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Toyota Troubles: Lessons in How (Not) to Handle a Green Halo

Toyota’s ongoing recall and the safety concerns embroiling an automaker that climbed to the top of the global car market through a reputation for reliability, may offer an opportunity for competitors to seize market share, at least in the near term. But Toyota’s troubles, which most recently have spread to the automaker’s 2010 Prius hybrid model, could also offer something more lasting to companies ranging from General Motors (s GM) to startups Fisker Automotive and Tesla Motors as they race to crank out plug-in vehicles: lessons in what works — and what doesn’t — when it comes to cultivation of rapid growth and a green halo.

In an automaker’s lineup, a “halo” car  is meant to cast a positive glow over a company or brand — showcasing technology, styling and smarts while also helping to define what the brand stands for and luring customers into showrooms to buy other models. The Prius did this to such remarkable effect for Toyota that the industry took notice. As GM-Volt tells it, the status Toyota acquired as “a media and environmental sweetheart” through the halo effect of the Prius helped inspire GM’s push for the plug-in Volt. But hanging so much of your reputation on one model also carries risk — and that can get lost in the green glow.

Supporting the Halo: Automakers can ride the wave of a halo for awhile, but sustaining a reputation for environmental innovation will require follow through. As BusinessWeek explained in a 2006 piece on halo models, automakers risk falling short of customers’ expectations when they launch (and sometimes hype) these defining vehicles. “A halo car is a promise,” one analyst explained in the article. “A promise of what great things are coming down the road from the manufacturer. But if that promise falls short the people who took a chance will be slighted and will probably never come back.”

Toyota built up on the promise it made with the Prius, producing one of the industry’s most fuel efficient lineups. How much load Toyota ends up shifting off of the Prius model in the wake of these recent braking problems, and how consumers respond in coming months, will offer a hint of just how far startups can go with their eye-catching first models (Tesla with its Roadster, Fisker with its Karma) en route to more mainstream offerings.

The Tortoise Wins: As the maelstrom around Toyota grows, critics and observers have begun asking whether Toyota grew too big, too fast — prioritizing new markets, new models and ramped-up production over quality. To what degree the emphasis on growth is responsible for Toyota’s current predicament can be debated. But it should nonetheless offer a warning to companies that have pledged ambitious production ramp ups in loan agreements with the Department of Energy in recent months. At the end of the day, it’s better to have a reputation for delays (in the green car market, that’s almost standard at this point) than for defects.

Value of Transparency: Part of Toyota’s troubles at this point stem from the question of how much evidence it had about safety problems, and when, and why it didn’t take action sooner. As the Christian Science Monitor wrote on Monday: “[I]f Toyota had a problem with sticky accelerators in Europe as early as December 2008, why did it wait until the following October before investigating the problem in the United States? And why fix the problem in new vehicles on the assembly line but not on cars already on the street?”

The company now faces a growing number of lawsuits, and the lesson is a simple, somewhat hokey one: Honesty is often the best policy — for safety as well as performance issues. For electric car makers that anticipate battery performance and longevity may vary based on climate and temperature, for example, following this policy would call for public recognition of that tendency (as GM’s Bob Lutz has done, while Tesla has portrayed “the potential for extreme temperatures to affect the range or performance of electric vehicles,” as a somewhat surprising new discovery).

Expect the Script to Flip: Automakers seem to be playing musical chairs in the hot seat. Whether under scrutiny for bankruptcy or basking in the glow of a government award, successful launch or trendsetting model, companies in today’s tumultuous car market can see public attention shift relatively quickly. The Detroit Free Press notes research from BrandIndex today showing, “Consumers say they have heard more negative news about Toyota in recent days than they heard about General Motors and Chrysler during their bankruptcies last spring.” Toyota’s next test comes up this week, at the first Congressional hearings on Toyota’s response to reports of safety issues in its vehicles.

What do you think are some of the key lessons for green car makers can take from Toyota’s handling of the sudden acceleration and braking problems in its vehicles?

5 Responses to “Toyota Troubles: Lessons in How (Not) to Handle a Green Halo”

  1. Americans are such opportunists. Online – and via phone calls to local dealers – inquiries about affected models and especially the Prius have risen significantly since the recalls began.

    For the obvious reason. It’s a good time to try to screw the dealer to the wall and get a terrific deal on a car.