Business Insurance – Toyota Recalls Again

Car giant Toyota is once again reminding all companies of the importance of business insurance following news that it has to recall 1.7 million vehicles around the world after concerns about a suspected fuel leak.



Business insurance can help with such matters as product recalls and there’s no doubt that Toyota, named just a few days ago as the largest car manufacturer in the world in 2010 (knocking GM off the top spot for the first time in decades), will have consulted its various policies.



It’s not just a matter of blue-chip companies of course, as smaller operations need protection as well. Small business insurance is an equally demanding sector.



But the fact that Toyota has had to recall yet another load of cars will send shock waves not only through SME insurance circles, but every insurance company as well.



The latest Toyota recall involves 1.2 million cars in Japan and overseas, over 400,000. In the UK, they reckon it involves 15,500 Avensis models and 3,100 Lexus.



Toyota played down the leak which the Japanese Transport Ministry said involved slight cracks which have appeared in fuel pipes. The Ministry reported: "Slight cracks may appear on the engine fuel pipes. If the car continues to be used, the crack may be widened and there may be risks of fuel leakage."



Toyota were keen to stress that there have been no accidents, but around 140 faults have already been reported in Japan.



Recalls come in two types: mandatory and voluntary. Toyota said that it had offered voluntary recalls of nearly a quarter of a million of Lexus models. This included models made in 2006, 2007, 2008 and 2009.



Car industry experts are amazed that Toyota has had to issue another recall and are waiting to see how the company deals with the problem. Most of the flack it endured last time around was because the company appeared to drag its feet over the problem and were not quick to respond to customer complaints and arising issues.



Toyota senior management will be braced for another round of washing dirty linen in public and will be at pains to show that they have learnt from the past.



Koji Endo at Advanced Research Japan told the BBC: "There is that perception of here we go again, and that hurts Toyota's image, especially in North America."



The business insurance world tends to take a knock at the time of major product recalls and the repercussions can be felt through all industrial sectors. And for all businesses, it’s not just a case of taking a financial hit, it’s also the less tangible perception problems which can damage a company’s reputation with the customer marketplace. Product recalls are something to be avoided at all costs.



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