post note: 1 22 12 I leave all posts up here as part of a timeline. This thread, brands in crisis during a social correction, is meaningful and will be improved upon later on by me. When? not sure? This post is a link resource for me and the subject of Toyota has been set asside by me as part of a larger and longer consideration of the idea. When I do revisit the thread, I will address Toyota. The Toyota issue certainly has been overshadowed by other national events and may be better re-framed inside of the bigger picture of social mood. end of note:
This is my original post and it has become a scrap book of links following this storyline. The triple calamity in Japan was two weeks ago and it is certainly not my intention to be insensitive. The point of this exercise is to follow an issue like this relentlessly through conclusion. There have been many twists and turns that endeavored to be or feel conclusive. Today I add a link that introduces "Tin Whiskers" to our lexicon and suggests that electronic controls could be at the heart of some of these reports as they have been shown to cause failure on satelites in orbit. The point of this thread is not about blame. That will continue on regardless of this effort. The point is how perceptions toward brands surf waves of emotion and that during a social correction this is a critical endeavor for companies that steward worldwide brands. The link thread is below, just page down. I make no offort to be complete but feel it captures the key turns in this issue. At his point I suggest you ignor my text on thie issue and simply note the link thread as it unfolds. It will be another year before this reaches what I suspect will be anything more definitive than today but the lessons will be rock solid by then. Brands in crisis during a social correction are critcal areas of concern because emotional perceptions are attached to rational use decisions and that demands extra special effort. Dave
Last link added to news thread: 3 22 11 (page down for most current links)
This post has evolved into a thread of ongoing news links and notes as this Toyota mess continues to unfold over many months. I say it several times below in different (earlier) entries but this brand crisis will not have smooth edges until a single problem is identified and that is beginning to seem remote.
By adding yet another model with a completely different problem, the brand crisis is cementing into American consumer's minds spending the hard earned brand equity like a spendthrift.
And when we revert to the original quality/speed control issues, if the problem is the electronic control units (the car's computer) the cost to recall them would be prohibitive enough to make this problem linger for years and maybe finish spending Toyota's brand equity in the US. (pure speculation? yes.) The story links will be valuable in the months ahead as experience shows how memories of time lines fade depending on your disposition toward this crisis. The reason this is worth monitoring is to better appreciate how a brand in crisis during a social correction is a wholly different kind of business crisis than during a period of social expansion. The caretakers of the Toyota brand will base their cost benefit decisions on their economic forecasting methods and if that happens they risk making a huge mistake with the future of the brand's image. For the rest of us, this is an exceptional opportunity to watch and learn. Dave
Links for my earlier thoughts on this subject:
Perrier & Tylenol:the revisionist lessons of social mood for brand managersManaging Brands in Crisis:
America's Financial Brands (an update is in progress)
Brands in crisis during a social correction - an updateSocial Corrections: shinning a light on the little parts of the larger process
comments from 3 10 10
Based on everything up till now (since 1-28-2010) and looking forward here is what I think will happen and why:
The lynch pin to this entire brand crisis, and the larger threat to American car buyer perceptions, is that the problem remains undiagnosed. There are three fixes and potentially three different problems that somehow are being combined in a very negative way. The electronics issue has been denied more than once and clearly does not offer an avenue of remedy at this point, though that may be misdirection. In fact, Toyota is now running ads on web sites that tell how their electronics are fail-safe...and how to learn more why. Risk to the brand remains high and at critical levels. Here's why: The entire premise of this idea offered here is how social mood, in a corrective state(now), affects our collective expectations of the always uncertain future. This uncertainty is skewed pessimistically during a social correction. When the macro force of this public perception is focused upon a particular brand and a persistent problem that is opposed to the existing perception of the utility of that brand, then the outcome is likely to be lost brand equity in a proportion much greater than how it was gained and long lasting too.
The possibility exists that Toyota will not find the problem and that further unexplained incidents will occur. (wow, yesterday's runaway Prius in Los Angeles (3/09/10)made the all the evening news hours and prompted a recall notice by the WSJ that was retracted within hours....how's that for crazy media attention?) Should social mood deepen into this corrective state further, the risks to the brand will increase and the risk to the company along with it. It is very possible that the negative effects are only just beginning now. Personally, I still regard Toyota as offering a high quality product that I have considerable admiration towards. My opinion about the brand is not what matters. If these two factors should occur going forward, the lessons of Audi in the late 1980's and early 90's are well worth revisiting. A definitive conclusion to these malfunctions are mandatory IMHO.
Daily flow of headlines on the thread (newest last):
Toyoda Shrinks World’s Biggest Carmaker for Quality Control
Toyota U.S. Dealers May Lose $2.47 Billion a Month (Bloomberg) (distribution Channels will suffer)
Toyota Owners Frustrated With Massive Recall (CBS) (uncetainty)
Toyota safety recall spreads to Europe (clearly an accelerator issue) FT 1 29 10
With Recall Expanding, Toyota Gives an Apology NYT 1 30 10
Toyota to Issue a Fix for Recalled Cars NYT 1 31 10 A Solution is ready says the NYT
U.S. Doesn’t Object to Toyota Plan for Pedal Repairs BB 1 31 10
Toyota Plans Media Blitz After Stockholders Lose $21 Billion BB 1 31 10
Toyota’s Slow Awakening to a Deadly Problem NYT 2 01 10
With Eye on Its Reputation, Toyota Issues Repair for Pedal NYT 2 02 10
Toyota’s President Eludes Media Amid Ballooning Vehicle Recall BB 2 02 10
Toyota’s Electronics Said to Be a Focus of U.S. Recall Probe BB 2 03 10
Toyota Recall Crisis Mounts as U.S. Steps Up Pressure BB 2 03 10 (Amer. politics gets involved)
Toyota May Recall Prius After Japan Orders Probe BB 2 04 10
LaHood’s ‘On the Fly’ Toyota Statements Accelerate Confusion BB 2 04 10
In a Prius Preserve, Shaken Fans NYT 2 04 10
In California, a Rebuke to Toyota NYT 2 05 10
Toyota's payback for stealing from the Gods Op-Ed WP 2 05 10
Toyota Has Pattern of Slow Response on Safety Issues NYT 2 07 10
Toyota recalls 437,000 Priuses, hybrids globally Wash Post (headline) 2 09 10
Toyota recalls Prius over brake problem FT (headline) 2 09 10
Federal Officials Review Toyota Corolla Complaints WP 2 09 10
Toyota's Plan to repair its public image Op-Ed WP by Akio Toyoda 2 09 10
Regulators Hired by Toyota Helped Halt Probes, Documents Show BB 2 12 10
Toyota Is Said to Discuss Rebates, Warranties to Lure Customers BB 2 13 10
Toyota Acceleration Complaints Cite 34 Deaths, U.S. Data ShowBB 2 15 10
Crisis-hit Toyota to idle two US factories Breitbart 2 16 10
Toyota faces class-action problem FT 2 16 10
Toyota Chief to Meet Press for Third Time After Recall Crisis BB 2 17 10
Toyota chief to skip US safety hearings FT 2 17 10
Toyota’s President Softens on Speaking to Congress NYT 2 18 10
Toyota Chief Agrees to Testify Before House Panel NYT 2 19 10
Toyota Saved $100 Million in ‘Favorable’ Recall, Document Shows BB 2 22 10
We Didn't Listen by Akio Toyoda WSJ 2 22 10
Toyota Probe Fueled by Politics as Well as Safety, Critics Say BB 2 23 10
Congress says Toyota misled public about runaway cars, engine electronics WP 2 23 10
Toyota Official Says Recall May Not Fully Solve Safety Problem NYT 2 24 10
2/24 & 2/25 had substantial TV coverage of Congressional hearing where Toyota execs testified
Toyota accused of withholding records in lawsuits FT 2 26 10
Will Toyota's problems hurt Honda? CNN Money 3 01 10
Toyota Sudden Acceleration Tied to 43 Fatal Crashes, U.S. Says BB 3 02 10 this seems like a statistical conversation waiting to happen.
Data Shows Camrys Outside Recall Also Had Problems NYT 3 02 10
Millions of Toyotas Recalled, None in Japan NYT 3 05 10
Toyota runs clickable ads saying its electronics are fail safe and offers details why. 3 06 10
AP IMPACT: Toyota secretive on 'black box' data 3 04 10
Toyota to Recall Prius Models including one in runaway incident WSJ 3 09 10 (Toyota rebuts story)
3 23 10 CNN has a video on their web site this AM showing a service bulletin from 2002 that suggests electronics are the root of the problem and that the billions required to fix the problem is why it has not been directly addressed. If even a portion of this is true no amount of positive or negative spin will change the outcome: This problem will continue for years and ruin the brand's reputation toward quality.
http://cnn.com/video/?/video/us/2010/03/22/pkg.cb.griffin.toyota.document.cnn
Americans Saying ‘No’ to Toyota as Ford Leads Opinion Survey BB 3 25 10
NASA to investigate cause of Toyota Problems WP 3 30 10
Steep Discounts Boost Toyota's March Sales FT 4 01 10
Toyota faces $16.4 million U.S. fine for waiting to warn of defect WP 4 06 10
Regulators May Pursue More Fines Against Toyota NYT 4 10 10
Lexus Stops Selling SUV That Was Called Unsafe NYT 4 14 10
Canada's Doubt on Toyota NYT 5 05 10
US Opens New Investigation in Toyota FT 5 11 10
Common Products, good returns Marketwatch on Toyota qrtly results 5 12 10
the link above, when read closely, shows a clear cost to managing the crisis so far
Toyota Finds Most Sudden Acceleration Crashes Are Driver Error BB 7 13 10 (this is a classic!)
Toyota Educates Customers as Floor Mat Alert Ignored BB 7 16 10
The latest? 'But you are using our cars the wrong way!' I use Bloomberg discussions for the objectivity of the reporting. The tone emanating from Toyota corporate is one that is terribly defensive. Understandable though it may be, it is not helping when objective reporting makes it sound like excuses. Why do people stack mats? If you are going to put 100,000+ miles on a car and not use floor mats then the carpet will wear out. Period. Toyota seems to have forgotten why so many people buy their cars in a very subtle way. If in their attempts to be defensive they abandon their market position, the brand will be further tainted.
1 11 10 Toyota Hegemony Fades as Damage Brings Sony Style Decline Bloomberg
2 09 11 US report finds no electronic flaws that would cause acceleration Wash post
So, one year ago we were all ready to hear TV testimony froM Mr. Toyoda himself in our Congress. Today we read that the government says it finds nothing like Toyota did when looking at computers in their cars. Was it all a mistake with a few nutjob outliers mixed in? If you are following this thread you know that isn't the point. The point is how the Toyota brand has suffered because of the social momentum created around scrutiny of the venerable brand. What really matters now is how much damage was done to Toyota's brand image and will a few stories denying the concerns fix what went wrong? The real point about brands is how the ultimate decision in made somewhere in the background. IMO
2 24 11 Toyota recalls 2.17 million cars for floor mat issues WP
Here's a point worth noting....this runaway Prius incident (3 09 10) looks a lot like a complete fraud. How do you take away a night of lead off news reports and interviews when it looks a lot like complete BS only a week later? And what does it say about the quality of the reporting a week ago that no one asked why the car was not put into neutral or the engine turned off? My point is that this story has its own social momentum now. It's not about being out to get Toyota. It's about social mood and social momentum. The only option for Toyota now is to find the problem and eliminate it.
3 24 10 The main message of this brand crisis is that it persists because an answer has not been found. Arguments over the authenticity of runaway incidents keeps this in the news headlines each week. No matter how much garbage reporting is out there right now, some of it is true which means a solution of some kind must be there. I've read how replacing all electronic units in every Toyota in the US would cost billions if you use $500 per car. I submit that is a bargain if this issue is allowed to drag on for the next year. It is bleeding goodwill from the brand that took decades to build. There is no way around that truth. Ford and GM will not gain what Toyota loses in terms of brand goodwill but they will see incremental bumps in sales this year for sure.
Original post from 1-28 10:
My last installment on this subject was somewhat indirect in that it offered a familiar personal (sports)brand. The Tiger Wood's brand may be characterized as inconsequential to anyone but his sponsors now that he has temporarily retreated from public life for a re-boot, (as is so common) in the world of celebrity.
Now, Toyota's well crafted brand has its turn in the glare of crisis during a social correction.
Last week I recall seeing word (2x in a few months) of their unfolding floor mat recall problem and I dismissed it because every car company has had recalls. Even a quick Google search shows the other Japanese car model I own has been recalled three times in eight years for minor things; so recalls by themselves do not have to be a true brand crisis.
Toyota's problem(s) was all over the headlines yesterday afternoon and this AM in the US (Europe too probably). I must admit that, at first, it felt like the biased opinions out there were piling on to a problem that is eminently fixable. Sliding floor mats can be secured, right? I am pretty sure many Toyotas have metal snaps on floor mats. In any case, the discussion in the Bloomberg article I noticed yesterday was about the accelerator cable/pedal assembly. It remains undetermined in large mainstream media accounts if it is a cable issue, which would be more severe, or/and if it is simply floor mats.
Then this morning, we get an example of why a brand in crisis during a social correction is such a critical time....and every hour and move counts.
My New York Times email this AM with their top headlines included a story about Toyota's brand problem. It was the third story listed under "Top Stories". My point here is that I am sure it is a high percentage read. After 20-something short paragraphs and an impressive graphic showing the growth of their sales figures, and a picture of a top exec scratching his head, the only mention of the actual problem in the NYT article was this quote:
Toyota said Thursday that it was extending the recall to Europe, and that "the models and exact number of potentially affected vehicles is under investigation. It added that "details of corrective action and implementation will be communicated directly to customers with vehicles potentially affected."
What's the problem?! It does not matter that this problem began in November with a very specific issue and has expanded to now include a potential specific mechanical issue and it includes 8 models of north American and European cars sold by Toyota.
The real problem is that as of this AM Toyota lost control of the conversation in a world that demands immediate communication. I have no doubt the competitive forces are spinning this for all it is worth at the moment. The Bloomberg article yesterday afternoon was filled with obviously biased opinion (quotes) against the company. It was very transparent, in fact but, politicians and pundits of all kinds know that negative advertising for the competition is effective in moving perceptions in the short term. The first time I ever wrote about this topic I discussed how Perrier in 1990 lost its dominant market share in a wildly competitive business in the span of a month. That is not likely to happen in this case but that does not mean extensive damage can be done to Toyota's 2010 sales in North America.
I wrote this in my last update on the subject of brands in crisis during a social correction:
The premise in my first post in the series is that brand equity is at greater risk during periods of social correction (now). If you are an owner or manager of a valuable brand this is a very big responsibility. The premise of this post is to fine tune that point further by showing how the violation must be something that is correlated with the brand's interaction with the customer. If it is, the implications are critical and likely to be long lasting.
Toyota's problem with sliding floor mats or sticking accelerators (or both) got away from them as of this AM. I am posting this now because it is a great real-time case study of this premise. We'll watch in real time. I have no idea how this is going to turn out but can already tell that extreme risk surrounds the company right now in North America and that any further delay could be very costly to 2010 sales and maybe beyond depending upon how this is handled going forward.
The Drudge Report has a CBS story (one paragraph) of a little old lady driving into the side of a laundromat building in her Toyota saying she does not know what happened. This is lousy reporting and journalism to say the least and it is almost intentional piling on by some PR firm somewhere. Business can be rough and tumble...we all know that well. My deeper point is how right now, and for the next few years, we are in the midst of a deep social correction where the natural proclivities of people will be to accentuate the negative and potentially tear down well built brands (and people) that are not 100% proactive in communicating the details of problems associated with brands (as they pertain directly to their customers) in an instantaneous manner.
Moreover, in a world where social networking on-line has increased the immediate nature of communication (in two directions), this only makes this mandate that much more critical now for brand managers when the problem touches the core of your brand's utility.
I have no idea how Toyota's crisis will turn out (in my thinking) because right now because I am not even sure if it is a cable problem with the accelerator or a floor mat problem being spun out of control. No matter which it is time is of the essence as it pertains to the general car buying public. When I first sat down to write this post I was thinking to myself there is no way that my image of Toyota quality could be permanently damaged by something of this nature....at this point. My own personal assumption has to be qualified however; I've bought several cars, foreign and domestic. The American car I did own was a POS in the early 90's. The Japanese brand car I now own is not without glitches and if I were in the buying cycle I would be considering many brands looking for quality because I see cars as depreciating assets....not status markers. That's just me. Many less informed people are liable to simply pass by the Toyota dealer if they are shopping this month or next. Heck, they recalled eight models; doesn't that mean they don't have many cars for sale right now anyway?!
Like I noted, time is of the essence for the Toyota brand right now. Even if this does not produce a death blow to the brand because all those Toyota dealer buildings across the USA are good advertising by themselves, it can screw up the entire sales year in just a few weeks. Brands in crisis during a social correction are worthy of a full court press, every time.
This Toyota story thread and post has been monitored and updated daily since begun and is being offered in a flowing format with links from major news outlets in an expanding link thread at the bottom. In ten days we've gone from multiple recalls to a worldwide brand crisis that will not be fixed with any one move at this point:
My premise when beginning this post was to document the unfolding brand crisis for Toyota following their multiple recalls worldwide and to correlate it with the idea that brands expose parent companies to significantly more downside risk during periods of social correction (now). It may be tempting to dismiss this as either obvious or not offering specific value in terms of "what to do with it" but before we can go there it is important to document that this is what happens to parent companies of significant brands in crisis during these corrective days.
I first suggested this idea two years ago by looking back at the brand crisis encountered by both Tylenol (1982 & 1986) and Perrier brand (1990) and offering a revisionist perspective on their divergent outcomes based on the imposing effect of social mood and whether we are expanding or correcting (in a macro sense) at the time. Because of the size of this social correction now developing multiple consumer brands in various industries are facing this effect and the implication in the years ahead can already be called dramatic. It is tempting blame the specifics of a crisis for the damage to the established brand but as we will see over time, it is the combination of both the crisis and the developing social mood that needs to be considered. It is a human chemical reaction of sorts that demonstrates how the oppositely characterized periods of social expansion and social correction work to produce wholly different experiences when managing a crisis.
Links for my earlier thoughts on this subject:
Perrier & Tylenol:the revisionist lessons of social mood for brand managersManaging Brands in Crisis:
America's Financial Brands (an update is in progress)
Brands in crisis during a social correction - an updateSocial Corrections: shinning a light on the little parts of the larger process
The crisis thread accumulated over ten days is below. You may choose to skip down to the list of links for stories from major news outlets. Below that is an excerpt from Wikipedia about the eerily similar Audi recalls in the late 1980's and their American decline in a smaller period of social correction. The parallel is not in how the issues were similar but in how they were allowed to linger and inflict damage on a brand that previously had positive momentum in the US. Take note of their sales decline in that period.
The next post in this series will be an overview of the "what now" aspect of these observations. For now, brands serve companies by offering an emotive connection with both current and potential customers. This edge can cut both ways and social mood has a lot to do with this dynamic. Dave
Friday AM 1 29 10:
The story to the public has been made more clear if you choose to read everything available. The problem is really two problems that are, as yet, not completely understood. The manufacturer of the accelerator cables (a supplier to Toyota) came out and said it is a cable/component design problem. Apparently, the floor mat issue is separate. (I wonder ?!)
The leader of Toyota, Akio Toyoda, has made the monumental decision to halt production on eight models around the world guaranteeing a big slowdown in revenues for the sake of stopping the brand's reputation from bleeding over this critical quality issue. An undefined problem is an even bigger problem when your competitors behave as they have. (Ford and Hyundai offer cash bonuses to Toyota customers was in the headlines last night)
This is definitely a brand crisis. What is not clear is the magnitude of the crisis. Industry insiders (competitors) seem to have sensed immediately that it will not go away quickly because the nature of the real problem got away from the company and is now being discussed by unrelated parties without Toyota's involvement. Is it one problem or two? I saw a video segment yesterday on how to stop you car if it accelerates by itself. Toyota was not mentioned once. I cannot help recalling a somewhat similar crisis Audi had many years ago. I do not remember Audi's crisis having a definitive conclusion other than a secondary brand stepped back even more for a while as its reputation was tarnished with American car buyers. How will the world leader in quality respond to a crisis at the core of their brand? Let's stay tuned.
The point of this thread is to monitor the status of a leading brand in crisis during a period of social correction. My plain contention is how the state of our consolidating/correcting social mindset (a collective state best seen as a moving average of sorts) will affect this particular brand in a way that is as negative in an opposite direction as when good events conspire to dramatically lift a brand during social expansionary times. This morning's positive GDP report is not an indication of a return to an expansionary state for the US. The time frame that this perspective works around is considerably larger than that. Toyota has big problem that may become a monumental problem if not handled decisively and immediately. The perceived leader for quality in middle market cars is facing a crisis of that core perception (utility). Combined with the overall competitiveness of the industry, the potential for an intermediate term setback is dramatic. If you were to compare this to the crisis that Perrier experienced in 1990, two critical parts are potentially different:
1. Perrier did not control their distribution channel (like Toyota does) and the swift loss of distribution was outside of their control in the beverage market and led to their almost instant decline.
2. The outcome of this crisis for Toyota is still in front of us even if we know time is precious right now.
later installments noted:
Tonight (2 05 10), a Bloomberg article suggests that regulators in the US are now looking at electronic components as a problem source. Just the mere suggestion takes us from floor mats, to pedal assemblies, to circuits for a potential cause or causes. The brand crisis deepened on this news. The main problem right now is the lack of certainty has caused Toyota to lose control of the conversation and the political realm is owned by American competitors. Is this really justified? There's no way to know right now, we'll have to wait till much later but consider this: When the first American Toyota plant gets shut down and a few thousand people get fired, only later will we know if the lobbying tail is wagging the dog. Right now, Toyota's core brand is in crisis during a social correction.
Today (2/04/10)we see another widening, on a new front, of the brand crisis for Toyota. The Prius may be recalled for brake concerns in Japan. A quote in the report by a securities analyst suggests that " this could be fatal". I do not offer this quote thinking that could be the case in just a week's time. It does pay respect to the dynamic of social momentum working against the company's brand right now. The point of this discussion, here, is to show that social correction dynamics are working as hard (or even more intensely) against the brand right now as they did on the company's way up the quality perception scale in consumer's minds. Brands in crisis during a social correction are exceedingly vulnerable and the main message here is how any mistakes are magnified by the social environment.
The thread of links at the bottom of the post has built steadily everyday as the company lost control of the process. It seems to have its own life that is related to media's need to produce compelling content and this type of controversy fits nicely right now. It is time for heroic effort on the part of the management team as well as seamless cohesion in corporate communication on a global scale.
as of 2/02/10 the recall has expanded to include 7.6 million cars (worldwide) and American media seems very irritated at company executives not being engaging. Yesterday (Monday)it felt like the announced solution was about to begin working. This afternoon it feels very different. This is the nature of real-time crisis tracking.
1 31 10 update: The link posted for the Sunday NYT article below claims that Toyota is ready to announce today or tomorrow that a fix is in place and that two separate problems are being addressed. First 4.1 million cars worldwide were recalled for accelerator pedal issues. An additional 5.4 million cars in North America were recalled for floor mats that affect the accelerator pedal. There is overlap in the two recalls. Tonight's media release (link below) tells of a massive media blitz to communicate actions. Is this over?
Here's my position as of right now: In four days (1/28-1/31)we went from not being sure what the problem was exactly to the planned implementation to two fixes related to gas pedals and floor mats. So far it is a good flow. Now for the talk and the implementation. The speed with which the problem was addressed outwardly was good for non-Toyota owners who might be potential customers.
The point of this thread is to observe in real time and not inject too much other than what potential exists for a deeper and protracted brand crisis. Implementation is everything.
observation 2 09 10....notice the last 4 days of headlines. The Prius recall was anticipated and then sustained across major new sources extending Toyota's stay on the front page of the key sources with a constant and resounding "recall" attached to their brand name. It makes one additional recall look and feel like three. In periods of social expansion the headline space would be more valued for the big deals happening that were successful or the people and ideas that are creating the new success. Instead, during a social correction people collectively value the information about failures, letdowns, and relish the blame. If you really read these stories it is easy to take note of Toyota's quality questions go back many years. Did it really take a family in a runaway accelerating Lexus that could not think to shift into neutral and brake in order to make this a runaway headline theme of recalls?...or a little old lady running into the side of a laundry building in her Toyota? Right now, like it or not, the Toyota brand is a magnet for speculation that is not favorable and the social momentum surrounding the story has tremendous energy (enough to make one non-critical Prius recall feel like four days of brand pain and look like three recalls in staggered banners in key mastheads. ouch.
Audi: A Similar Case in the mid-late 1980's?
For starters, this was pre-electronics era but it is fascinating how it began very similarly.
For those interested to consider if the series of Audi recalls in the late 1980's are worthy of comparison, I saw this short excerpt at Wikipedia. My main observation is how from the mid 1980's to 1990-1991 sales of Audi cars int he US fell almost 80%. The most significant observation is to be made outside of the recall specifics: The last part of those years included a social correction. The problem developed during a social expansion as the company endeavored to grow quickly in the US and left undiagnosed, it lingered until it collided with the sharper social tones of 1988 and again in 1990-1991. Here's the few related paragraphs to the recalls. Brands must be managed differently during periods of social correction. This upstart brand crisis necessitated a complete do-over for Audi's launch in the US.And while I do not expect that for Toyota, I do expect more downside to American sales than most others suspect at this point primarily because the issues are not clearly defined and the legal process to follow will move slowly.
http://en.wikipedia.org/wiki/Audi
Reported sudden unintended acceleration
Audi's U.S. sales fell after a series of recalls from 1982-1987 of Audi 5000 models[14] associated with reported incidents of sudden unintended acceleration linked to six deaths and 700 accidents.[14]
A 60 Minutes report at the time featured interviews with six people who had sued Audi after reporting unintended acceleration, showing an Audi 5000 ostensibly suffering a problem when the brake pedal was pushed.[15][16]
The National Highway Traffic Safety Administration (NHTSA) concluded that the majority of unintended acceleration cases, including all the ones that prompted the 60 Minutes report, were caused by driver error such as confusion of pedals.[17] CBS issued a partial retraction.
The first fix Audi implemented adjusted the distance between the brake and accelerator pedal on automatic-transmission models.[14] Later repairs, of 250,000 cars dating back to 1978, added a device requiring the driver to press the brake pedal before shifting out of park.[14] A legacy of the Audi 5000 and other reported cased of sudden unintended acceleration are intricate gear stick patterns and brake interlock mechanisms to prevent inadvertent shifting into forward or reverse.
Audi’s U.S. sales, which had reached 74,061 in 1985, dropped to 12,283 in 1991 and remained level for three years.[14] Audi subsequently renamed the affected models/ with the 5000 becoming the 100 and 200 in 1989 — and only reached the same sales levels again by model year 2000.[14]
A 2010 Business Week article — outlining possible parallels between Audi's experience and 2009–10 Toyota vehicle recalls — noted a class-action lawsuit filed in 1987 by about 7,500 Audi Audi 5000-model owners remains unsettled and is currently being contested in county court in Chicago after appeals at the Illinois state and U.S. federal levels.[14]
2 23 10 The Wash Post headline this AM reads Congress misled by Toyota You have to respect president Toyoda's letter in the WSJ yesterday but this is a much broader issue now. With Congress on the defensive about most everything, this is a fight better invested in finding a definitive conclusion to remaining equipment questions. Of course how do you find such a conclusion to something that seems to happen with the frequency of a lottery win? This is the nature of a brand in crisis during a social correction.
2 18 10 What a mess! In three weeks one of the most consistent and well regarded brands in the automotive business has been subject to an endless barrage of criticism, questions, and lawsuits. The basic thesis I put forward that says brands in crisis during a social correction may well end up costing the company more of everything faster than it was ever gained was discussed before this story unfolded and in real time it has been like watching a slow motion accident. Nothing feels to be settling as yet and every moment is still potentially a problem or opportunity for Toyota.
Toyota grew as a brand during decades of social expansion and it was the quality of their ideas put into action along with their vision for what people wanted that allowed them to grow to a super successful worldwide brand. During a social correction, however <now>, it is the demonstrable track record of those ideas and products that matters most. Unsolved problems lurking in the background have snowballed into vocal questions toward their business practices. This points to how business policy must reflect the differing social dynamics of a social corrections or risk small problems becoming large setbacks.
The solution, as seen through this perspective, is straight forward but that will not make it easy to achieve. What works? What always worked? Brands are tools we create <as individuals> to make tasks easier. They are tools. Tools do not distinguish between right and wrong, we do. The major headline links below are updated and a day has not gone by where Toyota has not been prominent in the major mastheads in a negative manner. Zero percent 60-month financing is no match for the impressions created by the endless headlines.
2 16 10 The latest link posted to the news thread below shows that whatever combination of fierce competition versus damaging safety problems, Toyota's quality crisis is now costing US jobs. It is pretty clear that there are quality problems for Toyota across several brands and that they are, as yet, poorly understood. It is also clear that competitive posturing and back door politicking is taking place. IN the late 1980's a similar crisis only cost Audi sales on US soil...and no US jobs other than salespeople. Today there is a different dynamic. This story has become a monster and since two factories are being idled, it suggests a longer time horizon can now be expected. The priority now must be to save the Toyota brand name because the world could easily do with one less car brand no matter how strong it may have been previously. The point of a brand is to clarify and simplify decision making for customers; past, present, and future. If that cerebral process turns customers to negative points then the tool is broken. As stated many times here, this is more likely to occur during a social correction.
This post is sloppy as heck but I leave it up to help seeing the crisis better, later on. The point that must be accepted more than any other is that the greatest enemy of a brand during a social correction is uncertainty because in any vacuum, pessimism will fill the void and hurt the parent company. This is proving to be both an unfortunate and timely example.
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