Bridging The Gap
Dealer Insight from Edmunds.com

Volume I   Issue No. X March 2010


In This Issue:
2010 NADA Convention & Expo Wrap-Up
Rattled & Cracked: Toyota Tries to Regroup


Rattled & Cracked: Toyota Tries to Regroup

Toyota

While Toyota's recent recalls for accelerator problems have yet to rise to the level of Ford's late '90s/early 2000s massive recalls for fire-breathing cruise control switches, Toyota's misstep may result in a much deeper, far-reaching kind of damage, the type that can significantly diminish the company's trusted reputation of quality and reliability. Simply speaking, Toyota's situation couldn't have come at a worse time for the automaker.

Toyota's recall saga is turning into a continuing miniseries with a strong viewer audience. The feverish pace is gaining momentum abetted by the 24-hour news cycle, the economy, sites like Edmunds.com and the Internet blogosphere. Consumers are buzzing. Competitors are drooling.

From a competitive standpoint, Toyota has opened the door into its sacred market share. Ford is surpassing Toyota in many safety and quality categories; GM has reinvented itself into a leaner post-bankruptcy position; and Hyundai has emerged as a real contender. Also, China and India are coming to the U.S., meanwhile Chrysler's lineup will soon include some Fiat-based models that target the heart of Toyota's traditional strength.

Even with so much commentary out there regarding these recalls, I would be remiss if I didn't recap and comment for dealer insight. No matter what you're selling, it is very important to have a clear understanding of the situation, and have the ability to answer questions as they relate to your store. With NHTSA investigating another half-million '09-'10 Corollas for steering issues, we're looking at recalled models that account for over 10% of U.S. new car sales, not to mention the MILLIONS of existing vehicles that may be sitting in used car inventories and/or may be presented soon for trade.

The Precursors

Looking back, safety recalls are nothing new for Toyota. For historical purposes, here's a quick recap of some Toyota headlines spanning the last decade. Key issues are highlighted below:

March 10, 2001 — Toyota Motor Co. is recalling 53,061 Camrys that might have flawed accelerator cable housings, the U.S. National Highway Traffic Safety Administration said.

October 5, 2002 — Asia: Japan: A Toyota Recall in Europe — Owners are being notified to take the cars to dealers, where the rear brake tubes will be replaced, a Toyota spokesman said. The problem was discovered on mail trucks in Finland and has not caused any accidents. Toyota said earlier this week that it was recalling 421,542 vehicles in Japan for brake and steering faults.

September 7, 2005 — Toyota Recalls 978,000 U.S. Trucks Over Steering Flaw — Toyota Motor Corp. is recalling almost 1 million light trucks, its largest U.S. recall, to check for and repair a steering-related flaw that in the worst case could cause drivers to lose control of their vehicle.

October 14, 2005 — Toyota Recalls 160,000 Prius Hybrids Due to Software Glitch — Toyota Motor Corp said it is recalling about 160,000 Prius cars sold mainly in the U.S. and Japan because of a potential software glitch that may cause the vehicle to stall.

May 31, 2006 — Massive Toyota Recall Affects Nearly One Million — Toyota Motor Corp. is recalling nearly 1 million vehicles around the world to replace faulty parts that could cause drivers to lose control of the steering wheel. Included in the recall are 170,000 Prius models in the U.S. and 113,000 of the hybrids in Japan.

July 16, 2006 — Toyota Is Planning a Recall of More than 360,000 SUVs Later this Month — Vehicle owners should bring their SUV to a dealership to have the clips on the floor carpet replaced for free. The current clips can become loose and get in the way of the gas pedal.

April 9, 2008 — Toyota Recalls 630,000 Minivans in Japan - Toyota Motor Corp. said Wednesday it would recall more than 630,000 minivans in Japan due to defective fuel tanks and computer systems, in the latest quality concern to hit the auto giant.

2009-2010: A Closer Look

Now let's take a more in-depth look at the last year as the true crisis took shape. I have correlated these events to the Toyota shopper's behavioral intent for Camry, Corolla and RAV4 on Edmunds.com during this time period.

February 10, 2009 — Toyota Launches U.S. Recall After Crash Deaths — Toyota is to recall 3.8 million cars in the United States after four people were killed in crashes caused by a faulty floor mat. It's suspected that a problem connection led to the floor mat forcing down the accelerator. The U.S. government said it has received 100 reports of related incidents, including 17 crashes. The recall includes the top seller the Prius hybrid and marks the company's biggest ever call back.

April 24, 2009 — Toyota Recalls 259,119 Camry Sedans in China — Toyota Motor Corp is recalling 259,119 Camry sedans in China, one of its largest recalls in the country, to fix faulty brake systems.

August 28, 2009 — Lexus ES 350 Crash — 4 people are killed while on 911 call that their accelerator is stuck.

September 2009 — Toyota Issues Huge Recall over Accelerator Risk — TOYOTA will recall 3.8 million vehicles in the U.S. because of the risk that a loose floor mat could force down the accelerator, a problem suspected of causing five deaths already.

November 25, 2009 — Toyota Recall Fails to Address 'Root Cause' of Many Sudden Acceleration Cases, Safety Expert Says — Toyota's decision to replace accelerator pedals on millions of its vehicles will not completely fix the company's sudden acceleration problem, believes an auto safety expert who has been tracking reports of runaway Toyotas.

January 21, 2010 — TOYOTA RECALL: Reports of Runaway Cars — Four Dead in Dallas Crash Where Problem Floor Mats Found in Trunk — Toyota, which launched the largest auto recall in U.S. history last fall after incidents of random acceleration resulting in fatalities, has just announced an additional recall of 2.3 million vehicles to correct sticking accelerator pedals.

January 26, 2010 — SALES & PRODUCTION HALTED

January 28, 2010 — Lawmakers Concerned about Toyota Recall
A House Democrat expressed concern Wednesday about a massive Toyota recall that has led the automaker to stop manufacturing and selling vehicles linked to problems with gas pedals, signaling that Congress could soon review the massive recall.

February 3, 2010 — Prius Adds to Toyota's Woes as Stock Drops in Tokyo — The hybrid-electric Prius has long been Toyota's "green car," the symbol of the automaker's engineering prowess and its big bet on the kind of car consumers will want to buy for decades to come. But on Wednesday, the Prius was drawn into the mounting crisis for Toyota, as Japanese officials ordered the company to investigate problems with the brakes on the 2010 model. American safety officials also said they had received dozens of similar complaints.

February 17, 2010 — Feds to Open Formal Investigation of Corolla — First it was gas pedals, then brakes. Now Toyota and the government are looking into complaints that the popular Corolla is difficult to steer straight, raising a new safety concern ahead of next week's congressional hearing about the automakers recalls.

Hard to tell when the crisis facing Toyota will end, and even harder to forecast the end effect to consumers' trust of the brand. Testament to their years of positive branding, it has taken time to chip away at. Factories and local dealers have begun Toyota conquesting. As a dealer, it's important to understand and stay tuned.

 

Good Selling!

John Giamalvo

John Giamalvo, Director, Strategic Marketing
DealerInsight@edmunds.com


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