Facing Its 'Tylenol Moment,' Toyota Needs to Move Fast

Toyota Motor (TM) faces a Herculean task to convince the public that its cars are safe. Three major recalls in as many months will have that unpleasant effect.

The problems center around a sticking accelerator. Media reports today indicate that 2 million Toyotas in Europe and China may be recalled because of the problem on top of the 2.3 million Toyota-brand cars and trucks, dating to 2005 models recalled in the U.S. last week.Last November, there was a separate recall of 4.2 million Toyota and Lexus brand vehicles because as USA Today put it, "throttle pedals could get stuck under floor mats, and the cars could zoom out of control." That recall was expanded on Jan. 27 to 5.4 million vehicles.

Oh yeah, more than 100,000 Toyota Tundra pickups were also recalled amid concerns about their spare tires possibly falling off.

All Bets Are Off

As word of these quality problems spread worldwide, Toyota has been losing its hard-won reputation for quality built over decades. The drive for quality has been in the DNA of the founding Toyoda family (who spell the name differently than the company for decades. The family recently moved to reclaim active management recently, when Akio Toyoda, grandson of company founder Kiichiro Toyoda, took over the company's top job as it reeled from a worldwide auto slump.

Since then, Japan's largest automaker -- and going bumper-to-bumper with General Motors for the title of world's largest -- had been optimistic that it would stem its losses and see sales rebound in North America. Such rosy projections may no longer be realistic, especially now that the public is increasingly concerned about the safety of Toyota vehicles.

"People are naturally skeptical, and it's hard to prove safety particularly when you are talking about accelerators and brakes," says Dave Sargent, vice president for auto research at JD Power & Associates. "I am surprised there have been a number of separate announcement.... It gives a sense that they are not entirely sure on the extent of the problem."

Lost Customers, Lost Time

Toyota, which my colleague Peter Cohan argues traded quality for quanitity, should quickly appoint someone to be the company's public face, experts say. Someone to lend a sympathetic ear to worried customers and concerned dealers who so far have been left pretty much in the dark. Toyota has halted production of eight models at six factories in North America as it investigates the problems.

Time is not on Toyota's side, they say, because if people are turned off, the company might have wait five to six years to win them back. Many customers in the market to buy now won't wait for Toyota to fix its problems.

Edmunds.Com senior analyst Michelle Krebs says she was surprised that the automaker hasn't been more "upfront" with its customers. She agrees that to calm their anxiety will require "pampering."

"Dealers Feel Abandoned"

Crisis communications expert Gene Grabowski says the automaker is being put to the test by this ordeal much as the makers of Tylenol were tested in the early 1980s by the negative publicity surrounding poisoning deaths connected to their product.

"Consumers are going into dealerships getting confused messages. Dealers feel abandoned," says Grabowski, senior vice-president of Levick Strategic Communications. "This is their Tylenol moment."

McNeill Consumer Products, the Johnson & Johnson (JNJ) unit that marketed Tylenol, withdrew the medication from the market and later reintroduced it with better packaging and a tamper-resistant pill, a move later copied widely by the pharmaceutical industry. Tylenol has long been used as an example as the right way to handle a product crisis.

Toyota has miles to go before reaching that standard.
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