Can Toyota Recover Its Reputation For Quality?

STEVE INSKEEP, host:

Now lets ask how you recover when you damage a reputation for quality.

Here is NPRs Wendy Kaufman.

WENDY KAUFMAN: As an automaker, you know you are in big trouble when you become the butt of jokes on late night television.

(Soundbite of TV show, "The Late Show with David Letterman")

Mr. DAVID LETTERMAN (Host): You want to get your heart racing, you really want to get it pumping, you want to get that blood moving, then do what I do: Drive to work in a Toyota. That...

(Soundbite of laughter)

KAUFMAN: That was just the beginning of David Letterman's opening monologue last Thursday.

(Soundbite of TV show, "The Late Show with David Letterman")

Mr. LETTERMAN: Here's how scary it is: The navigation lady was actually praying.

(Soundbite of laughter)

KAUFMAN: In recent months, Toyota has recalled about eight million vehicles worldwide because of accelerator pedals that can get caught on floor mats or stick for other reasons. And now the automaker has been forced to acknowledge a problem with Prius brakes.

By not acting aggressively and decisively to address mounting problems quickly, Toyota squandered its reputation for quality and reliability.

Professor PAUL ARGENTI (Dartmouth College): I would give Toyota an F in my class for their corporate responsibility program.

KAUFMAN: Dartmouth Professor Paul Argenti teaches at the Tuck School of Business.

Prof. ARGENTI: There are three things that Toyota did wrong. One is not trying to help us understand what they were doing to fix the problem.

KAUFMAN: Number two, he says, is not apologizing in the appropriate way. And number three: not being humble enough in addressing consumer concerns.

The automaker didn't own up to the problems, it minimized them - pointed to a supplier, even blamed the drivers. Toyota watchers wanted to know what was going on and they wondered where was the company's CEO. Akio Toyoda was nowhere to be found until a Japanese TV crew caught up with him at the glitzy World Economic Forum in Davos, Switzerland.

The CEO spoke only briefly, and what he said didn't satisfy anyone. And then, says Jeffrey Sonnenfeld of the Yale School of Management, Mr. Toyoda hopped into an Audi - that's right, an Audi - to make his getaway.

Professor JEFFREY SONNENFELD (Yale School of Management): That's astounding. It's too over the top for a Hollywood version of this. It's getting hard to satirize Toyota because their judgment is so poor right now.

KAUFMAN: Last week, Toyota finally offered a more traditional bow of apology. But it was at a hastily called news conference, and to many it wasn't convincing. Sonnenfeld says what Toyota needs to do now is get accurate factual information to the public, enlist outside engineers to help find and fix any safety problems, and, he says, put the CEO out front.

Prof. SONNENFELD: Then get out there in the blogosphere with whatever the right information is and some evidence. Give us the demonstrated evidence that this fix is working.

KAUFMAN: In addition to the engineering fix, they will need much better crisis management, says Harlan Loeb, a senior executive with Edelman Public Relations. He says over the next two to three months the automaker has to demonstrate that it's resolved all the issues for each and every car owner.

Mr. HARLAN LOEB (Edelman Public Relations): They need to prove that their eye on the consumer is unwavering and laser-like: 24/7 service to evaluate and repair cars, some type of action pledge, whether it's a 100,000-mile warranty on these cars.

KAUFMAN: Or other - guarantee that the automaker will take care of them. And even then, Loeb says, it could take years to earn back public trust. Toyota is now trying to regain some of that consumer confidence with new corporate image ads, but Kelly Blue Book has already lowered the value of recalled Toyotas by hundreds of dollars, and Toyota's competitors are already pouncing.

Wendy Kaufman, NPR News. Transcript provided by NPR, Copyright National Public Radio.