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Toyota's recall crisis provides lessons to automakers

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Toyota Motors, one of the world's most admired automakers that had redefined the art of manufacturing through the so-called "Toyota Way," has lately seen its reputation of high-quality tarnished following the massive recall crisis.

Toyota Motor Corp. President Akio Toyoda is pictured during a press conference in Beijing on March 1, 2010. Akio Toyoda apologized to Chinese consumers for recall of Toyota cars. [Xinhua photo]

In response, South Korean media and industry experts have voiced concerns that since many domestic brands have been following the precedent set earlier by Toyota in achieving global prominence, they should try to take Toyota's recall issue as a learning lesson, rather than just seizing it as an opportunity to expand market share.

Industry experts have pointed out lack of quality-control as the predominant reason behind the Japanese car giant's recall issue, as it couldn't adequately keep track of every step involved in its manufacturing process, stemming from an overwhelming global expansion while cutting costs simultaneously.

As a result, Toyota's plight has had ripple effects across the global auto-industry -- automakers around the world are making staunch efforts to toughen safety measures and South Korea, who's ranked as the world's fifth largest carmaker, has been no exception.

Lessons to be learned

"This isn't a matter only pertaining to Toyota," Bae Choong- shik, professor of mechanical engineering at (South) Korea Advanced Institute of Science and Technology (KAIST) said. "Other carmakers potentially could have similar problems arise, including South Korean brands who benchmarked after Toyota's business model. "

Bae emphasized Toyota's underlying problem has been "its excessive overseas expansion," as reflected in their overwhelming production increase; in 2000, Toyota produced 5.2 million cars but last year it had the capacity to make 10 million, all the while adding 17 more production sites.

Unsustainable growth in the number of assembly lines abroad has made it inevitable for them to procure auto-parts from overseas subcontractors, thereby making it difficult to oversee every procedure involved in the quality-control process, Bae said.

"Also, there was immense pressure to cut costs as competition grew," Bae said, adding Toyota reportedly requested a 30 percent discount to its subcontractors-- diluting Toyota's quality by the demands of lower costs.

Similarly, Hyundai-Kia Motors has also accelerated its overseas plant expansion in the last five years.

Hyundai built a number of plants abroad with a capacity to produce 300,000 units annually, as they erected them in the US state of Alabama in 2005, in India and China in 2008, and in the Czech Republic in 2009.

Hyundai's rapid overseas proliferation of factory plants resulted in total production figures jumping from 670,000 per year in 2005 to 1.52 million in 2009, roughly a 127 percent spike.

"It would be impossible to abruptly stop overseas expansion amid competition to produce more at lower costs," Bae said. "South Korean producers must find a long-term plan to more efficiently manufacture cars while strengthening its quality-checking systems as well."

Lee Hang-koo, a senior staff at the (South) Korea Institute of Industrial Economics and Trade (KIET) said Toyota's recall has provided an invaluable lesson to local competitors as it gave them "an opportunity to review their overall quality-control process and seek ways to prevent any similar disasters from occurring to them."

Another factor that exacerbated Toyota's problem was the fact that its recalls were perceived as a "forced" act rather than a " voluntary" one, according to Lee, as the Japanese automaker failed to proactively respond to the customers' complaints in advance, which horribly damaged the company's customer-centric brand-image.

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