04/11/2010 05:12 am ET Updated May 25, 2011

Rethinking Toyota

Toyota's pummeling is long overdue.

With some 8 million cars on recall, repair costs exceeding $2 billion and the Prius suffering brake problems, the easy days for its legendary arrogant American dealers are at least temporarily over.

How arrogant? "Do you wish to order one" was the response I got when I asked to test a Prius at the Westport Ct. dealer in 2007.

"I'd like to drive one first."

"That would be a month from now at 9.30 am. If you're late you'll miss the opportunity."

I bought a Subaru.

This December. I went to Gettel Toyota in Sarasota, Fl about buying a Prius. Chris Crews, the young salesman got out a model after a 80 minute wait, then was sharply elbowed aside by his boss Sean as soon as I asked about an on the road price. "I'm going to put you in a Prius today," said Sean. "You won't be able to say no."

To get a price, you have to agree to buy.

I walked out. Two sales managers followed me to my car. "Ninety percent of customers don't return," said Tom. "We have to pressure you." Or thought they did.

On Thursday I drove a Prius I bought privately to the John Pierson Toyota dealership in Stuart, Fl the day after the Prius brake problem was announced. The place was jammed with seniors eating free Subway sandwiches and wondering about their Priuses, Corollas and Camrys.

The south lot was jammed with new Toyota's waiting for the accelerator repair part to arrive. With little to sell, salesmen had hours to banter.

Then suddenly out of the blue came a fresh idea. Remember the customer!

"I'd like to see the company take a big chunk of the marketing, budget and give the money to our loyal customers," said Kevin Peterson, a service manager. "Offer them say 10% of the value of their car. That would probably cover any resale loss and be offset by millions of dollars in goodwill and free PR. We don't have to be at the Superbowl to sell cars. We have a massive marketing budget. This is time to show our customers we're on their side."

According to valuations announced today Feb 8 by a number of Toyota models have in fact lost 10% of their value since the recall.

Ideas like this seldom make it up the ranks in larger corporations but the simplicity of the thing makes it revolutionary. How many businesses want to really take care of loyal customers? You can count them on one hand -- Apple, Best Buy, Mercedes, BMW, Lexus, Honda, people who chose to or need to run the business on reputation and service.

Most of the rest of sales is aimed at transaction marketing pioneered by Wall Street banks in the 1970s. Hook 'em in -- cram the teaser deposit rate, the cheap car, the iffy cable service, the unreliable flat screen or the hidden fee mutual fund down their throat. Then screw 'em when they complain. And make sure they can't complain to you.

If you've wound up in a call center in India or the Philippines where the robotic help, through no fault of their own, has no way to make a decision, you know the drill. Bad offshore service was a key reason for the downfall of Dell, Circuit City and dozens of other companies who blew off once loyal customers.

Toyota floated above the pack because the reputation of its vehicles for value and reliability and -- with the Prius -- hybrid innovation made buyers put up with its arrogant American dealers.

Now that those days are over, Toyota needs a big rethink. Its Japanese dealers could never bash customers like they do in America because Toyota Japan lives off repeat buyers, same as the every 2 year trade in U.S car makers enjoyed in the 1950s?

That kind of loyalty won't come back and doesn't need to for any carmaker, Detroit or foreign. But for Toyota, the choice it's facing is to come up rebuilding plan that sticks or slide into the pack with everyone else. In the Stuart dealer's showroom hangs a huge red banner that says 80% of Toyotas that are 20 years old are still on the road. Maybe those owners are a good place to start...