Toyota's Troubles

By Barbara Melendez


TAMPA, Fla. (April 7, 2010) – Now facing a possible $16.4 million fine from U. S. regulators, Toyota’s troubles continue to mount. University of South Florida experts point to some key issues the Japanese automaker faces as it tries to recover from the massive recalls marring its image.  And they offer wise counsel on what the company should do at this juncture.


Beyond its technical problems, marketing expert and USF College of Business Professor Sajeev Varki explains that Toyota needs to address how it relates to American consumers in light of their cultural differences. 


“The Toyota recall problem is an illustration of culture difference getting in the way of how things were handled,” Varki said. “I believe the Japanese executives did not realize that Americans expect firms to eat humble pie before the process of forgiveness can start.”


He points to significant differences between how Americans and Japanese view the entire matter.


“For the Japanese, a recall is an admission of failure which has serious implications in terms of loss of face, etc. But I doubt the Japanese executives were thinking of lawsuits. They were thinking more about the embarrassment resulting from taking the blame for faulty design, and before they admitted it, they probably wanted to be absolutely certain.”


USF School of Mass Communications Professor Kelli Burns singled out another aspect of the cultural difference.


"Sometimes it is not the crisis itself, but the response that angers consumers. If a company takes the appropriate action, it is possible to regain consumer trust. In Toyota's situation where the company is responsible for the defect, consumers want a swift response that offers not just a solution to the problem, but also an apology."


Both professors agree that things could have gone worse for the auto industry giant.


“Fortunately, there were no cover ups, or at least intentional ones that I am aware of, since Americans are more forgiving of the original sin but not of any attempt at covering up. One just has to think of Watergate to get the point,” Varki said.


But the Toyota recall and its implications are far from over.


"I suspect that consumers have not yet heard the entire story,” Burns said. “It will be problematic for Toyota if they had evidence of this safety issue at an even earlier date, but failed to divulge this information."


Nonetheless, Toyota’s future appears to be bright as far as they can tell – so far.


“Toyota’s brand equity is still very good,” said Varki. “Interestingly, the company has a large fan base, and I was surprised that many of my students still regarded Toyota very highly and most believe the storm will pass over.”


Burns concurs but is looking into this matter further. She has several teams of students in her research class looking at the impact of the recall issue on Toyota owners.


"Other companies have made grave mistakes and survived. Toyota, with its large and loyal following, is likely to come out of this crisis with only minimal impact to the bottom line."


Varki believes other carmakers can capitalize on what Toyota is going through.


“This is a time when other recalls pale in comparison, so it is interesting how companies like Honda and others have taken shelter under this firestorm surrounding Toyota by issuing recalls of their own,” he said.  “From my perspective, American manufacturers need to step up their messages about how Detroit makes quality cars without necessarily singling out Toyota.”




The University of South Florida is one of the nation's top 63 public research universities and one of only 25 public research universities nationwide with very high research activity that is designated as community engaged by the Carnegie Foundation for the Advancement of Teaching.  USF was awarded $380.4 million in research contracts and grants in FY 2008/2009. The university offers 232 degree programs at the undergraduate, graduate, specialist and doctoral levels, including the doctor of medicine. The USF System has a $1.8 billion annual budget, an annual economic impact of $3.2 billion, and serves more than 47,000 students on institutions/campuses in Tampa, St. Petersburg, Sarasota-Manatee and Lakeland. USF is a member of the Big East Athletic Conference.