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There’s no doubt Toyota Motor Co.’s massive U.S. recall will hurt its brand. To what degree is the matter for debate.
Toyota consideration and interest dropped dramatically since the company recently announced it was recalling half its line, according to Kelley Blue Book.
More than 20 percent of those who said they were considering a Toyota prior to the recall now say they no longer are considering the brand for their next vehicle purchase. Toyota’s overall brand consideration dropped to third-place behind Ford and Chevrolet.
When comparing Toyota consideration in Kelley Blue Book Market Intelligence’s Brand Watch survey from the days prior to the recall to the days following the recall announcement, consideration dropped to just 18 percent from 29 percent.
That’s a short-term problem. Long term, Toyota’s prospects for recovery remain strong.
More than 30 percent of those Kelley surveyed said Toyota is currently experiencing a challenge, but will offer better products in the future. In addition, 28 percent said that Toyota has had fewer recalls than other manufacturers, and the current recall does not change the fact that they produce great products.
“While it may take some time for Toyota to regain consumers’ trust and confidence in their products, the company should feel somewhat relieved that the car-shopping public does not appear to believe the effects of this crisis will be permanent,” said James Bell, executive market analyst for Kelley Blue Book’s kbb.com.
That bounce back may have already started.
Edmunds.com’s reach shows Toyota purchase intent, which fell to 9.7 percent, now stands at 11.8 percent. That’s close to the 13.9 percent Toyota enjoyed before the recalls.
Most recalls cause a limited effect on sales, according to George Hoffer, a professor of economics at Virginia Commonwealth University.
Even high profile events, such as the Ford Explorer recall in 2000, only dampen sales for one or two months.
But this is uncharted territory.
The recall damages Toyota’s most important asset - a reputation for outstanding quality.
“Their pedestal will have been shaken,” Hoffer said.
Tom Webb, Manheim’s chief economist, said this halo effect probably drove Toyota’s higher-than-average residual values. That could change in the face of the recalls.
The reason for the recall creates a lasting problem, as well, Hoffer said. Unintended acceleration strikes at consumers’ deepest fears of losing control.
A similar problem with the Audi 5000 in 1986 stunted that brand’s growth for years, Hoffer said.
“They lost an entire generation,” he said.
Toyota has been suffering growing pains for a while as it transforms into a full-line U.S. manufacturer.
The brand’s average buyer’s age keeps creeping up, said Art Spinella, president of CNW Marketing Research.
“Camry is the new Buick,” Spinella said.
Older drivers tend to worry more about safety, adding yet another challenge to image control for this recall. |
