Cultural tendency contributes to Toyota's crisis: US expert

• Source: Xinhua
• [08:23 February 21 2010]
• Comments

But once Toyota realized the potential damage these secrecies might cause, it reversed course quickly in multiple markets with both practical defect fixes and media ads designed to show responsibility.

The company has since been attempting to manage the crisis in a positive and proactive way.

However, Wottrich said, "the horses are already out of the barn, a lot of problems are already there! They will have to pay a very high price for that."

Nevertheless, the expert predicted that Toyota will eventually recover because it is a strong brand.

Although massive recalls of Toyota products have already caused huge losses in profits and revenues, Wottrich said that the real damage is on the power of brand names, both for Toyota and all other auto makers.

"We have such an overcapacity of auto manufacturing globally that cars are becoming commodities. People shop by price to a large extent, as dramatic gains in sales at Hyundai have shown," the expert said.

So when a top brand like Toyota is damaged by quality issues, it reduces the desire of consumers to shop by brands, he said. "This is probably the greatest danger to such recalls."

Commenting on whether US auto makers could take advantage of Toyota' s recalls, Wottrich said, "they will probably experience a short-term gain in sales simply because of the lack of availability of products from Toyota".

However, he said, long-term gains will be minimal beyond the efforts of these auto companies to sell their brands on their own. "Negative publicity tends to hurt the entire industry."

When asked about the role of US government in the crisis, Wottrich said, "US government is a competitor of Toyota because they own two major auto companies Chrysler and GM."

"You have to wonder what the priorities are for the federal government that is regulating the auto industry but at the same time also owns two auto companies, " said the expert.