Recalls Cause More Problems For The Auto Giant

It was discovered as early as December of 2008 that Toyota Motor Corp. would take its first operating loss since prior to WWII, when the company was founded. It was in 2008 or perhaps even earlier, that the  Japan’s Toyota Shokku was realized.

The world economic crisis has certainly affected Detroit and Europe as well. But many Americans believed that Toyota was unaffected by the global meltdown. This could now be hyped as America’s Toyota Shokku.

Toyota, a city located in the region of Aichi, Japan, has been in competition with its sister city in Detroit, Michigan. The town that used to be called Koromo, changed its name to Toyota in 1959. In 1960, Toyota City was competing with Detroit.

The company founded by Kiichiro Toyoda in 1937, has become the world’s largest automaker by sales. The company includes 522 subsidiaries.

Toyota Motor Corp. and Toyota Financial Services form the Toyota Group, which is considered to be one of the largest conglomerates in the world.

But, in May of 2009, Toyota reported a loss of $4.4 billion. Contrary to the perception of most Americans, Toyota has felt the crunch of the global economic crisis.  And now what has hit Toyota even harder – recalls of eight of its best-selling vehicles in the United States. This unwanted publicity has become overwhelming for Toyota.

How bad have sales plummeted in the United States? Sales for Toyota have dropped 16% since January of 2009, according to The Japan Times Online.

The eight popular models that were suspended due to faulty gas pedals, account for nearly 60 percent of Toyota’s total sales in the U.S. And as of late, the Prius hybrid model has had braking problems, which has caused Toyota to recall thousands of Prius cars, and has prompted an investigation by the U.S.Congress.

In contrast, Ford saw sales increase in January 24.4%. General Motors increased sales 14.6%, while Chrysler sales dropped 8.1%.

It’s difficult to determine how severe the recalls have damaged Toyota’s brand. The damage is obvious, painful, and very relevant. But it is too early to tell if  a large volume of Toyota’s customers will be swayed by American automakers.

GM, Ford, Chrysler, and Hyundai are offering rebates plus other incentives to attract Toyota owners. Can Toyota fix the problem soon enough?

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