What Toyota Can Learn From Audi's '80s Recall

If any company can relate to Toyota's current recall woes, it's Audi. The German automaker was hit with similar allegations of unintended acceleration during the 1980s, when supposed faulty gas pedals on its popular 5000 series sedan were linked to six deaths and 700 crashes. Though the problem was eventually determined to be a case of driver error—people were hitting the gas instead of the brake—Audi had to issue a major recall. A 1986 60 Minutes investigation plunged the knife in. The investigation was later debunked when it was discovered that an expert had rigged a car to accelerate irregularly. But the damage was done. Audi sales dropped 80 percent over the next five years. It wasn't until 2000 that it regained its peak from 1985.

So how likely is Toyota to repeat Audi's 15-year lull? Not very, say most analysts. "Audi really flubbed the PR aspect of their recall," says Jim Hossack, an automotive historian and consultant with auto marketing and research firm AutoPacific. Not that Toyota has done a bang-up job of crisis management. They've been slow to own the situation, and even when they do issue apologies, like the one from Toyota CEO Akio Toyoda last week, it has come off as insincere and lacking. Back in the 1980s, Audi's grip on the U.S. market was tenuous; all it took was a nudge to ruin its U.S. operations for more than a decade. But with 16 percent of the U.S. car market, Toyota has a lot more to lose, especially as it appears that, unlike Audi's cases of driver error, Toyota may have a serious defect on its hands. "Quality has been the main difference between Toyota and the rest of the field," says Jake Fisher, senior engineer at Consumer Reports. "With Ford and GM closing that gap, if Toyota no longer has quality at its core, it could be just as serious a blow as what happened to Audi." A Toyota spokesman tells NEWSWEEK, "The comparison shows why a lot of conjecture and unfounded rumor is a dangerous thing."

Over the last three decades, Toyota built its reputation around the most American of traits: durability, reliability, affordability. Entire families bought Toyotas. Parents passed the cars down to their children, confident it wouldn't leave them stuck on the side of the road somewhere. As Toyota's product line diversified, it became the every car for everyone. As Americans were continually let down by their own car companies, Toyota provided cars that drivers wanted and could depend on.

That may explain the surprising nature of this recall. With allegations that Toyota was aware of its accelerator problem internally for years, a sinister tone has seeped in. Transportation Secretary Ray LaHood's statement that we should stop driving our Toyotas, coupled with Congress holding hearings and the National Highway Traffic Safety Administration now investigating electronic defects, the drama has been raised to a national frenzy. It's not that Americans are unfamiliar with recalls. In 2008, Ford recalled some 14 million vehicles for faulty cruise-control switches that, on occasion, caught fire. From 1971 to 1981, GM recalled more than 16 million vehicles, yet never lost its top share of the U.S. auto market.

So what's different about this one? For many drivers, there is something fundamentally terrifying about a car that accelerates uncontrollably. Twenty deaths have now been linked to the faulty gas pedal. YouTube is rife with videos and 911 recordings of people whose Toyota has sped out of control. It doesn't help that a definitive explanation for Toyota's acceleration and braking problems remains in question. As Apple cofounder Steve Wozniak rants about a potential computer glitch, many drivers seem unwilling to believe that a simple coin-sized metal plate attached beneath the floorboard is all that is needed to fix their cars. The perception of secrecy that has hung over the recall has heightened tensions. Along with the November recall of 100,000 Toyota Tundras with rusting frames, and worries about the Prius’s braking system, there's now a growing unease among Americans that something is deeply wrong with Toyota, that some flaw has found its way into the company's culture, that a sickness is festering somewhere below the surface.

The current air of suspicion surrounding Toyota undermines much of the good will it has diligently built up in the more than 50 years the company has been in the U.S. Like so many famous love affairs, Toyota's relationship with America began in Hollywood. As the site of its first dealership in the U.S., Toyota picked a spot on iconic Hollywood Boulevard, just off the 101 freeway. When it opened in 1957, Toyota introduced as its flagship the diminutive, four-door Toyopet sedan, the first Japanese car to be imported into the U.S. It did terribly. Americans mocked the name as some sort of toy pet, while rushing off to buy tail-finned, homegrown Chevy's with loud V8 engines.

By the early 1970s, Toyota was selling more than 300,000 cars a year in the U.S. When the energy crisis hit in 1973, Toyota's line of fuel-efficient, midsize sedans, including the ever-popular Corolla, were well positioned to take advantage of Americans downsizing from their U.S.-made gas guzzlers.

In 1984, Toyota entered a joint venture with GM and opened the NUMI plant in Fremont, Calif., its first U.S.-based facility to turn out fully made cars. Once the butt of jokes by the Big Three, Toyota was now a model of efficiency. The biggest car company in the world had taken notice of the pesky, Japanese upstart. GM executives figured they might be able to learn something. Two years later Toyota decided to strike out on its own and built a massive manufacturing plant in Central Kentucky, 300 miles due south of Detroit. Toyota was now staking claim to the Big Three's backyard, serving notice that it was a serious competitor. The move was pivotal to the story of Toyota in America. Not only did it start churning out the top-selling Camry's from the Kentucky plant, Toyota's middle-American play ingratiated it with a swath of the country known for its patriotic conservatism. Suddenly, guys who'd driven Ford and Chevy trucks their whole lives found themselves working in a plant making Japanese sedans, just as many of their unionized counterparts up north were getting laid off. For an increasing number of Americans, Toyota wasn't just a car company anymore—it was a paycheck.

Toyota's campaign of campy advertisements, featuring the jingle "I love what you do for me, Toyota!" punctuated by a happy American jumping in the air, were the antithesis of traditional Big Three ads, with their macho men and muscle cars. Toyota went for what really mattered: dependability, with ads featuring moms driving through the rain to pick up their kids from school. That's all Americans really wanted, a reliable car we felt safe in, that would get us and our family from point A to point B. "Slowly but surely, Toyota built a very trustworthy brand for Americans, one that delivered confidence on an emotional level," says David Martin, president of Interbrand, a global brand-management firm.

When Toyota officially passed GM as the world's largest carmaker in 2008, the Toyota Tundra won Motor Trend’s Truck of the Year. In 2007, Camry was voted Car of the Year. Toyota had accomplished what GM never had—it was biggest and the best. It had the entire American spectrum covered: the best truck, the best sedan, and, with the Prius, the best hybrid. It had the roughnecks, the soccer moms, and the environmentalists all under one tent. "Toyota reached a point that no other carmaker has been able to achieve in the U.S.," Martin says. "People were in awe of what they were doing. They'd cornered the market on innovation with the Prius, and at the same time were making some of the best trucks on the road."

The crash came suddenly. From Jan. 19 to Feb. 4, Toyota's stock price on the New York Stock Exchange shed more than 20 percent. The damage to its brand may be worse. Amazingly, Toyota now ranks below Hummer, according to market-research firm YouGov's BrandIndex daily poll of Americans.

There is hope though. The gas-pedal problem didn't even register on the J.D. Power and Associates quality data sets from last year, evidence that the majority of Toyota drivers in America have had no problems. CNN spent a good part of last week interviewing satisfied Toyota owners outside dealerships, a good sign considering history suggests that if handled well, a recall can be an opportunity for a carmaker to strengthen its bond with customers. "If it's fixed right and fixed the first time, people usually end up being more loyal," says Steve Witten, executive director of U.S. automotive research at J.D. Power.

So that's Toyota's challenge: gaining consumer trust through quality cars. The first time it took 30 years. How long it takes this time is up to them.

A version of this story ran in NEWSWEEK Japan.

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