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Raissa Carey

Customer Care

Will Toyota’s Recall Severely Impact Customer Satisfaction?

The company’s proactive and unprecedented recall and sales halt, while expensive in the short term, may protect its image.

Published: Thursday, January 28, 2010 - 05:30

As in any good relationship, open communication is vital and Toyota Motor Corp., which recently suspended production and sales of eight models suspected of having sticky accelerator pedal problems, now has the perfect chance to show the world how healthy a relationship it has with its customers.

The recall and sales halt, which most industry observers agree was the right move, has generated different discussions about the company’s renowned quality expertise.

“Toyota has built this reputation on quality and reliability and safety and being a practical choice. When consumers start questioning that, it really can damage them in terms of reputation, especially when Hyundai, Ford, Honda, Subaru, and Nissan offer great choices and are coming up in quality ratings,” Jake Fisher, an automotive engineer for Consumer Reports, told Reuters.

However, Toyota could minimize the adverse effects of the recall and sales halt depending on how well the company communicates with its customers, according to Dave Sargent, vice president of the global automotive division at J.D. Power and Associates.

“We feel that Toyota is taking the right steps here,” says Sargent. “It is critical that they also focus on communications with customers and dealers. There appears to be some uncertainty right now. This is understandable, but Toyota needs to be as clear as possible around what consumers should do, what dealers should say to customers and potential customers, and (when they know) when sales and production will restart. This is obviously a hugely complex challenge. Action is critical, but clear communication is also important.”

As far as the effect on overall customer satisfaction of the Toyota brand is concerned, Sargent isn’t convinced Toyota will take that big a hit.

“Historically, vehicle recalls have minimal effect [as far as customer satisfaction ratings go] as only a very tiny percentage of owners actually experience the problem,” Sargent explains. “For the majority of owners, the most significant impact will be the inconvenience of taking their vehicle in to the dealer to be fixed. The high volume of recall work is also likely to affect other owners trying to get a dealer service appointment. The effect will be largely dependent on how well Toyota and the dealers manage this process. There may also be an indirect effect coming from some consumers’ residual concerns about the general reliability of their vehicle and potential effect on the resale value. Overall the impact is likely to be less profound than might be expected.”

It’s still unclear what Toyota is going to do as a definite measure to fix the problem, but Sargent is certain that Toyota is not going to risk its highly valued reputation by releasing the affected vehicles before the problem has been clearly identified and fixed.

“The actions that Toyota have taken this week are clearly designed to fix the problem (and the perception of a problem) once and for all,” says Sargent. “It is highly unlikely that they will move forward without being completely satisfied that the problem is fixed. Their long-term reputation is more important to them than losing a few weeks of sales, however painful that is in the short term.”

Meanwhile, The National Automobile Dealers Association (NADA) is encouraging Toyota dealers to verify whether or not they have business interruption insurance that might help them endure this crisis.

“This is creating a very difficult situation for dealers, in an already tough market. NADA is working with Toyota to identify a plan to help get dealers through this,” according to a statement from NADA.

Last year, the Japanese automaker issued a recall of vehicles to reduce the risk of pedal entrapment by incorrect or out of place accessory floor mats, according to a company statement. Approximately 1.7 million Toyota Division vehicles are subject to both separate recall actions.

Toyota’s accelerator pedal recall and suspension of sales is confined to the following Toyota Division vehicles: 2009–2010 RAV4, 2009–2010 Corolla, 2009–2010 Matrix, 2005–2010 Avalon, certain 2007–2010 Camry, 2010 Highlander, 2007–2010 Tundra, 2008–2010 Sequoia.

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Raissa Carey

Comments

The common complain about

The common complain about the 2010 model of Toyota is the brake. You have the Toyota recall, the Honda recall, and NOW the Nissan recall – and a GM recall, too. Nissan is recalling over 500,000 vehicles due to a faulty brake pin or fuel gauge. Models affected include the Titan, QX56, Armada, and Quest minivan (brakes), and the Frontier, Pathfinder, and Xterra have the faulty fuel gauges as well as the Titan, QX56, and Armada. It will cost them a lot more than a few payday loans. Most car recalls are errs on the side of caution – though the formula is ringing in my ears, of A times B times C, equals X.

Customer satisfaction versus customer value

More than likely the recall will have a negative impact on customer satisfaction but equally, and arguably more important, it will have a negative impact on customer value and Toyota's competitive value proposition. I can only be dissatisfied with Toyota if I own a Toyota. If I am a car buyer evaluating the different brands, I will factor in all of the quality factors (CTQs) and then look at the tradeoff between quality and price. Reduced quality at the same price has a negative impact on value.

Cadillac had this problem in the 1980s when their satisfaction scores were high but they were losing market share. Toyota could actually lose share and enjoy high satisfaction scores. Satisfaction has little predictive relationship with market share. This has been empirically established many times over. It is for this reason that the issue should be focused on value and not satisfaction.

For more information regarding the difference between satisfaction and value check out Listening to the Voice of the Market published by Productivity Press.

Based on the information

Based on the information available, it doesn't seem that the entire scope of the floor mat issue was investigated last year. Both mat and pedal acted together to create the problem.
Even if that wasn't evident from the initial assessment, problem solving methodologies were not fully utilized.
I would have to question how deep investigation into root cause was performed and what, if any, testing resulted in identification, correction, and validation that the mat issue was resolved? Essentially, it appears to have been a band-aid or a wishful solution to a problem which is now known to be multi-faceted. Risk analysis of the pedal design was obviously inefficient. If root cause (as guessed) is an environmental / humidity-related problem, that should've been considered with the mechanical function of this assembly (as well as with any other product). Beyond that, how much prototype testing was done is a valid question as well?

Toyota is exhibiting a (re-) commitment to its core principles

I agree that on the surface, it looks like Toyota took to long to take this action. Their action does, however, shows that their CEO, Akio Toyoda, was serious when he said that he would re-focus the company on its core principles when he took the CEO reins from Katsuaki Watanabe in 2009. Unfortunately, it is taking this kind of problem to show us that commitment.

I believe that Toyota will do the right things and that ultimately consumers will recognize that Toyota is still a great auto manufacturer. Note that both Ford and Firestone both seem to have recovered in the eyes of the consumer from their problem 10 years ago.

Toytota's tardy response hardly 'open communication'

Rod Goult
It has been intriguing to watch the media response to the Toyota debacle during the past 24 hours. With few exceptions most commentators seem to have completely missed two significant data points. The first is that the accelerator problem has been extant and noted for over two years. During these two years people have been injured and people have died in accidents which may well have resulted from this problem - and the company would not admit that there was a problem.

The second data point is that the decision to stop sales wasn't a proactive company decision, it was forced on Toyota by the Federal authorities. It is unfortunate that Ms. Carey's article failed to comment on either of these two uncomfortable facts, preferring to focus on a very positive spin being put on the situation by people with a vested interest in saving Toyota's face.

I wonder if everyone would have been so kind if this had been GM, Chrysler or The Ford Motor Company? Somehow I suspect that the headlines would have been very different - probably more like "XYZ Company ignored fatal flaws for years" or "XYZ ordered to stop sales by Feds".

Let us face the facts, folks. Toyota has behaved in exactly the way that the Big Three did in the 60's and 70's. None of the major US car companies would dream of acting that way today. All three of the Detroit manufacturers have learned that speedy recalls when there is even a suspicion of a problem is a far better policy than trying to pretend that it doesn't exist. Maybe this is a valuable learning experience for the new number one.

Recall was voluntary

Toyota's decision to recall and stop sales on 8 lines of vehicles was voluntary, not mandated.

impact to customer satisfaction ratings

The recall might create a short-term negative impact to customer satisfaction, but I think that a person's long-term satisfaction will be based his/her personal ownership experience.