Will consumer backlash bite into GM’s, Toyota’s profits?

Source: By Maxine Joselow, E&E News reporter • Posted: Wednesday, November 20, 2019

After several major automakers sided with President Trump in the legal fight over California’s clean car standards, consumers are vowing to boycott those companies.

But auto analysts said it’s unlikely the backlash will have a meaningful impact on those companies, which generated hundreds of billions of dollars in revenue last year.

At issue is the decision by companies including General Motors Co., Toyota Motor Corp. and Fiat Chrysler Automobiles NV to endorse the Trump administration’s attack on California’s vehicle emission standards (Climatewire, Oct. 29).

The reaction was swift and furious in some corners. One longtime Toyota customer told The New York Times: “I can’t imagine any Californian saying, ‘All things being equal, I’m buying the brand that spews more poison into our children’s air!'”

Another Toyota customer, who had leased several Prius hybrid-electric vehicles, wrote in a blog post for the environmental group Moms Clean Air Force: “My hope is there will be enough pushback from Prius drivers that Toyota will reverse their greedy financial decision.”

The author of the blog post, Alexandra Zissu, said in an interview that she used to feel pride when driving her Prius around the neighborhood, given its association with sustainability.

But now, she said, she feels only shame and outrage.

“I’m tremendously pissed off and disappointed,” Zissu said. “I hope they lose outrageous amounts of money and they rue the day they sided with Trump and decided to pollute our air.”

She added, “This is a very political moment. It’s a period of time where everybody’s saying, ‘Which side of history are you on?’ And I just feel like Toyota is on the wrong side.”

Jack Gillis, executive director of the Consumer Federation of America, said Toyota could lose hundreds or thousands of customers to Honda Motor Co., which supports California’s authority to set its own vehicle emission rules.

“Because cars today are more similar than dissimilar from each other, especially within certain size classes, automakers can very easily lose customers,” Gillis said.

“For example, a consumer who’s seriously considering a Toyota Camry would likely be equally happy with a Honda Accord,” he said. “So if they are predisposed to being upset with Toyota because they’re siding with Trump, then they could easily lose that sale to the Accord.”

Auto analysts, however, cautioned that the consumer backlash could end up taking a small bite out of the multibillion-dollar companies’ bottom lines.

“The reaction of some consumers may affect sales for certain brands, though in the past these kind of reactions have been relatively short-lived with minimal impact,” said Karl Brauer, executive publisher of Kelley Blue Book, an automotive research company.

Michelle Krebs, an analyst at Autotrader, agreed with this assessment. She noted that Toyota’s annual revenue soared to a record $270 billion in the fiscal year ending in March.

“I’m not worried that Toyota is going to lose any money,” she quipped.

Krebs also stressed that consumers often keep their cars for 10 years or more — a time period in which the backlash will likely die down.

“A car is not like bread, which you’re out buying every day,” she said. “So it’s not going to have an immediate impact.”

Role of social media

Asked about the analysts’ sentiments, Gillis of the Consumer Federation of America was undeterred. He expressed confidence that social media would amplify consumers’ concerns, with devastating results for the companies that sided with Trump.

“It’s clear that social media has become a very powerful organizing tool for consumers. And we’ve seen different corporations respond to pressure from social media,” Gillis said in a follow-up email.

As an example, Gillis pointed to Ivanka Trump’s decision to close her fashion brand after boycotts spread on platforms like Twitter and Instagram, as well as pharmaceutical giant Mylan NV’s decision to release a generic version of its EpiPen after social media outrage.

At least one celebrity has taken to Twitter to blast the automakers that sided with Trump. Bobby Berk, a star of the Netflix series “Queer Eye,” tweeted Nov. 10 to his nearly 433 million followers: “Hey @GM (@GMC @chevrolet @Cadillac) Putting profits before our planet again are ya? I will do whatever I can to make sure the #Fab5 never drive a @GM product on @QueerEye again. Same goes for you @Toyota @FIATUSA @Chrysler.”

He followed up in another tweet last week: “Btw… @subaru_usa @Kia @Hyundai @MazdaUSA and @Nissan @NissanUSA are all also siding with eliminating stricter emission standards. How do you sleep at night?! #corporategreed #corporateaccountability #environment #ClimateChange.”

Responses ranged from the gleeful “Yas, Queen!” to the glib “They’ll go bankrupt no worries!”