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Toyota is also #1 in recalls – a problem?

Many Detroit boosters will point out that Toyota has also led the industry in the number of recalls over the past year. Surely this will put an end to their reputation for reliability, right?

In my opinion, it won’t. Instead, I believe that the significance of recalls has been greatly exaggerated. They are generally a minor inconvenience and they cost the car owner nothing.

What would affect Toyota’s rep is if many of their owners started having costly failures after the warranty expired but before 120,000 miles or so, and Toyota did little or nothing to step up and lend assistance.

The sludge issue, for example. In recent years some Toyota engines have proved prone to sludge, where the oil inside gunks up and the engine has to be replaced as a result. Intiailly, Toyota resisted footing the cost of replacement engines. They argued that the customers affected had not changed their oil often enough, so the sludge was not Toyota’s fault. In response, critics argued that the sludge was promoted by overly narrow cooling passages within the affected engines, and that Toyota had unwisely designed the engines with such narrow passages to boost fuel economy. 

In the end, Toyota wisely realized that the actual cause didn’t much matter. If they wanted to maintain their reputation for reliability, they had better pick up the cost. So they did this before too much damage had been done to this rep.

(Honda went through a similar progression in respnse to the widespread failures of the transmissions used with V6 engines in many of its 1999 to 2003 model year vehicles. They extended the warranty to 100,000 miles, then further extended it to 109,000 miles to settle a class action lawsuit.)

If Toyota’s vehicles have more major out-of-warranty problems like the sludge issue, and if they insist that the customer foot the bill, then their rep will take a serious hit. If this happens, it will promptly become clear in TrueDelta’s survey results, with their quarterly updates. Until then, Toyota’s rep is safe, even with the recalls.