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Thursday, February 25, 2010

Toyota's Image Re-Building: The Start of a Long Haul

The headline from the past two days of Toyota testimony before Congress is clear. Toyota has finally shaped and disseminated a message of corporate contrition: we grew too fast, focused on revenues and profits instead of quality control and the customer, and we forgot what got us to the top in the first place.
But corporate messaging aside, predicting the outcome of the crisis for the world #1 carmaker remains dicey. Here are some thoughts on the Toyota testimony from the past two days:

1. Toyota was well advised that the Members of Congress were the stars. Toyota executives did not attempt to upstage elected officials. They knew this was political theater.

2. The apology from Mr. Toyoda to individual customers and their families appeared sincere, but did not give any additional information or ammunition to the plaintiff attorneys. Apologies are not admissions of facts. Still, for one of the most powerful Japanese executives in the world to apologize to the public in person before another country's governing body is a powerful statement given that country's traditional culture of organizational pride and personal accountability.

3. The pledges to do better also appeared to be sincere but the recent documents praising the victory in dodging U.S. sanctions for minimizing recalls were very scarily damaging.

4. It's unclear what impact the hearings will have on the audiences of existing customers and potential customers. Customer decisions will depend on whether the "fixes" work and when and if the bad news stops.

5. There did not appear to be any "Japan bashing" from the US lawmakers. Reasons: Toyota has worked hard to integrate itself into the U.S. Its American workforce and its impact on domestic suppliers is significant. Furthermore, lawmakers - despite the government ownership of GM and Chrysler - have no inordinate love of U.S. owned auto makers. Toyota played the Congressional game the way any domestic company would. Asking why the early memo and signals of problems weren't communicated to the U.S. subsidiaries was more questioning of corporate communications incredulity than any xenophobia.
For the moment Toyota may be stabilizing its seriously damaged corporate public image. But the automaker still stands on shaky ground. Fixing mechanical problems will only be part of the next challenge. Rebuilding confidence in its products, and regaining the loyalty of customers, dealers and suppliers is going to be a much longer haul. My biggest question: What impact does this continue to have on the next generation of auto buyers? The current ones wouldn't buy their parents Oldsmobiles. Will next gen buy a Camry or a Lexus just because it was in the driveway?

What do you think? Has the corporate image band-aid worked? Will it translate into renewed trust in the Toyota brand and its products?

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