Page 162 - Toyota Under Fire

RESPONSE AND THE ROAD TO RECOVER Y

the reaction of the dealers: “We’ve got 1,223 dealers. If I could
have hugged every one of them, I would have. They did an amaz-
ing job overall and thought first about our customers.”
One measure of the effectiveness of dealers was the percent-
age of vehicles repaired. While the media attention certainly
played a role, dealers’ outreach and logistics efforts deserve much
credit. Within six months of the sticky pedal recall, 85 percent of
the recalled vehicles had been repaired—an extremely high rate
by industry standards.*
Toyota’s strategy for developing a dealer network over de-
cades had laid the groundwork for this ability to respond. Unlike
the Detroit Three, Toyota deliberately keeps strict limits on the
number of dealers it has, preferring large dealers who have the fi-
nancial resources to invest and survive the ups and downs of the
economy. As Carter explained the strategy: “We rejected the no-
tion that if there’s a post office in the town, there should be a
dealership there. We want our dealers to be financially strong. We
are in a cyclical business, and while you may lose a little business
at the top, it gets you through times like this.”
Avoiding saturation means that the average Toyota dealer
sells many more cars, and is more profitable, than dealers sell-
ing other brands. For example, in 2009, Toyota (with the largest
share of retail sales) had 1,400 dealers, less than half the number

* For instance, Ford has recalled over 17.5 million vehicles over eight separate
recalls for a cruise control that could catch fire, the biggest recall ever. That re-
call started in 1999 and continued with 4.5 million additional vehicles recalled
in the fall of 2009. NHTSA reported in October 2010 that only 40 percent
of the vehicles recalled had ever been repaired. David Schepp, “Feds Warn:
Millions of Ford Recalls Still Aren’t Fixed,” Daily Finance, October 22, 2010;
http://www.dailyfinance.com/story/ford/feds-warn-about-recalled-fords-not
-fixed/19685055/.

131