Toyota’s problems show how crises can devalue a brand

It might have been Volkswagen that actually used the advertising slogan “if only everything in life was as reliable as a Volkswagen”. But, in terms of public perception, it could have been Toyota – at least, until now.

Toyota’s image was as a manufacturer of, possibly not the most exciting family cars, but ones that were utterly reliable and dependable.

In a matter of weeks, however, that reputation has been badly dented.

IoD Scotland Magazine

The article from the Spring 2010 edition of IoD Scotland’s magazine

Brand Finance, who run an influential ranking of the world’s leading brands, until recently rated Toyota as the ninth most valuable brand in the world. It gave Toyota an AAA rating with a value of $27 billion. Already they have chopped 10% from this value and downgraded it to an A rating, with the warning that the recall issues could end up with a total 25% reduction in the valuation.

As I have said in this column before, it takes years to build a company or brand reputation. But, that reputation can be severely damaged in just weeks, or even hours and minutes.

It was in November last year that reports began to circulate widely in the US media about problems with the throttle pedal sticking on some Toyotas.

The media coverage gave the impression the company was trying to downplay the issue. Some sectors of the media then adopted a campaigning stance in an apparent attempt to push Toyota into action.

Action, when it came, was in the USA. A recall was announced. But, other international markets – notably here in the UK – appeared to be left hanging.

Were cars in this country affected? Was there going to be a recall? Again – rightly or wrongly – the impression presented in the media was of a company dithering, apparently reluctant to acknowledge the scale of the problem. It was not until early February that Toyota placed full-page advertisements in UK newspapers to explain the situation to customers.

While the clamour about this sticking accelerator issue was reaching its crescendo, as so often happens, Toyota was hit by a second whammy.

Reports began to emerge of a possible brake problem on the latest Prius model. Once again, the media presented the impression of a company reluctant to accept the scale of the problem, then being pushed into making a decision – rather than leading the response.

In 2009 more than half a million cars from various manufacturers were recalled in the UK and barely any negative coverage ensued. Clearly something has gone wrong with the crisis plan this time.

One of the benefits of an effective plan is that it will help the company to identify when they have a serious issue, to determine its scale and implications and then to make the decision to implement prompt and decisive action.

In the apparent absence of a prompt response, Toyota customers were left harbouring doubts about whether their cars were safe to drive or not. These concerns were then fed by media speculation.

Additionally the protracted flow of negative news was spread over many weeks. In an ideal world it is better to bite the bullet and make an immediate comprehensive announcement.

That way the organisation can put the negatives behind them as soon as possible and begin to concentrate on the vital job of rebuilding the damage to their reputation.

© Ken McEwen Public Relations, 2010.
No unauthorised reproduction without full acknowledgement of source. All rights reserved.

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