How Toyota’s poor handling of its recalls it hurt its image more than the recalls

How would you feel if you were a Toyota executive and read this feedback from a consumer: “I don't believe I can ever trust a Toyota car again. They have to show a lot to change my mind in the future" (Steinberg 2). Toyota executives should feel nervous, because the quality of their cars has been their edge over other car manufacturers for many years. Of course, all car manufacturers have had to recall some models. In these cases, customer service and how the company handles the recalls is just as important to the consumer as the quality of the car. Toyota, a giant Japanese car manufacturer, recalled millions of cars in early 2010. The recalls themselves were huge news stories, but the media also honed in on the way in which Toyota handled the recalls. If Toyota had been more honest and forthright with consumers from the beginning, not nearly as many people would have turned their backs on the company. Many of these consumers decided to buy cars from other manufacturers, who may have had recalls in the past, but survived them much better than Toyota because of the way in which the recalls were handled.
Consumers have always rated Toyota and its models highly. The brand got the second spot in the most recent Business Times Top Brands car category survey (Dlamini 1). However, the company received different ratings in a survey conducted exclusively for Advertising Age after the recalls had begun. Before the recalls early this year, 92.4 percent of consumers viewed the brand as reliable (Steinberg 2). After the survey, which was conducted in early February, 66.4 percent of consumers thought of Toyota as reliable (Steinberg 2). Despite Toyota’s efforts to maintain customer loyalty, consumers have begun to place a higher value on Toyota’s domestic rivals such as General Motors, Ford, and Chrysler. One respondent to the Advertising Age survey said, "Toyota has been overrated for years. Domestic automakers make the same or better quality cars these days," and the general theme dictated by the majority of respondents of the survey echoed “Buy American” (Steinberg 2). Rob Larson, a sales manager at Larson Ford in Lakewood, N.J., expected to see disappointed Toyota customers coming to his lot as they learned about incentives being offered by Ford, such as $1,000 to Toyota, Lexus, Scion, Honda or Acura drivers who trade in vehicles or have leases expiring by June 30 (Shipkowski A16). General Motors and Chrysler had similar incentives to attract Toyota customers (Shipkowski A16).
Since Toyota has traditionally been a respected and trusted brand, consumers hold high expectations for the quality of its cars and customer service. Two more respondents to the Advertising Age survey said, "I want the problem to be fixed quickly and right. And I want to have my faith restored in Toyota again," and, "I appreciate them recalling their products and admitting there has been a mistake, but frankly I had higher expectations" (Steinberg 2). These responses suggest that Toyota should have been active in February in order to maintain and earn back the trust and respect of consumers. Even if some people were willing to forgive and forget the recalls, Toyota did not handle the situation as well as it could have, according to analysts. Dealers, brand experts, and marketing professionals predicted that if Toyota did not handle the recall well, its brand image would be tarnished (Dlamini 1). On the other hand, they agreed that if the company handled the matter in a “transparent, honest and responsible manner,” Toyota would see consumers forget the recalls after six months (Dlamini 1).
The company did not act soon enough in apologizing and informing consumers on what steps would be taken to fix the problems. The company’s image began to tarnish as early as January 21, 2010, at which time Toyota did not invoke any PR damage control (O’Leary 1). However, Toyota’s domestic competitors did not waste any time creating and advertising incentives for consumers to switch car dealers. The combination of these two actions, or lack there-of, have greatly harmed Toyota’s image and the trust consumers have for the company. If Toyota had been upfront and clear about its apology and how the company plans on resolving any recall issues from the beginning, the damage to the company’s image could have been greatly reduced. However, it does not appear that Toyota had thought of that back in late January and early February. Ian Schafer, CEO of Deep Focus and the owner of two Toyotas, said in February, "If you look at Toyota's Twitter feed, it's all about recall information and it reeks of spin. It doesn't feel like they're trying very hard; it feels like they're defusing. I get more information right now from CNN news alerts and the government. People expect access to a lot of information and a time like this is not a time to underwhelm them” (O’Leary 1).
Toyota had the opportunity of reaching 106 million viewers during Super Bowl XLIV on February 7, 2010 (Bauder 1). Instead of airing an apology commercial during one of those time slots, Toyota waited until the week after the huge advertising event to air a one minute commercial, telling consumers “For over 50 years, Americans have counted on Toyota... 172,000 Toyota and dealership employees are dedicated to making things right. Notice we said 172,000 and not 172,002. Those two were the guys who screwed up. As soon as we heard about all of those car crashes, we fired those two guys” (Toyota Commitment TV Commercial). However, this commercial does not inform consumers of what the company’s plans were for fixing the problem. Informing people that the two guys who “screwed up” does not help the public know where and how to get their cars fixed.
Once Toyota started interacting with its customers about the recalls, crisis-management experts began criticizing the company for not being clear and reassuring enough (Shipkowski A16). As a result, U.S. car dealers have begun seeing more Toyota owners in their lots (Shipkowski A16). In late January, Toyota released an ad campaign in major newspapers to attempt to communicate with its customers about the recalls. However, experts criticized the attempt and claimed Toyota needed to do more to save face with its customers. Alexander Edwards, the president of Strategic Vision, an automotive research group, commented about the ads, “They are trying to do the right thing. But what's going on isn't stated very clearly, and that causes more uneasiness with customers" (Shipkowski).
Despite Toyota’s many mistakes, including the recalls and the manner in which they were handled, and incentives by American companies to sweep up dissatisfied Toyota customers, the Japanese manufacturer saw a 40 percent increase in sales in March (Associated Press 1). Bob Carter, the vice president of the Toyota Group, said, "Many more retail consumers are going to be buying Toyotas in the month of March than any other brand” (Associated Press 1). The reason is because Toyota initiated multiple incentives in early March, including zero percent financing on recalled models, low-priced leasing and free maintenance (Associated Press). Toyota's incentives were supposed to end April 5, but Carter said some will continue into the spring, including free maintenance for returning Toyota customers (Associated Press).
Toyota may have seen an increase in sales in March, but it was only because of the multiple incentive programs. Even though American car manufactures have begun similar programs, eventually all manufacturers will stop the incentives. When that happens, the old issue of the quality of the car and the trustworthiness and reliability of the manufacturers will reappear (Associated Press). At that time, Toyota customers should decide if they have really forgiven the company and feel comfortable buying a Toyota after the way the company handled the recalls. Many will not consider buying another Toyota vehicle because the company was not honest, upfront, and clear in its apology and handling of the recalls. If Toyota had possessed those traits when the recalls first began, the company’s image might have suffered a lot less.

Toyota Commitment Television Commercial:
http://www.youtube.com/watch?v=sfrPn2cgyZA

Works Cited


Associated Press. "Toyota sales on the rise despite recall." The New Zealand Herald 1 Apr. 2010: Lexis Nexis. Web. 26 Apr. 2010.

Bauder, David. " Your request is being processed... Super Bowl 2010 Ratings: 106 Million Watch, Top-Rated Telecast EVER ." The Huffington Post. 8 Feb. 2010. Web. 10 May 2010.

Dlamini, Artwell. "Recall tests consumers' faith." Business Day (South Africa) 11 Feb. 2010, Business Day: Lexis Nexis. Web. 25 Apr. 2010.

O'Leary, Noreen. "Toyota: A Battered Giant." AdWeek 8 Feb. 2010: LexisNexis. Web. 10 May 2010.

Shipkowski, Bruce, and Tom Krisher. "For Toyota, an important drive to reassure nervous customers; Without giving details, ad campaign pledges fix for gas pedals." The Washington Post 1 Feb. 2010, Regional: A13. Lexis Nexis. Web. 26 Apr. 2010.

Steinberg, Brian. "Lightspeed survey: Toyota's loss of consumer trust is domestic rivals' gain; Exclusive research shows 26% of consumers view brand as lower quality than U.S. autos following recall." Advertising Age 8 Feb. 2010: 2. Lexis Nexis. Web. 26 Apr. 2010.

Toyota Commitment TV Commercial . Dir. Toyota. 17 Feb. 2010. YouTube. Web. 10 May 2010.