Toyota showed a dramatic U.S. sales recovery in the first two weeks of March. Of course, so did the rest of the industry, which is on track to sell 12 million cars in 2010, compared to just over 10 million in 2009.
But it was Toyota’s performance that stood out, given the endless bad publicity it has been enduring. My theory is that people’s personal experience with Toyotas trumps the second-hand bad news. They worry somewhat about sudden acceleration, but they’re reassured by statistics that suggest it’s very unlikely to happen to them.
Part of my evidence for this is anecdotal, since no less than three people (including my mother) told me, unsolicited, of their loyalty to the Toyota brand in the last few days. They’d buy Toyotas again.
Toyota’s reliability is not in question. In a J.D. Power survey released March 18, the Lexus brand was third overall, and the Toyota brand fifth. Four Toyotas (the Highlander, Prius, Sequoia and Tundra) were first in their segments, more than any other manufacturer. (Here’s a summary of 2010 Toyota ratings by J.D. Power.)
A warning sign for Toyota, though, is that the latest report fromKelley Blue Book shows Toyota falling from the top spot in brand loyalty. Hyundai was number three, but now Toyota occupies that spot and Hyundai is number one, and Honda second. Given the circumstances, being third is still a very good showing.
Incredible incentives are also helping Toyota. I’ve heard from many friends who say they’re attracted by Toyota’s great deals, especially because (unlike Ford, GM and Chrysler) the Japanese automaker has rarely discounted before.
As the Wall Street Journal noted, “The Japanese auto makerusually refrains from big incentive campaigns, but began offering zero-percent financing, cash rebates and subsidized leases to halt a slide in its U.S. market share in the past two months.”
Jeff Schuster of J.D. Power’s global forecasting unit warned that Toyota could spark an “incentive war” among major carmakers, andJeremy Anwyl, chief executive of Edmunds.com, cautioned that the sales bounce we’re seeing is largely due to the incentives—take those away, and the bounce goes away, too.
Despite its many missteps on sudden acceleration, Toyota has built very good cars for a very long time. Don’t bet against it coming out of its crisis and regaining its status as America’s favorite car company.