Toyota Hybrid Cars and Legal Issues
Introduction
Automobile industry is a faster growing industry nowadays than any other industry. Most car manufacturers face the challenge of providing the best quality products to remain competitive to retain or regain market share during this tough economic times. Every organization has the opportunity to make more profit than their competitors do by improving delivery method and its impact on the company’s turnover. Toyota Corporation has implemented different plans and techniques to remain competitive and make profit. One of the innovative plans Toyota Corp. created is the Prius. The Prius brought about a major revolution in car manufacturing industry, and opened a place in the market for hybrid vehicles.
Although Toyota experiences worldwide successes, they are constantly under the watch full eyes of the general public and the government because of the many serious allegations and lawsuits brought against the Company. This paper will examine the first mover advantage of Toyota got by launching Prius. The initiatives undertaken by Toyota to bring their environmental friendly hybrid into the market will be discussed. Additionally, we will point out the many legal issues Toyota currently facing in the marketing environment. These issues will be analyzed and discussed in further detail such as: (1) intellectual property protection; (2) the legal and business concepts of ethics; (3) and the product liabilities and warranties of the company.
Background
In 1957, Toyota Motor Corporation introduced its first vehicle to the American market, Toyopet Crown (Valdes, 2010). The small, fuel efficient vehicle had seen much success in Japan, but did not do well in the U.S. market. Toyota found an opportunity to re-enter the U.S. marketplace during the fuel shortage of the 1970's (Careforest.com. 2010). For the first time, American consumers were looking for fuel efficient vehicles and Toyota had the answer. With the soaring oil prices and increasing environmental awareness issues around the world, Toyota shifted its outlook toward cleaner and efficient cars. “Then, in the 1990's, while U.S. automakers were building bigger and bigger SUVs and trucks, Toyota threw itself into hybrid gasoline-electric research, investing more than $1 billion in the then-little-known field” (Collier, 2006).
The Hybrid cars are cars that make efficient use of both an internal and combustion engine and another source of energy, such as electricity. Yost and Friedman (2006) claimed that the Prius was the first major hybrid vehicle to hit the car market in 1997. It first hit markets in Japan and in May 1999 it arrived in the United States (Yost and Friedman, 2006). Toyota being the leader in the hybrid market is not surprising because it follows strategy that consists of anticipating future regulations. Fuel cell technology means important investment in research and development. Electric vehicles don’t’ meet the performance of existing vehicles. So hybrid technology seems to be the right compromise for Toyota.
Problem Statement
Toyota recalled millions of cars because of admitted acceleration pedal problems and brake problems. Some of the cars affected by the recall include Toyota’s RAV4, Corolla, Matrix, Camry, Highlander SUV, as well as Tundra and Sequoia Trucks (FindLaw, 2010). The US government got involved also and began investigating Toyota Prius brake problems after carmaker admitted that the 2010 Prius had a design defect. Recent law suits by the customers alleged that Toyota was engaged in fraud, negligently manufactured cars, and defectively design vehicle system. Even though the Prius has done well in the U.S markets, almost doublings its profits every year, there are still some legal issues that the Prius has had in the U.S car market.
Toyota Prius is the most popular hybrid vehicles worldwide but the third generation models suffered problems regarding the brake pedals and floor mat which