Old reliables begin to crack

The brands we once swore by have begun to let us down and new marques are making the best of it, writes Donal Byrne

The brands we once swore by have begun to let us down and new marques are making the best of it, writes Donal Byrne

Toyota, Mercedes and Sony are among the most powerful brand names in the world, synonymous as they are with the highest level of quality and reliability. These names appear in countless books on business and industry as icons of global success, towering above many of their competitors.

These days, however, there has been a serious shift in their fortunes and their reputations.

Mercedes is trying to emerge with dignity from perhaps the worst period in its production history, Toyota is urgently addressing quality issues after several recalls of cars (in Ireland some 17,000 Toyota cars are currently being recalled because of a steering problem) and Sony is suffering the indignity of having the world watch laptop computers being set alight by faulty batteries supplied by the company.

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Much of what has gone wrong with big companies and their products has to do with ever more sophisticated technology being employed, rapid growth and, in the case of Japan, a slippage from the traditional work ethic that built Japanese business from a base of zero to one which achieved global recognition for customer satisfaction.

If you were to underestimate the effects of what has happened in Japanese industry recently, then it would be wise to heed the words of Hiroshi Okuda, the retired chairman of Toyota and one of his country's most influential figures, who has taken the unprecedented step of speaking out in his retirement: "Japan lacks a sufficient sense of crisis".

What has been happening in Japan attracts more attention than elsewhere because the country's industry has such a strong reputation.

Much worse has been happening to traditionally strong European companies.

Mercedes-Benz has had to send for the cavalry to try to sort out enormous production problems right across its range.

Dieter Zetsche, the man who rescued Mercedes-Benz from the quagmire of its involvement with Chrysler, has been rushed back to Europe to take control after 1.3 million cars had to be recalled due to problems with electronic and brake-system faults between 2000 and 2005.

A letter to Motors from a Mercedes SL customer sums up the end result of Mercedes' difficulties.

"Since the day I bought it I have had trouble with it," a reader who is now pursuing a legal remedy writes. He cited constant electronics problems - an automatic transmission that sticks in gear, oil leaks and long periods off the road. "It is the last Mercedes I will ever buy."

Ciaran Allen, Mercedes' sales manager in Ireland, accepts both the perception and the reality of what has happened to the image of the luxury marque.

"Customers have been disappointed with our problems and we have slipped, but things have been turning around. People might look at the recently face-lifted E-Class and think not a lot has changed but there are over 2,000 technical changes to the car.

"We have been seeing constant improvement since the C-Class was modified in the middle of 2004 and the improvements have been evident right across the range.

And we can tell things have improved because we know from the feedback we have been having on these cars that things have," he says.

He points out that Mercedes in Ireland has acknowledged its problems with previous models and goodwill has been extended when known problems occurred after the lapse of the warranty on the car.

Dieter Zetsche has been busy since his return to Germany from Detroit. Some 12,000 people working with Mercedes franchises, outlets and dealerships in Europe, including Ireland, are being brought to Stuttgart for a course in improving customer satisfaction.

"You can take it that people will be dancing on their toes to make sure Mercedes gets back to where it used to be," says Ciaran Allen. That will mean a lot of tough dancing if Mr Zetsche is to achieve his ambition to put Mercedes back up with Lexus by the year 2008.

Over at Toyota an aftersales team (one of the few such dedicated full-time teams in the Irish motor industry) is busy dealing with a recall of 17,000 cars. Those affected by a potential steering problem include Avensis - some 1.6m Corolla and Prius models built between 2003 and 2005. Perhaps because the company that says it makes the best-built cars in the world even has a recall, it hits home harder.

"There will always be recalls but it really depends on how they are handled. We are half-way through contacting all owners and the aim is to get it done efficiently through the dealer network," says Toyota Ireland's deputy managing director who is responsible for after sales service.

He too has to concede the problems caused by product recalls. "One of the Toyota family, which controls Toyota, has been appointed an executive vice-president of Toyota to sort out quality issues and a senior managing director has been put in charge of quality for European production.

"Production is up from 6.8 million cars in 2003 to 9.0 million cars this year. Pre-production quality checks are being re-doubled. Toyota is about to take over from General Motors as the world's biggest car manufacturer. We are very conscious of our reputation for customer satisfaction and we are hell-bent on not losing it," says Mr Cusack.

We can probably take heart from the latest bulletin from JD Power, the motor industry's most powerful monitor when it comes to quality and reliability.

Toyota and Lexus are in the top four in the company's initial quality study (the first 90 days of ownership) but the number one spot is for Porsche.

Most revealing, however, is the fact that Hyundai has entered the league at number three, behind Lexus and above Toyota in fourth place.

Ten years ago most people did not know Korean companies, such as Hyundai, made cars and in another ten years people will be getting used to Chinese-made cars. The stakes for reputation and standing have never been higher.