Drumming up support for Akio Toyoda.

Many years ago, Toyota showed this TV commercial.


The short 30 second ad pretty much sums up what the Toyota brand stands for in the eyes of the general public.

In an almost hero-zero like manner, Toyota started making headlines late last year for all the wrong reasons. Starting with this incident. Recordings of the frantic 911 call by the driver of an out of control Lexus ES were spread on Youtube and TV news networks. And you know the rest of the story.

When Akio Toyoda finally scheduled a press conference, the Japanese media, of all things decided to focus on the way he bowed. In Japanese etiquette, a bow to greet your neighbour is different from a bow of then Shinkansen train driver that is late 1 minute late, and will be remarkably different from chauffeur who crashed his boss's Toyota Crown. Toyoda's bow was criticised for being too casual, too brief and not low enough. The Western media, picked on Toyoda's poor command of spoken English. Which is fine if the criticism came from Americans whose command of Japanese is as good as Akio Toyoda's English, but unfortunately this was not the case.

1. Why Toyoda needs support of petrolheads.
Prior to Akio Toyoda's appointment, petrolheads used to criticise Toyota for not offering anything sporty that stirs passion in its model line-up. The previous president of Toyota had terminated all sports car programmes. When Akio Toyoda came on-board, it was due to his work that we now have :
i) Lexus LF-A - TMC's management had wanted to kill it along with Toyota's failed F1 programme. Akio Toyoda lobbied hard.
ii) Lexus IS-F - TMC's board said no go. Akio Toyoda proceeded on his own, setup a "skunkworks" team, invested his own money, recruited volunteer engineers who donated their free time for the project
iii) FT-86 Concept - spiritual successor of the legendary AE86, probably the most anticipated new Toyota model.


Akio Toyoda races in the 24 Hours of Nurburgring under a pseudonym "Morizo." There are only 2 car company bosses in the world that races their own cars - Dr. Ulreich Bez of Aston Martin and Akio Toyoda himself. Besides the late Enzo Ferrari, I can't recall any car company boss who races their own cars.

Here is car company boss who is an experienced investment banker and test driver. Unlike most car company executives, he has a wealth of experience sampling other competitor models as well. He once said in his blog after his experience in a VW Scirocco, "I am jealous. Besides having "cool styling, it runs incredibly well, to the extent I can't believe it is a 2000cc engine." He also added that, "I cannot afford to lose. I will tackle the challenge of creating a car with even more splendid flavor than the Scirocco." How cool is that to have a company boss who readily admits the superiority of a competing model AND vows to up the ante?

A car company boss who is a professional racer and turns up at product launches in black racing overalls, who is pushing for his company to produce more emotional and sporty cars. A maverick who is not bogged down by consensus seeking with men in grey suits who simply won't get it. What more can a petrolhead ask for? You want the style and passion of the Italians and precision engineering of the Germans at affordable prices, and who do you think is going to deliver that to you? Sergio Marchionne who recently threatened to freeze development of new Alfa Romeos and wants to mix-up Chryslers, Lancias, Dodges and Alfa Romeos in one big Italian-American melting pot?

Realising Toyota is losing touch with younger Japanese buyers, Toyoda had the vision of a lifestyle web-portal, which also include non-automotive content like food and travel. As expected, the conservative management at TMC were against the idea. Not a man who would take no easily, he set off on his own and setup the portal by investing his own money. Today, gazoo.com is one of Japan's most popular web portals.

It would not do us petrolheads any favour if Akio Toyoda was removed from his current position.


2. Treat the root cause, not the symptoms
Akio Toyoda merely inherited all these problems from his predecessor, Katsuaki Watanabe? Long before these safety issues cropped up, Akio Toyoda have repeatedly warned his senior associates at TMC that Toyota is veering dangerously off course from its founding principles. He certainly ruffled many feathers along the way and was probably only kept on the TMC's payroll out of respect for the founding Toyoda family.

He has publicly stated that Toyota is grasping for salvation, that Toyota has become too big and distant from its customers and that it is on the verge of irrelevance. There aren't many CEOs that are so frank in admitting their own short comings.

During the time of past President Katsuaki Watanabe, TMC chased sales volume to the earth's end and was eager to dominate the sales chart in every segment in every market, plugging any hole in the model line-up they could find.

2.1 Resources stretched too thin
Many also forgot that during Watanabe's time, there were a number of high profile "karoshi," death from overwork, involving Toyota employees. 30-year old Kenichi Uchino, a quality control manager collapsed at the factory floor in 2002. It took a very lengthy legal battle with Toyota before his widow was awarded compensation in 2007. An unnamed 45-year old lead engineer for the Camry Hybrid also died of karoshi in 2006. Many believed that these are only the tip of the iceberg as Japanese labour court are notoriously slow and there is a cultural issue as well. Working long hours are seen as a badge of pride in Japan and Japanese companies typically promote from within and rarely hires outsiders for senior / middle level positions. Making it almost impossible to switch jobs without "resetting" your pay scale. In spite of Japan's developed nation status, it's labour laws still lag behind many European and OECD nations. Without having the support of a strong labour court and state protection, many karoshi cases go unreported and the company could easily challenge the prosecutor by saying that the overtime hours were voluntary - which was the argument used by Toyota in these two cases, but fortunately the widow and her lawyers were able to prove otherwise.

It is not difficult to connect the dots between Toyota's overworked staffs and its drop in quality. In his recent hearing with the Feds at Capitol Hill, Akio Toyoda was very candid about this when he said "We pursued growth over the speed at which we were able to develop our people and our organization, and we should sincerely be mindful of that."

2.2 The Relentless Pursuit of Lowering Cost
But the mad chase to dominate the industry did not happen suddenly during the reign of one president. Toyota's growing appetite can be traced way back to Hiroshi Okuda, who famously quoted "we can and we will." Okuda-san believed that he could always get more out of TMC's part suppliers and was always pushing for them to reduce cost. Granted they were many possible areas for cost savings. Mechanics will tell you that Toyota models of yore were famously over-engineered. But that's what gave it their famed reliability that rival Swiss watches.

These relentless pursuit of cost cutting probably culminated in the sticky pedals that caused sudden acceleration, and the omission of a brake over-ride feature that would have avoided all these problems in the first place. CTS was the supplier that made the problematic accelerator pedals, but CTS also supplies pedals to Ford, Chrysler, Mitsubishi, Honda, Nissan with no problems. Suppliers manufactures parts according to OEM's design and cost requirements. The brake override feature was omitted by Toyota to reduce cost, probably because it feels that it is not required by law and customers will not see them while German manufacturers include the feature anyway. It would prove to be a very costly decision by Toyota to save a little bit of money. Akio Toyoda was not on TMC's board when these were decided. In fact he was the one who immediately decided to install the feature on all Toyota and Lexus models.

2.3 The signs of trouble were all there
The recent safety and quality issues were merely symptoms of a deeper problem. Toyota thought the world about problem solving and to ask 5-Whys to solve any problem. Ironically, the company failed to ask 5-Whys that lead to its current state. Companies as big and as proud as Toyota will need nothing short of a crisis to shake them up. The upper echelons of Toyota have long fostered a mentality that they could do no wrong, and due to their immense contribution in local economies and job security, Toyota knows that they have shored up sufficient connection with Japanese and American government to see through almost any slip ups.

Toyota might lecture the world about problem solving. But Toyota's 5-Whys and centralised-hierarchical decision making process might be out of touch with today's world. A problem further compounded by the company's inward looking / insular mentality from its policy of emphasising promotions from within.


Toyota F1 team's former chief Mike Gascoyne have previously expressed his frustration at Toyota's decision making process, that all major decisions need to channeled back to Japan. The best F1 teams are ran by men, dictators if you like, who ate, sleep and drink F1. When Ferrari was king, Ross Brawn made all the decisions as he sees fit. The same reason could be explained for Brawn GP's rapid rise in performance once Honda's management threw in the towel and Ross Brawn bought over the entire operations and turn it into a champion team in one season, once the Japanese backed off. When you hire the best guys you need to trust them to do their job. But the centralised and hierarchal nature of Toyota could not accomodate this. Of course, Toyota is not used to being lectured. After all, they thought the world on lean production. So the folks at Toyota's headquarters told Mike Gascoyne to go take a hike. Less than 2 F1 seasons later, Toyota's F1 programme was terminated.

The rebukes by Mike Gascoyne would return to haunt Toyota again when Toyota is criticised for its slow response.US Transportation Secretary Ray LaHood called Toyota "safety deaf."

Akio Toyoda recognised the problem and has since gave greater autonomy to regional offices by establishing positions of "regional qualify chiefs," who are empowered to make decisions. It is ironic that Toyota took so long to recognise the problem when one of the teachings of Toyota Way is that solutions should always come from the level closest to the source. Not thousands of miles away in Japan.

3. Toyota chased hard to be No.1, but was not prepared to be a No.1 company
Despite being a nation that rose from the ruins of war, Japanese companies have relatively very poor crisis control measures in place. American companies, from their 9/11 experience are the leaders in this area. There is a cultural dimension to this problem. Admitting a problem is a big no no in Asian cultures.

Back in the 1980s, the Japanese government knew that HIV tainted blood were being supplied but took no action to recall the products. Their reasoning? Doing so would allow foreign competitors in. An estimated 2000 Japanese contracted HIV through infected blood.

Crisis management is not something that is widely discussed in Japan, and is still considered a sort of taboo to speak of such matters in a society that is very proud of its quality products. But nothing manufactured is ever perfect. Once in a while, Murphy's Law kicks in. Toyota's PR were tripping themselves all over throughout this period. The company's PR was not prepared to manage the attention as a No.1 car maker. But that's the price you pay for being No.1.


True leading companies always have a clear disaster control / crisis management policies in place. Be it PR, data backup or even leadership succession. The recent incident clearly shows that Toyota did not have such processes in place.

Toyota tried to avoid going public about its problem. When it is a safety issue, that is never a good idea. The company lost consumer's trust when it could no longer contain the problem and the public found out through a high profile fatal crash. It was revealed that Toyota knew of sudden acceleration problems since 2007, and the company thought it was an achievement on their part to "negotiate" for a smaller scale recall. That document would certainly charged up the on-going congressional hearing.

It seems that Toyota worked very hard to get to No.1 spot, but once there it did not know what to do. It's easy when you are No.2, with a clear target to beat, and learn from the No.1 guy. But once at No.1, you are pretty much on your own.

Akio Toyoda is an easy target for everyone. He is the visible figure. Those within TMC, particularly the old guard who resisted change instituted would be grinning.

The point here is like all great empires of the past, the rot usually comes from within, and it usually starts when the empire is at its peak. Neither was the decline of the Roman empire caused by barbarian hordes lead by Attila. It started with people like Caligula and Nero, in power and a weak / corrupted Senate who could not keep powers in check. Rival military forces merely took advantage of a slowly dying empire. The rise and decline of companies are similar. Toyota with its immense wealth and power, could not possibly be defeated by any rival car company. They had to shoot themselves in the foot before anyone to topple them.

Akio Toyoda just happens to be the president of Toyota at a very difficult time. If we wish to see more fun to drive, affordable, good quality cars, we need to honk in support of Akio Toyoda. Competition improves the breed. With a weak Toyota, who else will Volkswagen, which have vowed to unseat Toyota by 2018 benchmark against?

World's first - Removable car clock you can wear as wrist watch

French car maker Peugeot is the latest car maker to unveil a car (albeit in Concept form) in partnership with a premium watch maker. The Peugeot SR1 Concept will be the first car in the world to have a detachable premium watch that you can remove from the vehicle and wear on your wrist. Correction : This is the correct world's first.

Luxury watches and cars often appeal to the same consumer demographics group. As such, premium watch makers and luxury car brands have a long history of working together. Even the infamous Smart car was started by Swiss watchmaker Swatch in partnership with Daimler. In fact, Smart is short for Swatch Mercedes ART. Not forgetting F1 sponsorship by Oris and Tag Heuer. The Breitling for Bentley brand is probably the best example of a successful synergy between the handcrafted premium watch industry with super luxury cars. All Bentley cars feature bespoke analogue timepieces made by Breitling while Breitling sells premium watches that are "inspired" by Bentley's illustrious history.

Examples of Breitling for Bentley, both the wrist worn and car dash version.



The watch made by Bell & Ross for the Peugeot SR1 Concept is a bespoke unit made exclusively for the Peugeot SR1 and is not available in retail outlets. According the Bell & Ross, the watch's design is cast from a block of stainless steel with a milled dial and nickel-plated steel hands. Whatever that means - watch talk is lost on this humble peasant boy editor who still relies on his cellphone to tell time.



Peugeot will unveil the SR1 Concept in the upcoming March 2010 Geneva Motor Show. Peugeot will also be showcasing the latest iteration of its HYbrid4 Technology in the SR1. The diesel-electric AWD powertrain uses 1.6-liter turbodiesel four-cylinder engine powering the front wheels with a 95-horsepower electric motor at the rear. The first production ready car to use the powertrain will be the hybrid 2011 Peugeot 3008 Crossover.

This however is not the Peugeot's parent company, the PSA Group's first partnership with Bell & Ross. Back in 2006, Bell & Ross already created a bespoke timepiece for the 908RC Concept. Of course, that was not a detachable unit like in the latest SR1 Concept.



But the ultimate car-watch has to be the AMVOX2 DBS Transponder watch made by Jaeger-LeCoultre for Aston Martin. This "fit for James Bond" watch also doubles as the keys to the owner's Aston Martin DBS. The watch has not a single push button and all controls are done by pushing the sapphire crystal face. Tap between the watch's 8 and 9 o' clock to unlock and between 3 and 4 o' clock to lock the car. The AMVOX2 is sold exclusively only to Aston Martin DBS purchasers. Unlike the Peugeot SR1, the V12 engine Aston Martin DBS is available for sale. And if you have to ask, prices starts from €240,000 ($330,864) while the Jaeger-LeCoultre made AMVOX2 DBS Transponder watch is a €25,000 ($34,465) option. Like they say, if you ask for the price it would mean you cannot afford it.


Peugeot is facing a multitude of challenges going into the next decade. Among the more pressing ones are Peugeot's over-reliance to the already saturated Western European market and an almost negligible presence in the rapidly growing BRIC (Brazil, Russia, India, China) developing markets. EU government's scrappage scheme has since expired and 2010 sales are naturally expected to be lower without any further government incentive to spur consumer spending. Peugeot's previous attempts to crack the large car market in Europe (607 model) fell short of expectations, largely hampered by the brand's fleet car image outside of France. PSA's alliance with Mitsubishi to rebadge the Outlander model as Citroen C-Crosser and Peugeot 4007 happened just before the SUV market tanked. Unable to compete with the Japanese in petrol-electric hybrids, PSA's solution to Europe's increasingly tough CO2 emission regulation is to bank on diesel-electric hybrids instead. Though diesel-electrics far costlier thant petrol-electrics and are fundamentally more NVH issues to work out than a petrol equivalent, PSA's believes this is the right path to pursue as it builts upon PSA Group's strength in diesel engine passenger cars. It's latest attempt to crack the large sedan market will be previewed in Peugeot 5 Concept, also to be unveiled in March's Geneva Motor Show. The 5 hints at the replacement for the floundering 607, the 2011 608.

Audi Winter Olympics commercials

Once again, Audi (of America) takes a jab at its competitors. Not contended with the recent TDi Superb Bowl ad, Audi purchased two ad spots for the Winter Olympics season.



Personally I think it is a little bit over the top. Audi has always been about subtlety and understated elegance, a strong preference of inner strengths over superficial values, hence the tagline "Truth in Engineering." So the recent ads do come across to me as being a bit over the top. But what do I know...maybe this is what is needed to appeal to American consumers, a culture that is generally more outspoken, individualistic and brash compared to say...a typical British gentlemen.

Nissan Juke looks to VW TSI

Like many people, our jaws dropped, and we scratched our head in disbelieve when Nissan revealed the Juke crossover. Then again, what do we bloggers / arm-chair critics / so-called industry watchers know about car design? More than 5 years ago, critics spelled doom and gloom when Chris Bangle unveiled the flame surfaced E60 5-series and duck-tailed E65 7-series. The market responded by providing BMW with the best ever recorded sales and Bangle shut up his critics for good. It was the same when Marcello Gandini’s unveiled his Lamborghini Countach concept 3 decades ago. And that car soon became the defacto poster of every 8-year old's bedroom. Good design is supposed to make you sit up and take notice, though not always in a comfortable manner. Plus, Shiro Nakamura, Senior Vice President for Design and Chief Creative Officer at Nissan is known to be quite a bit of a maverick amongst car design circles. And I am glad that such a counter-culture personality can thrive at the Japanese arm of the Renault-Nissan alliance.

So lesson learnt, and this time around we shall hold back our criticisms and not discuss too much on the subjective topic of the Juke's design, but rather its oily bits. Soon after the Juke was revealed, Hiromichi Matsui the chief vehicle engineer revealed that the Juke's 1.6-litre GTDi engine is benchmarked against VW's TSI.

“We looked at Volkswagen’s TSI technology – which is now becoming very popular and I think we’re developed an engine here that’s very competitive to the TSI,”

I believe this is probably the first mainstream example of a "down-sized" Japanese engine. Previous examples of Japanese forced inducted IC engines were mainly built to boost power output, not exactly to meet rigid exhaust emission and fuel economy standards. As such, areas like a smooth transient power delivery and low speed torque, broad spread of power range are far from exemplary. A "downsized" engine's objective is not just to boost power but also to maintain exhaust emission, fuel economy and usability of a small capacity engine. It's not the usual ricer's / Car Beng's job of bolting on force induction parts.

In the 1.6-litre gasoline turbo guise, the Juke's engine produces 190PS and 240Nm of torque, assisted by an army of fancy bits including a single turbo, intercooler, direct injection and variable valve timing, plus diamond-like carbon coatings for the valve lifters and mirror finish camshafts to reduce internal friction / pumping losses. Nissan likens the 1.6-litre petrol turbo unit's power delivery to that of a normally aspirated 2.5-litre gasoline unit.

Japanese car manufacturer's are generally less keen on downsizing trend, prefering to opt for micro-hybrids, an area which the Japanese are traditionally stronger. Also, forced inductions will of course exert greater stress on engine internals and conservative Japanese car companies are understandably concerned on this. But micro-hybrids cost significantly higher and providing seamless flow between IC engine on-off power periods is still a great challenge and is particularly problematic on automatic transmissions.


The Juke was created at Nissan Design Europe (NDE) in London, and refined at Nissan’s Design Centre (NDC) in Japan. Production will begin next year at Nissan’s factory in Sunderland, England and in Oppama, Japan.

In an related news, the next Nissan model to feature a downsized engine is the next generation Micra / March, which is rumoured to feature a super-charged 1.2-litre gasoline engine. All will be revealead in the coming Geneva Motor Show.

Thoughts on After-Sales

55% of American drivers surveyed by AutoMD intend to use their current vehicle until "it dies," a decision mainly driven by the generally poor confidence of consumers in the economy.

Nearly 50% of survey respondents indicated that their current vehicle had over 100,000 miles. A combined 69% reported that they planned to drive their current vehicle for 150,000 or more miles (13%), or until their vehicle dies (56%).

Nearly four in five (77%) plan to drive their current vehicle for 50,000 (or more) miles than they drove their previous vehicle. Less than 12% said they will keep their current vehicle for fewer miles than their previous vehicle. For further reading go here.


AutoMD.com is an automotive portal owned by Nasdaq listed US Auto Parts Network, Inc. It's key attraction is the ability of the site to provide an estimated cost of repair, pulled from over 400,000 workshops searchable by their area code. Of course, the service is only applicable to State side users but will have very little relevance to the rest of us. However there is a very informative "How To" section that you can still browse through.

The press release did not mention the total number of users surveyed nor their geographic location and demographics group so its hard to know if the conclusion is drawn from a sufficiently robust sample size and applies to American drivers in general, let along those of us in Europe and Asia-Ocenia. But in any case, it does provide some food for thought.

We all know that after-sales have been a strong revenue earner for car makers. In fact car companies actually earn more from selling bundled / optional accessories, replacement parts and service maintenance of vehicles than from the actual act of selling the car. Stiff competition and constant downward price pressures have left modern day car makers with very little margin from vehicle sales, especially the usual bread and butter models, whose low margins have to be balanced with substantial volume. The percular thing that I am noticing is that despite the depressed new car market, particularly in 2009 when we were at the worst of economic times, there was very little after-sales marketing / promotion activities from car companies. Most were still very focused in meeting their annual new car sales target. Is it because current service bay utilisation rate in a typical OEM owned service center is already high enough and thus there is very little capacity to accomodate any influx of vehicles? Or it could be that a typical OEM's view is that after-sales market is centered around the used car market, relative to the number of brand new vehicles. A typical Western European car owner relies on an OEM garage for vehicle maintenance only in the first 4 years of vehicle ownership. After which owners will switch to independent garages or in the case premium brands, specialist networks that are equipped with similar diagnostic computers used by OEMs. The trend is applicable across Japan and other developed markets as well.

Oddly, the customer profile breakdown in after-sales market is relatively unknown to most car companies. Though this is probably related to the fact that after 4 years of ownership, the expectations of car owners against their after-sales service providers changes from brand expertise, use of original parts, and warranty to one that is highly dominated by price concerns only. OEMs, with their high investments and rigid brand identity and customer service standards laid down by their principal to adhere to, obviously can never match the prices offered by independent garages, and thus do not bother to compete with the independents. But this begs another question - why can't automakers offer an "alternative" budget after sales service channel? I am not just talking about premium vs standard service packages, but an entirely different branded entity. One that does away with the many layered structures and rigid requirements to lower cost. The main rule that they have to adhere to is use of original parts. Investments in infrastructure and service tools to service the latest models need not be spread out to these old models over 4 years old, whose visit frequency to OEM outlets is negligible anyway.

In developed markets like Japan, we already have separate sales channel targetting different customer groups. The "Netz" channel focuses on young and trendy models, while "Toyopet" deals with middle-aged buyers offering mid-size models while "Toyota" channel deals with luxury Toyota branded models. In USA, Scion dealers offers high levels of customization to target the young, far higher than a typical American Toyota dealerships and this require setting up of very tedious back-end processes to monitor the dealer activities to ensure that all standard processes and quality standards are maintained. All these were developed to meet requirements of different customer groups. So why can't the same be extended to after-sales? Possible? No?

After-sales is probably the most tricky part of the car business and is often overlooked in the chase for higher sales volume. Expansion of service bays and service centers is often an after thought, after receiving many complaints from irrirate customers who were forced to put up very long waiting period to service their vehicles.

2010 Super Bowl Commercials

Super Bowl is America's most celebrated sports event. TV commercial slots during Super bowl is also the most expensive and a highly coveted airtime for commercial brands. In this year's Super Bowl, Hyundai purchased the most airtime, some of the ads were clearly targeted at Toyota, with reference to their recent high publicized quality concerns. Toyota meanwhile took this opportunity to launch a commercial reminding Americans of their long history of producing high quality products in America, notice how hard the company tries to potray themselves as deeply American, without any single hint of Japanese roots in the ad. Audi meanwhile touted the green credentials of their TDi diesel models. Below is a sample of some 2010 Super Bowl commercials.

Audi Green Police


Toyota recall


Honda Accord Crosstour


Hyundai



There are 8 Hyundai Super Bowl ads this year. You know where to watch the rest of them.

Honda expands airbag recall

In the wake of Toyota's recent gas pedal and Prius brake recall as well as Honda's recent power window switch recall, Honda Motor Co. today announced that the company needs to expand the coverage of a recent airbag related recall. The part under scrutiny is the driver's airbag inflator module, which under a worst case scenario, could deploy with excessive force, rupturing the module and sending metallic fragments tearing through the airbag material injuring the driver. 11 injuries and 1 death have been confirmed.

A total of 437,763 Honda vehicles will be affected by the recall. Back in July 2009, a total of 510,150 vehicles mainly in Japan, US and Canada have already been recalled for the same problem. Markets affected by this most recent recall are USA, Canada, Japan, Mexico, Taiwan and Australia. Models affected are mainly Accord, Inspire (JDM version of overseas market Accord), Odyssey, La Great, Civic (North American market version) and CRV.

For more details, read it here.

The recall could not come at any worse time, as media is likely to blow up any recall, however minor, out of proportion.

Fast & Furious 5

According to rumours within the entertainment industry, a fifth installment of the Fast and Furious franchise is in the plans.

According to Variety, the next installment will be called Fast Five, with the old crew of Vin Diesel and Paul Walker as lead stars and Justin Lin directing. Filming is set to begin later this year, with a movie release in 2011. Filming location is rumoured to be either in Brazil or Europe (or both!).

To movie critics, the FNF series is typical Hollywood trash. But that didn't stop it from consistently hitting top charts in the box office, so there is still money to be made from the series.

Related link
Fast and Furious Skyline Stolen

VW Cars Sdn Bhd to pursue legal action against VGM

Back in Nov 2009, VW Sdn Bhd, the then master dealer of VW vehicles in Malaysia had their dealership terminated with immediate effect by Volkswagen Group Malaysia Sdn Bhd (VGM). The news came very sudden and there were many speculations as to reason behind the sudden fallout. Prior to their termination, VW Cars was operating two dealerships in the Klang Valley, a "boutique store" in The Curve and another outlet in Jalan 219, PJ as well an outlet in Ipoh. The gap has since been filled by F.A. Wagen Sdn Bhd, the latest dealer appointed by VGM. F.A. Wagen is a unit of Federal Auto Group, which also operates Volvo dealerships and have been servicing VW vehicles in its Sg. Besi outlet for some years already.

Below is a press release, stating VW Cars intent to pursue legal action against VGM on their termination.

Kuala Lumpur, 4 February 2010: VW Cars Sdn Bhd has recently filed a civil action against Volkswagen Group Malaysia Sdn Bhd (VGM), arising from the contractual dispute between the two companies. VW Cars is claiming for a substantial amount of damages from VGM, based on its cause of action which is contained in the relevant court documents filed into court. This civil action was filed in the High Court of Malaya at Kuala Lumpur and the Court Documents have since been served on VGM.

VW Cars Sdn Bhd is a subsidiary of Cartrade Group Sdn Bhd, operated by Ilyas Alex Chan Abdullah. Prior to their appointment as a VW master dealer, Cartrade was the sole importer of BMW vehicles, before their termination by BMW Malaysia, which has since assumed all vehicle importation duties on their own.

An interview with Ilyas Abdullah on BFM can be downloaded here.

Thoughts on Toyota's recall

Above is an image explaining Toyota's permanent solution to its problematic runaway cars. The part is currently being shipping to all Toyota dealers in markets affected (North America, Europe, China, South Africa, Middle East, Latin America) by the recall as we speak. Just when you thought that Toyota can finally put that episode behind it and work on repairing its damaged brand reputation, we now hear news that the Japan Ministry of Transportation has ordered Toyota to investigate into complaints of brake failure in the third generation Prius. A total of 18 brake related complaints have so far been logged to US NHTSA. One driver reported injuries on her neck when she collided with another vehicle after brakes in her 3rd generation Prius failed. While in Japan, at least one death was reported when a Prius crashed into another vehicle at a busy intersection, again due to brake failure.

Ford, GM, Chrysler and Hyundai were quick to prey on Big-T by rolling out promotional incentives specifically tailored to attract Toyota owners. And now the Obama administration along with other me-too politicians like US Transportation Secretary Ray LaHood and one-time Presidential candidate Ralph Nader joining the chorus to demand actions from Toyota. Ray LaHood have told the media that he will be calling TMC President Akio Toyoda to emphasise how seriously the Obama administration is viewing the problem of sudden accelerating Toyota vehicles.

The American media in particular have been having a field day tearing Toyota apart. But we have seen this pattern before, the US media likes to prey on the top guy, over-glorifying the No.2 foreign guy. Two years ago, GM was at the receiving end of sensationalised American press while Toyota was raised on the pedestal. Now that Toyota has dethroned GM, Toyota is now at the opposite end of things while I am slowly seeing more and more repeat stories of VW's intention to unseat Toyota by 2018.

But let's step back a moment. If the US government is so concerned about American safety, what took them so long to act on the Ford Explorer-Firestone (Bridgestone) fiasco? Back in 1970s, NHTSA said that it found no strong evidence to force Ford to recall the Pinto, despite many death and fire due to a design flaw that allowed the Pinto's fuel tank to burst into flames in relatively minor accidents. Then there is the very dangerous handling Chevrolet Corvair which resulted in many fatal accidents, and again NHTSA remained mum about it. Remember that this was the same government who dished out incentives for people to buy gargantuan SUVs, and those in the know are very well aware of the safety reputation of these cars in reality. See, the recent actions by the Obama administration are mere works of political opportunists. Obama's administration was heavily criticised because the cash-for-clunkers scheme benefited Japanese and Korean brands more than Detroit-3. And the closing down of the former Big-3's plants did not help win votes from UAW aligned bodies. When Japan issued a similar cash-for-clunkers scheme, obviously American car brands were snubbed. As for Ralph Nader, well...it's Ralph Nader and for some reason he hates car companies to the core. That reason alone is easy to see why he never got elected as president to the country who invented steel and mass produced cars. Some of his arguments are valid, but in the grand scheme of things,...why pick only on car companies? Tobacco companies, American weapon manufacturers do just as much harm if not more.

The faulty gas pedal at fault in the affected Toyota cars were made by CTS, an Indiana based auto parts supplier. Toyota initially pinned the blame on CTS, an act which totally goes against any management or PR school teachings, let alone the famed Toyota Way. But Toyota was quick to put down these bad PR when TMC's VP Shinichi Sasaki said that Toyota shares the blame with CTS. What many do not realise is that CTS makes the same parts for Ford as well. In fact, Ford was conducting its own investigation was considering pre-emptive recalls, but later confirmed that CTS pedal assemblies installed Ford vehicles were not affected. A couple of months back we hear that TMC targets to cut parts procurement cost by 30% by 2013, and I am sure there were already many drastic cost cutting efforts before this. I know it is difficult to compare but put the pieces together, I am sure you will form some ideas on your own.

Many so called analysts have been downgrading Toyota stocks, and said that Toyota's reputation is in shambles. But TMC does not think so, in fact the company has even raised its financial forecast. Much as we like to pick on the Big-T, but Toyota's strength is not to be undermined, even under such circumstances. The company's ability to manage the logistics of this global recall is a strong testament that this company has laid a very strong foundation and it is going to take more than a major bad PR to put it down. Toyota dealers in America are already putting in place a Toyota Production System style production line style workflow in dealerships to manage the influx of cars coming in to inspection. There aren't many car companies who can manage this crisis. When all this is over, someone should document and write a book on this episode so we all can learn from it. I am sure this will be a management case study for many business schools in the future.

Toyota's problem are not unique, they are common symptoms of companies who expanded too much too fast, bloated with egoistic middle management who became too distant from the customers. Many consultants and industry watchers have previously warned the company that it is stretching itself too thin in chasing very optimistic results. In doing so, it has veered too far off course from the company's founding principles. Something which Akio Toyoda is very well aware of.

But before you call me a fanboy, I do not believe that Toyota is infallible, as posted here.



Related link : Drumming up support for Akio Toyoda.