The news media is filled with stories about the eight million or more vehicles that Toyota (NYSE:TM) has recalled in the US, China, and Europe. These have gas pedals that can stick, which can cause unintended acceleration. Audi had a similar problem in the American market in the late 1980s. It took the Germany company 15 years to rebuild its business in the US.
Toyota has a “fix” for the problem that it is sending to dealers now so that they can make the necessary repairs on the cars which have the problem. The press and consumer groups assume that Toyota’s sales will fall and it may face liability lawsuits from owners of cars which may have been in accidents because of the defect. Brand experts claim that it could take years for Toyota to get back the quality image that it took the Japanese company over three decades to build.
But, when it come right down to it, why would a consumer every buy a Toyota again? Why won’t Toyota’s sales in the US fall by a half, two-thirds, three-quarters, or more?
Toyota had something in the 1980s, 1990s, and early in this century that American car companies did not. It built a nearly defect-free set of cars that got good gas mileage, needed few repairs, had strong trade-in value, and was head-and shoulders above its competition in customer satisfaction studies. Honda and Nissan did well in these surveys as well, but Toyota usually finished in first place and its US sales dwarfed those of its Japanese rivals.
The quality balance has shifted in recent years. Most major studies from firms like J.D. Power and Consumer Reports show that the view of US car companies has changed radically. Car buyers no longer see a huge gulf between the workmanship and reliability of Toyota and its US rivals. Hyundai’s American sales have surged as it has done what Toyota did a generation ago–provide low-priced cars that are reliable, fuel-efficient, and fun to drive.
Toyota has its reputation and broad model line as foundations for its 18% of the American car market. Many rival brands make vehicles that are competitive with every Toyota model.
Toyota has shown that it can make a major error in product development and manufacturing. There are enough rival products that consumers need not ever buy a Toyota again. And, why should they?
Douglas A. McIntyre