Friday, February 05, 2010

Can Toyota Turn Fear into Loyalty? :: The 2010 Prius Recall

I've been following the Toyota recall story, from a branding point of view, as well as a 2007 Prius owner. Here's a CBS News story covering the major points::

Toyota is recalling the Prius in the US for a sudden acceleration problem and will be making two fixes, one at the pedal and another with the floormats. Their dealers will be staying open later to accommodate the recall, which has been after over 2,000 complaints on a sticky accelerator problem. One lawyer representing families suing Toyota brought up the issue of other alleged electronics problems, as well as similar problems on other models. The LATimes reports on the braking problems of the 2010 models, a stalling issue, and other electronics issues, such as the headlights going out, a problem I've been having since August::
"Since 2001, Prius owners have lodged more than 1,300 complaints about exterior lights shutting off without warning, most frequently the headlights.
According to complaints, the high-intensity discharge (HID) headlights, anoption on the Prius, shut off without warning, sometimes in dangerous situations, leading to four crashes and at least one injury."
The US NHTSA refused to require a recall on the headlight issue in September. The agency claimed that some of complaints that initially stated two headlights failing really only had one go out, although they made their ruling before receiving all of the information they requested from Toyota. The report stated::
“Since there is still one headlight operating when the other one cuts off, there is still lighting available to get the vehicle to a repair facility. Thus, a safety defect trend has not been identified at this time.”
In the CBS News story and the LA Times article on the HID failures, Toyota President and a spokesperson both said that the company would be working on the issue, reassuring customers, and addressing customer dissatisfaction.  I sure hope so. I realize that these headlights don't last forever, but I saw on discussion groups that the fix was hundreds of dollars for the HIDs. What happened to $8 bulbs from the auto parts store that you could put in yourself? I also read that there might be an issue with the ballast for the bulbs, so I have concerns that if the problem doesn't fix the cause, I'll just burn out another bulb and be at square one again.

While this all will be costly, Toyota can turn this around and help strengthen its brand.  Back in the 1990s, I was a grad student and dubbed a "brand" guy and was a disciple of Dave Aaker at the Haas School at UC Berkeley. In his book, Building Strong Brands, he wrote about the 1993 Saturn recall::
"In June 1993, Saturn decided that a recall was needed on all 350,000 cars made before April 1993 to ensure that a wire was properly grounded. The initial negative publicity was gradually replaced by more positive reports. Why? First, the recall was voluntary, not mandated by the government. Second, it was handled expeditiously: After two weeks 50 percent of the cars had been repaired, in part because of the contact that retailers had with their car owners. (In contrast, a major recall by a competitor—mandated by the government—was only 33 percent complete after twelve months.) Third, retailers handled the event positively. One chartered a bus to a baseball game; when the bus returned, the cars had been repaired and washed. Another had a barbecue that customers could attend while their car was being fixed. A third offered theater tickets.  
In all, Saturn's strong customer relationship was reflected in the way that the recall was handled. Tracking studies indicated that the Saturn image on the 'takes care of customers' dimension was not affected, and that the brand had actually improved on the "good dealer" dimension."
Toyota should heed how Saturn handled their recall. Turning a negative into a positive is a way to gain loyalty, but first and foremost Toyota needs to acknowledge and fix all of its safety and quality issues. I'll blog about my experiences with these issues and how it's being handled in Canada—or if I have to go to New York to get my Prius fixed.

Twitterversion:: #ToyotaPrius recalls are cause for alarm, but can they turn it around to assure customers like Saturn in 1993? @Prof_K

Song:: Primitives-"Crash"

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