http://www.cbc.ca/consumer/story/2010/04/13/con-lexus-don-not-buy.html
Summary
Toyota has another problem with their car. On Tuesday 13, 2010, Toyota announced that they will suspend sales of the 2010 Lexus GX 460 SUV. The problem with the SUV is that there could be a possibility of the car flipping over during an unusual turn. This problem was discover during the handling tests. Before the problem was discovered, Toyota already sold 149 GX 460 SUV in Canada. In order to get back the SUV from their owners, Toyota will supply owners of the faulty car with a loan car.
Reflection
The connection I had made between this article and chapter 5 is the cash-to-cash cycle and the lead/lag relationship. The problem of the SUV is going to cause a problem with Toyota’s cash-to-cash cycle because Toyota used cash to purchase the materials to build the car (outflow of cash), but they will have a hard selling their inventory of cars due to the danger the vehicle presents. Since won’t be sales, so there will be no cash inflow. Without cash inflow, they won’t be able to generate new cash to purchase new materials. This causes a knot between the “inventory purchased” and “inventory sold” phase.
Reflection
The problems of Toyota cars are just piling up over the pass year. First the brakes and now the rolling over issue. These aren’t minor car problems. These are problems that have a high impact on the passengers lives. Personally, I think the reason for these problems is that there is problem with the management level of the company. Now Toyota will have a hard time recovering from these faults. The reputation that they had build up for years had suddenly gone down the drain. In order for Toyota to recover, I think Toyota has to first bring back the confidence of the customers to the Toyota cars.
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I find it quite surprising that Toyota has made yet another faulty car even after they had to recall many problematic Corollas. I agree that it seems like Toyota will probably come short in cash inflow until they fix their faulty cars. However, that's not all, due to the fact that they messed up yet another type of car, many consumers will have second thoughts whether to purchase a Toyota product. The series of faulty cars has most likely tarnished Toyota's reputation and also their marketability. These factors will greatly affect Toyota's cash inflow, plus Toyota's cash outflow because they need to expend money to fix those faulty vehicles.
ReplyDeleteAlthough Toyota is one of the world largest automobile makers, I am not surprised that they have another problematic automobile. They had already had a problem with their brakes earlier this year, so it's not that shocking to find out that their new 2010 Lexus GX 460 has turning problems. Even though it happens all the time, big companies shouldn't be so careless. Lives are at stake and at this rate I wouldn't be surprised to hear if they had another problem with their automobiles or that their sales dramatically drop. Although Toyota's current slogan is "Moving Forward," I don't think they will be moving forward anytime soon in their current position.
ReplyDeleteSam Hui
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