Toyota is considering issuing a recall of 270,000 more vehicles. This time it involves engine problems in its high-end Lexus brand.
Earlier this year Toyota recalled millions of cars for sudden acceleration and other problems. It also suspended sales of some of its most popular models, paid a record $16.4 million fine and saw its reputation for quality take a beating.
Hundreds of complaints about unintended acceleration are still coming in. But Toyota says the number has fallen about 35 percent since April. Hoping to improve its cars and its image, Toyota has hired outside experts to look at quality control and technical issues.
Return Customers
For now, most of the customers visiting the automaker's showrooms are Toyota loyalists. One of them is Adam Morris, who has a big Toyota Tundra.
Returning from a test drive at Michael's Toyota in suburban Seattle, Morris says he's not dissuaded by the recalls and other problems. "They made me think twice," he says. "But ... Toyota has a pretty good track record by me. I'm trying to make sure that I do them right. They have done me right, so I'm giving them the opportunity to do it again."
But repeat buyers -- by themselves -- have not been enough to keep Toyota's share of the market from slipping. The automaker, which was challenging General Motors for the No. 1 spot in the U.S. market, is now No. 3 in sales, behind Ford and GM.
Nonetheless, Erik Paulson, one of the owners at Michael's Toyota -- one of the largest Toyota dealers in the Northwest -- says the worst is over, and he's encouraged to see more non-Toyota trade-ins. "If they are trading themselves out of a Honda or other product into a Toyota, you're feeling like the confidence is coming back in Toyota," Paulson says.
'A Lot More To Be Done'
It may be coming back, but Paulson says it will take time to repair the damage and get some people to even consider buying a Toyota. "Image-building right now is the most important thing Toyota can do," he says.
But skepticism about automaker quality persists.
Toyota spokesman Mike Michels is quick to say that the results weren't all that surprising given that much of the survey was conducted during the height of the recalls and the negative publicity surrounding the brand. He says the automaker has asked outside experts to examine its cars and has taken many other steps to improve overall quality.
"Our company is more committed to be transparent, more committed to our customers," Michels says. "We feel we have done a lot, but there's a lot more to be done. And we are not satisfied with where we are."
A Rise In Competitors' Quality
But as Toyota seeks to improve, its competitors are also improving, says auto industry expert John Paul MacDuffie of the Wharton School.
Image-building right now is the most important thing Toyota can do.
"People who came to Toyota because they were the quality leader may feel like they have other alternatives," he says. "And with the rise of Ford's quality, for example, I've wondered if there may be some latent demand from U.S. consumers for a domestic champion to go back to."
To avert that -- and to keep car buyers from choosing other foreign makes -- Toyota has been offering some of the best incentives in the industry: zero percent financing, two years of free maintenance and low-cost leasing packages.
Toyota had hoped to phase out many of those incentives but has instead extended them. It's a new environment for the automaker. In the past, the company didn't have to offer those kinds of deals.
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