Toyota’s reputation at stake because it is not siding with California over fuel-efficiency standards

Toyota has spent decades cultivating an environmentally conscious reputation for pioneering the Prius, the first mass-market hybrid in the United States, along with other hybrid cars. Now that reputation may suffer because it has sided with the federal government against the government of California over stricter fuel efficiency standards for vehicles.  Dino Grandoni explains in an article in the Washington Post.

 

Toyota faces revolt from eco-conscious customers after siding with Trump

Last September, Ericka McCauley drove her 5-year-old son from their home in northwest Indiana to Chicago to attend a youth climate strike.

The car she took was her gasoline-electric hybrid, a Toyota Highlander. “As soon as I could afford a hybrid SUV, I traded in my Chevy pickup truck for the Highlander,” McCauley said. “And one of the biggest reasons is because I want to do my part.”

But now McCauley, a communications manager for a healthcare system, has her doubts about buying another Toyota. It has little to do with how her hybrid performs on the road — and a lot more to do with what the company just decided in the boardroom.

“I’ll probably be looking at other automakers that are moving forward before I go back to looking at Toyota,” she said.

This could be a worrying sign for Toyota, which backed the Trump administration last week in trying to strip California of its ability to set more stringent fuel-efficiency standards in an effort to combat climate change.

The Japanese automaker, joined by General Motors and Fiat Chrysler, is not the only car company taking the Trump administration’s side in the high-stakes legal fight. But Toyota’s position may be particularly risky since it has spent decades cultivating an environmentally conscious reputation for pioneering the Prius, the first mass-market hybrid in the United States, along with other hybrid cars.

Some Toyota owners, drawn to what they thought was a green brand, are in open revolt against the automaker. They’re sending complaints to the company, taking to social media to call for boycotts and promising to buy cars that sided with California in its fight with President Trump.

“I am outraged that they have taken their stance,” said Margot Tobias, a Toyota Camry owner from the San Francisco Bay area who is looking to buy a hybrid or fully electric vehicle within the next three years. “If Toyota continues with its stance, I will be looking at Honda or other options.”

Jeff Schuster, a forecasting analyst at LMC Automotive, said Toyota and other automakers may see some downturn in hybrid and electric vehicle sales. “Toyota has built a reputation of being environmentally friendly so this decision may have some lasting volume loss with buyers focused in this area,” Schuster said.

But it remains to be seen how widespread and persistent the backlash is, since similar calls for boycotts on cars haven’t lasted too long in the past.

The company is now trying to contain the fallout, explaining in a statement to customers that “reducing our impact … is built into our DNA” but that the federal government is the best entity for setting standards for pollution from tailpipes.

“What consumers are willing to do, what California is willing to do, what the federal government is willing to do and what automakers are willing to do — all of that has to be aligned. And in today’s polarizing political climate, that’s very, very difficult to do,” Jim Lentz, Toyota’s top executive in North America, said in a video sent to Toyota customers who complained to the company.

Lentz also sent an email to Toyota employees to reassure them the company wasn’t trying to appease Trump or anyone else in government with its decision. “Our decision to participate was in no way influenced by any politician or political party, despite some news and social chatter suggesting otherwise,” he wrote.

The controversy illustrates, in some ways, just how successful Toyota has been at marketing itself to a certain kind of customer. First sold in 1997, the Prius achieved an iconic status through its first decade as one of the greenest cars on U.S. roadways. A survey in 2007 found that more than half of Prius drivers said that the main reason they purchased one was because “it makes a statement about me.”

It might also be making a political statement: According to a GfK MRI survey this spring, Prius drivers are 60 percent more likely to identify as somewhat or very liberal. And these political leanings that may be fueling some of the outrage today.

Any appearance of breaking with that brand identity could pose risks in an increasingly crowded market, where environmentally-conscious customers will have plenty of low-mileage options.

Ken Spaeth, who works in healthcare IT in Conifer, Colo., said that when he bought his Prius in 2007, some of his friends and family wondered if the new-fangled hybrid engine would hold up. “It was still, ‘Wow, that’s crazy. Why would you want to buy a hybrid vehicle?’ ” Spaeth said. More than a decade later, he feels vindicated. The odometer on his Prius, which he still drives to work, is about to hit 152,000 miles.

But that doesn’t mean he would buy a Toyota again, especially given its decision to side with Trump. “If I had my druthers, I’d probably buy an all-electric vehicle and I don’t know that I would be looking at Toyota’s offerings,” he said, adding that he may buy a Tesla “if I could afford it.”

Despite hybrids being more popular than ever, Prius sales have dipped over the past six years. The competition “has made some pretty big strides,” especially compared to a decade ago when Toyota made a huge leap forward with hybrid technology in the form of the Prius, said Sean Hecht, co-executive director of the UCLA School of Law’s Emmett Institute on Climate Change and the Environment.

Trucks and SUVs instead increasingly make up a bigger chunk of Toyota’s profits. And by selling more larger vehicles, the overall fuel economy of Toyota’s fleet actually declined slightly between model years 2012 and 2017, according to data from the Environmental Protection Agency.

The Trump administration wants to require auto manufacturers to improve fuel efficiency at a rate of 1.5 percent a year. That’s a pace much slower than the 3.7 percent rate that would be required under the deal struck between California and four of Toyota’s competitors: Ford, Honda, Volkswagen and BMW of North America.

As that legal fight plays out in the courts, time may be on Toyota’s side.

Karl Brauer, executive publisher at Cox Automotive, said that similar calls to boycott GM and Chrysler for taking loans from the federal government during the 2009 recession faded away. So too did calls to stop buying cars from Volkswagen over its diesel emissions scandal.

“For every person you might lose during a headline-making story,” he said, “you can often gain another back through excellent product execution.”

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