Over the last few weeks a story has broken that has the potential to pull down the biggest automotive firm in the World. Toyota has recently admitted a technical fault in some of its vehicles that interferes with the operation of the accelerator. Some Toyota drivers have stated their vehicles accelerator pedal becoming stuck down causing the vehicle to speed out of control. A number of car accidents in the US have been attributed to this default.
The company’s response to the allegations of technical malfunctions has been somewhat sporadic and less than confident in nature. A solid position on this issue was not initially forthcoming leading some speculators to question Toyota’s crisis management abilities. Toyota has now ordered an international recall of all affected vehicles and will be working with the DVLA in the UK in order to get in touch with all drivers in the UK operating a potentially faulty vehicle. I imagine that any Toyota driver is well aware of the situation and that they will have attempted to get in touch with Toyota long before the corporate engine finally engaged in an attempt to resolve the situation.
Toyota drivers have complained about a communication breakdown between the firm and its dealers resulting in less than clear signals being passed onto them regarding the safety of their vehicle. There appears to also have been a lack of clear direction passed down from the HQ in Japan to its national subsidiaries. Just this weekend the Chairman of Toyota, Mr Akio Toyoda made a personal appearance at a news conference to offer his apologies for the situation and outline Toyota’s response to the crisis. It is estimated that the international recall of all of the vehicles could cost up to $2 billion, for the firm who has already suffered a financially difficult 2009 brought on by the world recession. It is speculated by some commentators that the crisis could prove financially crippling for the automotive giant.
What interests me about this situation is not the supposed PR disaster relating to Toyotas staggered responses or the strong position (politically motivated without question) that the US transportation department is taking. I’m interested in looking at what implications this situation has on Toyota’s reputation and the related ramifications. The Toyota brand has been associated with reliability, build quality and safety for the last few decades and is one of the primary reasons behind the company’s success. This situation has the potential to severely tarnish this brand image which is estimated to value over $33 billion and has taken Toyota many decades of constant management and development to attain. Furthermore the flagship Prius model has been rather singled out as a range susceptible to the fault.
In recent years Toyota has attempted to reinvent itself as a firm leading the way with regards to technical innovation. Their Prius Hybrid Electric Vehicle has been the market leader (by a long way) in the hybrid market segment for over 12 years now. This has lead to a level of detachment between the Prius brand and the brand of the overall Toyota company. If the allegations of this potentially disastrous technical fault only revolved around “Toyota” and not the “Prius” as well then there may have been an argument for a reduced impact into the hybrid sales.
Unfortunately for Toyota the industry and media have labelled both Toyota and the Prius range as malfunctioning and the fallout has the potential to be devastating. This market response has the possibility not only to destroy Toyota’s reputation but have the knock on effect of damaging people’s perceptions of hybrid vehicle technology. As the Prius is not only the flagship for the hybrid market segment but for the technology as a whole, consumers may perceive the technology (and not the firm or the brand) as being potentially dangerous.
Obviously this does not bode well for the development of low emissions vehicles. At the end of the day automotive firms will not invest into developing new technologies that consumers do not have confidence in. I hope that consumers will be able to associate this crisis with the firm/brand and not with the technology as consumer buy-in is a critical component to any form of a sustainable future for private vehicle transport.
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