Posted on 02/28/2010 7:02:22 AM PST by ConservativeHideout
Even automotive history repeats itself. Let’s compare Toyota’s sudden acceleration…
"A top Toyota official claimed that a negotiated agreement with U.S. government auto-safety regulators prevented a widespread vehicle recall and saved the Japanese auto giant more than $100 million, according to a document obtained by The Washington Post after it was turned over to congressional investigators."
To the Ford Pinto…
"Cost-Benefit Analysis One of the tools that Ford used to argue for the delay was a “cost-benefit analysis” of altering the fuel tanks. According to Ford’s estimates, the unsafe tanks would cause 180 burn deaths, 180 serious burn injuries, and 2,100 burned vehicles each year. It calculated that it would have to pay $200,000 per death, $67,000 per injury, and $700 per vehicle, for a total of $49.5 million. However, the cost of saving lives and injuries ran even higher: alterations would cost $11 per car or truck, which added up to $137 million per year. Essentially, Ford argued before the government that it would be cheaper just to let their customers burn!"
Lesson? If you build something that is dangerous, and try to cover it up, don’t expect a group hug when it becomes public. The “Big Three” had these problems in the 60’s, 70’s and 80’s. Poor safety, deaths, poor quality, cars that rusted on the showroom floor, and poor assembly contributed much to the decline of Detroit. The causes? Poor management, poor engineering, union interference and outright sabotage, all caused too many Americans to lose faith in the US auto industry. The market took its vengeance on them, and only in the last few years have they begun to regain the trust of the public (Well, at least until two of the big three became part of gubbermint motors). It’ll be interesting to see where the current situation leaves Toyota.
Milton Friedman defended Ford’s move in a college debate. The video is on youtube and it is very educational. Definitely the brightest economic mind in my lifetime.
From a financial standing it was a good move but Ford is lucky it didn’t destroy their branding and they did end up doing a recall in the end. Grimshaw v Ford could have seriously hampered them for a long time.
I think, looking back at all the mistakes from the 60’s to the 80’s, that it took the big three that long to destroy their buyer loyalty. The Pinto was a big part of that. Poor quality, bad engineering, and all the other errors eroded confidence. I knew dozens of people in the 80’s and 90’s that told me that they wouldn’t even look at an American car. Either they had bad experiences, or they had family members that had a lemon. It was the death of a thousand cuts. They have worked at getting that back, and are improving, but Ford might be the big winner in the current situation.
But you have to really know to understand this, most don't.
It comes down to business. If you don’t make your customer happy, they go elsewhere. If you crispy fry a few, others might just shy away.
This is one I found frying on the side of I77 a while back:
http://www.youtube.com/watch?v=pphs4pJnTpg
I’m not convinced Toyota has a problem. An old man drove his Buick through the front glass of a store I worked at as a teenager. He swore up and down it had surged forward and that he was stepping on the brake. Yeah, right.
I’d buy a Toyota before any Government Motors product on basis of quality and not supporting a communist/union owned car company.
“Toyota's denial that electronics played a role in the problems has been challenged. Questions linger, including why, according to a congressional analysis, 70 percent of Toyota speed-control complaints involve vehicles not covered by the floor mat or sticky-pedal recall.”
Another Audi 5000 story? Perhaps.
Don't forget that the first Japanese cars imported during the 60’s and 70’s were junk too and the manufacturers spent a lot of time fighting lawsuits over quality issues.
But unlike Detroit they had a plan for gradual improvement and followed it. Detroit surrendered.
What did the problem turn out to be and what tenets did they ignore?
I always thought that Audi got off easy. If a brand/model has a high number of one kind of 'operator error' accidents, its engineering is certainly questionable as inviting that kind of accident.
As I recall the pedals on the Audi were closer together than some people were used to and that might have contributed to the imaginary “sudden acceleration” that was in fact driver error.
Audi’s moving of the pedals further apart since a few drivers seemed not to be able to tell the gas from the brake, the go from the stop, and the 60 Minutes fraudulent hit piece cost Audi a ton of money and damaged reputation, not what I would call getting off easy.
Thanks — very interesting.
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