Toyota Customer Retention: Breaking Up Is Hard To Do. Or Not

Cammy Corrigan
by Cammy Corrigan

To the victor go the spoils. Who will be the victors, and how much spoilage will be there in the protracted Toyota battle? Of course, this is all in the name of safety and the children, and any sales dislocations will be unfortunate collateral damage. Really.

As optimistic as Toyota might want to be, over the next few months, their sales will decrease. They already do decrease. “Toyota’s US sales tumbled 16 per cent in January from a year earlier and are set to record another hefty fall this month,” reports Financial Times. Stoppage of deliveries and production, topped by a media onslaught, can have that effect.

Maybe Toyota’s ideas of an increased warranty and more incentives will work, long term, but in the short term, they’d better prepare themselves for negative numbers at the end of each month ahead.

As the first law of thermodynamics infers, energy cannot be created or destroyed, merely transposed. If customers are leaving Toyota, they don’t just disappear like Toyota‘s reputation for reliability China’s interest in US debt, they have to go somewhere. So where will they?

The price research site (via FoxNews) says that the searches for the recalled Toyota models had dropped off by almost half. 25 percent of the lost traffic absconded to Ford, another 25 percent made off to Honda, whilst 20 percent hopped over to Hyundai.

The virtual spoils of war went – not surprisingly – to three marques with reputations for quality and reliability (let’s not get sidetracked by the fact that Ford announced a recall recently, as did Honda.)

TrueCar thinks their numbers are significant, because TrueCar usually gets a lot of traffic from shoppers looking to get a final run-down of the numbers as they close in on closing the deal on a new vehicle.

Competing site came up with a report that found something slightly different. Like TrueCar, the Gurus found less clicking on Toyota and more on Ford. But CarGuru’s visitors did nor flirt with Honda or Hyundai. They pulled up the pages of that other pinnacle of quality and reliability, Chevrolet. Yes, CarGurus found that GM’s products were seeing increases in traffic to their brands.

Back to Financial Times. The pink sheet finds “little sign so far of a stampede to embrace” Toyota’s rivals. They cite Art Spinella, president of CNW, an Oregon-based market research group, who said: “The long-time Toyota owner considers this a pretty major issue, but the faith in the brand is still strong.”

CNW research shows that the proportion of prospective Toyota buyers who have decided to opt for another brand had fallen to 7 per cent, from 18 per cent immediately after last month’s recall of eight models with potentially faulty accelerators. Customers are a fickle bunch and prone to changing their minds for on a dime.

Weighs in Dave Cole, chairman of the Center for Automotive Research (CAR, get it?) that UAW and Detroit industry-funded mouthpiece think-tank. Cole hopes cautions that any flight from Toyota is likely to start slowly but could easily snowball. Drawing from extensive Detroit experience, Cole says: “Car owners are notoriously disloyal.”

While some armchair generals see massive desertions amongst the Toyota ranks, and some are not so sure, other analysts predict that Toyota could regain most if not all of its lost market share with a vigorous marketing campaign and reassurances on quality.

Time and most of all hard sales numbers will tell. Until then, it’s reading of green tea leaves.

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  • Tricky Dicky Tricky Dicky on Feb 18, 2010

    @Skid666 "I am not suggesting that everyone should stop buying Toyota and start buying Ford/GM/etc. – but they should at least do some research and be open minded when they make a new car purchase" Isn't this the difference between buying a car and buying a brand? OEMs put a whole heap of money into building up brand image for this very reason - switch off the competition in the consumer's mind by offering a promise of a consistently desireable product/ service. @Suprarush "Why hasn’t Toyota been levied a fine from NHTSA or Transport Canada or any other safety committe for thier “alleged” cover-up? Oh yes Toyota’s lining their pockets…." I think the word 'alleged' is pretty relevant here. Some might substitute with the words 'wildly accused on the basis of self interest', but I'll leave the cynicism to Cammy, who does it so well ;-)

  • TomLU86 TomLU86 on Feb 18, 2010

    The dynamics of this whole Toyota pedal situation are fascinating! And I don't mean the root cause of the defect. So many angles! I don't like Toyotas--they are conservative, boring, and they play to the worst tendencies of the American psyche...fat and lazy, just like Buicks used to. They're last noteworthy product was the 92-96 (gen III) Camry. Also, to their credit, they were among the first to adopt 4-valve per cylinder engines (maybe THE 1st mass producer). The original MR2 was a blast to drive. Since then, boring, coasting on that reputation. On the other hand, their manufacturing system is the envy of the world. At GM, we were trying to emulate it. Toyota's arrogance is amazing! They have only one computer that can download their black box data--give me a break! Yet, one can't avoid the conflict of interest--if GM gets some of the sales lost by Toyota, this will help move forward toward become a publicly held company again. If the govt could sell it's share, that would take a nasty election issue off the table in Nov 2010...and more importantly Nov 2012. Also, while (some of us) rejoice in the struggles of the boring car company, how will our never-satisfied Federal govt and the Obamites use this to further their power at EVERYONE's expense and make all cars more boring than the basest Corolla or Yaris? I hadn't even considered the Okinawa situation (thank Mr Carpenter above), where the Japanese govt was elected, among other things, with a pledge to 'reassess' US bases there. We want to stay, they don't really want us. We are broke anyway--maybe Obama's Secty of State can persuade the Japanese to pay to repatriate the US troops back to the US, and the brake pedal will finally 'fade' away.... In the end, I may wind up supporting Toyota against our overbearing govt--caveat emptor--buyer beware--but for now, it is interesting. And by the way, Toyota's vaunted manufacturing system is overrated, and enabled by small businesses in Japan that take up all the slack. But that's for another time.

  • MaintenanceCosts This class of car competes hard with Chargers/Challengers and modded diesel pickups for the douchey-driving crown.
  • 28-Cars-Later Corey - I think I am going to issue a fatwa demanding a cool kids car meetup in July somewhere in the Ohio region.
  • Master Baiter Might as well light 50 $100 bills on fire.
  • Mike1041 At $300K per copy they may secure as much as 2 or 3 deposits of $1,000
  • Sgeffe Why on Earth can’t you just get the torque specs and do it yourself if you’re so-inclined?!