Recalls Make Toyota Go-Slow On Production Lines
Toyota is bracing for lawsuits in the US and Canada, and the impact of a recall of 8 million vehicles is starting to hurt the operations of the world’s largest manufacturer. While, Toyota recalled the cars on account of gas pedal issue it has faced criticism at home in Japan and in the US for its inept handling of the entire situation.
The impact of the recalls has been such that there has been a global Sales meltdown for the brand Toyota, and customer confidence is at an all time low. The company is bracing against multiple lawsuits in the US and the Congress wants to grill the Toyota Chairman for the unprecedented quality issues. All this has led to a situation of over-capacity at plants across Japan, US, Britain and France.
If you were to infer the consequence of this decision, then there is a very clear attempt to control costs by reducing production at facilities that are more expensive to run and maintain. The company has decided to halt production for 8 days in the months of March and April. There are unconfirmed reports that this halt is expected to stretch to 2 weeks time in the UK, with both facilities being impacted completely. However, Toyota has not stated the duration for a halt in French operations.
The Company’s chairman, Mr. Toyodo, is expected to face US Congress and come up with an explanation in defence of the recent recall issues that demonstrate poor quality control at the world’s largest automaker.
While, most of Toyota’s sales come off the Japanese manufacturing plants, the US and UK manufacturing plants serve respective markets. Due to the recent recalls, the company has had to face an issue of over-capacity. In order to reduce operational costs and check rising inventory levels the company has had to take steps to reduce production or temporarily halt the production across the World.
The overall impact of the recalls is expected to intensify in the coming months because the long-term consumer confidence has taken a strong beating. At this point, it looks increasingly difficult for Toyota to fight a battle against lawsuits, Congressional hearings and falling customer confidence. If you add the employee-morale to the equation then you can pretty well understand the nature of Toyota’s problems with no immediate end in sight.
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