Toyota's total recall

For decades, Toyota has been the gold standard of automotive quality and customer satisfaction. That makes it all the more stunning that the company has halted sales and production of eight popular models because of an accelerator problem.

No doubt many of its competitors are gloating. Not only does this show that Toyota is not perfect, it also gives domestic automakers an opening to reclaim lost market share.

Certainly, exploiting the moment is fair in business. But, counterintuitively, this debacle could end up enhancing Toyota's reputation in the long run.

With no precedent like it in the car world, Toyota's reaction is being compared to Johnson & Johnson's 1982 recall of all Tylenol after some mysterious deaths (later attributed to tampering) started occurring.

What the Tylenol episode showed — and the Toyota one might yet show — is that when there are problems with your product, the wisest course is to take immediate action to fix them, and worry about the financial impact later.

Such far-sighted thinking isn't always the business norm. Earlier this decade, Guidant, a maker of heart implant devices, discovered that its defibrillators were defective but waited years before notifying doctors. Before that was the Ford-Firestone saga, when both the carmaker and the tire company sat on evidence that a particular tire had a high incidence of failure when mounted on the Ford Explorer and its equivalents.

If there's a lesson in these and similar episodes, it's that coverups make problems worse.

For Toyota, this shutdown creates a number of problems, not the least of which is that it still does not have a fix for the problem. The company also lacks a strong public figure in the U.S. or Japan to reinforce on TV the message that the company's actions and statements convey. And further investigation might show that Toyota was initially too quick to blame the sticking-throttle problems on floor mats.

That being said, it's hard to imagine a company that spent so long obsessing about quality and building its brand would let it all crumble. Now that would be truly stunning.

Posted at 12:21 AM/ET, January 28, 2010 in USA TODAY editorial

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