Yet the biggest fear for Toyota execs should be what is still to come – the consumer lag effect that can keep a brand dragging its feet, even when its real-life problems have long since been corrected.
How does it work? Take a look:
1. Safety Recall – whilst owners have their car off the road, they’re experiencing rental vehicles of other manufacturers – for many super-loyal customers, this is the first time they’ve driven a non-Toyota in quite a while, and some will be pleasantly surprised by what they find
2. New Sales decline – anyone in the market for a new car right now is under siege from Toyota competitors, offering unbeatable deals especially for classic Toyota-profile customers. US market share for Toyota has already tumbled from 17.5% to 12.1% since Jan 21 [Source: auto information company TrueCar.com]
3. Repeat Sales decline – for those planning a future car purchase more than 12 months out, the seeds of doubt have already taken hold, with Toyota’s market-leading 58% repeat purchase rate down to 51% last month, behind Honda, whose own reliability and value scores are climbing
4. Fading Residuals – Toyota’s past reliability has always kept resale prices above-average. But with the brand tarnished, and so many older Toyotas still on the road, that’s a huge number of second-hand owners who have suddenly taken a hit from a faulty model they’ve never even come close to owning
5. Loss of trust – so many product recalls at once may cause many, once-loyal and satisfied owners to start ‘looking’ for faults they previously may not have noticed.
Suddenly, what looked like a containable problem, restricted to particular models has the potential to be far more widespread, with a lag effect of many years.
Such a prognosis does not make Toyota’s task an impossible one – only that they have to tackle the consumer lag effect at each stage, with just as much dedication as the more obvious recall-affected vehicles.
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