by a media frenzy. Our politicians are more interested in sound bites than getting to the bottom of this, or much of any other issue. Consider this, at best, a look behind the curtain at “the great and powerful Oz.” With no guarantee that its the “real” Oz…

Buyer Beware.

9 CarLitGuy 02.24.10 at 11:20 pm

correction –

that was supposed to read “…and exploiting what has become a green advertiser’s marketplace.”

Detroit focused on the profit in its truck markets, and got broad sided when gas prices spiked and going green was suddenly the fad. Left a lot of very expensive, very hard to move, steel sitting on dealer lots. Even today, w/ gas prices more moderate, and a significant number of consumers truly needing trucks for their hauling/towing capacities, Detroit continues to place huge incentives on those products to sell – due in part to old inventory. This practice cuts into both profits and resale value (resale, or residual, value is used to set lease costs, and is also widely perceived by the industry as an indicator of long term quality/reliability), ultimately shrinking sales in some markets (by driving up lease costs) and damaging the long term reputation of the brand. Huge incentives drive down quality perceptions over time by stretching the difference between MSRP and trade/auction values at resale. Heard a Ford ad just today for $11,000 off MSRP on a number of their supercabs. GM and Dodge similarly. None have found a way to wean consumers off of big discounts – Americans seem to want “a deal” more than they want a good price to start with.

10 MF 02.26.10 at 7:34 pm

More expensive does not always mean better customer service, or more reliable transportation. The US Space Shuttle program, unfortunately, illustrates that point quite well. As did the Appolo project, and its predecessors.

I get your point, but this particular illustration doesn’t cut it at all. The Space Shuttle and prior space programs have incredibly high quality levels. They just happen to have even smaller margins for error.

11 CarLitGuy 02.27.10 at 8:49 pm

As it happens, I’ve done some work on the shuttle project – sometimes, ignorance *is* bliss.

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