Posted by: David Welch on February 11, 2010
Toyota is on the ropes. Some in the commentariat think that the recall issues will blow over like sooty blast of diesel emissions. But I don’t believe it will. Problems keep piling up, with Toyota’s recall of 437,000 of the Prius for brake repairs being the latest. The embattled giant’s recall tally now tops 8 million cars.
Might this be the hole that Detroit’s carmakers can race through? General Motors, Ford and Chrysler have been hoping that their toughest rival might finally slip up and allow them a way to get some consumers back. This could be it. TrueCar, whose Web site tracks vehicle pricing and consumer shopping traffic online, says that people intending to buy a new Toyota declined 12% in January. The biggest beneficiaries were Kia, Honda and Ford, with Hyundai and Nissan not far behind. That means Ford is most likely to catch a tailwind from tempest that is pounding Toyota.
GM could as well, but the company doesn’t have the marketing momentum or the quality image that could get Toyota owners to give its brands a look. But at least GM can rest assured that Toyota won’t be grabbing easy market share for a while. Chrysler’s quality lags well behind the pack, according to J.D. power and Consumer Reports. So it will be tougher for the smallest of the Big Three to sway Toyota customers who are so reliability focused.
Advertising experts think this is a shot for Ford and GM to get in front of some consumers who deserted American metal decades ago. “You have to run through a hole when you see it,” says Lance Jensen, co-founder and executive creative director at ad agency Modernista!, which has done work for Hummer. “We’re talking about capitalism. If I were Ford and GM, I’d make the case that they’re on top now.”
Certainly, there are some things that Detroit can do that could have more impact than the $1,000 rebates Ford, GM and Chrysler have offered for Toyota trade-ins. That approach has a whiff of desperation to it. What can you say for a brand that has to put cash on the hood to get a Toyota owner to ditch his car during this maelstrom? I understand that competition can be bare-knuckled, but it’s also unlikely to work. Ricky Beggs, vice president and managing editor of Black Book, which tracks used-car prices, said he has heard from some dealers who have cut trade-in values anywhere from 10% to 30%, mostly on the low end. Some Toyota owners looking to trade up may need a rebate just to make them whole on lost resale value, but it’s not a great deal. If Toyota resale values rebound as Edmunds.com analyst Joe Spine believes, savvy consumers may think it is better to wait that trading in now when the only bait is a $1,000 rebate.
So what’s Motown to do? Try something a bit more subtle. Here are a few ideas:
• Rather than spend $1,000 per car in rebates to Toyota owners—as GM and Ford have and Chrysler is on select models—use the money to amp up advertising. A purse of $1,000 a car can go a long way.
• Make the advertising very targeted. GM has already been running ads comparing its new models to Honda, Toyota and others. Chevrolet, for example, has ads comparing the Cobalt compact, Malibu family sedan and Equinox crossover SUV to rival Toyota models. Run more of those ads and brag about the attributes. In other words, run with the “May the Best Car Win” campaign, but get some more air time.
• Dig into Toyota’s lineup and see where their cars offer more standard equipment. Whether it’s Bluethooth, a premium sound systems, navigation or whatever, use the rebate dollars to throw in some of those options to match or beat what Toyota has to offer.
• Ford has a real opportunity with its hybrids. The Fusion hybrid gets 39 mpg compared with the Camry’s 34 mpg. The Dearborn, Mich., automaker has been advertising that in local markets. But they should amp it up and do more comparisons.
• This one cuts closer to the edge, but brag about safety. Don’t mention Toyota or brakes or throttles. Talk about any cars that have posted strong scores in crash tests or safety and quality surveys, advises Eric Hirshberg, CEO and chief creative officer of ad agency Deutsch-LA.
• And one more, make a stronger pitch for the Ford Mustang and Chevrolet Camaro, which is pictured above’’. Those cars, both hot sellers, may have taken their styling cues from yesteryear’s muscle cars, but they are packed with technology. The Mustang has gadgets like active park assist, and crash avoidance systems. The Camaro has a 304 horsepower direct-injection engine that gets 29 mpg on the highway. And the car is loaded with airbags.
I especially like the last strategy because it marries Detroit’s muscle heritage with new technology. Both cars would be metaphors for two companies that Toyota once so easily beat. It might work. Toyota is already proving that it no longer is the company that ran circles around America’s carmakers for so long.