Toyota is learning this the hard way…the massive recall has the potential of undoing 40 years of industry-leading, awe-inspiring brand building in one fell swoop (Come clean: I used to work for Nissan North America and was always envious of their great work). What they knew and when they knew it is a big deal and shouldn’t be ignored, but I would like to focus on what they did after the recall became official, and why.
A few weeks back there was a great story in the LA Times, that talked about the effects of the recall. According to the Times,
“Kelley Blue Book says that values of used Toyotas — already down 3% — will decline further this week by about 1.5%. The Prius hybrid, which typically sells for close to its entry-level sticker price of about $23,000, is likely to see its retail value drop by $1,000 to $1,500, Bell said.”
This isn’t a stock on the Nasdaq, it’s a car. A car with an engine, a nice interior, and features, like a 6 CD changer, remote keyless entry and an adjustable front passenger seat. None of that changed with the recall…the cars have the same engine, seats and key. So what makes you want to pay $1,500 less for their car today?
You trusted them that this wouldn’t happen and were willing to pay $1,500 more for their sheet metal because of that piece of mind the Toyota brand gave you. But things do happen, and based on how they handle this, by galvanizing their 172,000 employees to focus on the “fix”, by running ads telling you things are under control, by being incredibly transparent through a great social media site called Toyota Conversations, by bringing their global CEO to America to testify before Congress, most people will probably stay with the big sombrero after the buzz dies down.
You will trust them again because of the way they ultimately handled the problem, and because we can’t imagine them ever letting this happen again. You’ll gladly pay that $1,500 again. I bet you will.
So when people come to you with the lowest price for a major product or service, like a real estate professional, a contractor, or in stock trading or insurance, you gotta ask yourself, “will things go wrong with the low price guy and if so, do they have the scale/desire/funding to fix it?” Do I Trust them??? If not, remember, you get what you pay for…
I’m living that nightmare now with my new hardwood floors…but that’s the subject of another blog…
Toyota badge photo by Harley-Quinn