Toyota Squandered Its Reputation For Quality

Feb. 9, 2010 | By Wendy Kaufman | National Public Radio

The Japanese automaker has stumbled badly in managing its current recall crisis. It's been accused of withholding information, changing its story and being less than aggressive in dealing with the various problems. Assuming the company can solve the technology and safety problems, how does Toyota regain public trust?

As Toyota's global recall grows to more than eight million cars, the world's largest automaker has seen its once vaulted image take a serious beating

Business experts say Toyota squandered its reputation for quality and reliability by not acting aggressively and decisively to address mounting problems such as sticky accelerator pedals and a brake-system glitch.

"I would give Toyota an 'F' in my class for their corporate responsibility program," says

Dartmouth professor Paul Argenti, who teaches at the Tuck School of Business.

Argenti says Toyota did three things wrong: It didn't help people understand what it was doing to fix the problem, it didn't apologize in an appropriate way, and it wasn't humble enough in addressing consumer concerns.

The Japanese giant didn't own up to the problems — it minimized them, pointed to a supplier, even blamed the drivers. Toyota watchers wanted to know what was going on, and they wondered where was the company CEO.

Akio Toyoda was nowhere to be found until a Japanese TV crew caught up him at the glitzy World Economic Forum in Davos, Switzerland. Toyoda made brief, unsatisfying remarks and then left in — an Audi.

"It's astounding, it's too over the top for a Hollywood version of this. It's getting hard to satirize Toyota because their judgment is so poor right now," says Jeffrey Sonnenfeld of the Yale School of Management.

Last week, Toyota finally offered a more traditional apology, but it was at a hastily called news conference and wasn't convincing to many people.

Sonnenfeld says what the company needs to do now is get accurate, factual information to the public, enlist outside engineers to help find and fix any safety problems, and put its CEO out front.

"Then get out there in the blogosphere with whatever the right information is and some evidence — give us the demonstrated evidence that this fix is working," he says.

Toyota also needs much better crisis management, says Harlan Loeb, a senior executive with Edelman Public Relations. Over the next two to three months, he says, the automaker has to demonstrate that it has resolved all the issues for each and every Toyota owner.

"They need to prove that their eye on the consumer is unwavering and laser-like: 24/7 service to evaluate and repair the cars, some type of action pledge where there is a 100,000-mile warranty on these cars," Loeb says.

Even then, it could take years to earn back public trust. Toyota is trying to regain some of that consumer confidence with new corporate image ads, but Kelley Blue Book has already lowered the value of recalled Toyotas by hundreds of dollars — and Toyota's competitors are already pouncing. Copyright 2010 National Public Radio. To see more, visit http://www.npr.org/.