Toyota (TM) Owners Don't Care About Recalls

The Toyota brand may be much more resilient than most experts would ever have imagined. That is bad new for its primary competitors in the US market–GM, Ford (F), Chrysler, Honda (HMC), and Nissan.

A new study from Rice University’s Jesse H. Jones Graduate School of Business which questioned 455 current Toyota owners found  that “the level of overall satisfaction with their vehicles’ quality was equally high among Toyota owners and owners of other vehicles.”

It may seem as though Toyota owners have a cult-like loyalty especially since the company’s 8.5 million vehicle recall has been in the headlines of every newspaper, online news site, and television news broadcast. The Rice survey found that owners believe that “Toyota appropriately handled issues with the brake-pedal recall.” Most evidence presented to Congress indicates that this may not be true.

Another result of the survey was that owners of Toyotas believe that  “this incident is an outlier.” In reality, Toyota’s accelerator problems cover eight million cars, and brake recalls involved over half a million Prius’s. Together, the vehicles recalled are more than Toyota’s annual global sales.

The other shocking results of the poll is that owners believe that “the recall shows Toyota’s commitment to customer safety.” There is a great deal of evidence to the contrary. Possible criminal charges may be filed against the Japanese car company for keeping data about the dangers of its cars secret, and the federal government is examining the same issue. E-mails and documents from Toyota show that there was, at the very least, only a casual regard for customers safety.

New data from Consumer Reports and Fortune show that Toyota’s reputation was extremely high before the recalls. The Fortune survey was released last week and Toyota placed 7th among the Top Fifty World’s Most Admired Companies. The list also included Apple (AAPL), Google (GOOG), Berkshire Hathaway (BRK.A), Johnson & Johnson (JNJ), Amazon (AMZN), and Procter & Gamble (PG). Each has had product or investor trouble over the years. Google faces antitrust charges in Europe and its proposed settlement with authors and book publishers in under siege by the Justice Department. J&J survives the 1982 Tylenol recall after someone tampered with packages and killed seven people. Procter & Gamble faced charges that it was affiliated with the church of satan in 1997.

The Rice research demonstrates what fools consumers can be when the memories about a brand trump rational thinking.

Douglas A. McIntyre