U.S. President Obama took power in the face of a global financial crisis and an even more dramatic economic downturn within his country.  His inauguration marked a turning point:  government repudiated its belief in the invisible hand of the marketplace and opted for a much more interventionist stance.  Massive bailouts to the failing auto industry ensued, and Canada and Ontario rapidly followed suit to protect Canada’s share of the market.  With this activism came protectionism, and a strange new business market emerged by the summer of 2009.  Obama’s Cash For Clunkers campaign offered up to $4500. to an owner to scrap an older vehicle and buy a new one.  $3 billion evaporated in weeks, and the car market has been skewed once again in favour of the immediate sale over the long term relationship with the customer.

As the billions ran out, Edmunds.com posted an analysis suggesting that every clunker retired actually costs the U.S. people $20,000, a classic illustration of the broken window theory.  Then economistmom.com released an article entitled Could I Really Kill My Clunker?  “It just seems very wasteful (and somehow ‘heartless’, even with a car) to prematurely end a ‘life’ that still could be valuable to someone–doesn’t it?”

Many owners don’t want a new set of wheels.  I drove my ’95 4Runner to 370,000 km just to see how long it would last.  Then my friend Tony took it to 400,000, and it’s still going.  It has driven clean through every eTest it has ever had, and gives mileage in the mid twenties.  Why should it be taken off the road?

Toyota seems to have come up with a stimulus plan for those who see the fallacy in the argument that a broken window is good for everybody.  For Tacomas registered in the rust belt, they’ve retroactively extended the corrosion warranty on the frame to fifteen years.  This addresses a problem on a number of truck frames purchased from Dana, a California supplier, which made it into production without proper corrosion protection.

The program has produced a good deal of Internet buzz.  Toyota’s offering to buy back terminally ill trucks at 150% of retail value.  An extravagant gift, but not an absurd one in the face of the current blizzard of handouts in the automotive trade.  More significantly, they’re replacing frames on trucks in good condition which do not pass inspection.  This is a big job, but in a week or two the truck comes out of the shop with a new frame.  The owner gets a free loaner in the meantime.  For the vast majority of Tacoma owners, the program means a free frame inspection, minor frame repairs, and an extensive anti-corrosion treatment to extend the life of the truck’s frame to at least fifteen years.

A program like this appeals to men who like their machines.  I looked on a driving site (canadiandriver.com) and a tractor site (tractorbynet.com) to get a sampling of how North American men feel about this realistic, if generous, extended warranty program.  A new metaphor seems to have emerged.  The phrase “Toyota has stepped up” appeared in a surprising number of the postings I read.  It will be interesting if the phrase goes viral, appearing in mainstream media as well as on Internet discussion boards.

The Buzz:

On canadiandriver.com, Snowman commented:  “Because Sudbury is in the salt belt I know of three Tacoma owners that had their trucks inspected at the dealer and received 1.5 times the book values on their Tacomas. One guy paid $8500 and received $13k and promptly bought another one from the dealer. How many manufacturers would do this? The word of mouth advertising has been amazing and has many people I know talking about the commitment Toyota has towards their customers.”

On tractorbynet.com, Matt Jr. wrote:  “Although I’m glad I own a Chevy, I still think the Toyota is a good truck. The domestics would have a hard time living that one up.”

TCowner added:  “I agree that Toyota, Nissan and some of the others are treated a little easier than the domestic manufacturers when it comes to defects but man, this is an ingenious marketing move. I have no idea what this will cost Toyota but this decision will bring more customers into the showroom.  Ford beats up Toyota on their weak frame and how it flexes so much more than the Ford. But I think it’s pretty safe to say that neither Ford nor GM would ever consider an extended warranty program like this which would include buying the truck back at top book value.”

Podunkadunk commented:  “Ford’s running a nationally televised TV commercial right now and in it, they are stating ‘Quality that’s now equal to Toyota’…  I doubt it, but hey…it’s their nickel.”

Dfkrug reflected the attitude of many posters:  “Toyota is far from infallible, but they have stepped up numerous times when problems arose.”

And finally, a Dr. Spock wrote:  “A good reputation can go much further than a good product.   If you have a good product but a bad rep, no one is going to buy from you.   If you have a good rep and a so-so product, people will still buy from you because they feel they can trust you.”

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