• 20
  • October
    2010

In April of 2008, Toyota recalled more than 500,000 Matrix and Corolla models sold between 2003 and 2004. This August, the company announced that an additional 1.13 million Matrix and Corolla vehicles manufactured from 2005 to 2008 would be recalled to repair defective electronic control units as well. In July, the company recalled 480,000 Avalons and Land Cruisers due to a steering defect.

These are just the latest in the string of recalls by the company. Since Toyota began recalling vehicles due to an unintended acceleration and other safety issues, the total number of vehicles recalled worldwide has exceeded 11 million according to a report in The Los Angeles Times.

Further damaging to the company was the $16.4 million dollar fine issued by the U.S. Department of Transportation (USDOT). According to a CBS report, this is the largest fine ever levied against an automaker. The USDOT assessed the fine after determining that the company knew about defective gas pedals and unintended acceleration problems in September of 2009, but did not issue a recall until late January 2010.

Recalls Take a Toll on Company's Reputation

Toyota's quality has long been the centerpiece of the company's marketing approach. But recent surveys show the dramatic effect that the company's lapse in quality has had on its brand. In a Kelly Blue Book survey conducted in the first quarter of 2010, Toyota fell from number one in customer loyalty, down to number three.

A recent Bloomberg survey found that 4 in 10 consumers say that they would "definitely not" purchase a Toyota brand vehicle. Less than half of those surveyed had a positive impression of Toyota, while 36 percent had a negative view of the company.

New Legislation

At the time, the $16.4 million in fines paid by Toyota was the maximum amount the USDOT could assess against an automaker. But a bill pending in the House and Senate would dramatically increase the amount of fines issued to companies like Toyota.

Among the many provisions contained in the Motor Vehicle Safety Act, the National Highway Traffic Safety Association (NHTSA) would have the authority to impose larger fines on automakers. According to Consumer Reports, though the new legislation would not give the NHTSA the power to issue recalls of its own, it would also have the authority to issue public notices of vehicles it considers "imminent public safety hazards."