Toyota’s Quest to Regain its Reputation, Market Share and Sales
After enjoying a top ten ranking on Ward’s Automotive list for most of 2009, Toyota Motor Corporation suffered a severe blow to its image of quality, safety and reliability. Toyota, the world’s largest automaker, has recalled 8.5 million vehicles worldwide as a result of runaway vehicles caused by defective gas pedals, faulty floor mats and braking software glitches. The company is desperately trying to salvage its reputation and regain market share and sales. Some considered this to be the biggest crisis in the auto industry since the bankruptcies of GM and Chrysler while others thought that Toyota would not be able ...view middle of the document...
9 percent after five days of declines. According to Bloomberg Business Week, “Toyota’s market capitalization has fallen to about 12.3 trillion yen ($136 billion) from about 12.9 trillion yen on September 15, when it notified U.S. dealers to inspect how floor mats are installed on models after four people were killed in an accident”. (Ohnsman, 2010)
For years, Toyota’s success has been partially driven by loyal customers who repeatedly purchase only Toyota vehicles. Many experts thought that the company’s reputation for outstanding quality was finished. It was also assumed that people simply wouldn’t purchase any Toyota vehicle, especially after reported deaths.
Subsequent to the reported deaths and massive recalls, the airways were flooded with reports that were not flattering to the automaker’s image. Consumer Reports announced its top picks in its annual auto issue and it didn’t include any Toyota models in key segments such as family sedans, small sport-utility vehicles and family SUVs. “Still, the magazine picked the Prius as best “green car” and the Lexus LS 460L as best car overall.” (White, 2010) Thus, it is vital for them to minimize bad publicity and somehow reassure consumers that Toyota vehicles are still safe and reliable while resolving the current issues.
In efforts to meet these objectives, Toyota announced a series of aggressive incentives. The following alternatives were considered:
• Complimentary maintenance with loaner vehicles and extended hours
• The addition of a brake system override
• No-interest loans
• Discount lease offers
• Standard free maintenance on new vehicles
• Extended Warranties
• Reduce sale prices
• Increase quality controls, safety tests and inspections
• Increased response time to customer complaints
Complimentary maintenance with loaner vehicles and extended service hours would make things more convenient for consumers while their vehicle is being repaired as a result of the recall issues.
The addition of a brake override system would give consumers more confidence and a better piece of mind in the event of problems with the braking system. Starting with new models, this system would allow the brakes to work if they are pressed together with the accelerator. (Kageyama, 2010)
No interest loans and discount lease offers were extended to encourage sales. As reported in the Wall Street Journal, “Dealers say Toyota has sweetened lease deals on many models by increasing the “residual values” – the projected value of the car at the end of the lease contract – and dropping finance rates. Toyota dealers are moving 2010 Corollas with a 0% interest, five-year-loan offer. New Camrys are on sale for as little as $179 a month. The Lexus luxury division is promoting discounted lease offers as well, which vary by region and dealer. Toyota is also offering deals to people who want to buy a new car. Depending on where you live, for example,...