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The Toyota implosion…what it really means.


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Editor’s Note: Due to the severity of the Toyota crisis and the overwhelming and pervasive coverage of it, Peter has written his new column early this week. See last week’s column by clicking on “Next Entry” at the bottom of the page. - WG

The Toyota implosion…what it really means.

By Peter M. De Lorenzo

(Posted 1/30/10, 6:30PM) Detroit. A corporate image for a company directly involved with consumers is a very fragile thing. A savvy company can carefully cultivate and nurture an image over a period of years. It can forge an identity by exploiting its nuances and crafting its effectiveness, and it can even create an aura for itself that may or may not be completely true, but if done expertly enough can convince legions of consumer/believers that you are who you say you are.

Over the past 35-plus years Toyota has burnished one overriding message into consumers’ minds in this country, and that message revolves around the idea that Toyota-built cars and trucks are the highest quality vehicles on the road, and that if consumers adhere to by-the-book maintenance schedules they just do not break. Ever.

And Toyota has enjoyed considerable success in this market by riding that reputation for all it was worth, as more and more consumers bought into the idea that - though bland transportation conveyances for the most part - Toyotas just wouldn’t let you down.

Until the events of last week, that is.

Actually, last week was the culmination of a series of negative events having to do with quality – or the lack of same – that has vexed Toyota for years now. There was the oiling-sludge problem in a brace of their engines. And there was the severe rust problem in Toyota pickup trucks, to the point that the spare tire carriers would simply fall out and on to the road it was so pronounced, just to name a few of the most noteworthy examples.

But Toyota skated through these “hiccups” as they quickly and for the most part quietly addressed consumers’ problems and moved on, escaping the harsh light of a frenzied media too busy holding the domestic manufacturers accountable for myriad transgressions, both real and imagined. For years and years if there was ever a Toyota recall the news of it would quickly come and go, while in comparison, if there was ever a recall from a domestic manufacturer it was the top story on Internet news sites and leading the evening television news for days.

As I wrote about it in The United States of Toyota, there was a blatant bias at work in the media that fueled the notion that Toyota=Good and Detroit=Bad – not that Detroit didn’t contribute to its atrocious quality reputation, because it emphatically did – and Toyota’s heretofore impenetrable and unimpeachable reputation for quality could never be sullied by a few rusted pickups here and there. After all, its cars and trucks – and its reputation – were bullet proof.

That attitude came across in spades when the executives of the Detroit Three ended up in Washington, D.C., begging for financial help at the end of ’08 too. In those disastrous hearings it became crystal clear by the intensity of the bile spewed against the Detroit executives that the “notion” of Toyota=Good, Detroit=Bad wasn’t a notion at all, but a fact that had not only burrowed into the American consumer consciousness, but into the gaping maw of the Washington political establishment as well.

Until the events of last week, that is.

Last week the automotive world as we know it became unequivocally and irrevocably altered when Toyota was forced to admit that not only did they have a severe problem with sticking accelerator pedals – or sudden unintentional acceleration incidents in their vehicles – but that they didn’t really have a grasp of the scope of the issue or just how they were going to fix it, either.

Toyota plants were idled and dealers were ordered to stop selling the vehicles in question immediately as the severity of the problem blew up into the American consumer consciousness. Rental car companies removed Toyotas from their fleets. Automotive auction houses ordered an immediate cessation of all activities involving the affected Toyota models. And the media of all stripes went absolutely crazy.

After all, this just wasn’t another auto company recall - no, it was the end of everything great and wonderfully righteous about a brand that had basically enjoyed a free pass with consumers and the media for years.

Don’t forget that as part of Toyota’s orchestrated image offensive its U.S. marketing and Public Relations arms had purposely gone after something that no import automaker had ever attempted to do – or even thought about doing for that matter – and that was to capture the hearts and minds of the American consumer public and convince them that Toyota was indeed an American company, by any measure.

Toyota absolutely believed that they could become part of the American fabric, and they were hell-bent on doing so.

Toyota sponsored everything from local ball teams to NCAA football, PGA Golf, Major League Baseball and NFL telecasts. As a matter of fact wherever there was a quintessentially American sporting event going on you could bet that Toyota was present and accounted for. But Toyota’s calculated largesse didn’t stop there. The company also promoted high-visibility educational scholarships and charitable initiatives, while its exceedingly slick lobbying efforts laid waste to any sense of objectivity left in the halls of Congress, and particularly in the states in which they built plants.

And its jolly green, Prius-driven, holier-than-thou persona as the Greenest Entity on Earth was just the icing on its proverbially self-righteous cake, as legions of consumers and legislators bought into the fact that that not only was Toyota an American company, it was, in fact, America’s Car Company in every possible way. (Except, of course, when it pertained to where Toyota’s profits went at the end of the day. Ah, those niggling little details.)

But now, with last week’s massive recall and the burgeoning fallout from it, Toyota has become something it had so desperately wanted to avoid over the last 35 years: just another car company.

Don’t believe it? Up until last week Toyota had managed to stay above the fray by operating as if it was in another solar system, one not subject to the vagaries of the business or such sordid, untidy, image-killing episodes as the kinds of recalls that other auto manufacturers had to deal with. Toyota believed – and had managed to convince a great number of others too – that it was immune from such nonsense. That it really was above all the rest.

But last week changed all of that.

In this media-intensive frenzy that we all live in today - fueled by the Internet and exponentially multiplied by the new social media outlets – Toyota’s one-word alter ego – “quality” – was eradicated. I was going to say it became something else, but what has really happened is that there’s now a void, as if the one-word descriptor that used to define Toyota has blown away with the prevailing media-driven firestorm.

This Toyota debacle isn’t just another car company recall, because the “Toyota Way” that used to perfectly encapsulate the mindset behind Toyota’s success has now become “Toyota Has Lost Its Way.” And other than the usual assortment of company apologies and platitudes, the company doesn’t have the first clue as to how it will get its mojo back.

A few years ago, when Toyota management embarked on its now disastrous (and now quaintly ludicrous) quest to become the world’s largest automaker, finally dethroning GM from the top spot, little did anyone know that - consumed by its mission - it would walk away from everything it had stood for up until that point in time.

The slow but ploddingly sure Toyota method of incremental sales increases year-over-year followed by a correspondingly gradual increase in capacity - while accounting for its usual high quality standards - gave way to a frenzy of plant building and a complete abdication of what it once stood for when it came to quality.

The Toyota implosion marks a definitive shift in the American automotive landscape. After dominating the hearts and minds of the American consumer public for the better part of three decades, we are now witnessing the end of Toyota’s reign over this market.

With Toyota unable to avoid the kind of national and now international scrutiny - and notoriety - that has humbled lesser companies, we will see Toyota eventually fall back from the top tier in this market, eclipsed by a host of savvy competitors led by a dramatically rejuvenated Ford and an increasingly aggressive Hyundai.

It took 35 years of intense focus for Toyota to get to the top of the industry in this market and around the world, but in just one week Toyota’s masterfully calculated image and hallowed reputation is now in tatters, decimated by a swirling maelstrom of its own hubris and unbridled greed.

It has been a devastatingly painful lesson for Toyota.

And it will be a worthwhile case study for the rest of this industry too - as in how even the best can get caught up in their own delusions and lose focus - for decades to come.

That’s all I got for this week.


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