Thursday, April 8, 2010

Toyota's Recovery: Inevitable or Out of Reach?

A couple months ago, the Toyota scandal was still freshly ripping through America, and it was the only thing you could find on the news, it seemed. Daily mentions on the 24-hour news cycle still happen, but health care, Tiger Woods, iPad disappointments and coal mining have all taken over the headlines for now. Slowly, but surely, the negativity surrounding Toyota is… well, not going away, but it’s on the agenda far less.

Shortly after the whole thing went down with floor mats and sudden accelerations and supercharged Prius hoaxes, I wrote about the importance of relational history for organizations and how, based on Toyota’s previous good standing with its customers, the company should be able to rebound. Heck, just look at Audi, once the target of similar scandal, now known as a high-class brand. Though, it did take the automaker 15 years to recover, and Audi was exonerated of building faulty cars in the end. The point, though, is — recovery is possible after a crisis.

Toyota’s problems might be more severe than originally thought, though. It seems there was deception going on within the company, as newly released internal memos urged officials to “come clean.” When the pre-existing good relationship with consumers was built on a lie, it certainly complicates image restoration. Again, here is an example where having a public relations professional at the table and actually listening to his or her expert advice would have come in handy. With all the available case studies out there, you’d think by now corporations would realize that cover-ups never, ever work — at least not for very long. Honesty always has been, and still is, the best policy.

Still, however, my prediction that Toyota should rebound from its crisis seems to hold some water. The company is doing some things right, such as offering unbeatable deals and promising via its advertising that it will do better in the future by its customers. Toyota’s sales were up a whopping 41 percent in March, compared to the same month a year ago. This increase was likely more a result of unprecedented deals than Toyota’s mostly successful social media outreach efforts since the crisis, considering you’ve probably never heard of the Toyota Digg interview. Regardless, 41 percent is quite a bit for a company the media has demonized enough to make any Toyota owner hesitant to touch the acceleration pedal.

It seems Toyota’s woes are far from over, but it also doesn’t sound as though we’ve seen the last of them. Will it take 15 years to recover? Only time will tell, but if Toyota plays its cards right by becoming more transparent, it should remain profitable.

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