Tagged 'cars'

Recall phenomenon hits India, investors and consumers (over)anxious

a-star1Leading Indian automaker Maruti Suzuki is the latest entrant in the “Recall Club,” joining distinguished names that include Toyota, Honda, Peugeot Citroen and, more recently, Hyundai. All these brands have recently recalled one or more models in various markets around the world. In India, Maruti Suzuki recalled 100,000 A-Star models, owing to a faulty fuel tank part. Its stock tumbled to a six-month low, and A-star owners are anxiously linking regular car issues like poor mileage and pickup to a possibility of fault with their cars, even if theirs isn’t part of the recall.

While recalls have generally been regarded as a sign of a responsible automaker, this time it’s a little different. Both investors and consumers seem to be overanxious, likely because caution and nervousness (even about short-term losses) is a lingering effect of the recession and also because of the frequency with which some big and highly trusted brands are joining the recall phenomenon.

Given the fragile state of consumer and investor confidence in today’s post-recession world order, brands will need to do worst-case-scenario planning even for actions that look logical and are in the consumer’s interest, and really step up communication efforts to make events like recalls more transparent so as to avoid stirring anxiety and speculation.

Photo Credit: http://www.marutisuzukiastar.com/

Toyota responds to warranted anxieties with ‘Restore’ message

In a post earlier this month we talked about how anxious consumers might respond to the global recall of Toyota vehicles and pondered how Toyota would take action. Toyota’s response to complaints had been too slow and had fallen extremely short of expectations, eventually leading to the recall of now global proportions. Unfortunately, the brand’s steps in addressing consumers on a public platform have been all too slow as well.

On the upside, Toyota.com has been serving as a hub for news and updates surrounding the recall, with a page wholly devoted to the matter. And today, CEO Akio Toyoda will be addressing Congress and issuing a formal apology to those affected by the faulty vehicles. Toyoda will declare his goal to restore confidence in his cars: “You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers.”

The brand also recently released its “Restore” spot (see below). The TV commercial leverages the history of Toyota with black and white images of old warehouses and models, ending on a grainy, colored shot of a smiling little girl jumping into a red car. The more striking aspect of the “Restore” ad is how transparently it addresses the recall, acknowledging that the company has made mistakes—from which it will learn, the voice-over assures. The commercial is an attempt at Maximum Disclosure, and an effort to win back those hesitant to trust the corporation again. Toyota tells the viewer, echoing what the CEO will tell Congress today, “We’re working to restore your faith in our company.” Considering the constant stream of negative details surfacing from the recall, renewed confidence in the brand could be a long way off. It will take more than nostalgic images and assertive words to convince customers at this point.

BMW gets touchy-feely with ‘Joy’

BMW’s recent shift away from its longtime tagline “The ultimate driving machine” to “Joy is BMW” looks like a savvy way for the luxury brand to remain relevant to post-recession consumers. In a release, BMW marketing VP Jack Pitney explained: “All of our efforts in engineering, design and technology are about one thing, which is creating moments of joy” and said the campaign focuses on “sharing those moments in an upbeat, humanized and refreshing fashion.” In other words, a cool car isn’t an end in itself. The visuals reinforce this, with ads showing more people (real BMW owners) than vehicles.

The North American campaign, emphasizing that “what you make people feel is just as important as what you make,” is at the opposite end of the emotional spectrum from one focused on performance and engineering. Which is about right, considering that “People now want to lead a richer life, rather than a life of riches,” as Madelyn Hochstein of DYG, a market research firm working with BMW, told The Wall Street Journal. Still, consumers may see touchy-feely as too much of a stretch for BMW; “Germans? Joy? Hahahaha,” remarked one commenter on the auto blog Jalopnik.

Hyundai stands firm with the little guy in timely transition messaging

As we’ve noted, a couple of recent commercials are tapping into today’s populist sentiment. Hyundai does a good job of this in a recent spot for the popular Assurance Program, hammering home its commitment to the little guy. While “the dust has started to settle, and some indicators are up—especially for the big guys,” Hyundai understands that many people are still anxious. So it’s sticking with its Assurance Program, reassuring viewers that “The economy hasn’t really turned around for any of us until it turns around for all of us.”

An Ad Age article, “Now’s the Time to Reset Marketing for Post-Recession,” cites this spot as an example of messaging that “bridge[s] from recession to recovery.” But a real recovery isn’t likely to happen soon—as we noted in our 10 trends for the year ahead, consumer spending in 2010 will look very much as it did last year, with people continuing to exercise restraint until they see more clear and dependable signs of stability. By addressing the current sense of instability—and the resulting anxiety—head on, Hyundai offers yet another example of smart marketing in a downturn.

Toyota recall likely to boost consumer anxiety about brands

toyota-logoThe global recall of Toyota vehicles over a gas pedal problem is a case that will be interesting to watch over the coming weeks. How will consumers respond to a deeply trusted brand with a long history of success like Toyota suddenly failing on the public stage? Whether we like it or not, the rhythm of our lives is deeply linked to the brands we patronize. And if a brand as trusted as Toyota can fail its customers, who knows what’s next? It’s enough to make people anxious about brands. Especially given that faith in corporate institutions is already weak, with huge, seemingly solid financial brands having collapsed (e.g., Lehman Brothers) or come close (e.g., Merrill Lynch).

Some Americans have already taken action on their own through www.toyotarecall.org, an unofficial portal for all things on the recall. Toyota, your move.

Photo Credit: diongillard

Desperation play pays off for GM

I’d written earlier that GM’s satisfaction guarantee was an act of desperation, something a car company would do when it had few, if any, other options. Desperation move or not, early results show it’s working, with GM’s sales up 5 percent in October in an overall flat market. All four of GM’s surviving brands were up for the month.

It wasn’t just the guarantee: GM hit the airways hard, heavily pushing the “May the Best Car Win” theme, with Chevrolet the primary focus. And incentives were up substantially, especially for Chevrolet, and the trade-in data suggests it’s overwhelmingly GM buyers coming back for another.

But none of that matters right now. Market share was up, and GM is hinting that November will be strong as well. GM needed a big month, and some good news, and got both. The guarantee seems to be what got the ball rolling, so it has to be judged a success so far. Sometimes desperation plays pay off.

gm-may-the-best-car-winPhoto Credit: www.gm.com

Another smart move from Hyundai: Showcasing its good buzz

picture-11picture-1Another Hyundai follow-up: There’s a reset happening in the U.S. car biz, caused by the financial/economic meltdown, the bankruptcies of GM and Chrysler, and even recent quality glitches from Toyota. A handful of brands are capitalizing on this reset, perhaps none more so than Hyundai, which is winning awards, gaining share and garnering more media attention. Hyundai wants the world to know this, so it created Hyundai Momentum, a place it describes as “Everything you need to know about Hyundai, as told by everyone but Hyundai.”

It’s impressive. The site highlights just how many positive things are going on with the brand, and the story is told through the conclusions and opinions of unbiased parties. This has to make an impact on buyers looking at the brand for the first time. This seems so basic; why wouldn’t all brands do this, or at least the ones with ample positive stories to share?

Volkswagen outlines how new plant will help Tennessee locals

carsIn a recent print ad, Volkswagen quantifies how its new factory in Tennessee will help jump-start the local economy there while emphasizing how the German automaker has already bumped up community optimism:

“Why are we smiling? For the same reason the good folks in Chattanooga, Tennessee are. There you’ll find a whole city of smiling people excited about the brand new, state-of-the-art factory we are building there. And the positive effects are already apparent. To date, more than $437 million in local contracts have been awarded, with $1 billion being invested overall. Our new factory will also provide over 2,000 new jobs … and bring an additional 9,400 indirect jobs to workers in Tennessee.”

We’ve seen a few other brands go a similar route, such as Woolworths telling consumers that it “employs thousands of Australians. And we’re always looking for more.” In this case, Volkswagen is tapping into emerging notions of community spirit while making an international brand feel particularly local. This is a smart idea at a time when grassroots economic stimulus movements like the 3/50 Project—an attempt to bolster independently owned businesses—are gaining popularity. The ad also assures consumers who are losing faith in corporations that large global organizations can play an important role in helping their communities.

Can GM’s money-back guarantee get it on car buyers’ radar? Not likely

General Motors knew a post-bankruptcy world would not be a friendly place, but August’s 20 percent drop in a month when the auto industry was slightly up—dealers were swamped with Cash for Clunkers deals—was an eye-opener. Something must be done to stop the bleeding, and getting on new-car buyers’ shopping lists is critical.

GM’s warranties are already better than average, however, and cash incentives have lost their potency. So GM has no more aces up its sleeve … except a money-back guarantee! New chairman Ed Whitacre explains that the “new GM” is so confident in its products that buyers can drive them for 60 days, then bring them back if they don’t love them. The tagline is “Let the best car win.”

If only it were that simple. The problem is that it’s not about the “best car” anymore, it’s about everything to do with GM’s historical baggage, recent design disasters, long-established brand images, perceived quality, record losses, bankruptcy, tax-funded bailouts, layoffs, euthanized brands, dealership closings, “car czars,” the federal government, etc. A 60-day guarantee can’t undo any of that.

The question many new-car buyers will be asking isn’t “Does GM have the best cars?” it’s “Do I want to be associated with GM in any way?” I don’t think any guarantee will change that answer for the vast majority.

Porsche dents premium image with appeal to pedestrian buyers

In a perfect automotive world, when demand drops, carmakers would sharply lower production and just wait for demand to pick up again, protecting brand image, pricing and profit margins. This never happens, as the makers need huge amounts of revenue flowing through the system, and dealerships go broke if sales drop too far. They can’t just let nature take its course; sales have to be juiced during bad times. Porsche is no exception, but it has to be extremely careful. This is a brand that sees a third or more of buyers paying cash, so rebates will have minimal effect on sales ($115,000 is a lot of money, and so is $105,000 after a $10K giveback), and the cheapening of the brand can be devastating.

So the Porsche Moment offers 1.9 percent financing and lease deals. Sales details show the percentage of cash buyers decreasing as the utilization of cut-rate financing rises, so all Porsche has done is turn cash buyers into payment buyers, as overall sales are still way down. As a premium brand, Porsche must develop more creative ways to entice buyers to the showroom—pushing financing options that appeal to more pedestrian buyers just doesn’t get the job done.

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