Toyota’s “exceptionalism” came back to bite
– Edward Niedermeyer is the editor-in-chief of The Truth About Cars. The views expressed are his own. –
(Paragraph 7 corrected on February 10.) Life rarely offers easy answers to important decisions, but up until a few weeks ago, it seemed that new cars buyers simply couldn’t go wrong buying a Toyota. For decades, the Japanese automaker had built up an unmatched reputation for quality and reliability, on its way to becoming the best-selling automaker in the U.S and the top car producer worldwide. A Camry might not have been a particularly glamorous or exciting choice of vehicles, but consumers could buy one without doing a lick of research, and expect it to run reliably and efficiently for years. At least they could until a flurry of defects and recalls suddenly brought Toyota’s untouchable reputation back down to earth.
In a matter of days, Toyota’s good favor in the eyes of consumers has been replaced with suspicion and doubt. Having first ignored reports of unintended acceleration in its vehicles, Toyota then blamed floor mats before finally recalling some eight million gas pedals worldwide. When a brake software problem on the Prius hybrid emerged within days of the gas pedal recall, and Toyota’s leadership moved slowly to get in front of the burgeoning PR nightmare, the automaker’s spotless image suddenly found itself in shreds.
This rapid reversal of Toyota’s fortunes indicates that its reputation as an unquestionably logical choice in car brands was already wearing thin. Having refined the most efficiency and quality-focused manufacturing system in the industry by the late 1980s, Toyota responded to currency fluctuations in the early 90s by cutting costs on the design-end of the business.
According to the company’s logic at the time, a “lean” manufacturing operation couldn’t afford to build “fat” or “overquality” products in the face of intense pressure on profitability.
The result was 20 years of decontenting, in which Toyota reduced the cost and quality of its products, while coasting on the reputation of its most famously “fat” products of the late 80s and early 90s. The fact that this occurred as America’s domestic automakers were facing their own major deficits in quality and reputation allowed Toyota to build on its reputation without incurring the high costs of overquality.
In short, Toyota’s fall from grace was decades in the making, and in retrospect, the real surprise is that Toyota maintained its perceived advantage for as long as it did. Millions of dollars are won and lost in the car business by balancing cost and scale against quality and reliability, and Toyota is no exception. Only the longevity of its reputation with consumers makes Toyota’s decline so noteworthy.
Green business and the conscience premium
Welch is the publisher and editorial director of Ogden Publications, home to Mother Earth News and Utne Reader. Any opinions expressed are his own.
Green business is arguably the most important marketing innovation of the century. And it’s here to stay.
When we talk about green business, we’re really talking about the provenance of the products and services we sell. A business is green if its creators take into account its impact on the environment, and on society. Like a historic work of art, a pair of running shoes now has a provenance – a chain of collaborators, stakeholders and events that led to its appearance in your closet.
Did the factory owner in Guatemala employ child labor? Are the materials carcinogenic? What about the environment downstream from the factory, is it threatened? Did the shipping company control the pollution from its freighters? Does the U.S. distributor pay a living wage?
Consumers care.
And because consumers care, businesses can charge a premium for conscience.
Take the green building sector for instance. People often mistakenly assume that the boom in green building technologies was driven by conscientious consumers. In fact, contractors and manufacturers largely invented green building, then introduced it to the consumer as a way of differentiating, and premium-pricing, new products and services.
“alert, well-trained drivers will continue to be the only factor capable of preventing inevitable quality slips from becoming fatality statistics.”
Perhaps true, but not if the federal agency tasked with protecting their safety blows them off such as the Oct. 20th, 2009 “Denial of a Petition for a defect investigation” from NHTSA to a very savvy consumer who insisted that there was more to the Toyota pedal issue than floormats. NHTSA couldn’t find anything and refused to look deeper. Three months later, Toyota issues the gas pedal recall, installing ‘shims’ on pedals involving over 2 million cars. Someone at NHTSA should be red-faced?