Total recall – Toyota’s approach to managing risk

Posted on 10 Oct 2012

Commenting on the largest product recall in the automotive sector for 16-years, Richard Matthews, head of product liability at law firm Eversheds, says the size of the response indicates a total approach to risk management:

Richard Matthews, Eversheds

This morning (Wednesday) Toyota GB sent out a recall notice on all its Yaris, Auris and Corolla models, as well as the new compact SUV, the RAV4, with over 138,000 of these cars currently on UK roads.

Eversheds’ Matthews says:

“Recalls in the automotive sector are not rare events, but the size and scale of this particular recall is unusual.

Toyota faced heavy public scrutiny for the way it handled recalls in 2009-10, culminating in a record fine of $16.4 million from the US Transportation Department. Toyota’s approach this time around is perhaps indicative of an increasingly ‘belt and braces’ approach to managing risk.

It clearly recognises the benefits of proactive communications with its customer base where its reputation is at stake. The recall comes at a time when the brand is already experiencing trading issues, with anti-Japanese sentiment taking hold in China – one of the manufacturer’s key export markets.

Despite this Toyota’s brand has proved remarkably resilient. In August it announced a quarterly profit of ¥290bn, the highest in four years, and the business still claims the top spot for global sales, with 4.87m units sold in the first half of 2012.”