Global Troubles Mount for Toyota
Well, it's starting to look like Toyota's reign as the world's No. 1 automaker might be a lot shorter than most people thought. Despite winning the Cash for Clunkers battle, the company is reeling from so many other setbacks that it may be in danger of losing the war for global auto industry dominance.
The biggest news: According to CBS News, a former attorney for Toyota here in the U.S., has filed a federal racketeering suit against the company, claiming that, "For years, Defendants Toyota Motor Corporation ('TMC'), its United States subsidiaries, and key Toyota executives, have conspired, and continue to conspire, to unlawfully withhold evidence from plaintiffs and obstruct justice in lawsuits throughout the United States against Toyota."
In other words, when people have been suing Toyota for product liability claims, the company has been allegedly hiding evidence that would make it look bad '” evidence of its vehicles "structural shortcomings," that is. And the guy making these claims is in a pretty good position to know, as he was personally, directly involved in defending Toyota against a wide variety of these types of claims.
The timing is especially bad because it comes on the heels of two recent Toyota recall campaigns. Here in the U.S., the company is recalling about 95,700 vehicles that could have trouble stopping in cold climes due to icing on their brake systems. The models affected are the 2009 and 2010 Toyota Corolla and Toyota Matrix, along with the Scion xD.
Less dangerous, but much bigger in scope, Toyota has announced its largest Chinese recall ever, involving more than 688,000 sedans, including the Camry. The problem here is only a power-window switch, and it's being blamed on a single supplier, but massive recalls won't do much to improve Toyota's standing in the highly competitive, highly important Chinese market.
Then there's Toyota's closure of the NUMMI plant '” its former joint venture with GM '” which has all the makings of a true PR debacle. According to the "New York Times," California officials are claiming up to 40,000 total jobs could be lost due to the plant's closing. Meanwhile, the folks in the UAW are naturally furious, with union president Ron Gettelfinger pointing out that Toyota is cutting jobs in the U.S. at the same time it was taking advantage of U.S. taxpayer cash via the Clunker program.
It also looks as if there could be serious trouble on the home front for Toyota, along with the other Japanese OEMs. After some 50 years of basically running Japan as a one-party state, the Liberal Democratic Party '” which had some trouble living up to its name '” has been ousted in a landslide by the Democratic Party of Japan (DPJ).
Now, a key plank in the DPJ's platform was a promise it would significantly cut carbon emissions by 2020, and the Japanese automakers are responding in exactly the fashion one would expect: By complaining about how hard and expensive it would be to meet that goal. It's like a rerun of the CAFE disputes here in the U.S., except that the Japanese OEMs appear to be in an even weaker position relative to their new government than their U.S. counterparts.
Also, in another bad omen for the Japanese auto industry, the DPJ has proposed banning the use of temporary workers, who represent an amazing one third of the total Japanese workforce, in the manufacturing sector. As a reminder, many Japanese companies, automakers included, benefit greatly from the fact that they pay temporary workers much less than "regular" workers, offer them very few benefits and can fire them much more easily. It's a pretty ugly situation that has seen unemployed temporary workers forced to form tent cities in Japan to gain access to food and shelter.
Based on this kind of move, I'm also thinking the new Japanese government won't exactly be amenable to supporting the Japanese auto industry the way the U.S. government has with Ford, General Motors and Chrysler. I mean, if it comes to that.
Now, I'm not up on the towing limits of cars like the Prius and Lexus HS 250h, but it looks like it's going to take an awful lot of hybrids to pull Toyota out of its current ditch.