Public and politicians in Japan are not enthused about Toyota’s latest utterings, especially at yesterday’s news conference. “At home, fiercely loyal Japanese drivers are wondering how a firm with a deserved reputation for quality and reliability could allow substandard vehicles to slip through its vaunted quality-control apparatus,” reports the Christian Science Monitor from Toyko. The natives are getting restless … Read More >
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With Congress already investigating a possible Toyota unintended acceleration cover-up, the NHTSA has decided that it should probably be getting a piece of the action, and has invoked its statutory power to request documents relating to when Toyota learned of the defects involved in its recent gas pedal recall and how it reacted to them. Federal law requires that manufacturers notify the NHTSA within five days of discovering a safety defect, reports the Wall Street Journal [sub]. The WSJ [sub] also notes that Toyota is offering to disclose new details about its crisis response task force (which reportedly includes “outside quality experts”), as the world’s largest automaker struggles to respond to a rash of recalls that has affected over 8m vehicles worldwide and will cost the company at least $2b. CEO Akio Toyoda will hold his third recall-related press conference in two weeks on Wednesday evening to disclose these details and more on the company’s plans to boost testing and transparency. According to yet another WSJ [sub] report, those measures are said to include less reliance on computer modeling in vehicle design, improved consumer feedback capabilities and more stringent testing of supplier-designed parts.
It’s not a question that should leave many folks on the fence, but apparently there are at least a few Detroit-area journalists who might be willing to consider the career change. “Dealers optimistic about Chrysler’s future” proclaims the Detroit News headline from NADA’s annual convention. A more accurate headline (such as USAToday‘s “Chrysler dealers face new-model drought”) probably should have included the term “punch-drunk” to better explain this unexpectedly sunny outlook. One grizzled ChryCo dealer sums up the mood with aplomb:
We’re the toughest fighters. We’ve always been 3 or 4 (in the marketplace). We’ve never been spoon-fed. We have to fight for every piece of ground… There’s light at the end of the tunnel; I just don’t like the length of the tunnel.
BMW has ditched its long-running “Ultimate Driving Machine” tagline in favor of the vague, lifestyle-y “We Make Joy” promise. And though advertisers never tire of explaining that products themselves pale in comparison to the feelings they inspire in their owners, much of BMW’s (and most German luxury brands’) appeal comes from a projection of sachlichkeit, or single-minded obsession with something for its own sake. “The Ultimate Driving Machine” expressed the brand’s practical and emotional values in a simple, original phrase. The new line might open the brand to more non-enthusiast consumers, but it also reeks of the kind of marketing done by firms that don’t have top notch products on the market (usually because of a distinct lack of institutional sachlichkeit). For the closest analogue we could find on short notice, hit the jump.
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Everyone in every business everywhere thinks they are at least somewhat underpaid, and for most, there’s a certain amount of truth to the sentiment. But then, most Americans don’t have jobs that allow them to destroy billions of dollars in value over the course of their careers. Nor does the Detroit News give most of us a forum to whine about our perceived underpayment. Having helped lead GM into bankruptcy and bailout (with thousands of Americans losing their jobs along the way), Bob Lutz still isn’t happy about executive pay limits at GM, and he clearly has no compunction about airing his grievances to the DetN.
What you see is what you get, and it ain’t a lot. All I know is, right now, we are given our responsibility, and given the rigors of the job and demands and the accountability, I would say we are being paid way, way, way below market. Right now, that isn’t a problem, but over time, clearly a company that undercompensates senior executives is going to have a retention or recruiting problem
The Toyota case is heading towards hearings in DC and to courts all over the country. Both sides are putting heavy artillery in position. Both sides of the SUA wars commission heavy caliber studies – both with inconclusive results. Toyota funded a study into the electronics in its vehicles. Before that, a group of lawyers had “sponsored” Safety Research and Strategies, a company that makes money by investigating auto-safety for those suing auto makers. Ford, which had been at the receiving end of an SRS fusillade during the Explorer crisis, called the company “supposed safety advocates who are actually just shills for trial attorneys.”
Here are the latest dispatches from the front lines: Read More >
As we fumble towards a more complete understanding of Toyota’s stunning fall from grace, we’ve only uncovered a single class of people who truly stand to benefit from the last several weeks of hysteria: the lawyers, of course. Thanks to Toyota’s deep reserves of cash, every single possible damage incurred in the last several weeks will be picked over for an opportunity to sue the world’s largest automaker, and already the suits have crossed over into the realm of the absurd. Automotive News [sub] reports on latest class-action suit charge against Toyota, which seeks damages from the automaker for diminished resale value and lost use of recalled vehicles. These charges have been filed as class-action suits in “at least 30 states,” and lawyers suggest that the damages could run as high as $2b. Ford paid Explorer owners $500 a piece when it settled similar class-action suits in the wake of its Firestone safety scandal.
Fiat/Chrysler CEO Sergio Marchionne was supposed to give a speech in conjunction with the Chicago Auto Show today, but backed out at the last minute, sending Dodge honcho Ralph Gilles in his place. The Chicago Sun Times was able to snag an interview with the globetrotting CEO though, and it features some of Sergio’s more candid (if confusing) comments on the state of new product development at the New New Chrysler. Of particular interest is his very apt criticism of Cerberus’s mismanagement of new product development, specifically the decision to replace the 300 before the Sebring.
The biggest market segments in the United States are the C [midsize cars] and D [large luxury vehicles] segments. If you only have a dollar to spend that’s where you go spend it, especially if you’ve got products that are structurally not working.
The decision was made to invest elsewhere. So we developed a brand-new platform for the 300, a decision that took capital that may have been required elsewhere to go play in a different sandbox. Until you’re clear about where you need the money, where the money needs to be spent to ensure longterm survival – that part of it was substantially missing.
Despite spending $264.1 million on measured media in the first 11 months of 2009, up 16.5 percent from the year-ago period [per AdAge monitoring] while sales fell nearly 27 percent, Automotive News [sub] reports that Acura is upping its 2010 ad spend by 50 percent. According to Acura’s advertising boss Steven Center, Acura’s awareness levels have been consistently high, but consumers didn’t perceive it being as prestigious as other luxury brands. By boosting advertising of new products like the ZDX and TSX Sportwagon, Center hopes to close the gap with the premium perceptions of its German competitors. Center explains:
Our messaging for years has been too ill-focused and not about the product. The ads weren’t making the point and the point is: What is it about Acura that makes it better? We want to have the emotion of BMW without the hardware,
You know, instead of being seen as higher-content, uglified Hondas. Yeah, more advertising should help with that.
Transportation Secretary Ray LaHood’s get-tough quotes during the Toyota recall have generated significant backlash against an administration that is already knee-deep in the automotive industry. The governors of Mississippi, Kentucky, Indiana and Alabama (all of which host Toyota plants) laid into the NHTSA and Obama administration in a letter covered by the Detroit News. The governors argue:
Despite the federal government’s obvious conflict of interest because of its huge financial stake in some of Toyota’s competitors … it has spoken out against Toyota, including statements U.S. government officials have later been forced to retract… Toyota must put the safety of drivers first and foremost. However, they deserve a level and reasonable response from the federal government – one that is not tainted by the federal government’s financial interest in some of Toyota’s competitors
Strangely, the governors of Texas and West Virginia, where Toyotas are also assembled declined to sign onto the letter. Still, the attack isn’t being simply written off has home-state selfishness. One bellwether for the issue is the fact that the Detroit News looked past its own hometown interests and ran an editorial by the Cato Institute’s Daniel Ikensen, amplifying the governors’ critique. And sure enough, Obama decided to take the issue on head-on in an interview yesterday.
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Toyota’s president Akio Toyoda was already getting ready to “visit the United States over massive recalls of its vehicles,” reported the Nikkei [sub]. Japan’s transport minister Seiji Maehara told U.S. Ambassador to Japan John Roos that Toyoda would be dispatched to DC. There, he would be ready to “explain the recall problems to the U.S. Congress if asked.” Read More >
Every year, Japan’s Ministry of Economy, Trade and Industry hands out prizes for products it regards as the pinnacle of energy-efficiency and eco-friendliness. This year, Toyota’s Prius was chosen as the recipient of the grand prize.
Last Monday, Toyota said “enryo shimasu” (no thanks) to the Ministry, and refused to accept the governmental honors, an industry ministry official disclosed today to the Nikkei [sub]. Read More >
Toyota’s PR efforts have been competent if muted during the ongoing recall scandal. Though it could certainly have done more in the past weeks (specifically by making top leadership more available to the public) Toyota has carefully avoided overreacting to the mushrooming media frenzy. Until now. The NYT’s Wheels Blog reports that the 173 Toyota dealers who make up Toyota Southeast have pulled regional ads from ABC stations because of “excessive stories on the Toyota issues.” Toyota Southeast’s ad agency 22Squared says “We have counseled the client on the pros and cons of this, and ultimately it was their decision to make.” Toyota continues to run corporate ads on ABC, but the petulant backlash from its Southeast dealers can’t help but reflect poorly on the brand. Any PR pro will tell you (and presumably 22Squared counseled its clients of this), that these kinds of strong-arm tactics do nothing to improve public perceptions of a brand. Toyota dealers might feel that the parent company is not doing enough on the PR front, but this approach will only create the need for more PR in the future.
The House Oversight and Government Reform Committee will have to wait two more weeks to gets its claws into Toyota, as heavy weather has postponed hearings scheduled for today until the 24th. But don’t expect the delay take any of the pressure of Toyota: lawmakers are taking the extra time to widen their investigations. Automotive News [sub] reports that House Energy Committee Chair Rep Henry Waxman (D-CA) has solicited documents from a number of auto insurers after it was revealed that State Farm had warned the NHTSA of possible unintended acceleration in Toyotas as early as 2007. The Energy Committee has scheduled hearings for the 25th.
Meanwhile, Reuters has published one of the most comprehensive pieces we’ve seen yet on Toyota’s “epic breakdown.” Don’t miss it.
Reuters reports that Toyota has informed the NHTSA that it will voluntarily recall over 7,000 2010 Camry four-cylinder models. According to a Toyota document sent to dealers:
2010 Camrys equipped with a 4-cylinder engine might have a shorter-than-required power steering pressure hose in the engine compartment. That could deplete the brake fluid, increasing the brake pedal stroke and making it more difficult and requiring more time to stop the vehicle
For the record, Ford would have just called this a “Customer Satisfaction Program.”
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