Over eleven million Toyota vehicles, across almost every single variety of vehicles, have been recalled due to a potentially lethal breaking system that could very simply break while and leave drivers speeding on the open highway. Almost a year later from the initial outbreak of the mechanical epidemic Toyota is finally plugged their failing sales. According to Consumer Reports Toyota has now lost is lead in the car industry and is now neck and neck with Ford.
Economists everywhere are exasperated by Toyota’s economic lost. The damage of the recalls devastated the sales of the company; very few individuals were willing to buy cars that could potentially kill them and their families. They lost them millions, if not tens of millions, of dollars in profit on cars that would have otherwise gotten sold. These implicit costs are more damaging than any potential expletive costs that have arisen, such as increased costs for parts because suppliers are unwilling or unable to supply parts to Toyota. This tragedy blights the once pristine safety image that Toyota had, back when it was considered perhaps the safest of car companies.
Akio Toyoda, the CEO of Toyota, confronted these issues at the Detroit Motor Show. After evading initial questions concerning the recalls, including two recent ones that cost them thirty two million US dollars because they were announced long after the company knew about the mechanical problem, he finally addressed the issue in a quirky manner. He pulled out a rice ball, a common fast-food from Japan that is a staple in student lunches, and announced that, “the same heart and soul in each vehicle, just like mothers [do to] their children’s rice balls.” This message does not cool the anger of the families with deceased members who died in Toyota accidents and left critics skeptical of Toyota’s short term recovery.
Meanwhile the rusting giant of the car industry, General Motors, have lumbered forward, closing the gap between them and the Japanese manufactures. Ford is matching Toyota step by step, innovating faster than they have in the last twenty years. Volkswagen has released a public statement outlining an agenda that it will reign supreme by 2018.
Each and every single one of these car corporations, except Toyota, benefited from these recalls. The opportunity cost that Toyota has accumulated is staggering, the deficit that will arise due to these recalls has equalized the market. If an incident like this happens again Toyota will not survive, which may not necessarily be a bad thing. Toyota’s plunder has breathed new life into the international car industry, at great expense to Toyota.