Julian Knight: Reputation – built over years, gone in a trice

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The Independent Online

For a generation, Toyota has been a watchword for reliability, safety and build quality. The Corolla is one of the best-selling and long-lived models, and in almost every annual Which? survey of owner satisfaction they finish top. Last year, Interbrand ranked Toyota as the world's eighth most valuable brand ahead of Disney, Intel and Apple.

But now this hard-won reputation is going through the wringer. A decade ago, when working for the Reader's Digest, I heard its then chief executive Tom Ryder say that it takes around $100m to improve public perception of a brand by 1 per cent, but that that reputation can go in the blink of an eye with a dodgy internal email, a poor taste advert.

In Toyota's case, it is a slip of an accelerator pedal. The company has made the classic PR crisis error of sending out mixed signals. The decision to recall cars in the US was made on 21 January but the recall wasn't extended to Europe and China for another week. Is our safety less important or is it because of Americans' habit of serial litigation that theirs get recalled first?

What's more, the Japanese government has asked Toyota to investigate whether the flagship Prius has brake problems. In the UK, all management could do was issue a holding statement on the lines of, there maybe a problem with your brakes but we're not sure yet... happy driving, folks! Rival Honda has been less vague, recalling 170,000 Jazz models in Britain on Friday.

The impression, despite the ceremonious bow of contrition by Toyota president Akio Toyoda on Friday, is of a company dithering, even penny-pinching. The company has finally admitted that it knew last summer that the accelerator pedals were faulty.

In these times of 24-hour news, social media and Twitter, it's nigh on impossible for a major globalised company, with a huge number of managers in tow, with PR departments geared towards telling senior managers what they want to hear rather than actually communicating properly externally, to get on top of a story of this magnitude once it gets "legs". The story has accelerated away from Toyota. All that can be done to cap the well of bad news is to anticipate and take pre-emptive action.

In 1990 Perrier was number one in the market and charged a premium price. It was called the champagne of bottled water. But then a US lab found a trace of cancer-causing benzene in six bottles. Perrier panicked, vacillated and delayed. When eventually the firm recalled 160 million bottles worldwide, its reputation was toast, it lost market share and, in time, its premium price point. What had seemed healthy now seemed unhealthy, just as Toyota's former reputation for safety is battered.

Sales of Toyotas, most registered long before these problems, are said to have fallen dramatically. The jokes have already started: paraphrasing the firm's advertising slogan, "The car in front is a Toyota" appears online as "The car crashed into the car in front is a Toyota". And, what does Toyota stand for? Turning Off Your Option To Accelerate.

Toyota can recover. It has a lot of residual goodwill, but it will be a long haul. First it has to get the recall right, and now. A potentially embarrassing US Congress investigation will have to be navigated at the end of the month. New senior managers will be needed to show leadership out of this mess, and a policy of internal and external openness adopted.

Finally, massive sums will be needed to roll back public perception of the brand. That's the cost of restoring a lost reputation.