The PR fallout from the auto bailout and GM’s subsequent recall issues continue to cause trouble for the auto industry in the United States. While Ford and Toyota continued to post stronger than expected U.S. growth numbers, most other manufacturers reported disappointing growth. Some are blaming overly optimistic expectations, but Ronn Torossian says continually poor consumer PR could also be to blame.
Even though GM remained in the top spot spot for overall sales, Ford and Toyota posted much better gains and are closing the gap quickly. As General Motors continues to deal with the public relations fallout of its continued recall debacles, it’s likely that consumer confidence in both its products and services will continue to decline. Meanwhile, Ford and Toyota are gaining in both these areas.
How important is consumer mood to auto sales? Well, Honda chose to cut incentives last month, and sales dipped about 8 percent. Tough not to see the direct connection there. Even though GM, Nissan, Hyundai, and Chrysler all offered tremendous incentives, their sales still failed to meet expectations.
Automakers are arguing that the expectations were simply overstated, and they have a point. Hyundai’s experienced their best July ever, and GM, Ford, and Chrysler also experienced strong results – certainly the strongest since before the Recession. But only one of these companies exceeded expectations. Not coincidentally, it is the same company that is seeing consistently strong consumer PR and customer confidence.
Torossian says automakers may be right to dismiss overly dramatic reactions to this disappointing sales month, but they would be foolish to ignore the continuing trend.
Consumer confidence – or lack thereof – can spread until it is positively cliche. Even when Honda and Toyota were experiencing mechanical issues and multiple recalls, consumers still flocked to the brands because of perceived quality. And, it took years for both Hyundai and Chrysler to gain consumer confidence because of perceived shortcomings.
This reality should be a powerful lesson for anyone attempting to build consistent brand identity, and encourage business growth.