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Toyota's teflon image shows cracks

Posted by: David Welch on May 28, 2009

Toyota’s surprising $7.7 billion fourth-quarter loss isn’t the company’s only headache. Its image has taken a hit, too. The Reputation Institute, which ranks the corporate image of the 600 largest companies in the world, put Toyota at 59th this year. The company was tops last year. Even worse, Toyota ranked behind Honda among carmakers this year. The chief reason, says Anthony Johndrow, managing partner of the Reputation Institute, was the company’s slipping financial results. Toyota lost money for all of fiscal 2009, which just ended on March 31. Honda made money for the year, so the company is gaining clout.

To get back on top, Toyota will need to show better financial results, Johndrow says. But Toyota has said that it doesn’t want to close plants. The company says that when car sales rebound, it will need its workers and factories to satiate pent-up demand. Plus, Toyota has always been loath to cut workers. That will make for a tough test. Toyota said it will lose money this year without a sales rebound, since it plans to pay workers even with slow sales. But if the company must lay people off, its image would take a hit, Johndrow says. That’s because the survey takes into account how friendly an employer a company can be. So unless Toyota can find a way to keep layoffs and losses to a minimum, managing its reputation will be difficult. On the plus side, Toyota’s survey results show that the company is still widely respected, just not like it used to be.

Reader Comments

Paul (Vw)

May 28, 2009 11:20 PM

>>> So unless Toyota can find a way to keep layoffs and losses to a minimum, managing its reputation will be difficult.

"Difficult"? How so?

Compared to Chrysler? Compared to GM?
In the end, matters is most how many cars Toyota can sell compared to it's competitors. How many car buyers ever heard of "Reputation Institute"...let alone care what its rankings are?

In the race to the bottom of consumers' image/reputation perceptions, the Detroit3 are light-years ahead of Toyota.

The "Reputation Institute?" Looking at their website the "...Reputation Institute offers a range of services designed to help clients manage their reputations strategically." So they publish "image" rankings (however arbitrary or not they may be), then also sell services to remedy your "reputation?"


May 29, 2009 3:29 AM

Reputation Institute's anticipated fourth quarter loss isn't the company's only fiasco. It's survey has taken a hit too. The Disrepute Institute, which ranks other survey companies such as Reputation Institute, Standard & Poor, and Moody's, put Reputation Institute at 99th this year. The chief reason, says Dr Spin Fordollars, CEO of Disrepute Institute, was Johndrow light weight analysis of auto companies. To get back on top, Reputation Institute will need to critically evaluate itself and bitch-slap Johndrow, Dr Spin Fordollars says. That's because Johndrow's survey of business reputation is bogus, made without any meaningful metrics or scientific methods.

David Welch

May 29, 2009 8:26 AM

David Welch here. I'm BusinessWeek's Detroit bureau chief and writer of the post. To Paul, the survey is the effect on Toyota's image as a result of business issues, not the cause of a sagging reputation.

Second, Toyota cares deeply about its image and much of its success has come from managing that very well. Comparing the company's image to GM or Chrysler is silly. Everyone knows Toyota has a better reputation than they do. Even George W. Bush has more respect than GM and Chrysler. But losing out to Honda in anything, even a soap-box derby, will irk Toyota. As an aside, Toyota ranked higher in the survey than VW.

Paul (Vw)

May 29, 2009 10:30 PM

I get the intent of the survey, but "reputation" and "image" are subjective concepts which vary across cultures (and within). I doubt if they can even be measured in a meaningful way across 600 companies into a useful ranking. My point is that for Toyota what really matters is how many cars it sells (sustained over the long run). And for that what matters is the customers' perceptions.

If Toyota cares about this artificial ranking and because of that choose to avoid necessary layoffs--just to to beat Honda in a survey that consumers have no clue exists--then bully for them. I just hope they realize that a substantial reason GM/Chrysler are in a mess now is because over time (for admittedly different reasons) they chose to avoid necessary layoffs.

It seems there may be a proliferation of similar rankings:

Wow. Now Toyota has to worry about it's reputation (uh..."admiration") being behind BMW.


>>> Even George W. Bush has more respect than GM and Chrysler.

Well slap me silly and buy me a Fiat. Things are far worse in Detroit than I imagined.


June 4, 2009 11:29 AM

I would trust GM anyday over


June 4, 2009 11:40 PM

Its wonderful how all you "patriots" support U.S. business. My Dad, U.S.N. WW2, remembers when GM, Ford, and Chrysler, saved our country, while Toyota, Honda, Mitsubishi and others were tyying to kill us. Then we set them up after the war with modern factories, which we paid for, and have been defending them ever since. Hey! I hate the UAW, they screwed themselves, But the big three do make good cars. See the road test between Ford and Toyota trucks. The Toy falls apart! Remember, wherever, Japenese, Chinese Junk, etc. are made, most of the $ go back to the homeland. Go visit a National Cemetery in your foriegn junks. Listen to the spirits.


June 5, 2009 5:21 PM

Het Dave- Stop involving ww2. My father was also a vet (both theatres) and thought that people that were armchair patriots like yourself were idiots. he saw the oncoming Japanese cars getting better. he said a few decades back that the big 3 were slipping due to management stupidity more than anything else. As for our "enemies", they invest here, build factories here and pay good wages. It's not 1945 any more and GM is not 50% of the market. yes they do make good cars FINALLY but it's going to take more than a few years to make up decades of mismanagement.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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