Automaker must back up words with action to win back reputation

Toyota’s top brass have finally shifted out of reverse. They’re apologizing to customers, shipping replacement parts to fix faulty accelerator pedals and asking dealers to work around the clock to repair millions of vehicles and to restore the company’s reputation for quality.

But it remains to be seen whether the global automaker can regain its position in a highly competitive and cost-sensitive marketplace after engineering what has been one of the most poorly handled recalls in auto history.

After a week of silence from corporate headquarters, Toyota CEO Akio Toyoda, attending the World Economic Forum at Davos, Switzerland, apologized for the anxiety his company has caused them following a massive recall and said the company was working to solve the problem.

Monday morning, Toyota’s head of U.S. operations, Jim Lentz, appeared on NBC’s “The Today show” and pledged that Toyota dealers would remain open day and night until all customers are satisfied that their cars are safely repaired.

Lentz had all the right moves. In the interview, he apologized to consumers and vowed that Toyota will do everything humanly possible to satisfy its customers and prevent such a catastrophe from happening again. Until then, Lentz said he's confident Toyota cars remain safe.

"I drive Toyotas, my family members and friends drive Toyotas … I would not have them in products I do not believe are safe," Lentz told "Today’s" Matt Lauer, applying the tried-and-true technique of leveraging personal experience into empathy.

Meanwhile, competitors Ford and General Motors have seized the opportunity to capitalize on Toyota’s missteps over the past week, offering highly attractive financing and trade-in terms to Toyota drivers that are bound to attract buyers.

Likewise, plaintiff’s attorneys, not ones to stand idly by during any major product recall, are filing lawsuits against Toyota. In one of the first of many suits sure to come, lawyers from the Corpus Christi, Texas, firm Hilliard Munoz Guerra announced Monday they are pursuing a federal class action against Toyota on behalf of “all Texas residents who have purchased Toyota and Lexus vehicles with faulty throttle control systems.” The central plaintiff in the case allegedly was involved in an accident last month after his 2008 Toyota Avalon unexpectedly accelerated through a stop sign.

Toyota’s stumbling, which began with the automaker handling a relatively narrow recall last fall, now must stop. Lentz’s apology and declaration to customers on “Today” has created a platform on which the company must rebuild its trust with North American drivers.

Now Toyota must take action and keep its promises. Dealers must have the replacement parts they need right away. Every consumer who drives to a dealer for the free replacement part must be helped promptly and cordially. And the new Toyota models coming off the assembly line must be as defect-free as possible; when they’re not, Toyota must fix them swiftly and without questions or concern for cost.

Toyota’s painful production shutdown last week—which sent Toyota shares tumbling nearly 10 percent on the New York Exchange and erased $13 billion in market capitalization—probably should have come after that platform was built earlier in the process. But Toyota can’t change history. What happens next is most important.

Like Johnson & Johnson nearly 30 years ago, Toyota is facing its own Tylenol Moment. Its actions in the next few days could determine whether Toyota’s brand will remain a powerful force in the marketplace a generation from now.

Remember the Tylenol recall? Upon learning in 1982 that its best-selling pain reliever had been tampered with and caused cyanide-related deaths in the Chicago area, Johnson & Johnson recalled 31 million bottles of Tylenol nationwide.

The move came at great cost to J&J’s bottom line, just as Toyota’s shutdown decision has. But because J&J ran to the light and did everything in its power to keep consumers safe, the company’s initial losses were followed by strong growth and an increase in brand credibility and trust. Simply put, J&J understood the restorative power of sacrifice. It now seems that Toyota has begun to recognize this as well.

But the words of Toyota’s leadership must now be backed up with action, and a company-wide resolve to win back the reputation it took more than 30 years to build.

The key is this: Toyota must recognize that for the time being, it is no longer in the automobile business. It’s now in the safety business.

Gene Grabowski is one of the nation’s leading authorities on product recalls and chair of the Crisis and Litigation Practice at Washington, D.C.-based Levick Strategic Communications. Connect with him on Twitter at: www.twitter.com/crisisguru.