Toyota Dealers Rise to the Challenges of Ongoing Recalls

Owning a franchise of any kind offers a multitude of benefits to small business owners. As franchise owners, Toyota dealers have benefitted in recent years from the automakers’ reputation for safety, reliability and innovative designs including the Prius Hybrid. The automaker’s reputation for exceptional value helped make Toyota the second-largest automaker by sales volume in the U.S. and the largest single beneficiary of last summer’s Cash for Clunkers program.

But last fall Toyota and its dealers found themselves in unfamiliar territory as the automaker announced the largest recall in its history to address concerns over unintended acceleration problems that it attributed to improperly designed or driver-side floor mats.

Since then, additional recalls and sales suspensions have left Toyota’s dealers continually on the defensive as new allegations of safety defects have surfaced with increasing regularity. Dealers know that the key to surviving the maelstrom is retaining their hard-won and heretofore loyal customers.

In many cases, that involves going to extreme measures.

Last week, Earl Stewart, who owns a Toyota dealership in North Palm Beach, Florida, sent one of his mechanics to a customer’s home to perform recall repairs. The customer refused to bring their car into the dealership for the needed repairs after hearing Transportation Secretary Ray LaHood’s remark that recalled vehicles should not be driven.

In Vineland, New Jersey, Toyota owners who have experienced suspicious performance from their accelerator pedals need only call and Larry Kull, president of Burns-Kull Auto Group will have their vehicle towed to his dealership for inspection and repairs.

One of the nation’s largest auto groups has even considered the possibility of allowing recent Toyota buyers to exchange their purchases for another vehicle. No such trades have been made, but the company’s COO said, “We’re open to discussion of doing whatever it takes to satisfy our customer.”

That appears to be the prevailing sentiment among Toyota dealers, large and small, as they struggle to restore trust among their shell-shocked customers.

In a move unprecedented in the history of automotive recalls, Toyota last week offered to help its dealers by providing unconditional financial aid ranging from $7,500 to $75,000 based on sales volume to help them serve their customers and ride out the sudden and, they hope, temporary collapse in sales.

Most Toyota dealerships have extended their hours of operation to accommodate their customers. Some even plan to remain open around-the-clock to perform as many recall repairs as quickly as possible.

Larry Kull said he has brought additional staff on board to handle the workload. Last week his dealership was hampered by a lack of repair parts, but additional supplies are expected this week.

Kull said his dealership is operating in a fashion similar to the triage method employed by hospitals, making vehicles suspected of operating improperly their top priority. Some other dealers have said they are assigning priority according to the customer’s level of concern.

Most are repairing their stock vehicles as time permits between customer appointments.

“We see this as a defining moment for both Toyota and their retailers,” said the COO of one of the country’s largest auto dealer networks.

At this point, no one can say for sure what the ultimate affect of the safety recalls will be on Toyota. One thing, however, is certain; turning the tide of public opinion will be a monumental task and, if successful, will be due in large part to the Herculean efforts of Toyota’s dealers who are attempting to save the brand one customer at a time.

Today, Toyota announced its third recall since last October. The global recall of some 437,000 vehicles is aimed at fixing braking problems that have been reported by owners of the 2010 Prius.

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