The Arc of Crisis

Funny how the passage of time dulls nearly all crises. Just a few weeks ago, Toyota was all anyone could see on the news, but now the story seems to have subsided into a dull rumble, buried under the successful passage of healthcare, Jesse James/Sandra Bullock, earthquakes in Chile and China, and a volcano in Iceland that may be causing a new economic crisis in Europe. Aside from short attention spans, Toyota seems to be showing a completely different attitude toward quality problems; together, these factors appear to indicate that Toyota is entering Turner's Stage 6 of crisis - the "new normal."

Toyota has clearly been chastened and humbled by its experiences over the past months. Until recently, it would be impossible to imagine the carmaker voluntarily withdrawing a Lexus SUV off the market after a single Consumer Reports article. Just a few weeks ago, Toyota might very well have contested the rating, and aggressively fought back. Toyota is clearly operating in the "new normal" now, as Consumer Reports gave the $55,000 GX 460 a "don't buy" warning on April 13, citing electronic stability control problems. Instead, within days Toyota admitted that its engineers were able to reproduce the problem, and immediately pulled the SUV off the market.

It remains to be seen how well Toyota will recover. Car sales in general are still weak for all manufacturers due to the limping economy. Therefore, it's difficult to quantify how much of Toyota's sales decline is truly caused by the crisis. Still, despite Toyota's earlier missteps, the fact that much of its production is in the US may give Toyota an advantage that Audi didn't have a generation ago, when it was essentially driven from the US market.

Related Article: http://www.nytimes.com/2010/04/17/business/17toyota.html