Toyota’s troubles and the rise of Ford

Saturday, March 27, 2010, 16:08 by Auto Correspondent

Toyota, whose models were till recently a mark of quality, is going through changing times. In 2008, the company surpassed General Motors to be the largest automaker in the world.

But the Japanese car manufacturer’s fate changed for the worse after it was forced to recall millions of its cars worldwide owing to a problem of sudden acceleration. A recently conducted survey by Bloomberg now reveals that the once gleaming Toyota has lost its shine among customers. But while Toyota’s popularity graph has been falling, Ford’s graph is on the rise.

The numbers

Going by the data retrieved as part of the Bloomberg survey, four out of every ten Americans said that Toyota would definitely not be their vehicle of choice. 36 percent of the people interviewed for the survey viewed Toyota in an unfavourable light and only 49 percent viewed the company favourably. Toyota was the most negatively rated brand in the survey.

Ford, on the other hand, found 77 percent viewing it favourably in the survey. Even General Motors, which faced a lot of flak during the economic downturn, managed to get 57 percent positive votes.

Toyota’s market value has also taken a beating since the recall saga. It has lost market value worth $16.3 billion after it first announced the recall this year on January 21.

As many as 1,200 adults in the US were interviewed as part of the survey conducted by Selzer &Co. 3.1 percent added or subtracted from the total is the margin of error.

The reasons

But it isn’t just sudden acceleration that has damaged the company’s reputation. It was also how the company acted after the problem was discovered.  Toyota’s response was too slow and it has already faced criticism from policymakers in the US, safety advocates and regulators for the same. The company managers at first tried to prevent recalls by negotiating and they boasted about the money that they saved by preventing a recall. Documents attesting to this fact were included in a testimony that was held in front of a US congressional committee.

Future strategy

IHS Global Insight’s auto analyst Rebecca Lindland says that Toyota’s short term goal should be to attract those people who changed their view about the company recently. Its long terms goals would also change and would be dependant upon the amount of customers aged below 40 that have been alienated by the company.

Among people aged over 65, only 39 percent gave Toyota a positive vote. This is much lower than the 51 percent of people aged below 35 who did the same.

So far, the company has taken steps such as offering loans without interest and discounts on leases to attract buyers in America. On account of these measures, the company has been able to increase sales by 44 percent sales till March, even though its sales in the US fell by 12 percent in January and February this year.

Ford’s rise

The economic downturn hit Ford just as badly as it did to the other automakers. However, Ford’s management saved it from declaring bankruptcy and asking for a bailout. This had already enabled the company to become favourites among the American public. The brand quickly began to be associated with values such as stability. Its products have also managed to sell very well and the company’s value in the market today is five times its market value 12 months ago.

The positive media coverage that Ford has received over the last 12 months has also benefited the company, creating a positive impression in the minds of the public. The others ranked, according to favourability in the survey, include Honda at second spot, Nissan at third and General Motors in the fifth.

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