So, I Drive a Toyota… Now What?

Actually, I drive an 09' Toyota which makes the recent problems the company is experiencing hit a little closer to home. Since news first broke early last week about a faulty design causing accelerators to stick, things keep getting worse for Toyota. A global recall on more than 8 million cars, reports of brake problems with the popular Prius Hybrid, and harsh criticism of the company's CEO, Akio Toyoda, over his lack of public appearances during the crisis. What can we take away from Toyota's public relations nightmare? Solid risk management can save companies a lot of headache in the long run.

According to supply risk specialists, there are three distinct kinds of supply risks every company should be aware of: brand, commodity and disruption. Toyota is most certainly dealing heavily with two out of three... expensive disruptions in its supply chain and a huge hit to the brand. In the past, Toyota has consistently ranked among the most respected global corporations with historically high resale values by building dependable cars.  Even though there are just a few models being recalled, the bad reputation that comes from a bombshell like this would permeate the entire line.

For customers like me, the recall crisis could heavily affect the expected resale value for our cars. KBB (Kelly Blue Book) and ALG (Automotive Lease Guide) agree that Toyota could see a 4% to 5% additional decrease in value on the vehicles it currently has out on the streets.

"As leases come due and used Toyotas are returned to the manufacturer, the inability of dealerships to either sell or remarket these vehicles could add to an increase in overall supply of used Toyotas," KBB writes.

The questions is, if a crisis like this one can hit the world's most respected auto manufacturer, then we all have reason to be a little more on our toes. It should force all business owners and companies with a reputation at stake to take a closer look at supply risk management and tighten the screws a bit. One thing we can tell for certain from all this is that prevention heavily outweighs the cost of correction.

No matter what, we'll have to keep watching to see how Toyota pulls out of this episode. It will no doubt prove to be long-term, influential, and very expensive.

Tara Young, Marketing Coordinator
Unified360