Toyota Reputation Takes a Hit - GMC and Kia Rise

Toyota reputation drops among U.S. new-car buyers, J.D. Power says


Laurén Abdel-Razzaq

Automotive News
December 14, 2010 - 4:37 pm EST

UPDATED: 12/14/10 6:41 pm ET

DETROIT -- An increasing number of new-car shoppers are staying away from Toyota showrooms because of the company's quality and safety problems, according to a study by J.D. Power and Associates.

The market research firm's 2010 Avoider Study, which was released today, found that 19 percent of new-vehicle shoppers surveyed said they avoided Toyota because of “bad reputation of manufacturer” -- a startling increase of 17 percentage points from a year ago.

Fifteen percent of respondents cited a “bad experience with this manufacturer,” up 12 percentage points from 2009. And 15 percent said they were “concerned about the future of this vehicle brand,” up 11 points from 2009.

Respondents could cite several reasons why they did include a brand in their search.

“In terms of reliability perception, Toyota has always done well in the past,” said J.D. Power and Associates analyst Kerri Wise. “A couple of areas where Toyota really took a hit were in terms of bad reputation of the manufacturer and bad experience with the manufacturer.”

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U.S., Koreans make strides

U.S. and Korean car brands have been the most successful at improving customer perceptions of reliability this year, according to the new J.D. Power study, which measures which brands and models customers choose not to consider when shopping for a new vehicle.

Among the most improved brands in terms of consumer perception of reliability this year are Ford, GMC, Hyundai, Kia and Ram. Audi, Scion and Smart also made significant strides among consumers. Each of these brands reduced customer avoidance by four or five percentage points from last year.

Wise said people who have never had firsthand experience with Toyota are more likely to have a poor perception of the company, while people who have owned or own a Toyota are likely to continue considering the automaker.

In an odd twist, only 16 percent of buyers said they avoided Toyota because they “didn't want a foreign/import vehicle,” a reduction of 16 points from 2009, when 32 percent of the buyers avoided Toyota for that reason.

Perceptions slow to change

Wise said one-fifth of customers surveyed avoided a vehicle because of reliability concerns, and these perceptions are slow to change.

“It can take three to five years to change perception and this is after brands have improved in their actual reliability,” said Wise.

The brands that have higher perceived reliability are doing a few things well. They are improving the reliability of their vehicles, using word-of-mouth references and hitting the right notes with their marketing messages, the researcher said.

Exterior styling is the most frequently cited reason for avoiding a model -- 35 percent of new-vehicle owners said it was important to them. The next most important reasons are the cost of the model (23 percent), doubts about reliability (20 percent), dislike of the interior styling (19 percent) and a unfavorable perception of a manufacturer's reputation (16 percent). Some brands produced scores above 100 percent because respondents were allowed to cite more than one factor.

Maintenance costs

For shoppers looking at premium models, concerns over maintenance costs was also an important factor, even though many of these brands come with free maintenance as part of the purchase price.

Some redesigned car models that came out in the past year were much more successful compared to the models they replaced. They include the Cadillac SRX, the Ford Taurus and the Kia Sorento, the study found. They also outshine other vehicles in their respective segments.

Wise said this indicates certain automakers have been successful in changing customer perceptions.

“While most redesigned models have higher consideration than the previous-generation models, some models are far surpassing their predecessors, and in the process, are attracting many additional customers to the brand,” she said.

J.D. Power and Associates surveyed 25,000 owners who registered a new vehicle in May 2010. The firm conducted the survey between August and October. This is the eighth consecutive year the Avoider study has been conducted.