Tuesday, February 23, 2010

Toyota’s Crisis Management

From the perspective of a young man who is marginally obsessed with cars, the name Toyota has always conjured images of utilitarian vehicles whose primary demographic was people looking for a machine that will last a long time for a little amount of money. Toyota’s brand never achieved the exciting racing connotations associated with its competitors Honda and Nissan. This, I suspect, is probably due to their lack of success as a Formula one race team, and their focus on fuel economy rather then engine power.

Despite not placing high on the “dream car” list of a young car enthusiast, Toyota is undoubtedly one of the most recognized and respected brand names in America. As of 2006, it ranked the highest in return customers for any US car manufacturer, with its luxury brand Lexus taking a close second place. It seemed like it was the Golden Child of auto makers. At least, it was

Due to its recent recall, the Japanese auto-giant is experiencing a bit of a brand crisis. The one solid concept the company was known for (reliability) has been put into major jeopardy. Nearly 4.8 million vehicles of both the Toyota and Lexus brand have been recalled due to functionality issues with floor mats and accelerator pedals.

So what has Toyota done to make amends with angry customers? Well, if you watched the Super Bowl you might have seen this Toyota public announcement:

This heartfelt ad might seem like a good idea at first. But if you examine the response to the video on YouTube you will see that the internet crowd does not buy it, especially after information came out to suggest that Toyota stalled recalling faulty vehicles for almost a whole year. One commenter says:

“If they have no respect for me why should I respect them???”

This Bay City News article asks readers to respond to Toyota’s campaign, and received some of the same kind of outrage:


Despite the backlash, these ads might be the best way for Toyota to go about repairing their image. The Big 3 US auto makers has long faced quality issues with their vehicles, and some claim that their slip into obscurity may be due to their lack of honesty with their consumers, and their perceived stubbornness in changing practices to ensure higher quality. Also, the responses on the internet aren’t necessarily the views of American consumers as a whole.

I am not one to be easily influenced by a sappy TV ad, and I think most educated American’s are in the same boat. Though it might be difficult to translate into a marketing campaign, the best way to show quality is through a good track record and word of mouth. In my opinion, the only way for Toyota to reclaim its former days of glory is to actually learn from their mistake: admit quality problems immediately when they are recognized and make sure your 2011 models are spotlessly reliable.

The fact that Toyota has shut down some of its manufacturing plants to deal with problems in current models might be a pragmatic business solution, but its marketing implications might not be as good. Stopping production implies that there are deeper problems in the company then just floor mats and accelerator pads… to me, this doesn’t seem like a good thing to be putting in commercials for the public to see.

Despite its recall, Toyota still enjoys a decent reputation among the American public. According to this NYT article, it is still ranked 3rd in reliability, and Consumer Reports describes their vehicles as, “extremely good, reliable cars.”

So, Mr. Akio Toyoda, my advice to you is to wait out the storm. Lay low and let the product speak for itself. If your commitment to learning from your mistakes is true, the consumer will recognize this as a snafu. If not, you might as well begin reissuing the Ford Pinto with a Toyota insignia on its hood.ford-pinto

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