Tag Archives: Toyota

Volkswagen – another epic big brand fail

stephen2By Stephen Rhodes

When big brands fail, somehow we are shocked.

The latest is Volkswagen,  engulfed by a growing crisis over its attempt to make millions of diesel cars appear cleaner than they are.

The scandal broke Friday, when U.S. regulators said the German company had programmed some 500,000 vehicles to emit lower levels of harmful emissions in official tests than on the roads.

vwVolkswagen stunned investors Tuesday by admitting that the problem was much bigger than that: internal investigations had found significant discrepancies in 11 million vehicles worldwide.

It set aside 6.5 billion euros ($7.3 billion) to cover the cost of recalls and “efforts to win back the trust of our customers,” trashing its profit forecast for the year in the process.

Shares in Volkswagen plunged 18% Tuesday, after crashing 17% Monday. That means about a third of the value of the group has been wiped out in two days.

Volkswagen is not the first. There is the GM ignition switch problem, that caused 13 deaths and 10 years to recognize. Toyota’s airbag problems. Toyota ‘s $1.2 billion settlement with federal prosecutors over its handling of more than 4 million recalled cars because of unintended acceleration in 2009 and 2010.

The US Justice Department will investigate Volkswagen, so undoubtedly there is more bad news coming.

What are we to make of this other than greed is ever present in corporate America?

Brand loyalty is built on trust. Trust isn’t bought, it’s earned. Volkswagen has a tough row to hoe.





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Brands on the run

By Stephen Rhodes

A few weeks ago I mentioned that brand is not what you think it is, but what your customer thinks it is. And what your customer thinks  of your company is completely in your hands to control.

Witness the recent list of companies who have done their very best to change how their customers view their brand

Toyota noted for quality, particularly when compared to North American auto makers, has broken its promise with seemingly endless recalls. Google and Facebook have both felt the ire of their customers over privacy issues. Goldman Sachs, the investment bank, has suffered in the wake of the credit crunch in the United States.

In the past two weeks even the venerable Apple has run afoul of its customers with  its new iPhone 4. Apple finally acknowledged a problem with the iPhone 4’s reception but claims  it isn’t in the external antenna design, but rather with the iPhone 4’s formula to calculate signal strength bars. They promise a fix soon but it’s unlikely to remedy the reception problem, just the fact you will now know when you have lousy reception.

And then, of course,  there is BP.

Tom Bergin, of Reuters had a piece in the National Post BP’s colossal PR blunder about the Gulf oil spill.

“BP’s handling of the spill from a crisis management perspective will go down in history as one of the great examples of how to make a situation worse by bad communications,” said Michael Gordon, of New York based crisis public relations firm Group Gordon Strategic Communications.

“It was a combination of a lack of transparency, a lack of straight talking and a lack of sensitivity to the victims. When you’re managing an environmental disaster of this magnitude you not only have to manage the problem but also manage all the stakeholders.”

BP failed to understand the  attitude and perception it was building in its customers’ minds.

The rise of Twitter, and other social media tools, allows companies to monitor what people are saying about them but also help them to engage actively with consumers. It also enables customers to communicate with each other, and it is the stories they share that can shape the future of a brand.

Credibility and trust are pillars in brand management. Break the promise with your customer and it’s difficult to recover.

Your thoughts?

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The mighty fall fast and hard

By Stephen Rhodes

How the mighty can fall. Hard and fast.

The halting sales and production of eight of Toyota’s most popular vehicles over its  sticky-pedal has had a devastating impact on the once unassailable brand.

Stephen Beatty, Toyota Canada Inc, told the National Post that Toyota’s response to the crisis is just the thing that will endear the brand to consumers. He said companies tend to be judged “not so much by the challenges but rather how you respond to them.”

True. To its credit, and  after a shaky start,  Toyota appears to be confronting the issue head on. And while Toyota is aggressively marketing through its “challenges”  it’s hard to get by the notion that the company that built its reputation on quality can tumble so hard, so fast and in so many ways. Who took their foot off the accelerator?

Toyota expects to lose US$2-billion and 100,000 in worldwide vehicle sales as a result of the sales freeze and the recalls.  Production has been temporarily halted at two US Plants. Managers are cloistered and preparing a new marketing campaign to halt the slide and put bums back in seats.

Meanwhile, the vultures are circling with the likes of General Motors Co., Ford Motor Co., Chrysler and Hyundai Motor Co. offering incentives to lure Toyota customers into their products. They eat their young in autoland.

Toyota lost about a 2% market share in Canada in January because of the sales freeze. In the United States, Toyota is expected to lose a full percentage point of market share this year, which should allow Ford Motor Co. to reclaim its spot as the No. 2 auto manufacturer in the country.

Consumers have multiple avenues of complaint these days with online tools like Twitter and Facebook, LinkedIn groups and YouTube, which makes crisis control even more difficult. And Toyota has not done a good job of managing the online chatter.

Most analysts think Toyota will recover. But it’s lost much of its lustre.

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Filed under Branding, Communications, social media, Stephen Rhodes