GM Takes Advantage of Toyota Recall With Incentive Program

Japanese Carmaker Still at Work on Marketing Strategy to Repair Battered Reputation

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NEW YORK (AdAge.com) -- While Toyota Motor Co. is still figuring out how to alter its marketing in light of its unprecedented and potentially devastating recall of 2.3 million vehicles, General Motors Corp. has already jumped in with an incentive program targeted at Toyota owners.

GM's program allows Toyota owners who terminate their lease to get up to $1,000 off a new or leased GM vehicle.
GM's program allows Toyota owners who terminate their lease to get up to $1,000 off a new or leased GM vehicle.
"All Toyota advertising is currently under view and we're looking at a range of options," a spokeswoman for Saatchi & Saatchi, Los Angeles, the agency of record for national advertising, told Ad Age. She declined to get into specifics about the types of strategies under review, and more critically, how soon a new ad push is coming. The Japanese carmaker is the 13th biggest U.S. advertiser, with a $1.69 billion marketing budget, according to Ad Age's DataCenter.

People close to the situation said Toyota marketing executives have been locked in discussions for the past two days examining different marketing strategies for communicating with consumers about the recall and trying to salvage its reputation. But breaching the silence, GM seized advantage of Toyota's indecisiveness by unveiling a purchase-and-lease incentive program designed to pick off Toyota and Lexus customers.

GM's program, which runs through the end of February, allows Toyota owners who terminate their lease to get up to $1,000 off a new or leased GM vehicle. The offer applies to Chevrolet, Cadillac, Buick and GMC vehicles. Financing buyers can get zero-percent interest rates for 60 months on most GM vehicles. Cash buyers can get $1,000 down-payment assistance to get into a GM vehicle.

"We decided to make this offer after receiving many e-mails and calls from our dealers who have been approached by these customers asking for help," a GM spokesman said in an e-mail. "Such 'conquest' incentives are used commonly in the industry."

No similar plans for other rivals
For now, though, it seems other rivals beyond GM aren't crafting new messaging about their cars to capitalize on Toyota's troubles. "We have not changed our focus, which is to provide all customers with products they want and value," said Robert Parker, director-product communications at Ford. "It is through the strength of our new products -- with leading quality, fuel efficiency, safety, smart design and value -- that we have been and will continue to attract new customers."

A spokesman for Hyundai said it has no plans for any advertising aimed at Toyota owners or those considering purchase and will continue with its current retail programs. A Honda spokesman said it also have no plans for taking advantage of the situation.

Toyota is buying search ads against the keywords "toyota recall," but so is GM. GM's ads say "May the Best Car Win." Other advertisers include a law firm specializing in auto suits and AOL's dailyfinance.com. A New Jersey-based internet marketing agency, Pasch Consulting Group, has also launched an independent website filled with news about the recall: toyotarecall.org.

The potential damage to Toyota's reputation is almost as massive as the auto giant itself, which surpassed former worldwide top seller GM in 2007. Last Thursday, Toyota said it would recall approximately 2.3 million vehicles to correct sticking accelerator pedals on specific Toyota Division models. Five days later, it told its dealers to temporarily suspend sales of eight models involved in the recall.

"Helping ensure the safety of our customers and restoring confidence in Toyota are very important to our company," Group VP and Toyota Division General Manager Bob Carter said in a statement. "This action is necessary until a remedy is finalized. We're making every effort to address this situation for our customers as quickly as possible."

Did Toyota take the right approach?
While the company got some praise in the blogosphere for putting its customers ahead of its business reality, some experts believe there's more to it than that. "The initial recall wasn't handled as properly as it should have been," said Wes Brown, partner at Iceology, a brand consulting and consumer insight firm. "They let it linger too long because they didn't think it was a design flaw."

Now, Mr. Brown said the best approach will be "some level of admitting their initial diagnosis didn't go deep enough" and talking about "why they took this unprecedented approach to say why you can't sell or run the risk of selling anyone a car right now."

His suggestion: "I have to assume they may try to get out a massive ad campaign ... they have no choice and have to do everything they can to stay in front of this. If they can get on the Super Bowl, that would be huge," Mr. Brown said. (Audi, Dodge, Kia, Honda and Hyundai are currently in the game.) "That would be a great way to get in front of 100 million people to explain the situation and what they are doing about it."

Rich Tauberman, exec VP at Interpublic Group of Cos.' MWW, said the damage will be directly related to when Toyota first knew there was a problem with the recalled cars. "It almost seems that they tried to put some Band-Aids on the situation," he said. "In any of these situations, if there's a cover-up, it's more damaging then the crisis itself. Crisis 101 teaches you to come out with as much information as possible right away and keep your audiences informed and do what needs to be done."

He added, "What we're seeing now is almost death by 1,000 cuts. [Toyota] always had a reputation for quality and at a time when their competitors in the U.S. are really struggling, this is the last thing they need for their reputation."

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