Business
3:01 am
Wed April 18, 2012

Rough Patches Behind It, Toyota Tries To Accelerate

Originally published on Wed April 18, 2012 8:23 am

Paul Schubert and his wife decided to buy a new car last summer — a really fuel-efficient one. After a lot of research, they settled on a Toyota Prius. But there was a problem: They couldn't find one.

The tsunami that devastated Japan in March had dried up supplies of the Prius, which is made in Japan, and a dealer told them they would have to wait — "about four months," Schubert says. "And we thought, well, it'd be, probably, end of November, early December before we were going to have a car."

The Schuberts still had a working car.

"Did we want a Toyota badly enough that we were willing to wait?" Schubert asks.

They did. Their new red Prius now sits in the driveway, with a license plate that reads "LTLSIPR."

Recall Woes

But some customers didn't wait. They bought cars from Hyundai, Kia, Nissan or Ford instead.

The tsunami couldn't have come at a worse time for Toyota. The company was finally recovering from the year's previous crisis — a massive recall to correct a risk of unintended acceleration.

Retiree Jan Alford already had a Prius. And she loved it. But it was causing a little trouble at home.

"My husband was reminding me every time I left the house that I might be unsafe," she says.

Then, U.S. Transportation Secretary Ray LaHood chimed in.

"My advice," LaHood said in February 2010, after the acceleration problems surfaced, "is if anybody owns one of these vehicles, stop driving it."

Alford's kids were worried about her, so she sold the car. She and her husband now own one car, and it's not a Toyota.

A Rough Patch For Dealers

Meanwhile, dealers were busy.

"You can imagine what our customers, the phone calls, our phones lit up — it was just unbelievable," says Bob Page, who owns Page Toyota in Southfield, Mich.

Three things caused the incidents of unintended acceleration: loose floor mats, sticky gas pedals and human error — hitting the gas instead of the brake. But Page says the recalls took a toll.

"The fence-sitters — the customers, the ones who had not committed yet to one product or another — we lost a number of those," Page says.

Before the recalls, Toyota's market share in the U.S. was 17 percent, nipping at General Motors' heels. Now it's about 14 percent.

"The jury's still out on whether there will be no long-term consequences," says Rebecca Lindland with IHS Automotive.

To add to Toyota's troubles, some of its cars look a little bland these days compared with competitors. And Lindland says the strong yen has made it more expensive to export from Japan.

"They cut corners, and it showed — and they cut corners at a time when other manufacturers were really going in the opposite direction," Lindland says.

Still In The Black

But these problems don't mean Toyota is weak. The company posted a profit during its darkest time. And it still reigns supreme in reliability. Of the 10 most reliable cars in the latest survey from J.D. Power, five are Toyotas.

Then there's the Prius. Thomas Lhamon just bought the new "Prius c" model from a local dealer.

"They had this car in stock. I went in an hour later and bought it the same day," Lhamon says. And with gasoline prices going up, he has no particular worries. "So far, I've been getting a little over 50 miles per gallon," Lhamon says.

The new Prius models are just two of the 19 new or refreshed vehicles Toyota will introduce this year. The company hopes that will get it some second looks from former customers — and first looks from new ones.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

Toyota says it expects strong sales in the United States this month. But the company is not fully recovered from its recent crises.

Michigan Radio's Tracy Samilton has this look at Toyota's effort to regain lost customers.

TRACY SAMILTON, BYLINE: Paul Schubert and his wife decided to buy a new car last summer, a really fuel-efficient one. After a lot of research, they settled on the Toyota Prius. A Problem: there weren't really any to be had. The tsunami that devastated Japan in March had dried up supplies of the Prius, which is made in Japan, and the dealer said, you'll have to wait.

PAUL SCHUBERT: About four months. And we thought, well, it will probably be end of November, early December before we're going to have a car.

SAMILTON: They still had a working car. So, it came down to this.

SCHUBERT: Did we want a Toyota badly enough that we were willing to wait?

SAMILTON: They did. Their new red Toyota now sits in the driveway, with a license plate that reads, Little Sipper. But some customers didn't wait. They bought cars from Hyundai, Kia, Nissan or Ford instead.

Toyota's production slowdown couldn't have come at a much worse time. The company was finally recovering from the year's previous crisis - a massive recall over a risk of unintended acceleration.

Retiree Jan Alford had a Prius and she loved it. But it was causing a little trouble at home.

JAN ALFORD: My husband was reminding me every time I left the house that I might be unsafe.

SAMILTON: Then, U.S. Department of Transportation Secretary Ray LaHood chimed in.

SECRETARY RAY LAHOOD: My advice is if anybody drives one of these vehicles, stop driving it.

SAMILTON: Ouch. Now the kids were worried about mom. So she finally sold it. Alford and her husband now own one car and it's not a Toyota.

Meanwhile, dealers were busy. Bob Page owns Page Toyota in Southfield, Michigan.

BOB PAGE: You can imagine what our customers, the phone calls, our phones lit up. It was just unbelievable.

SAMILTON: Three things caused the incidents of unintended acceleration: loose floor mats, sticky gas pedals, and human error, hitting the gas instead of the break. But the recalls took a toll.

PAGE: The fence sitters, the customers, the ones who had not committed yet to really one product or another, we lost a number of those.

SAMILTON: Before the recalls, Toyota's market share in the U.S. was 17 percent - nipping at General Motors' heels. Now, it's about 14 percent.

Rebecca Lindland is with IHS Automotive.

REBECCA LINDLAND: The jury's still out on whether there will be no long-term consequences.

SAMILTON: To add to Toyota's issues, some of its cars look a little bland these days compared to competitors. And Lindland says the strong yen has long made it more expensive to export from Japan.

LINDLAND: Then they cut corners and it shows, and they cut corners at a time when, you know, other manufacturers were really going in the opposite direction.

SAMILTON: Now, none of this should be interpreted to mean Toyota is weak. The company posted a profit during its darkest time. And it still reigns supreme in reliability. Of the top 10 most reliable cars in the latest survey from J.D. Power, five are Toyotas.

But then there's the Prius brand.

Thomas Laymon just bought a Prius C from a local dealer.

THOMAS LAYMON: They had this car in stock, I went in an hour later, and bought it the same day.

SAMILTON: And as gas prices go up, he has no particular worries.

LAYMON: So far, I've been getting a little over 50 miles per gallon.

SAMILTON: Fifty?

LAYMON: Fifty.

SAMILTON: Combined?

LAYMON: Combined, yup.

SAMILTON: The new Prius models are just two of the 19 new or refreshed vehicles Toyota will introduce this year. The company hopes all that fresh metal will get the company second looks from former customers and first looks from new ones.

LYNN NEARY, HOST:

For NPR News, I'm Tracy Samilton in Ann Arbor. Transcript provided by NPR, Copyright NPR.