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Appalling report on Toyota dealers

Andrew Prince

Well-Known Member
Feb 23, 2010
This is shocking - but it does go a long way to explaining the dire experiences most of us have had with Toyota dealers, and with Toyota GB as I have discovered :evil:

Here is the article as you need a subscription to read it, I've copied and pasted it below:

On a summer afternoon in the stuffy heat of a Toyota dealer’s workshop, the busy technician hoped he was in for a quick fix when he was asked to examine a brand new Yaris with a glitch in its central-locking system.
It was the third time the shiny hatchback had developed this fault in the four days since it was sold, and the owner was understandably furious.
The customer had not noticed, however, that something else was wrong with the car.

As soon as the technician got behind the wheel to drive it into the work bay, he was alarmed by a loud clicking from the steering column.
Worryingly, it was not the first time technicians in the workshop had noticed this suspicious noise when servicing the popular Yaris model. They had shared concerns that it might be an early symptom of a fault which could later cause the steering system to “malfunction drastically”.

The technician, who worked for a large dealership in the south of England, decided to replace the entire steering column and made a £500 order for the parts he needed.

Within an hour, his manager marched into the workshop angrily demanding an explanation. “All hell let loose,” the technician recalls. “He told me Toyota would never agree to the repair . . . without the customer complaining.”

The technician stood his ground. “I went off my head at him. I just said that it was a load of horse s**t. The customer deserved better,” he says.
The problem was that Toyota’s warranty policy and procedures manual, a secret document seen only by dealers, states that “the warranty should address only those issues raised directly by a customer”, unless they are a direct risk to safety or reliability.

As a result, defects such as the clicking Yaris steering column, heavy clutches, corroded wheels and faulty wing mirrors cannot be fixed under warranty unless the customer reports them.

Dealers who are caught out repairing these “cosmetic” faults under warranty without a customer complaint can be fined up to four times the cost of the work.

Although Toyota said last week that this maximum fine is “very rarely” imposed and that it always covered safety issues under the warranty, dealers and technicians said that they felt compelled to disregard more serious problems that could affect the operation of the vehicle, such as oil or water pump leaks, faulty shock absorbers and blockages in the engine oil pump.
The policy caused such discomfort among technicians that dealers from the south of England zone decided to challenge Toyota bosses at a meeting at the company’s futuristic headquarters in Epsom, Surrey, in November 2009.
The zone — which is made up of 15 dealers — gathered at the four-star Arora hotel in Crawley before the meeting to put together an agenda that set out “grave concerns” about the ethics of the practice.
The fears were presented to Toyota bosses by Tim Murphy, then chairman of the southern dealer group and now brand manager for Motorline, a major Toyota outlet.

The minutes of the meeting say the dealers felt the policy was “very demotivational” to technicians who feared being held responsible should “something terrible happen”. Ignoring manufacturing defects in new cars in order to avoid paying for the repairs was “most definitely not in the spirit of complete customer satisfaction”, they said.

One witness said Jon Williams, the firm’s commercial director and now its UK boss, “just said ‘Stop!’ and raised his hands” when one dealer challenged him directly over concerns that the policy could compromise customer safety.

Williams told The Sunday Times that he could not remember the exchange and “didn’t think” he was in the room during that part of the meeting. The minutes, which were prepared by the dealers, suggest concerns were raised by the whole zone, but Williams said that they were “likely” to have been just “the views of one retailer”.

Toyota bosses sought to quell the concerns by telling dealers that any genuinely safety- related items should be covered under the warranty, including significant oil and water pump leaks. The firm says its dealers are now happy and the matter has not been raised since.
However, Shaun Mcelhinney, who ran three Toyota and Lexus dealerships in Suffolk and Essex, said concerns about the policy continued until he sold his business last summer. “If it was a safety- related issue and the customer hadn’t reported it Toyota would always say ‘get it done’,” he said. “If it wasn’t safety and it wasn’t going to affect the performance of that car there and then: ‘not interested’.”

He listed items that might not be fixed if the customer failed to report them as: “water leaks, oil leaks, noisy steering racks, cosmetic things on the car such as alloy wheels — basically anything that wasn’t safety related”.
When cars came out of warranty, the dealer became free to tell the customer about the very same faults and charge them for the repairs because, he said, Toyota is “in the business of selling parts”.

He said that in the month before he sold his dealership last May, he had been penalised for replacing a set of corroded alloy wheels on an £80,000 Lexus because he could not prove that the customer had complained about them.

A second former dealer has made similar allegations. “This is how it works. A Yaris comes in for a routine service but the technician may find that it has an oil leak in the engine. Oil leaks were a company problem, a major problem. The engine could lose all of its oil and if the engine seizes up at 70mph the car will go out of control.

“If it was clearly safety related the dealers had to carry out the repair. [But] the issue of clearly safety related was one that the dealers and Toyota did not agree on.”

Toyota denied this and insisted all oil leaks are safety issues and will be repaired.

David Duke, who until last year was the warranty manager at the Toll House dealerships in Gatwick and Horsham, alleges that dealers were made to keep customers in the dark about an array of faults until their warranties expired.

He explained how customers booking their cars in for a service were required to sign a “job card” on which any defects that they mentioned were recorded. The technicians in the workshop were then unable to carry out warranty repairs on any additional faults which they discovered, unless they were clearly related to the safety or reliability of the car.

“Non-safety-related faults are defined as ‘cosmetic’ and cannot be repaired unless reported by the customer,” he said. “The minute the warranty is expired and the financial responsibility is transferred to the customer, we could report as many faults as possible.”

Toyota auditors inspect the job cards when they spot-check dealerships, and reserve the right to penalise dealers who are found to have conducted repairs that were not mentioned by
the customer.

Documents seen by The Sunday Times show auditors reprimanded Toll House in 2009 for four repairs which breached the secret policy, including corroded wheels, heavy clutches and faulty wing mirrors.

The documents repeatedly state that the repairs were wrong because the faults were discovered by the technician who entered them on a visual safety report (VSR) which was given to the customer. It states: “This fault was originally reported on a VSR and is not therefore a customer reported condition.”

A covering letter with the documents emphasises the point: “There was no evidence to confirm that the customer had reported these conditions and therefore the claim should not have been claimed under the terms of the warranty.”

Toyota last week claimed the breaches of the policy were more complex than the documents indicated, and said one of the clutch faults had been deemed wear and tear. It pointed out that the dealer had not actually been fined.

Duke said the policy was a source of constant frustration to technicians in the workshop who felt their hands were tied when they found faults with new cars because the policy so often prevented them from carrying out repairs. A technician at another centre, who asked not to be named, said: “I found it mindblowing. How is the customer supposed to know about a fault? It’s our job as technicians to recognise problems.”

Duke said the policy was a source of constant frustration to technicians in the workshop who felt their hands were tied when they found faults with new cars because the policy so often prevented them from carrying out repairs. A technician at another centre, who asked not to be named, said: “I found it mindblowing. How is the customer supposed to know about a fault? It’s our job as technicians to recognise problems.”

It is a complaint echoed by David O’Halloran, the 26-year-old owner of a three-year-old Toyota Auris hatchback. “I know as a customer that I am expected to maintain my car and make sure that the oil and coolant levels are right, but with internal things that I can’t check, like the clutch or brakes, I would absolutely expect to be informed by the garage if there was a fault.”

His comments were seconded by Robert Gifford, chairman of the Parliamentary Advisory Council for Transport Safety. “Most customers wouldn’t know that their car had developed technical faults because they are not mechanics or experts.

“They trust the garage to tell them when something is wrong,” he said.
Some Toyota owners have taken to online forums to express their dismay after their cars mysteriously developed faults as soon as their warranties expired.

One posted a message saying that his Toyota Corolla had suddenly begun emitting white smoke and making “roaring” noises. “I feel this is totally unacceptable in a car that is just out of warranty and has been serviced regularly by a Toyota garage,” he wrote.

Another user described how she was suddenly told that she needed a new clutch within weeks of her Toyota Aygo coming out of warranty.
Which?, the consumer watchdog, and Motor Codes, the industry regulator, said they would investigate the evidence uncovered by The Sunday Times.
Insight: Jonathan Calvert and Heidi Blake

Fault lines
Minutes to November 2009 Toyota southern zone council meeting:
“The main issue; if it is in warranty it cannot be reported (gives us liability and CCS issues), if it is out of warranty, report and get the work. The zone has an issue with the ethics of this policy “TGB (Toyota Great Brittain) warranty policy and procedures manual (section on self-authorisation).
“TMC’s (Toyota Motor Corporation) principle is that warranty should address only those issues raised directly by a customer as they do not recognise ‘add-on’ repairs. In addition to customer reported faults TGB have always considered that any safety or reliability problems should also be addressed.”

Letter to the Toll House dealership in Horsham, West Sussex, following warranty audit:
“There was no evidence to confirm that the customer had reported these conditions (corroded alloy wheels and door mirror wind noise) and therefore the claims should not have been claimed under the terms of the warranty.”

Toyota says there is no problem
Jon Williams, the managing director of Toyota GB, was on the phone to The Sunday Times within hours of our reporters putting to him the allegations made by dealers.

He promised to “drop everything” and travelled to London the following day to tell his company’s side of the story.

At the meeting, which took place 10 days ago, Williams told Insight’s reporters: “We wanted to show you today that we are real people and we care about our customers, and we care about our dealers and we want to do the right thing.

“It hurts that you are writing a story that could undermine that and damage our business.”

Williams and the two executives who accompanied him produced an independent report that said the firm’s warranty policy had the highest rate of dealer approval in the UK motor industry.

Indeed, the AA also holds the warranty up as an “excellent example of best practice”. Later the national council of Toyota dealers wrote to The Sunday Times to confirm that it believes the policy is “robust but fair”.

Williams emphasised that any safety or reliability fault would always be fixed and the cost would be covered under the warranty policy. He said nothing was more important to the firm than the safety of its customers.
The Toyota executives initially denied that Toyota had any policy of refusing to recognise “add-on repairs” — a term for faults that are not reported by the customer — until the reporters produced the firm’s confidential warranty policy manual, which clearly states that this is the case.

Williams and his executives argued that very few faults would not be fixed under the policy because almost all would fall into the category of safety and reliability. It describes all faults that are not safety or reliability related as “purely cosmetic”.

Toyota firmly denied the claim by dealers that the policy stopped them fixing any faults that could have affected a vehicle’s operation such as oil and water pump leaks, faulty shock absorbers and engine oil blockages.
The company said that steering faults would almost always be considered safety related, but it had conducted a full investigation into the clicking noise from the Yaris steering column and concluded that it was not dangerous.

Toyota says that customers are encouraged to report all problems when they book their car in for a service or repair.

It also insists that its policy is replicated across the industry. However, The Sunday Times last week contacted seven leading car manufacturers, including Nissan, Volkswagen and Ford, who all said that they would repair any defects found by their technicians under warranty, regardless of whether or not they were reported by the customer.

When pressed, Toyota said that its technicians were “at liberty” to ring customers and inform them about faults that had not been reported. The customer would then be required to book the car in for an entirely new repair and report the fault in order to get it fixed.

However, the five former dealers and technicians who spoke to The Sunday Times said they had always understood that they would have been penalised for telling customers about faults.

It is unclear why Toyota chooses to burden its customers with extra bureaucracy by insisting that they book their cars in to the workshop all over again when technicians find defects with their cars, rather than repairing them on the spot.

Nor is it obvious why the firm operates a complex audit system that can penalise dealers for repairing faults under warranty that are unknown to the customer if, as Toyota says, its technicians are free to tell customers of any faults they discover.
Interesting read. Thanks for posting that. It makes things a bit clearer when it comes to why the dealerships are reluctant to carry out warranty repairs. :thumbdown:

I hope you don't mind but I have posted this over on the Hilux Pickup Owners Club forum too as it would be of interest to our members also.
That explains an awful lot then! Your 3 year old Toyota just lost another 1/3rd of its value in one foul swoop, s/h demand will now plummet for an alternative. I might raise the question next time I meet Mr Williams :evil:

The oil strainer issues with VVTi's & the 3.0 TD's is one that obviously springs to mind.

This catergorically does not happen at your Hyundai/Kia dealerships, if in doubt it gets fixed.

Merecedes were well known in the trade for fixing the Corrosion Class merc models when you took your rusty new nail in for a service, "it might be a few days sir, here's a loan car" meanwhile your car would go in for a respray without you knowing ;)
What the technicians may not realise is that although they are employees they are personally liable in tort for any damage caused to a customer due to their negligence. So the customer can sue either the technician or garage. The garage cannot contract their technicians out of negligence, nor themselves. Obviously they go for the garage because they have the insurance but if the garage stops trading and the insurance lapses the technician is then at greater risk and his personal assets are more exposed.
Dishonesty obviously pays, and that would appear to be official.

Knowingly ignoring a fault that is covered by the warranty is tantamount to fraud, I'd say. And punitive action by the employer on the employee for not ignoring it, must be a criminal act, if a lawyer was to dig deep enough.

And I'm sure it's not only Toyota that's guilty.
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Interesting reading thanks for posting.

If we get a car in for service or a repair and find another defect not related to the customer compliant this is what happens.....
Under warranty, we fill out an additional work sheet, give this to either the workshop manager or the after sales manager, they look at the defect and agree with your findings then sign, date and time on the sheet.

We're even allowed to carry out an end of warranty check where any defects found are to be repaired.

The only restrictions are things like paint defects, trim rattles and such things.
Only got half way though it but can tell you that its a national issue at pretty much most manufacturers.

Most places get round it by "fudging" customer complaint forms and signatures for warranty purposes so its ot as bad as it sounds but its still not an ideal situation !