Attached is an article about a recently announced Toyota recall of 2.77 million vehicles worldwide. The recall is a result of flaws in its steering and water pump systems of many of its gasoline and hybrid vehicles, including 670,000 Prius models from between 2004 and 2009 in the U.S. alone. The car repairs will take a few hours total. Product quality issues would seem to be a major headache for Toyota, given the fact that they have been gaining so much momentum in stealing market share from U.S. competitors as of late.
This may be an opportunity for U.S. automakers to step in and attempt to demonstrate that their cars are made of superior quality, particularly through both informational and persuasive advertisements that show how their products are differentiated. If this advertising scheme were effective, automakers such as Ford and G.M. could charge higher prices for their “quality” premium and achieve higher profits. However, Toyotas have proven to be of very high quality at a very reasonable price, so this minor hiccup for Toyota may not present U.S. automakers a very large opportunity to regain lost market share.