Toyota using imperfect parts now?

So, we will have to pay a market adjustment, Toyota will use parts they normally wouldn't and Toyota is raising its operating profit.

https://www.powernationtv.com/post/toyota-will-use-imperfect-parts-instead-of-pausing-production

 

i'm fine with it, its not like we are talking scratched door panels or fenders:

 

Meh, a scratched or blemished alternator doesn't bother me

 

I get that, but its parts that they would normally throw away. So Covid allows us to reduce our standards?

 

I don't see it as a reduction of standards, per se. If it impacted the performance of a part (or the aesthetic of a part that is meant to be aesthetic), then it would be a reduction of standards.

This is using a tough situation as an opportunity to be less wasteful.

Would you rather have a 4Runner with a scratched alternator or no 4Runner at all?

 

Honestly, a scratch alternator is no big deal, but once you start cutting corners for a dollar, where does it stop. There has been conversations about Toyota’s decline in quality control over the years, does this add to it.
As I think about it more, I’m not sure I’d be happy looking under the hood of my brand new vehicle and seeing some scratch up stuff.

 

You have to decide whether it makes or breaks the purchase decision for you. Toyota and others have sat on thousands of vehicles for months due to a chip shortage. They’ve probably also experienced shortages on other parts due to the supply chain coming to a near halt in this country. So it’s idiotic for them to throw away the mechanical parts they DO have just because of cosmetic blemishes, because that could well mean throwing away millions of dollars of good inventory, and sitting on thousands more vehicles that otherwise are perfectly fine. How much money should automakers volunteer to lose under these conditions? And no, they’re not too big to fail, or so fat it doesn’t make a difference.

 

If it makes any difference in profit, the bean counters will definitely get theirs first.
We the buyers, SOL.

 

they still do today , the insurance company can use aftermarket parts on new cars as well . Read your insurance company policy . Some insurance companies can use used or aftermarket parts even on same year cars. Aftermarket means not made by the manufacturer like Tong Yang.

 

And idiots will pay over MSRP for it.

 

I do not believe Toyota has been sitting on vehicles, Ford yes, seen the pictures. I am not a fan of them changing their standards due to this situation. Why were they throwing away parts before? Why not return to the vendor, why not find a way to sell the parts…. Slippery slope.

 

Maybe you’re right about them sitting on cars. They simply cut production by 40% for a while.
Maybe they’re just smart:
https://autos.yahoo.com/toyota-busts-car-microchip-shortage-200000094.html

 

Would you rather transparency about this process or the secrecy others use? We likely get this from everyone, but at least Toyota is open about it.

There's a large need to not waste products in the current environment, but if there is no performance/reliability lost, I would accept that.

Watching a good bit of Japanese content it appears the philosophy is to be respectful to the food they eat, knowing they give their life for nourishment. Seems to agree with their cultural values to reduce waste.

 

the transparency is AWESOME, in fact it would make it easier if I opened the hood to a new ride and saw the scratched up products. Your statement about culture, makes me ask the question again, why wasn't Toyota finding a way use these "imperfect" parts before?

 

Truthfully, it's all speculation until we wait to see if the parts fail.

Given Toyota built a reputation on reliability this subjective conversation will probably go dormant for a while, at least I hope.

I will continue to hold them to the same level of accountability.

 

I'd agree. I doubt they would just toss them, there's still business value in an imperfect part.

To anyone worried about this, I'd suggest you research the following topics, which Toyota essentially forced the rest of the world to use after seeing it's overwhelming success:
LEAN manufacturing
Six Sigma
Kaizen
Toyota Production Systems
Building Quality in vs Quality Checking
Just in Time - Small batch sizes concepts of LEAN Manf.

Most companies didn't cut production, they just stacked them up in parking lots. Subject to weather, theft, confusion of which truck needs what part, etc. Toyota took the time to choose a more difficult path of production reduction, but that likely resulting in a more balanced processing style of matching inputs and outputs of product, based on the very efficient Theory of Constraints and the practices from Dr. Goldbatt's "The Goal" book about production renaissance that originated in the early 80's.

Side Note: The Goal is a really interesting read, and I've found use for it in so many more ways than the manufacturing it's based on. In fact, a few examples in the book relate to coaching kids sports, boy scouts, etc.

 

Oh, follow up. I do take issues with excessive Market Adjustments. I'd mentally lower someone who put excessive market adjustment at the bottom of every single future dealer list. They might make a few bucks more now, but those who remain steadfast in their ethics and mission statement will earn 5 purchases from me in the future, not just one giant windfall.

So while I agree with you on your first point @Spare Parts, it's the dealerships, not Toyota, who's doing that shenanigan BS.

 

According to the article
"In a statement to Reuters, Toyota stated it will be fine with using scratched or blemished parts from suppliers. As long as they don’t impact performance, safety, or consumer-facing aesthetics, the parts that would otherwise be thrown away will now be used."
Which I am surprised about.

Toyota has required their suppliers to have months of finished product on hand, so they can have a just in time manufacturing process. This was due to a previous issue that screwed toyota in the past. So while they may still be a just in time manufacture, they know this doesn't work 100% and their supplies can not operate this way. This benefitted Toyota in the chip shortage, as their suppliers had months of supply for Toyota.

The article is about Toyota manufacturing using "imperfect" parts, scratched and what not, nothing that should cause equipment failures.

 

In the gun world blem=discount.

 

I was referring to the above comment by you regarding that statement about Market Adjustments.

I see now you're looking for someone to agree with you, I shall respectfully withdrawal here.

 

Ahh, I see what your saying now. Yes that is dealerships doing this. So the consumer gets the shaft here. Toyota manufactures a vehicle to standards that are less than precovid standards, and the customer pays a premium for this vehicle. This is where the Toyota corporation should step in, but they will not as they are on the verge of selling the most vehicles and claiming the biggest in the world title.

But, maybe someone can use this to negotiate to precovid prices.

 

Oh, and I am not trying to get anyone to agree with me, but rather have a conversation about it. I love to hear others thoughts on stuff, helps me come to grips with my own thinking.

 

Re: Negotiating, I don't think it would do a lot of good, but worth a shot. I think the dealers are simply reacting to news of the lack of supply to drive up demand - and based on the demand for products that are not as available as in years prior - are taking advantage of people who are ALSO reacting to that same news and scrambling to get stuff "now".

The fact that the value of trade-ins / private sales are UP for the moment only exacerbates the problem. I know that I am guilty of this... I was NOT planning to trade in my truck, but was just going to wait for a T4R to pop up locally outfitted the way I wanted, and was going to buy it, and keep my truck. But the moment I found out how much I could get for my high-mileage truck, I started getting more aggressive to find a deal sooner, before the demand for used vehicles dwindles....

So I see this more as a battle of wills. Who's willing to wait them out... vs how badly do you want my product. LoL. In the past I would never pay MSRP. I ALWAYS figured out a way to get vehicles for either invoice or just over invoice (a couple of times UNDER invoice with big rebates and manipulating trade values). In this case the minute I was called and told they have a Pro for MSRP, I jumped on it because of the issues stated above. Not the color I wanted. Not the price I was thinking of (I was thinking ORP). But my mind quickly justified it. If NO ONE bought a single 4Runner that has a market adjustment, they would stop the practice so fast it would be funny. But some folks are willing to pay it, and they know it. So in a way, we (collectively) are causing the problem. just a thought/opinion.

 

Agreed, and I am also trying to use this as a way to upgrade my 17 taco to a 22 runner. I am willing to pay MSRP, as trade values make up the invoice to MSRP difference.

 

I think it's more complex. Sure, there is a scarcity psychology out there that's fueling price increases, but there's also a legitimate shortage.

The fact of the matter is that used car prices are up around 38%. New car prices are up 10%.

So consumers that have trade-ins are making out pretty well. I feel sorry for 1st time buyers or those who aren't selling a used car right now.

These times are unprecedented (at least in our lifetimes). Expecting business as usual is unrealistic.

 

Aight I'm back, thank you @Spare Parts for your comments. I misinterpreted them and felt I was no longer contributing. One of the things I enjoy most about this forum is we are willing to flex on our comments in order to remain respectable, and in this case, it's my turn to do so.

Regarding negotiation, having read a few books on this I discovered something really unexpected. Read "Master the Negotiation..."
https://www.amazon.com/Master-Negotiation-Negotiators-Objections-Conversations/dp/B08NTTT4N7?crid=25H8QPLSR9AL8&keywords=master+the+negotiation&qid=1639172130&sprefix=master+the+nego%2Caps%2C155&sr=8-3

Here's a few high points:
1. It must make sense - you have to separate the people and the problem. If you can't remove the emotion, you gotta give it some time to cool off and think about it rationally.
2. It must be efficient FOR BOTH sides.
3. It must preserve the relationship. This is for both sides. Selling me one overpriced car and me swearing off that dealership doesn't help the dealership. But understanding that sales people need to make money is the flip side of it.

How do we determine a dealer's avarice vs selling less cars so needing to make more per car. Sure, the feast at the dealership might be good, but the famine will come when no one wants to get ripped off a second time. There's also the perceived vs reality equation. If you think you got a good deal, or if you think you got a bad deal, it's going to only grow over time.

The one thing that REALLY stuck out was this, positional bargaining (hard dollars, ultimatums) limit creativity for finding a solution. A good example, a friend wants to sell me his 2017 LX 570 for $60k because he's moving out of the country in 5 months. I didn't want to pay more than $55k. So we spoke, and I asked what his monthly note on that truck was, he said about $1000/mo. I asked if he would be willing to allow me to buy it now, and rent it back to him until he moves away. Considering he can't come back into the country to do paperwork, it makes sense to remove this burden from him now, and in the end he'll pay the same amount a month to rent for the next 5 months than he would if he had the note, but he's got the vehicle out of his name, insurance out of his name, and he's done all the paperwork months in advance. He can simply have me drive him to the airport, and I'll drive his vehicle home with $5k in my pocket.

Get creative, people who sell get high on the sale as much as you get high on the buy. Find a way to tap into that emotion of the salesperson to come up with something unique if you can.

 

Indeed, I spoke to them and they said that he was ok to drive as long as he's not conducting business. If it's me "loaning" him a car it's covered. If he's running a business out of it, that requires commercial insurance.

 

A legit question. You'd really need to check with your specific insurance company on what's called "permissive use". It would be wise to know before an arrangement such as something like this.

 

A thousand-dollar car payment??? AAAGGGHHHH!!!

 

Yeah, I haven’t had mortgage and car payments COMBINED that came to a thousand.