Will the Recall Damage Toyota's Brand?

I just did several interviews with news channels in the US and Canada on the Toyota recall. One reporter said that he had talked to several "experts" who suggested that the Toyota problems would "inexorably damage their reputation". I could not disagree more. He also said that this same "expert" thought that Lexus would be damaged by this.

First, I am questioning the use of the term "expert" with this person the reporter referenced. Does this person know anything about brand and reputation? Sounds to me like a PR "expert" working for a competitive brand.

If Toyota were a new product, fairly unknown to the public, then damage of this type might do in the brand. However, Toyota has been on the market for a long time and has built expectations amongst consumers that it makes cars with the highest quality and reliability. Certainly, the recall puts a dent in those claims, but it does not damage the brand completely.

When a company continues to exceed expectations, as Toyota has done over the years, it builds up inertia in its brand--what some people call a "halo effect". Problems are judged against this experience level. Usually, in such cases consumers are more forgiving because things like this are extraordinary, not the usual.

What would have inexorably damaged the brand would have been had Toyota refused to withdraw the cars, arguing that the problem was not a problem for most people. Think about what happened with the Bridgestone/Firestone tire problems. The company continued to argue that the problem was not real, despite evidence to the contrary. There was even a lot of finger pointing between Ford and the tire company, since many of the problems occurred on Ford cars, the heaviest user of the tires.

Toyota could have pulled a "Jacques Nasser" (the former CEO of Ford at the time of the Bridgestone/Firestone crisis) and blamed the supplier. It is taking the hit, both reputationally and financially. One must give them kudos for this.

They are taking the first major step toward protecting their brand longer-term. They are demonstrating their commitment to consumer confidence and trust. They also are doing what crisis experts always suggest--get out in front of the issue. I would suspect that they will rebuild their brand upon return to market. Will their entire market share return? Time will tell. Things like this damage the perceived value of claims of quality and reliability and allow competitors to close the gap in those attributes. But, Toyota is a smart company and I would hope that they will come back with something special for their installed base as well as incentives for new potential buyers.