If you wanted to buy a car and the dealer was willing to give you 0% financing for five years, a guarantee of a loan regardless of your credit quality, free floor mats, top-of-the-line stereo, the best tires – really every type of first-class upgrade – and even take $10,000 off the sticker… would you buy it?
Of course, you would!
Now, what if I tell you that the car you would be purchasing is a Toyota. Still interested?
The discussion for would-be Toyota buyers is if consumers will forget the safety problems if the price is right. I say yes.
But on yesterday’s Bulls & Bears program on the Fox Business Network, the entire panel said “no way.” They told me I was dead wrong and people will never give up safety to save a couple of bucks. Oh really?
Let’s look at some other serious safety issues that have occurred in corporate America. Fairly recently, there was some cat who decided to fall asleep while flying 200 people on a Northwest Airlines flight to Minneapolis. I was at the airport last week, and there were lines of people looking to board Northwest flights, and none of them seemed overly concerned about anything.
Then there’s the story about Firestone tires. Back in 2000, over 200 people lost their lives when the company’s 15-inch Wilderness AT tires were blowing out. Yet today the company still manages to pull in over $2 billion in annual revenue.
And, let’s not forget about Merck’s arthritis drug Vioxx, which was a remarkable public relations disaster once word got out that Merck understood the risks and dangers associated with taking the drug, yet pushed it to the market in an effort to reach its plan. The victims in the Vioxx case weren’t just a pork chop away from a heart attack; these people died from taking the drug. Yet Merck – along with the Schering acquisition – will see roughly $12 billion in free cash flow by 2011.
These are just a few examples of how people, or consumers in this case, can easily forget as a result of clever marketing, quality public relations pushes and monetary incentives. Toyota will survive because they will go all out to improve their image and return to positive sales growth.
With $29 billion in cash sitting on the auto giant’s balance sheet, Toyota can offer a number of incentives to help capture some of the market share they gave up last month. Safety is great, but it only becomes a priority the moment before impact. Saving money, however, is immediate and a necessity during these tumultuous times.
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