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brand trainwrecks

Toyota Undertakes Record Risk With Unprecedented Sales Halt

Posted by Dale Buss on January 28, 2010 09:51 AM

Call it the stop heard ‘round the world.

The Detroit News is reporting that federal regulators were pushing Toyota to take more decisive actions to deal with the affected vehicles.

The venerable brand's subsequent decision to suspend sales of several recalled models until it figures out its accelerator-pedal problem – including its best-selling Camry and Corolla sedans – sends a shocking signal about just how serious the situation is and how badly the company’s top management has bungled it.

But Toyota’s halt of sales and production of eight models also comprises perhaps the biggest brand risk ever undertaken by the world’s leading automaker. Ultimately, the company decided that this move comprised less risk than simply continuing its behind-the-scenes efforts to corral the problem.

Consider that no automotive brand in recent history has ever just stopped producing and selling its most popular models for an interim because it couldn’t figure out how to make them safe. Ford ordered dealers to stop selling a handful of Ford Ranger pickups in 2002 because of an axle problem, and Nissan told dealers to stop selling its 2006 Altima for a while because of excessive consumption of oil. But the stoppages – and the stakes – were puny in those moves compared with what Toyota has done.

Also consider what the Toyota brand is and has become over the last 20 years. Just recently, the company overtook the beleaguered General Motors for global sales leadership, a significant brand achievement in itself. Before that, Toyota had established an almost completely unblemished reputation for quality, safety, and overall practicality with American consumers.

At the same time, Toyota had become the most-copied manufacturer within the industry. Competing automotive OEMs openly conceded that they’ve been trying to copy the Japanese leader’s vaunted Toyota Production System. Toyota became synonymous with continual, meaningful improvement in its processes and its vehicles – and for never making a significant mistake.

True, the brand has taken a few big risks before. One of them was its decision to blaze trails in hybrid technology with Prius; that decision has paid off handsomely. The other major risk was launching the brand into nearly every segment in the US market to match the breadth of offerings of the domestic Big Three; that decision hasn’t paid off so well, as Toyota has been burdened, for example, with a slow-selling Tundra pickup truck.

But those major decisions were deliberate and long-term. By contrast, the company’s new gambit to stop the bleeding caused by its accelerator problem is abrupt. And rather than make them appear confident and determined to “protect consumers,” this move only leaves Toyota leadership looking confused, almost desperate. Remember, it was just a few weeks ago that Toyota sales executives in the US were expressing high confidence to the automotive press that they were putting the accelerator-pedal fiasco behind them.

Toyota did begin running TV ads over the weekend that explicitly addressed “safety” and “quality.” But that was like spitting into the gales that Toyota has created for its brand with its latest decision.

And once Toyota executives believe they’ve got the technical and manufacturing problems fixed, they’d better have a lot more up their marketing sleeve. American consumers may appreciate the fact that Toyota apparently has their backs in this mess, but never again will they simply assume that any vehicle bearing the “Toyota” nameplate is a safe bet.


Andy Germany says:

There is one big recall in recent memory that you missed. When Mercedes-Benz launched the original A-Class in 1997, they also discovered quickly that it had a safety problem. Namely, it flipped over during the so-called "moose test". This was a huge, high profile embarrassment for an entirely new model in a new segment for a brand known for safety and good engineering.  After a short period of stonewalling and denials, Mercedes stopped sales, recalled all of the cars on the market, and refitted all of the cars with new suspension tuning and ESP, electronic stability control. Perhaps the big difference between this case and the Toyota case is that Mercedes recognized the problem and offered a solution within days. Also, it did not involve anything like the millions of cars Toyota is recalling.

January 29, 2010 04:16 AM #

Carmella United States says:

I disagree. As a long-time customer of Toyota, I would have expected nothing less. I think you've got it wrong. The fact that Toyota leadership chose to put a massive recall over sales clearly underscores what drive them. Halting sales shows a level of confidence in their decision to solve the problem while reducing consumer risk is something that no other car maker would ever consider doing -- government pressure or not.

Don't forget. This is the same car manufacturer that -- rather than put their production floor out of work for many months as the industry went in the tank last year -- they ceased production and sent the employees to training to allow them to continue to receive a paycheck. I'll take the Toyota brand any day. Lest we not forget, a brand is the sum of it's part ...

January 29, 2010 08:11 AM #

Adam United States says:

I wholeheartedly agree, while it's clear Toyota still doesn't quite know what the problem is, the brand has established so much credibility over the years it would take a considerable amount of bungling to erode that significantly -to the point that I would part with my Hybrid Camry or hesitate to buy another.

It seems that people are trying to write them off a bit prematurely by linking the concepts of Toyota's reputation of high quality with the notion that they are somehow seen as a brand of perfection, and I don't think most car owners expect that.

January 29, 2010 10:14 AM #

Deb Budd United States says:

If Toyota acknowledged that the problem is not a floor mat, but their electronic throttle system, THAT would be a responsible act worthy of a trusted brand.  Independent sources, including the NHTSA, have been investigating the electronic throttle as the culprit since at least 2005, yet Toyota continues to publicly insist a few clips on a floor mat will correct the problem.  Lives have been lost and many Toyota owners injured (or at the least, terrified) by this malfunction.  Shutting down production until they figure this out is what they should have done years ago.  I'll be sticking with Honda, frankly... at least until they add an electronic throttle.  And has anyone heard whether some Lexus models may also have this problem?
Here is some background on the history of the accelerator investigations:

January 29, 2010 10:05 AM #

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