"Our owners deserve an answer," says Toyota's Senior Vice President Don Esmond.
“Sometimes I feel like it’s back in 1969 and I’m flying medevacs, taking fire and occasionally getting hit,” says Don Esmond, a slight grimace showing through his smile.
A decorated helicopter pilot during the Vietnam War, Toyota’s senior vice president of automotive operations is once again maneuvering through a battleground, but this time it’s the company taking flak for an ongoing series of safety issues that have led to the recall of more than 8 million vehicles – and which have been tentatively linked to a rising number of accidents, injuries and fatalities.
In typical fashion, Esmond has been focused on his mission, or more precisely, missions. The first challege, he says, is to make sure Toyota’s products are safe, even if that meant briefly shutting down five U.S. assembly lines. With the plants going, the next step is getting all products involved in the recalls repaired.
But longer-term, Toyota has to rebuild a seriously tarnished image and regain its once daunting momentum – something Esmond admits will be “a little more difficult under the circumstances.” But a new incentive campaign, putting as much as $3,000 on the hood of some Toyota models may be doing its job, early sale numbers suggest.
To get a better sense of what’s happening and what’s ahead for Toyota, TheDetroitBureau.com caught up with the veteran Esmond in the midst of a series of “fireside chats” with the company’s dealers.
TheDetroitBureau: on the positive side, it sounds like the new incentive program is going gangbusters. What’s the latest since you started them, early this month?
Esmond: The first two months (of 2010) were a struggle. When you announce a stop-sale and have 130,000 of your biggest sellers, like the Camry, that you can’t sell, you’re going to stumble. Our dealers’ first priority was to fix customers’ cars, which they’ve done a great job doing. By the end of February, we repaired stock units. March is the kick-off of the normal spring sales season. We felt it was important to take responsibility for the recall, apologize to our customers….and get back into business. We have what, for us, is a very stepped-up incentive program. We’re barely 10 days in the months and we’re already up over 40% from where we were last year and double what we did last month.
TDB: At anywhere from $500 up to $3,000, these still aren’t the biggest incentives we’ve seen on the market.
Esmond: They’re big for us, but compared to some of our competitors, they’re…maybe 30% less than some. For us, they’re still pretty strong and our dealers are doing a great job of marketing them.
TDB: How long will the new incentives continue? Will they go past the end of March?
Esmond: Could be. I don’t know. We always look ahead 30 days at a time. But I made a promise to the dealers to keep them competitive.
TDB: As these incentives seem to suggest, won’t Toyota have to work a little harder than in the past?
Esmond: Did we tarnish the brand? Yes, though I don’t think we rusted the armor through. We admit we stumbled, and how we recover and how fast we recover, we’ll have to wait and see. We still have a loyal customer base. The unanswered question is how difficult it will be to conquest buyers (from competitors). That will probably be a little more difficult under the circumstance. The good news is that if this happened two years ago, as we went into a declining market, this could’ve been real tough. But we think the market will grow by a million units, this year, and that gives us a lot of opportunities.
TDB: One of your colleagues attacked GM for what he said were “predatory” incentives. But it seems like a lot of competitors are taking dead aim at Toyota.
Esmond: With or without the current circumstances, our competitors are getting stronger with their product offerings, which is how I judge a competitor. That says we’re just going to have to work that much harder. That doesn’t bother me, but what bothers me are some of the direct mail pieces (sent out by competitors) that say, ‘Hey, your Toyota is unsafe.”
TDB: It’s become almost a media feeding frenzy. A Prius takes off unexpectedly and the story is everywhere. How worried are you about the continued headlines?
Esmond: It takes a lot less effort to speculate than the science to prove it. Our owners deserve an answer, and we will aggressively investigate every one of these incidents. And we’ve got a lot of help investigating them. But we’re very confident…it’s not in our electronics.
TDB: Still, couldn’t this become a bit of a Chinese water torture?
Esmond: That’s a fair assumption. The more people read about it, the more they start to wonder if something’s happened. We’ll just have to deal with it. But if there’s something wrong we want to know because we want to fix it. But we’re confident there isn’t.
TDB: We’ve reported on TheDetroitBureau.com that numerous owners of second-generation Prius hybrids complain about similar braking problems to those that led Toyota to recall the 2010 model. Is there any consideration to recalling earlier models?
Esmond: Not that I’m aware of.
TDB: Some of the most damaging testimony during last month’s Congressional hearings suggested that Toyota’s U.S. management team didn’t know about nor have input into safety issues and recall decisions.
Esmond: We’ll correct a lot of that. Toyota grew and grew really fast and that required globalization, but some of that was centered in Japan, like technical matters. But Akio (Toyoda, Toyota’s CEO,) believes that if the customer comes first, you have to move your decision-making closer to the customer. (We will) put more of those technical decisions, those recall decisions, on this side of the water.
TDB: Of course, your different regions still need to talk to one another.
Esmond: Oh, yes. We got our first report of a sticky accelerator pedal in October ’09, (in North America), but in Europe, my understanding is that a good six or nine months before that they began to see some problems, centered around Great Britain. It was right-hand-drive and somebody didn’t connect the dots. If we had a better system that connected the dots, it might have been different.