road warriors

Toyota Brand May Be Bouncing Back Already

Posted by Dale Buss on April 2, 2010 11:11 AM

American consumers returned to showrooms in force during March, driving overall sales to their best levels since last summer’s peak around Cash for Clunkers. The spring surge brought especially good news for Toyota, whose sales rose 41 percent during the month even after its brand was badly battered earlier in the first quarter.

Automakers sold a total of 1.07 million vehicles in the United States last month, the highest absolute number of sales since the federal government’s massive buyback of late-model used cars sent sales skyrocketing last August. Last month’s number also was 25 percent ahead of March, 2009.

Toyota’s revival came on the back of its unprecedentedly large incentive program featuring zero-percent-interest loans on a wide variety of models in a bid to get consumers back into showrooms after all the bad publicity about its safety recalls in January and February.

US sales for Toyota increased by 87 percent over sales in February. “Consumers responded to the industry offers in March and came out in droves,” said Don Esmond, senior vice president of Toyota Motor Sales USA. “Our incentives clearly had an impact."

Jessica Caldwell, senior industry analyst for Edmunds.com, agreed. “People were lured by the money thrown out on the hood,” she said. “It shows that [incentives] remain a big driver and also that people were waiting for a reason to buy Toyota. They saw the opportunity and thought they might be once-in-a-lifetime kinds of deals, and jumped on them."

And overall, Caldwell said, March results “showed that people were not as unwilling to buy a Toyota now as we’d heard in the media. Some people thought it might be years before Toyota could recover” from the recall mess, “but these sales numbers are encouraging, so maybe it won’t be years. Recovery for Toyota may be faster than we had thought."

About 60 percent of Toyota’s March sales, Esmond said, were to current Toyota owners, while about 40 percent of customers traded in a competitive make. Esmond said that ratio was about typical for Toyota for any given month. So he was making the argument that the company already has recovered from the worst of its publicity nightmare.

“It was a tribute to Toyota dealers and products,” he said. “We were able to outperform much of the industry in March despite the level of scrutiny we had.” He credited improving weather, “growing pent-up demand” in the market and “continued confidence in the safety and quality of Toyota vehicles."

But was Toyota’s March performance a true rebound – or a blip? Coming months will tell whether Esmond was right.

Comments

Mark Australia says:

It makes you wonder just how badly (if hardly at all) Toyota's Brand Equity was damaged

April 4, 2010 11:11 PM #

Bassem Nassar United States says:

Toyota's top management did not move quick enough to get in front of the crisis - though their  agency and brand management executives I feel have done a wonderful job in restoring a high degree of trust back in the brand - both with consumers and just as importantly, front line employees.  

April 4, 2010 11:17 PM #

Tim Johnson United States says:

GM just went through similar quality problems, and Ford is in the middle of a recall concerning cruise control issues, but they aren't being attacked in the media. Many people understand non-union Toyota was the victim of an American car industry that has the federal government as a major stockholder and its key PR mouthpiece. The Toyota brand stands strong, even as they take unfair hits from unfair competition. That being said, Toyota could easily have handled this more effectively.

April 5, 2010 08:22 AM #

steven sessions United States says:

Toyota has an army of potential supporters in those who currently own Toyota cars because they need to support the resale value. So if Toyota solves this threat to their brand, they could come out winners. Here's more on that >>http://bit.ly/atPvY7 and it looks like they will, with people waiting on a discount opportunity to buy a quality brand.

April 5, 2010 10:04 AM #

Rudy Vetter United States says:

I think Tim made a very valid point about the true character and dimension of the Toyota "crisis". The call-back was indeed a welcomed opportunity to support US car-makers by creating such a media blast. Now as waves calm down consequences may look a little more different:
> US car brands may follow the false belief that they are back on track. They might be far away from that...
> Toyota may have the more sustainable set-up delivering a better product with a brand that shows it can resist even strong unfair attacks.
> Toyota's CEO showed a much more credible stand in front of legislators than the Detroit club of CEO's did when begging for getting rescued by taxpayers. People may not ignore this completely.

April 9, 2010 04:52 PM #

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