According to a recent study by Consumer Reports, Toyota has lost more than sales in the first quarter. It has experienced a spiraling decline in consumer loyalty.
In April, 57 percent of current Toyota owners said they would "most likely" buy another new vehicle from Toyota, which is down from 70 percent in December, with Honda and Ford the new beneficiaries. While Toyota has lost some consumers permanently, Honda now tops consumer loyalty with 68 percent of Honda owners saying they would buy another Honda. Ford has climbed to 61 percent.
While Toyota did manage to curb sales losses with zero-interest financing and cheap leases, it could be undermining its own long-term brand value as incentives tend to be quick fixes that competitors can match. And, if continued too long, can create consumer expectations to wait for more historic sales once they are over. Toyota's defensive posture throughout its recall crisis may have long-term consequences.
"There's permanent damage there," James Bell, an analyst with Kelley Blue Book, told the Daily Finance. Though not fatal, the recalls require that "Toyota compete in a way they haven't in 25 years."
Restoring Trust Starts At The Local Level With Dealerships.
If Toyota wants to regain long-term consumer loyalty, it may need to reconsider national sales efforts and focus in on where trust really counts — with individual dealerships. While reliability may no longer be associated with the once admired auto manufacturer, dealers could make the difference with one-on-one consumer-dealer communication and outperforming on service expectation.
A recently published five-month study by Foresight Research backs up such analysis. More than 50 percent of all new car buyers surveyed reported the dealership experience as being "highly influential in the purchase process." In fact, dealership experience is the number one factor positively influencing sales during the car buying experience.
"At a time when the dealership network is under increased pressure across the industry, this data clearly supports that no single aspect of the automotive sales and marketing spectrum is more influential than what happens inside the dealership," said Steve Bruyn, president of Foresight Research. "Many buyers visit the dealer early in the shopping process, not just at the end of the process so automotive marketers have a big opportunity to win new customers and build brand equity by offering attractive dealership environments."
To capture a positive in-person experience, the burden primarily resides on the sales team. Study respondents attribute positive experiences with professionalism (90 percent), product knowledge (84 percent), and trustworthiness (66 percent). Sixty-seven percent also said that inviting, modern and well-organized showrooms makes a difference.
When you stop to think about it, the new study goes well beyond auto sales. These factors tend to be the same underlying trait associated with sales professionals, consultants, and even bloggers, online and off.
But for Toyota specifically, the national brand needs to work at non-incentive reasons to drive people into the dealership and then encourage their dealers not to blow it. And, for some dealers, that may require a culture change.