Toyota’s “exceptionalism” came back to bite Feb 9, 2010 14:21 EST Life rarely offers easy answers to important decisions, but up until a few weeks ago, it seemed that new cars buyers simply couldn’t go wrong buying a Toyota. For decades, the Japanese automaker had built up an unmatched reputation for quality and reliability, on its way to becoming the best-selling automaker in the U.S and the top car producer worldwide. A Camry might not have been a particularly glamorous or exciting choice of vehicles, but consumers could buy one without doing a lick of research, and expect it to run reliably and efficiently for years. At least they could until a flurry of defects and recalls suddenly brought Toyota’s untouchable reputation back down to earth. In a matter of days, Toyota’s good favor in the eyes of consumers has been replaced with suspicion and doubt. Having first ignored reports of unintended acceleration in its vehicles, Toyota then blamed floor mats before finally recalling some eight million gas pedals worldwide. When a brake software problem on the Prius hybrid emerged within days of the gas pedal recall, and Toyota’s leadership moved slowly to get in front of the burgeoning PR nightmare, the automaker’s spotless image suddenly found itself in shreds. This rapid reversal of Toyota’s fortunes indicates that its reputation as an unquestionably logical choice in car brands was already wearing thin. Having refined the most efficiency and quality-focused manufacturing system in the industry by the late 1980s, Toyota responded to currency fluctuations in the early 90s by cutting costs on the design-end of the business. According to the company’s logic at the time, a “lean” manufacturing operation couldn’t afford to build “fat” or “overquality” products in the face of intense pressure on profitability. The result was 20 years of decontenting, in which Toyota reduced the cost and quality of its products, while coasting on the reputation of its most famously “fat” products of the late 80s and early 90s. The fact that this occurred as America’s domestic automakers were facing their own major deficits in quality and reputation allowed Toyota to build on its reputation without incurring the high costs of overquality. In short, Toyota’s fall from grace was decades in the making, and in retrospect, the real surprise is that Toyota maintained its perceived advantage for as long as it did. Millions of dollars are won and lost in the car business by balancing cost and scale against quality and reliability, and Toyota is no exception. Only the longevity of its reputation with consumers makes Toyota’s decline so noteworthy. But the fact that Toyota’s unmatched quality advantage existed largely in the minds of consumers doesn’t lessen the impact of its debunking. Indeed, if Toyota hadn’t enjoyed its reputational advantage, the current recalls would hardly have raised an eyebrow among consumers and the media. For proof of this, we need only look to last week’s recall of nearly a million Chevrolet Cobalt power steering systems, which addressed a loss of control comparable to Toyota’s unintended acceleration, but garnered little of the media attention lavished on the Toyota recall. Americans have had years to accustom themselves to the idea that General Motors sometimes falls on the wrong side of the cost-quality balance. Toyota’s transgressions, on the other hand, represented a real loss of innocence. Perhaps because “Toyota exceptionalism” was an unsustainable consumer perception, its demise has been accompanied by a strong, and equally unrealistic backlash. Lawsuits have been filed alleging that Toyota’s electronic throttle control unit lacks failsafes, raising the specter of yet another recall, and adding to the perception that Toyota management is unable to identify the causes of unintended acceleration. NHTSA investigations have been widened to include the possibility of such an electronic failure, and Secretary of Transportation Ray LaHood has already had to soft-pedal an ill-advised exhortation to “stop driving your Toyotas.” But as the Audi 5000 scandal of 1986 proved, unintended acceleration is a mysterious phenomenon that can be blamed as much on operator error as a manufacturer’s defect. Indeed, in the rush to condemn Toyota’s fall from quality excellence, many have lost sight of the fact that any of the recent unintended acceleration incidents could have been prevented by shifting the vehicle’s transmission into neutral. Barack Obama’s decision to increase the NHTSA’s investigation budget was a predictable politician’s reaction to the scandal, but alert, well-trained drivers will continue to be the only factor capable of preventing inevitable quality slips from becoming fatality statistics. Just as motorists can never assume that their vehicle will always function perfectly, consumers should avoid being lulled into a false sense of security by an automaker’s reputation alone. Automobiles are complex machines manufactured by firms that must constantly test the cost-quality equation to stay competitive in a cutthroat industry. As long as this is the case, the market for automobiles will remain dynamic and cyclical: an arena with little room for the kind of unquestioning trust that Toyota has enjoyed for so many years. If there’s a lesson to Toyota’s tumble, it’s that easy assumptions aren’t enough to keep you safe on the road, or in the showroom.