Sunday, February 28, 2010

Feasting on Toyota's Misfortunes

It is not a good time to be a Toyota corporate representative at all. Walk over to your local Toyota dealer and you’ll likely see a change in tone that was not there before the media blew the lid off the un-intended acceleration issue.

Not too long ago, the once invincible Toyota Corporation had very little preventing it from becoming the top automaker in the world and not even the “engine sludge” debacle of the late 1990’s did much to tarnish its image in the eyes of the industry and the consumer alike.

Yes, Toyota had won the admiration of many and it effectively established the gold standard that other automakers were measured against. Toyota’s rise to the top was neither sudden nor without merit. Over the last decades, the company invested heavily on quality, technology and marketing that all but guaranteed it’s almost bullet proof reputation.

And despite the steady improvements by some of its competition, the industry as a whole is not without high profile recalls and it is only sensible - and self preserving - for other automakers to adopt a measured and restrained position even though they will invariably benefit from Toyota’s hardships.

Take Honda for instance. The company’s management instructed its employees and public relations personnel to not only avoid commenting Toyota’s misfortunes but also avoid predatory public comments.

Yes, Honda sales numbers indicate that the company is benefiting from Toyota’s woes but make no mistake: Honda is keenly aware that they are not immune to similar issues and on this note, neither is any other manufacturer. Unless you are a bottom feeder in this industry, you will refrain from publicly and openly capitalizing on Toyota’s misfortune.

How about consumers, particularly those who are directly affected by these recalls? Well, I break this rather significant universe into two distinct groups: The long time Toyota owners, and those who have only recently purchased their first Toyota.

It is quite possible that Toyota’s long term prospects are not in jeopardy with the first group of owners. These owners have likely purchased two or more Toyota vehicles and have become very loyal to the brand. Perhaps the most loyal Toyota fans are the owners of the company’s most recognized hybrid car, the Prius. If you have any doubts about this, why not check some of the most popular online forums like CleanMPG and PriuChat?

The same cannot be said about the second group of owners. In fact, Toyota has every reason to be very concerned about this second group of owners as well as the pool of potential new owners that are so critical for its continued growth. You see, these owners did not have a chance to develop the brand loyalty of the first group and are hence more likely to cast doubt on Toyota’s much vaunted reputation.

Will Toyota ever recover from the effects of this crippling rash of recalls (floor mats, stuck accelerator pedals, steering issues and alleged software glitches)?

While we certainly hope so, we also hope that the automaker will re-engineer its internal communication processes as well as the mechanisms that admittedly failed the consumers and the brand’s image. This includes improved customer support as well as a return to a greater focus on quality control in all stages of the design and manufacturing processes.

The future remains bright for Toyota and we have no doubt that this crisis is not going to be wasted by the company, the government regulatory agencies or its competitors.

Even the legal industry is a significant beneficiary as it devours the automaker’s margins and reputation in its insatiable appetite for lawsuits.

Even though the maggots also get to feed, consumer and product safety will improve and that my friends, is good for us all.

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