Experts Say It Will Take Huge Marketing Effort to Regain Reputation
By Rich Thomaselli Published: February 01, 2010
NEW YORK (AdAge.com) -- Toyota Motor Corp. is facing a multi-billion-dollar hit to its brand image and reputation for high quality in the wake of its disastrous recall and sales halt of an unprecedented 2.3million vehicles over eight models.
In what many are likening to the 1982 Tylenol scare, Toyota can only hope this has the same outcome, except there is one crucial difference: Tylenol rebounded due to an aggressive and proactive communications plan from Johnson & Johnson, while Toyota at press time had remained all but silent.
When it's all tallied up -- lost profits from dealers stuck withstock they can't move while they await word on how the faulty accelerator pedal that caused the problem will be fixed; a halt in production at plants that are virtually shut down; and the substantial cost in advertising it will take to regain shaky consumer confidence -- some experts estimate the damage to be in the billions of dollars. "This is devastating, and this is not a blip," said PeterDeLorenzo, a former automotive advertising and marketing executive who runs autoextremist.com and authored the book "The United States of Toyota."
Even given that staggering figure, the dollars and cents might be the least of Toyota's woes right now. "We are at a pivotal moment in automotive history," Mr. DeLorenzo said. "Toyota had been at the top of the heap in this industry, from word-of-mouthto ratings to quality to customer satisfaction. Toyota has skated along as the bulletproof car company. That moment has passed. They're not going to fall on their faces and go out of business, but their image has been permanently tarnished."
"They are seriously damaged," said Mark Hass, CEO and partner of MH Group Communications and the recently named president of Edelman China, who has a longhistory in automotive PR. "What's made them a great car company is that their brand was all about consistency. Consumers always knew what they were getting with Toyota, and this has to give people serious doubts about what they are getting. This blows up that idea of consistency that has surrounded them for so long."
Toyota will lose an estimated $400 million a week for as long asit suspends sales and production, according to IHS Global Insight, Lexington, Mass., and TrueCar, Santa Monica, Calif., a pair of industry research firms. Toyota averages about 20,000 sales of new cars a week at an average price tag of $20,000.
The affected vehicles make up 57% of the car maker's U.S. sales. Avis, Enterprise and Hertz all said they were pulling thousands of Toyotas from theirrespective rental fleets, while Enterprise -- which also owns Alamo Rent-A-Car and National Car Rental -- said it was pulling the Pontiac Vibe, jointly made by GM and Toyota.
Asked if she felt the brand was damaged, Celeste Migliore, national manager for business and field communications at Toyota Motor Sales USA, said she didn't want to comment on that specifically. "We are in the initialphases of this," Ms. Migliore said. "We have experienced a strong consumer loyalty and trust for a long time so it remains to be seen what the impact of this will be, and we will certainly be measuring it. But we don't have a comment on it at this time because we are still assessing the depth and breadth of the event itself."
It seems inevitable that to regain its footing, Toyota will have to spendheavily on advertising. The company has cut its media spending almost 20% in the last year according to Kantar Media, a product of a weak economy but also a consequence of the lofty reputation Toyota has enjoyed. Last year, it was again the No. 1 car company in customer loyalty according to automotive information firm R. L. Polk & Co., a position that allows Toyota to spend less on advertising...