Could Toyota Damage Other Japanese Brands?

Kelly Blue Book Market Intelligence indicates that Toyota owners are shifting their car-buying interest to Ford and Korean automakers Kia and Hyundai, and away from not only Toyota, but also from other Japanese brands, including Honda and Nissan. This suggests that Toyota was not only a brand in and of itself, but also was the "Japanese car category".

Category is more important than individual brands. We think category before product brand. The leader in the category sets the standards against which all others in the category are judged. A funny thing happens, according to research. When competitors attack the category leader, it often helps to reinforce all the good things that led to its leadership position in the first place. But, when the category leader fails, it can damage others without clear brand preference attributes other than they are members of a desired category.

We are now seeing a very interesting situation arise. Since Toyota was the first and most prominent brand amongst the Japanese car manufacturers, it became not only a brand, but also the standard-barer for all Japanese made cars. All other Japanese cars--Nissan, Honda, Mazda, etc.--were judged against Toyota, but also were defined by it. They lived under Toyota's umbrella. When Toyota's metaphorical umbrella began to fold, the other Japanese car makers started to get wet. In other words, a significant number of Honda buyers select that car because it is a Japanese brand. Toyota build the Japanese brand, defined and lead in its key attributes of quality and reliability, and may be helping to damage the category now.

We are still seeing sales of other Japanese cars increase, but that is because there is market share to be gained by everyone at the expense of Toyota. But, the Blue Book analysis shows that Toyota's aura was big and may have encompassed the entire category of Japanese cars. So, Toyota's problems created a crack for all cars from that country--they were somehow lumped together, just like consumers got used to talking about the problems in "Detroit". Ford is still trying to distance itself from that category. It helped itself when it did not take federal bail-out money. GM and Ford have shown good increases in sales recently. People may be reconsidering a US-car category and Ford's success could be lifting even GM, even though the public is still not sold yet on GM's future.

We are witnessing an interesting situation of demand elasticity that is not related to price as much as it is related to perceived value of a category. Market demand for cars has a lot segmentation appeal and category attributes. Some people look for a car, but most people decide they want to look at European cars, or Japanese cars, or US cars. One might think that other Japanese makers would benefit, but they are getting hurt by category linkage.

At the same time, we see stories that Toyota is succeeding in getting its loyal customers to friend the company's Facebook site and to tout the car brand in social media. These are attempts by advertising and PR firms to drum up support and hopefully create a ground-swell--sort of like a political campaign. The problem is that Toyota is leading what happened in the last election. No Republican could win because Bush had damaged the brand and category. A similar situation could be at work in the market, with other Japanese manufacturers getting hurt for things that had nothing to do with. Toyota is rapidly becoming the Japanese car category George Bush.