What Happened to Toyota

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Robert E. Cole Professor Emeritus Haas School of Business University of California, Berkeley Visiting Researcher, ITEC Doshisha University
EOQ June 2011 1

How Many Quality Problems Do They Have?
• Operationally: 3 problems (as of 2/08/10) • From a “customer first” perspective, they had 7 million problems • From a future customer perspective, the universe of potential car purchasers

EOQ June 2011


The Unfolding Big Picture
• Subsequent to the recalls associated with floor mats and sticky pedals causing unintended acceleration, Toyota had 14 safety related recalls through Sept. 2010. • These highly publicized recalls may well have solidified in the U.S. public’s mind that Toyota has serious quality problems.

EOQ June
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If we deliver a product to the customer whose quality creates trouble for them, this will affect their trust in us. If we betray their trust, they will not buy our products for a long time!
* Source: Isao Nakatsuka, Director of the TQC Promotion Office at
Toyota Industries Corp., 1990.
EOQ June 2011 7

Table 1: Light Truck Sales for Ford and General Motors: 1999 2005*
1999 2000 2001 2002 2003 2004 2005

FORD 2,447,285 2,483,140 2,383,697 2,194,534 2,214,580 2,210,086 2,018,000









Federal regulations define a light duty truck to be any motor vehicle having a gross vehicle weight rating (curb weight plus payload) of no more than 8,500 pounds (3,855.5 kg) which is “(1) Designed primarily for purposes of transportation of property or is a derivation of such a vehicle, or (2) Designed primarily for transportation of persons and has a capacity of more than 12 persons, or (3) Available with special features enabling off street or off highway operation and use.” Practically speaking, light trucks include light duty vans, pickups and sport utility vehicles. I am indebted to Michael Flynn, former head of the Office for the Study of Automotive Transportation at
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