By on June 1, 2009

It might be a bad day for GM but it’s a much worse one for Toyota. Really. The days (decades, really) of weak domestic manufacturers shooting themselves in the foot with bad design, poor assembly, and non-existent customer satisfaction in passenger cars are coming to an end. Toyota didn’t have to outrun the bear, it just had to stay ahead of GM, Ford, and Chrysler. Years of producing huge profits in North America hit the wall for Toyota in 2009, and they’re likely not to return. Ever. The game has now changed—and it’s not good for Toyota.

Thanks to US and Canadian taxpayer support, GM and Chrysler are about to get a new start. They’ll enjoy fresh balance sheets, with minimized legacy liabilities and serious money earmarked for new products. (The taxpayers are paying for Fiat to develop cars for North America; you didn’t really think that the Italians would take this risk on their own did you?) Ford, by dint of luck or smart management, borrowed what it needed years ago to make the transformation outside of court oversight.

By the end of this year, all three Detroit automakers will be restructured, resized to match production with demand, and re-energized. They will reenter the market as the lowest cost producers inside the U.S. market, with slimmer, trimmer product lines. These automakers are getting ever-closer to 100 percent capacity utilization.

Looking at product, Ford’s passenger car line up just keeps getting better. The 2010 Taurus looks hot, the Fiesta test drive campaign is generating good press with the Twitter/Facebook crowd, and a new Euro Focus will be here in a two years. Slowly but surely, more Americans are considering a Ford passenger vehicle. Its trucks still lead the category and will continue to do so. Better products, increasing quality, and slowly increasing market share is building FoMoCo momentum.

GM’s go forward brands—Chevrolet, Buick, GMC, and Cadillac—still have some vehicles that don’t cut the mustard with consumers. But the balance is starting to tip back towards the positive. The Malibu and Camaro represent some better efforts. The gorgeous new Buick Lacrosse might give the new Taurus a run for the money. Cadillac will extend the CTS line and bring a new SRX to the market shortly. The Corvette still leads the pack in dollar performance value. And maybe, just maybe, the Cruze and Viva will live up to GM hype machine.

GM’s perhaps two to three years behind Ford with its product development cycle. But it can now concentrate on fewer models. Recent successful launches suggest that GM just needs time to plug the holes for the weak sisters. It now has the money to do so and you can bet (if you’re taxpayer, you already have) that the efforts on fuel efficient passenger cars will receive the bulk of the dollar spend. GM won’t abandon trucks (no matter what Nancy Pelosi thinks) and volume wise, GM leads.

Chrysler can’t do anything under their new pasta-fed management until the re-tooled imports arrive here for production two years hence. Its cars still (mostly) suck, except for the higher-performance versions of its LX cars. But it isn’t going away and will still find some buyers for its products at the pace of the recent past. So this company will just hang on . . . and on . . . and on.

Now, stop and think about this. What has Toyota done for you lately? Is there one single passenger car from Toyota that excites you?

Let’s keep the new Prius out of this discussion for the moment; it’s not a car for drivers but techno-geeks and greens mostly with excitement provided by the fuel gauge, not vehicle dynamics. The Camry might lead the C/D class in sales for now, but will this continue? What happens when Americans actually consider a Malibu or Fusion-based product instead? In terms of design appeal, the Camry looks dowdy or boring (take your pick) and its reliability isn’t any better than the Fusion. Put a four-cylinder EcoBoost engine in that Fusion and Ford wins.

Go through the rest of Toyota’s passenger car line up and compare each vehicle to the current and near future offerings from GM and Ford. The question is: will Toyota customers do the same?

Toyota (or Honda) products have been the default choice. That “Easy Button” is starting to get harder to press for buyers. Yep, Americans will begin to come back to consider Detroit products (at least GM and Ford), and that’s not good for Toyota. And we’ve really never left Detroit for our big pickups and SUVs, whle the Japanese are still mostly playing catch up.

Yep, it’s a bad day for Toyota and a great day for America. You can look forward to a new Detroit that will be competitive, if not lead, in cars and trucks for mass market Americans. Count on it.

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102 Comments on “Toyota’s Bad Day...”


  • avatar
    jkross22

    Remember that Toyota’s success had to do with GM and it’s dealers ignoring customer complaints, playing fast and loose with warranty claims, substandard products all emanating from an insulated corporate culture free of dissenting voices and connections to reality.

    Time will tell if these issues are fixed, but even if they are, why would content Camry/Civic/Accord owners leave their loved whips?

  • avatar
    Stein X Leikanger

    This is precisely on the money.

    Toyota’s “secret” was to just stay a notch ahead of customer expectations when it came to what they got for the money.

    That game will change now.

    I described it as follows in this editorial:
    http://www.thetruthaboutcars.com/the-disconnect/

    We’re looking at two strategies here. Toyota: build affordable transportation for the masses at a quality level that slightly exceeds expectations relative to price. GM et al: build oversized, under-engineered and fuel inefficient cars for people who don’t care about money while palming off sub-standard cars on mainstream customers. Is it any wonder that the truck-crazed domestic manufacturers lost mission critical market share to the transplants? Lutz and his cohorts failed to recognize that the vast majority of potential customers were simply looking for affordable quality transportation.

  • avatar
    derm81

    This is one of the best pieces I have read on TTAC in a while, no pun intended. A lot of doubters and haters will come out of the woodwork on this one, but Ken hits several good points perfectly. Ford, for all its debt and doubt, will be the new media darling…like that or not you will have to deal with it.

  • avatar
    superbadd75

    The problem is going to be will Americans;

    a.)be so pissed off at GM for taking our money that they won’t even consider GM?

    b.)continue to buy imports because that’s just what they’ve done for years, regardless of improved domestics?

    c.)pass right on by Japanese and domestic cars for the greatly improved, less expensive Korean cars?

  • avatar
    NotFast

    Wasn’t Toyota, Inc.’s secret yen/dollar manipulation? And dumping cars on the US market to gain share?

  • avatar
    Nedmundo

    Toyota has built up considerable customer loyalty with its mainstream products like Corolla and Camry. And Lexus appears to be doing the same with the LS luxury sedan, which has become a standard of sorts. So I don’t think its market share will go away any time soon, though it may begin a slow decline.

    But you’re right about the lack of exciting vehicles, and it’s a bad sign. The Lexus IS-F is perhaps the ONLY high-performance Totota on sale in the U.S., which is just mind-boggling. This is the company that once brought us twin-turbo Supras, the MR2, and high-revving Celica GT-S? Toyota has virtually ceded the enthusiast market to: the Europeans at the high end (and arguably Nissan with the GT-R); Nissan and Corvette in the middle where the Supra used to play; and Honda, Mazda, Subaru, et al. in the sport compact market. This cannot bode well for Toyota in the long term.

    Honda seems to be trimming its enthusiast offerings too, but at least the luxurious TL sedan will be available with a manual transmission. Even the IS-F is automatic only.

  • avatar

    Looks like Ken found some tasty Kool-Aid…

    The reasons (or lack of them) that led people to buy more and more Toyotas in the years before the current crisis remain valid. I don’t think nearly as much has changed as this editorial suggests.

    “Toyota’s products are not exciting”–not new. Nedmundo mentions the Supra, MR2, and Celica. Guess what? They were dropped because they weren’t profitable. Toyota’s fastest growth has occurred since dropping them.

    jkross22, in the first comment, nails it: people only defect in droves when their current car is awful. Many remain loyal as long as their current car is in the ballpark–it doesn’t have to be the best, just not awful. For GM and Ford to regain share, it’s not enough that they offer competitive products. Toyota et. al. must also mess up.

    Time was I bought the line, “We’ll regain share owing to excellent new products.” I don’t anymore.

    We hear a lot of talk about labor costs, but they’re just a fraction of the total cost of making a car. How will GM’s and Toyota’s total costs now compare?

    Ford–since they borrowed to the hilt a few years ago, they have a lot of debt to make interest payments on. And how long do they have before they must borrow again to pay this debt back?

    derm81 is correct that Ford is certainly the new media darling. I guess we’ll find out how many sales this is really worth. Chrysler was the media darling back in the early-to-mid 1990s. Didn’t seem to sell many more cars as a result.

    Finally, I don’t buy that small cars are going to save anyone until Americans are willing to pay a lot more for them–which I don’t see happening soon.

  • avatar
    psarhjinian

    Ah, the Holden Effigy.

    This is the car that ought to have been the next Malibu or Lacrosse. When people talk about the hypothetical “uniquely American modern automobile”, this is what they mean.

    Funny that it took GM’s Australian wing to make it, and that GMNA’s Not-Invented Here syndrome wouldn’t accept that brilliance could come from outside RenCen.

  • avatar
    Hank

    Seems like a bad day for Toyota might better translate into a good day for Ford & Honda, but not necessarily GM & Chrysler. We’ll see.

  • avatar
    Tosh

    You make it sound like Gov’t Motors will come out of rehab and release a series of platinum albums. As if they have somehow learned their lesson and will suddenly make good product (that they were prevented from making because of past lapses in oversight). Get real. And Toyota was never even pretending to compete with GM (except in Nascar), but rather against Honda and Nissan.

  • avatar
    Paul Niedermeyer

    I think Hyundai is as much, or more of a problem for Toyota than GM, Ford or Chrysler.

    But you’re right about it being a low point for Toyota’s smaller product. I’m assuming they’ve received the wake-up call. It will be interesting to see where they go these next few years.

    I’m none too overly optimistic about the Cruze and Viva. These are both Deawoo-designed products, and I’ve yet to see them be able to be competitive.

    The final problem for Detroit: inertia. It took decades for the Big 3 to lose their customers; are they really going to come back that quickly, even if they have the product? A lot of buyers have been well served by their boring Toyotas.

  • avatar
    Dynamic88

    Nah.

    Your analysis ignores the fact that Toyota’s vehicles were good because of Deming and the philosophy of constant improvement of every part of the business. It wasn’t just bad competition.

    The D3 forgot everything Deming taught them – and it was the D3 who sought Deming’s advice. Why would anyone think they’ll do the right thing now, just because they are sans legacy and sans debt?

    Toyonda has been the easy button, and others will match them for reliability, but I’m not convinced it will be the D3. I see BK wiping everything clean except executive culture.

    If customers become dissatisfied with Toyota, my guess is they go to Honda before any of the D3. Maybe Hyundai.

    No, nothing in the Toyota lineup excites me. That’s why I know Toyota is still ok.

  • avatar

    Sort of like saying the German 6th army surrendering at Stalingrad was a bad day for the Russians because that would really piss off and unite the Germans as never before. Now they would really mean business.

  • avatar
    yankinwaoz

    Two problems with this idea:

    (1) You assume that Toyota/Honda will stand still and compete with their current product line. I have no doubt that they will step up to the fight and come out with sexy products to compete.

    (2) You assume that Ford/GM now “get it” and will no longer treat their customers and dealers like crap. I’ll believe it when I see it. I’d rather buy a boring Japanese transportation appliance for a little more money than run high risk of being screwed over by GM and their so called “warranty” and “happy dealers”.

    I don’t see anything so far in this BK that is going to change how GM treats their customers or how they back their products. If anything, it appear to be getting worse.

  • avatar
    Rod Panhard

    I’m with Niedermeyer. It’s Hyundai, not Toyota that’s going to wallop GM between the eyes. Appearing remotely wealthy is so far out of fashion right now, that buying a Korean car is, in an odd way, a great status symbol.

    Right now, if you buy a new car, you don’t want your neighbors to notice. And if they do notice, you don’t want it to be a fly yellow Ferrari.

    As for Toyota, yes, it’s true, their products are not particularly exciting right now. But we’re car enthusiasts. We want to be “excited” by cars. Other people want just the opposite. That’s “Anonymous Driving Appliances.” They’re also about 95 percent of the car buyers out there.

    So what do GM and Ford have that are “anonymous driving appliances” now?

  • avatar
    geeber

    There will always be a certain number of people who want something “different” in their new vehicle. As Toyota grows more dominant, there will be more of these people.

    The only problem is that I don’t see large numbers of people defecting from Toyota for this reason. The number of people who want something different is always relatively small.

    There won’t be any large-scale defection from Toyota unless wheels start falling off, interiors begin disintegrating or engines start exploding on a regular basis.

    I do think that Ford will benefit, but primarily from customers leaving GM and Chrysler, not Toyota.

  • avatar

    The US automakers have got to stop leaving good products to whither on the vine, they make a lot of splashy intros with competitive cars and then sit around for 7 years doing nothing but adding new fascias. They also have to kill the rebate game which depresses the crap out of resale. Boring sells far better than enthusiast, so I am not convinced that more hp is the way to go anymore.

  • avatar
    mistrernee

    The Supra, back when it shared a platform with the Celica sold fairly well. Both cars suffered in certain ways once they were seperated, the Supra got too fat and then too expensive and the Celica got boring.

    The last Supra was ridiculous, no matter how legendary its performance was.

    If they brought back the two cars on a shared RWD platform they could probably wring some money out of it. They just need to show some restraint and keep it simple and the price down.

  • avatar
    Stein X Leikanger

    I’m still with Ken Elias here.

    Toyota and Honda had the restaurant to themselves, because the other carmakers were chasing non-viable markets.

    Toyota, especially, could mine this for what it was worth, by building cars that were just a notch above expectations.

    This doesn’t mean that GM now will have an easy game, but it does mean that Toyota will have a tougher one, they’ll be fighting for the market that matters, not the delusional market that Detroit focused on.
    http://www.thetruthaboutcars.com/the-disconnect/

  • avatar
    www.MyRideisMe.com

    Blatant optimism without even a hint of supporting data.

    “Yep, it’s… a great day for America…”

    We bought an auto company we didn’t want; with money we didn’t have while cutting budgets at kids schools.

    I’ll take some of that kool-aid please.

  • avatar
    tedward

    ““Toyota’s products are not exciting”–not new.”

    I disagree (the not new part). When Toyota (really Honda too) starting building momentum and image they offered cars that were substantially different in look and feel to the domestic offerings. Even the doughiest sedan was smaller, more responsive and had excitingly different ergonomics. I’m not saying these cars were all Miata’s, just that they may as well have been, from an average consumer’s standpoint, compared to the Oldsmobiles and Buicks everyone was used to at the time. Without that unique character all the Japanese had was a statistics rep…with it they had a set of traits which customers could grasp onto as a source of the difference (regardless of how irrelevant that was to the reliability). In short it gave the impression of real difference.

    Now I don’t think Toyota is going to crash and burn or anything, but they are going to lose customers when those customers test drive, or read really any comparison test that dosen’t focus solely on top spec models. I also think that the slow drain will be worse for Toyota’s product lineup than their current quality (not reliability) indifference already is. If it gets bad enough they’ll end up spending more and more of their time shuffling things around trying to keep their lines profitable, lines which were desinged in better days with higher sales volumes, just like GM’s been doing for the last bunch of years.

    Just like GM, they are going to generate a lot of bad press with every round of lay-off’s, and that will only amplify the noise machine’s treatment of recalls, horror stories etc…

  • avatar
    KatiePuckrik

    Now, stop and think about this. What has Toyota done for you lately? Is there one single passenger car from Toyota that excites you?

    There’s 2 problems with this statement.

    1. There are some good products on the horizon (which I’ll come to later).

    2. Toyota’s products aren’t exciting, but that’s the point. Toyota has made billions from appliances, we’ve proved this time and time again.

    This is why Toyota withdrew the MR2 and the Celica because they weren’t making enough money. It’s this kind of thinking which made Toyota a money making machine.

    As for new products, Toyota have the new Avensis out which is a really good car. Some reviewers in Europe are seeing it as a Ford Mondeo beater. They’ve improved the handling and driving dynamics, plus the fuel economy and emission figures are outstanding (beats the Ford Mondeo like a ginger step child). It also looks very good. Also, it is loaded with toys as standard, but are options on the Ford Mondeo. Another plus point.

    I’m certainly considering one as my next car (other contenders are the Jaguar XF and Toyota Auris, another great car from Toyota).

    The Toyota Aygo is another great car. Cute, fun to drive, cheap to insure & run and great fuel economy & emission figures.

    The american producers coming out of bankruptcy is not going to be a problem.

    Firstly, how many american consumers are against the bailouts for GM and Chrysler? Do you honestly think they are going to buy a car from them?

    Secondly, people were shunning Buicks and Chevrolets before GM’s chapter 11, what’s going to change that people will buy one AFTER Chapter 11?

    The only one which will cause Toyota a problem is Ford. Their quality is good, their cars are “interesting” and they have a good public perception.

    Personally, I think Toyota will relish the challenge. It brings out the best in them. When Toyota first came to the US with rust buckets and failed, did they give up?

    GM and Chrysler wished they did……

  • avatar
    RobertSD

    Mr. Niedermeyer – spot on. Hyundai is the new thorn that will annoy Toyota and to a lesser extent Honda. Toyota’s troubles this year in marketshare have less to do with product, loyal base or the resurgent Ford than Hyundai creaming them at building affordable, relatively reliable vanilla vehicles. Few extra problems, but a few extra bucks in your pockets up front.

    Honda will rise above some of that for a while. I think Honda has the most to win in the short-ish term, but I think the challenge for Honda will come when Ford gets its car line-up in order. The Accord was more heavily cross-shopped with the Fusion than Camry relative to the volumes of those vehicles. I suspect that in the future, the Civic will be more heavily cross-shopped with the Focus than Corolla. Both companies are focusing not on basic transport and reliability, but complete vehicle offerings with some style, features and composure found on more expensive vehicles. The Fiesta and B-Max will be a problem for the Fit and will steal from the Yaris, but none of those vehicle will ever be as cheap or crappy as the Yaris. And if Ford manages to pull off its Ecoboost transformation in the next 4 years with Fusions that get 40+ mpg hwy without an expensive hybrid system and Edges rolling with 30 mpg, 245tq@1500 engines, I suspect Honda will hurt even more.

    Toyota = right now, winning a little from Chrysler and GM, losing from Hyundai – a lot, I think…

    Honda = right now, winning a little from Chrysler and GM, losing a little from Hyundai and Ford, but marketshare relatively stable.

    Ford = right now, winning from Chrysler and GM, losing a little from Hyundai.

    Hyundai = right now, winning a lot from Chrysler and GM and a good chunk from Toyota.

    Tomorrow should be interesting…

  • avatar
    Bunter1

    I’m have to pitch in with the “not so fast” camp.

    Little of Big T’s current product does anything for me but I doubt the “they were just beating up cripples” premise.

    “New” GM a problem? Probably not. The Gov’t can barely keep up with the cash burn. With Uncle Sugar in the background to catch them I will not be surprised if any motivation to maintain or improve efficiency, reliability, quality, design etc. just went out the airlock.

    I’m going to go out on a limb (and it looks stout to me) and say that the future product of the “new GM” will remind us why state owned factories produce Trabants und Wartburgs.

    Ford-which I think has a chance to return strong-has some serious challenges ahead.

    Hyundia-Ya, they are real competition.

    Toyota-since when do they stand still-even now they are changing at the top to meet tomorrows challenges.

    I predict a tough summer for everyone as they compete with Gov’t Incentive Motors, but both branches will implode, shrink more, or die completely.

    Result, more market share for the rest, esp. Hyundia, Ford, Honda and (yes) Toyota to soak up.

    Toy and Ford will dominate trucks in 2-5 years.
    That heavily derided plant in Texas will suddenly look like a sharp long term move. Count on it.

    My thoughts.

    Cheerio,

    Bunter

  • avatar
    crackers

    This is an interesting article, however, it fails to provide a time frame for people to start reconsidering American products. From the time Consumer Reports declares the Americans are back in the game until I would consider an American vehicle is about 10 years, and I don’t think I am much different from most Japanese car buyers.

    Do they have 10 years?

  • avatar
    NN

    Ken, one issue…you are assuming GM and Ford can continue developing product on par with their best, most recent offerings. GM without Opel, and Ford without Mazda, means no decent new mass market (4-cylinder) automobile platforms to work with. Daewoo will not improve to this level to fill this void. So the current platforms will stick around a very long time, and likely become obsolete.

  • avatar
    Samir

    It’s good to have contrarian opinions once in awhile. Consensus sucks.

    But here’s my thoughts: while cost was a big issue for the domestics, product was a bigger one. Obviously a high cost structure led to less resources being available to design products, but in the end, have either GM or Chrysler proven they can design a good midsize car, which is the KEY turnaround segment?

    Ford has done it many times over and the new Taurus is actually a great car. Aside from the Malibu, GM’s best car is the Imapala which isn’t going to wet anyone’s panties. Meanwhile, Chrysler is stuck with a Sebring until a big Fiat arrives. So nothing’s changed on the REVENUE side of things.

  • avatar
    Bill Wade

    I’m extremely unhappy GM and Chrysler took money out of my pocket by not earning my business but by using the government to do so.

    I will NEVER purchase another GM or Chrysler product. This probably doesn’t mean much but Ford will benefit by around a dozen vehicles a year for my business. That’s too bad for GM and Chrysler, I had good luck with Silverados and Dakotas.

  • avatar
    CarPerson

    Ken,

    Don’t give up your day job.

    Toyota and Honda (and probably most of the dozen other auto companies in the American market) will be around long after GM and Chrysler have faded away. Camry and Accord have cut a very wide swath through the entire American car market and are already deeply entrenched. Don’t expect them to be dislodged anytime in the next dozen years or so.

    When Detroit lost Mid-America, they lost it for an entire generation and more.

    Please do not build Ford up to more than they really are. More of their product is on the level of the Ranger pickup (25 years out of date) than category-leading.

  • avatar

    NN,

    Good point. An even better question:

    How soon can GM re-start its frozen product development programs? Is this going to happen in the next few weeks?

  • avatar
    Ken G

    superbadd75
    The problem is going to be will Americans;

    a.)be so pissed off at GM for taking our money that they won’t even consider GM?
    b.)continue to buy imports because that’s just what they’ve done for years, regardless of improved domestics?
    c.)pass right on by Japanese and domestic cars for the greatly improved, less expensive Korean cars?
    I think I am A. and C.
    I’ll never reward the government for nationalizing anything. But I mainly blame the politically connected UAW. So, sorry Ford, even though you restrained yourself from my money the precedent of the other two has taken its toll on you too.

  • avatar
    JTParts

    Doesn’t anyone think that American buyers might feel like they HAVE to buy a bailout car? I mean they own 60% of the company right? How do I make sure that I don’t have to give more tax money to these guys? Well I guess I’ll buy a Malibu and tell everyone how great it is. Surely some of this will happen.

  • avatar
    SV

    @KatiePuckrik: in what alternate dimension of Europe has the Avensis been called a Mondeo beater? I read many European car reviews and the general response to the new Avensis has been only slightly better than lukewarm. As for the looks, that’s completely subjective; I consider the Avensis nice-looking from the A-pillar back, but with a decidedly WTF front end. I grant that the emission figures are impressive, but other than that, so what?

    The Auris is even more underwhelming; it’s little more competitive than the Corolla that preceded it, complete with cheapo torsion beam rear suspension in all but the top-line model, dumpy styling and acres of cheap plastics. Yes, it’s reliable. But so is the better-handling, better-looking and generally much more interesting Civic.

    Toyota will probably have a tougher time going forward, but it’s far from a doom-and-gloom scenario for them. I’m skeptical of GM and Fiatsler’s prospects; I see Ford coming out strong if the Fiesta and Focus are half as good as the hype. Hyundai will continue to be a pain in everyone’s ass, though the overlap with Kia will need to be managed carefully (so far it looks good, with Hyundai being positioned as the full-range sensible brand and Kia as the cheeky, stylish alternative). At any rate I doubt Toyota will be dominant for as long as GM was back in the mid-century heydays.

  • avatar
    geeber

    NN: GM without Opel, and Ford without Mazda, means no decent new mass market (4-cylinder) automobile platforms to work with.

    Ford did not give up its entire stake in Mazda. It reduced it to the point where it no longer has effective control of the company, but it still owns a chunk of the company.

  • avatar
    LennyZ

    The assumption seems to be that Toyota will stand still and let GM, Ford and that other one catch up. True the domestics have new products in the works that look exciting but as in the past they are still working at catching up. What is on the horizon for Toyota, Nissan and Honda? Don’t you think they have seen the new US products and are working on new products? I agree with a previous commenter that Toyota and Honda have built a loyal base who will continue to buy their products. I will and it will take some real persuading for me to buy a domestic again. They sold me POS in the past and didn’t stand behind their products. Now they are bankrupt and you think suddenly all will be well in the future. Dream on.

  • avatar
    Pch101

    I dunno. Just because the GM Death Watch has reached its end doesn’t mean that a replacement is required just for the sake of it.

    Toyota is in fine shape, despite the short-term losses. The brand is solid, it had segment leaders, and it has a truck that will give it the ability to take advantage of GM’s and Chrysler’s weaknesses.

    Meanwhile, its main US rival Honda is too conservative and timid to take advantage of this power vacuum, while Hyundai is still too dependent upon low price as a primary advantage in order to compete head-on based upon brand equity. A US economic recovery, which is most likely already underway (no, you never see these thigs until after the fact) and restored credit markets will put Toyota in a good position to rule the roost.

    Assuming their recovery actually succeeds, chances are high that Chrysler and GM will producing much lower volumes, with less fleet in their mix. The real thing that sucks about this is that the cost of car rental is going to go up. You can expect more Hyundais and Kias in your rental future.

  • avatar
    wsn

    How can it be good for a company when it’s competitor can print money?

    But then the question is why does GM even pretend to sell cars? That’s enough cash for all of the workers to retire and continue to spend to support other industries.

  • avatar
    ZoomZoom

    I think this article was written about two years prematurely.

    Today was merely the day that bankruptcy was declared.

    There is no evidence that the problems leading up to this have been recognized, let alone fixed.

    There is no evidence that desirable, reliable product has been designed, prototyped, or manufactured at a price point acceptable to the potential customer base.

    There is no evidence that reprehensible sales tactics have been eliminated or that dealer service improvements have even been considered, let alone implemented.

    I’m an optimistic guy, so I am willing to take a wait-and-see attitude on all this. But let’s not get ahead of ourselves here. Let’s see some evidence.

  • avatar
    derm81

    Toy and Ford will dominate trucks in 2-5 years.
    That heavily derided plant in Texas will suddenly look like a sharp long term move. Count on it.

    I disagree with Toyota dominating the truck market. They have struggled to turn loyal big 3 truck drivers and even with GM down, the big T will continue. The Tundra just isnt as good a product as the F150.

  • avatar
    blue adidas

    I consider Toyota today to be what GM was in the mid 80s and early 90s. Today every fifth car is a Camry, while in the 80s, half the cars had a “Cutlass” logo (usually crooked) on the trunk. In comparison to other midsized sedans, Camrys were solid, basic transportation. Today they still are, but everything else has matched or surpassed them in quality and trounces them in style. The materials and attention to detail have become conspicuously iffy in the latest generation Camry and unquestionable trash with the Corolla. I’m not saying that they’ve become as crummy as a 1984 Cutlass Supreme, but a Camry and a Corolla are vile in so many ways that makes some owners say “I have become the most boring person on my cul-de-sac.” So people are eyeballing Ford, GM, Mazda and even Hyundai and VW. While people romanticize the Toyota of the 90s because they offered the Supra and MR2, Toyota’s foundation has always been profitable whitebread. That’s what people associated with reliability and that’s why Toyota has rightfully been the default choice by an awful lot of people for a long time. But Toyota’s customer base is going to steadily siphoned away as other automakers develop more compelling vehicles that have reached an even higher level of quality. I drove a buddy’s CTS which he bought as a replacement to his Lexus ES. If these two cars are an accurate apples-to-apples case study, this case is closed even before the benefits (if there are any) of the re-org kicks in.

  • avatar
    Seth L

    This felt so much like one of Sweet Peet’s posts, I had to check the URL.

    The editorial raises interesting questions, but it also assumes lots of things that are unlikely to happen.

  • avatar
    gdavisda

    Yes, the balance sheets will look better, and the air will be full of hope and change. But, people seem to forget that the same people who ran GM before the bankruptcy are running it now. Only now, they have an army of bureaucrats helping them do the politically correct thing. Toyota has nothing to worry about when it comes to Chrysler and GM. Ford may be a better competitor if they can weather the recession without bailout money. The real competitors are still in Asia and they’re gaining ground.

  • avatar
    oboylepr

    Sorry ken but only one word comes to mind: ‘Poppycock’

  • avatar
    Stingray

    Refreshing article.

    Agree, today is Toyota’s bad day… remember they didn’t want Detroit go bust.

    Thing is, GM, Ford and Chrysler have to develop truly outstanding cars people want to buy.

    From GM I see the CTS, Corvette, Malibu, Tahoe, Silverado, G8 (should be an Impala), 9-3, Camaro. They need to bring the current Opel Corsa to the US.

    Ford: New Focus, the current one is hot, new Fiesta, Falcon (yeah, bring it from Aussiesland), Mustang.

    Chrysler: current Grand Cherokee, next one, Wrangler, RAM, I think they should bring back the cab forward, Challenger.

    The only Toyota that I think is nice is the Yaris. I’ve seen some new Toyotas and the materials employed up to mid 90′s cars looks way more upscale than the crap they’re building now.

    Only Hondas I like are the Civic and S2000

  • avatar
    John R

    “Count on it”?

    Miru koto wa shinjiru koto desu. Don’t forget Hyundai, Nissan, Subaru and Mazda are still around to contended with.

  • avatar
    Slocum

    I’m not buying it either–and didn’t GM just lose Opel? You know — the dividsion that seemed to be providing the technology behind the newer, non-sucky GM cars (Aura, Malibu and the upcoming Buick Lacrosse based on the Opel Insignia and Cruze based on the new Astra). How much of the talent responsible for those platforms is GM keeping?

    And remember Magna is buying Opel, getting ready to manufacture in Ontario and, maybe, distribute through the Saturn network (whose dealers are, obviously, already up to speed on Opel technology). New GM may end up competing with a company that has rights to their technology and actually employs the engineers most responsible for creating it — ouch.

  • avatar
    Stein X Leikanger

    A well known and always effective stratagem is to make certain that your enemies (competitors) are so busy fighting each other over the imagined spoils, that they miss the action taking place right under their noses.

    That’s been Toyota’s Way for a long time — while sites such as this one have knocked their product for being bland and uninteresting, the fact that it was profitable and built them into a behemoth didn’t register.
    While GM got kudos for building itself out of existence pursuing imagined spoils.

    And that’s what Ken Elias touches upon here. He’s right – Toyota certainly wishes that most of the world’s car companies remained busy fighting for the less profitable territory. So Toyota’s competition did get tougher, doesn’t mean they’ll lose, just that they won’t have the profitable market to themselves anymore. Everyone’s moving in on it now.

  • avatar
    tenmiler

    Kool-aid indeed.

    As if all GM needs is just one more RWD performance car, because you know, Camry’s just suck.

    Sometimes I wonder if the writers here ever get out of their echo chamber much. The rest of America, the folks who buy the dang cars, don’t “set aside the Prius for a second”. They BUY it.

    Yeah, I know it bothers your performance sensibilities, but the numbers show that Prius-killers are an important component of any GM comeback. Not another V8 or some opportunity to hire John Cougar and Pete Seeger to screech a duet about a new rEvOluTION with another RWD performance car for the 800 people who fall over themselves for one.

    Don’t get me wrong, I love those cars too. But other than the fleet buyers who have inflated falsely the sales numbers of the plastic-ridden Malibu, the only thing that matters are those buyers who are looking at cars like the Prius and marching to the dealer who offers them.

  • avatar
    Richard Chen

    Now, stop and think about this. What has Toyota done for you lately? Is there one single passenger car from Toyota that excites you?

    Oooh, ESC now standard on all vehicles except the Yaris.

    If boring equates to a extremely competent minivan with minimal unexpected repairs (read: a CD player), so be it. I’m may be merely content, rather than excited, at not having any major repairs with mine.

  • avatar
    John Horner

    I think Ken is making important points here, and I agree with Paul that Hyundai is a big strategic problem for Toyota as well.

    Another big problem for all of the Japanese based makers is that their home market is on a glide path of permanent shrinkage. The Japanese population is not only aging, but also shrinking. Old people living in congested cities have don’t buy many cars. The US population isn’t going to shrink because the US attracts, and largely welcomes, immigrants. Japan, on the other hand, is one of the most immigration hostile developed countries in the world. Japan has already lost the leading edge in consumer electronics. Apple has kicked Sony’s butt for portable music players and advanced cell phones. Samsung is running away with the cell phone business. Amazon has the first popular e-book device. Japan suddenly finds itself a small island nation with a shrinking population, lost technological edge and its long standing near complete lack of natural resources.

    Toyota remains a completely Japanese-centric company and is going to have a hard time reinventing itself against the backdrop of such malaise at home. Nissan wasn’t too shy to get help from the French, and Mazda remains very connected to Ford. Honda is aided by being well entrenched in emerging markets thanks to its continuing strong motorcycle business. Honda’s India affiliate holds over 50% of the motorcycle market there. This provides a reservoir of customer good will and business contacts which will continue to serve Honda well in its other endeavors.

    As I opined a few weeks ago, the recent slash and burn Toyota did through its management ranks is highly unlikely to result in a real path forward for them. Toyota is much more likely to be trying to go backwards to greatness, which leaves them unable to fully grasp the new competitive realities and more forward with urgency. So many years of the rest of the industry fawning over Toyota has almost surely given the company a massive case of hubris.

    Fire up the Toyota Death Watch series!

    BTW, GM didn’t loose Opel. GM remains one of the two largest owners of Opel and will continue platform development sharing with Opel. Opel isn’t big enough to do it all on its own.

    On what planet is having the remaining Saturn dealers push a few Opels out the door a threat to anyone? My local Saturn dealer still has over 15 2008 Saturn/Opel Astras waiting on the lot looking for buyers.

  • avatar
    Kyle Schellenberg

    +1 to Paul’s comments.

    Hyundai seems to be the only company that is not melting down amidst this ‘global crisis’. I don’t see them going to #1 right away but they’re going to keep eating away at it each year.

    Why are the Camry and Accord such boats? Disregard for staying true to the original mantra. I can’t wait until Toyota ditches the silly bulbous tail lights and goes back to cleaner lines.

  • avatar
    SunnyvaleCA

    “Thing is, GM, Ford and Chrysler have to develop truly outstanding cars people want to buy.”

    Or, they could use their standard approach for selling product: discounts, cash back, 0% financing, etc. Now that GM’s bank account has swelled by 100x, I fully expect more fire-sale pricing offers. The government has sunk so much money already, GM is likely to become the Obama “quagmire.”

    I sold my Ford stock (thanks TTAC for that purchase tip two months ago!) because I feel that Ford, while having superior products and public perception to GM, can’t compete with “employee Obama pricing for all” that will allow GM to retain its status as the largest manufacturer in the US.

  • avatar

    I don’t think the bailout will have a long-term impact on people’s car choices. The U.S. consumer doesn’t remember anything for long that wasn’t a source of severe emotional pain.

    People will talk a lot about buying a GM car / not buying a GM car because of the bailout, but the emotions that led to these statements will be fleeting.

    After all, how quickly did car buyers forget last summer’s high gas prices?

    It’s a sign of how badly Detroit burned people that years later car buying decisions continue to be affected.

  • avatar

    perfect time for Return to Greatness.

  • avatar
    mel23

    It would be interesting to get insight of what it’s like inside GM right now. And a month from now. Unless almost all of the thousands of white collars who got tossed were do-nothings, GM is starved for talent by this time. From all I’ve read about the fiefdom that GM is, I’d say there’s not much going on that’s likely to lead to great product any time soon. I don’t see them producing much of anything new on a par with the best competitors for a few years. And I don’t see customers flocking to their stores either. More like stand back and wait at best if not move on to another brand. I’d think a very significant number of GM personnel are tied up dealing with supplier issues at present.

    I certainly agree that the San Antonio plant will be of great benefit to Toyota. Of course Toyota could step in it big time with their pending management shake up.

    Ford has a huge debt, and Mulally has about two years before normal retirement. Surely he and Bill Ford have given this a lot of thought.

    I see Toyota and Honda taking market share for the next decade. Hyundai seems hollow to me. Too much crooked shit and terrible relations with their US management. Not a solid company by any means.

    Autonews is saying GM will require dealers to sign “Participation Agreements” if they want to retain their franchises. These will obligate the dealer to make now-unspecified upgrades as GM demands them. WTF? I remember reading several stories of Chrysler and GM dealers who made very expensive upgrades to their stores only to be told they were history. This is nuts. Bring back Wagoner.

  • avatar
    wsn

    JTParts :
    June 1st, 2009 at 5:02 pm

    Doesn’t anyone think that American buyers might feel like they HAVE to buy a bailout car? I mean they own 60% of the company right? How do I make sure that I don’t have to give more tax money to these guys? Well I guess I’ll buy a Malibu and tell everyone how great it is. Surely some of this will happen.

    ——————————————

    Wrong. They don’t own anything. Just Chairman Obama made them believe so.

    Same with Communist regimes. The people are supposed to be the owner of everything. In reality, the Chairman owns everything.

    Ownership to me means:
    1) buy at will
    2) sell at will
    3) has proportional voting power

    The American people has none of these over their GM stake.

  • avatar

    The faulty assumption here is that GM will survive.

    C11 could very well become C7, after a few more billion$ are set alight and consumed by the implosion known as General Motors.

    Even if GM does survive somehow, they won’t be competing for the top spot with Toyota anymore. They’ll be way down the scale fighting off the Koreans for the leavings.

    Hell, I’d buy a Korean car before the crap that GM has foisted upon us for the past few decades. At least the Korean stuff keep improving.

    –chuck

  • avatar
    Runfromcheney

    I am kinda with Katie, as well as the general consensus.

    Toyota doesn’t have to worry about GM or Chrysler at all. Even if Chrysler is going to emerge from Chapter 11, they will still have the same shitty products as before, and even with good credit and a good economy, nobody is going to buy them. GM may be filling up their showrooms with desirable products, but nobody is going to buy them because GM will forever be seen as “Government Motors”. This is kinda good though, as this means that Ford wins. I imagine that all this talk of the big three going bankrupt will make people want to try to buy American again. But since they will not touch GM or Chrysler due to bailout backlash, where are they going to go? Thats right, to a Ford showroom.

    There are only four companies that pose a threat to Toyota: Honda, Nissan, Hyundai and Ford. Due to the bailout, GM and Chrysler will forever be a joke.

  • avatar
    Andy D

    How many jobs is bankruptcy gonna cost the US? GM has already gotten another 30 B$ I don’t see many new cars of any make being sold until the economy rebounds.
    In this climate, I don’t see how GM can survive off the dole. As for Cerebus/Fiat…

  • avatar
    derm81

    Even if Chrysler is going to emerge from Chapter 11, they will still have the same shitty products as before, and even with good credit and a good economy, nobody is going to buy them

    I disagree. The main culprit of Chrysler’s shoddy product line for the past decade was the management in the fatherland. The Germans nickeled and dimed Chrysler’s products and did everything they could to reduce costs on the car. That is why Chrysler had such shitty gray plastic interiors. How do I know? My dad was one of the ones taking direct orders from our “friends” at Daimler. You wouldn’t believe the lengths to which the Germans wanted to go when cheapening a vehicle….no, really…you wouldnt.

  • avatar
    George B

    Toyota has problems, but they also have cash reserves and the ability to change their products to meet demand. Can’t see how Chrysler or GM are a threat even with government funding. Chrysler has almost no new products in the pipeline and government “help” probably slows down product development. GM has some pretty good cars, but they appear to be on a glide path towards being a smaller 2nd tier car company. As others have said, Hyundai is positioned to take the lower end business that Chrysler and GM had.

  • avatar
    Gardiner Westbound

    We have been burned way too many times to give Detroit wares room in our garage.

    Recent Toyota quality seems to have fallen off a cliff, and there have been several embarrassing recalls. Though we were happy with our Toyota, our most recent purchases were Honda and Nissan products. The Nissan has been great, the Honda not so much. We will give Hyundai a try next time out.

  • avatar
    Hippo

    Those little high strung euro small cars stay together because their duty cycles are very low due to short distances, they are driven by people with some mechanical feel and aptitude, and mostly have manual gearboxes.

    They also tend to be religiously serviced by people that have to qualify to certain standards.

    Put them in the hand of your typical American driver, add air conditioner and auto gearbox, send them to cross the desert or climb 10000ft hills in summer, and they will die like they always have.
    Add your typical dealer wrench used to cast iron, impact wrenches and sledge hammers, and the Fiatsco will be complete.

    The secret of the Japanese success has been the ability to produce appliances able to withstand average American drivers under real world local driving conditions and their dedication to training people to provide acceptable customer service.

    If they started today with training the service people at Detroit dealers, it would take minimum one generation to see a change for the better.

  • avatar
    Dimwit

    The biggest issue has barely been addressed in all these posts: The competition is irrelevant, clean sheet designs going on right now…

    What do you design?

    The ones that get it right will be the success and the rest will flounder and possibly founder if they can’t get it right fast enough. Right now a fresh design will not hit the streets until, minimum, 3 years from now. What do you design? Cheap, value laden econoboxes that will satisfy people absolutely shellshocked over this depression era? Aggressively designed “small” cars, fresh looks that dismiss the last decade of melted soap blandmobiles? Hypermiler gas sippers for the $5/gal times? Luxurous and powerful vehicles that reward the survivors of the last few years?
    Remember, GM and Fiatsler can’t make everything. They’re gonna be good for maybe 2 different lines and if they’re wrong…

    How good is your crystal ball? Pick a direction and tell me who can win these sweepstakes.

  • avatar
    ihatetrees

    I don’t see things so cut and dry. There’s uncertainty in Government Motors that’s not present with Toyota.

    And GM is now politically connected. It could make for ugly moments to be so connected to one party. It’ll be interesting to see how many GMtax dollars employee ‘contributions’ go to the DNC or the Obama 2012 reelection fund.

  • avatar
    NickR

    Could that hot rod be any cooler? I will answer that for you. No.

  • avatar
    brettc

    I’m not worried about Toyota and the “new” GM. The “new” GM will probably be just as poorly run as the old GM. It’s now government run, and we all know how well government agencies are at doing things. It’ll be interesting to see what exactly happens with GM in the next 1 to 2 years, but I’m not expecting anything all that spectacular. As long as Toyota/Honda/Hyundai can keep making reliable, competitively priced vehicles, people will continue to buy them. GM needs another 30 years to prove that they no longer make shitmobiles to a lot of people. Plus a lot of people won’t buy GM products now after the whole bankruptcy thing, along with the closing of local dealers.

  • avatar

    Not so fast, Ken Elias.
    Toyota will probably unleash a wave of new products in tune with the frugal times. The new Prius seems to be a great start. I do think their profits will be meager, but I also think their market share can continue upward. It’s only 17%.

  • avatar
    kaleun

    Weird article… After we see the june sales number we can judge more. Or after we see the september sales numbers (after supposedly we don’t give them federal money anymore to put $ 10,000 on each hood at sale). sure toyota lost sales, but htye also have to provide their own incentives and if your competitor has $ 10,000 discount thanks to the taxpayers, then it is harder to sell. no matter how good your product is.

    In general they have boring products. but the majority of people doesn’t want the excitement of going to the shop every week. If VW and Toyota could cooperate to build nice AND reliabel cars, that’d be great. I guess they would call them Mazda then :-)

    Why would people buy GM/Chrysler now? they still can go bankrupt and depreciate even more. If the stupid buyer doesn’t know it, the bank lending them money will know about residual value (unless the taxpayer is the bank, again)

    If Toyota built a little more excitement, or at least brought some of their European models over. and if they could ditch some of their 30 US models that have many redundancies; then they could sell some more cars. right now only the Prius is a car that is any different from bland average.

    Honda isnot much better. A Civiv that looks like s**t and has a Captn’t Kirk speedometer? an Accord that (finally) at least looks as exciting as a Hyundai? A CRV with the rear side glass not matching the pillar geometry? their only fun car is the Fit (I’m serious) why is the 80′s Civic more appealing than a 2009 one (besides is dwarf size, of course)

  • avatar
    windswords

    A couple of points: One Chrysler has a couple of new lines coming out and a new engine. If they do as good or better job than they have with their last two intro’s (Challenger and Ram) then it will be well received. First up is the new Grand Cherokee already intro’d at the NYC auto show. So far so good, especially the interior. We’ll see how the new V6 fares. Next is the new 300/Charger. hopefully not too delayed due to the C11. But, BIG BUT… none of this matters if cars don’t start selling. The Koreans and the Japanese don’t have magic powers, they are losing billions of won and yen too because no one is buying enough.

    Second I think the real threat to Toyota comes from Hyundai. Their cars are getting more reliable, and are better looking/better performing than a lot of Toyota’s.

    Trivia: Chrylser, Chrysler’s weakest division sold more vehicles than GMC, one of GM’s “core” divisions last year.

  • avatar
    don1967

    Several people have beat me to the Hyundai comment, but I will chime in anyway.

    Toyota identified Hyundai as its greatest threat back in 2005, long before anyone (besides RF of course) knew GM was going nipples up. That threat has only increased since then.

    As for those who still see Hyundai as a second-tier automaker… 1998 called and they want you back. My 2008 Santa Fe is arguably the best-built car I’ve ever owned in 20+ years, including seven Nissans and two Hondas.

    Still not convinced? We’ll continue this discussion next year when the new Sonata arrives and takes an even bigger bite out of Camcord sales.

  • avatar
    MadHungarian

    Did I miss something or what exactly does the Holden Efijy have to do with this subject?

    Certainly even its Australian creators never claimed it could be a Camry substitute.

    In a certain sense I am glad that GM never brought the Efijy to production on any continent, as it is far too likely that the result would have been one part Prowler and one part Chevy SSR and about as successful as either.

  • avatar
    Kyle Schellenberg

    I’m sure that all of us with our collective thoughts on what would make Car Company X more successful with more+less sporty cars, more+less small cars and more+less alternative-energy drive systems is a spitting image of what the typical board of directors meeting looks like.

    Wild trends and hip-shots may provide temporary surges in sales but consistency (if not dullness) is what defines long term success. Tortoise and the Hare kind of stuff.

    I don’t see a reinvented GM being able to build the type of momentum that a locomotive like Toyota (and other players) has going for them. Like others have said, a few simple product refreshes and they’ll continue to hoover the market.

  • avatar
    ragtopman

    It’s a bankruptcy filing; it’s not ‘get out of jail free.’

    I’m skeptical that this rescue will work for two reasons:
    1. The government is behind it. That makes it political and not profit-centric.
    2. It’s GM and Chrysler.

    These wobbly drunks are mere annoyances to Hyundai and ToMoCo.

  • avatar
    Robbie

    Can any of you experts explain why VW – a major player on the world market for cars – seems to not view the current situation as a golden opportunity?

  • avatar
    Geo. Levecque

    I too think Ken E is drinking too much “Kool_Aid”,right now the price of Gasoline is on the increase as it does every Spring except this year I have heard comments that some people want Gasoline to go to $400.00 per barrel, if that happens what do you think Gasoline will sell for later this year?
    By the way on the CBC News tonight an interview with the CEO of Magna(he just returned to Canada from Germany, he says they have no intention of going after Saturn, he also stated that the push for Car sales will be for the Russian empire once the World Wide depression settles down, somehow as much as Frank S would like to make Cars here in Canada, I think that’s a “pipe dream”

  • avatar
    Robert Schwartz

    Ken Elias: “You can look forward to a new Detroit that will be competitive, if not lead, in cars and trucks for mass market Americans. Count on it.”

    I have previously written that bankruptcy proceedings can fix certain financial problems. But it can’t fix stupid. The idiots who ran GM into the ground are still running it and I am quite sure that Bob Gerber has no f****ing idea how to make them smarter, he ain’t all that smart himself. So I must conclude that today is just another day for Toyota, although they may be sharpening their katana so that they can be the the kaishakunin when GM finally gives up the fight and commits seppuku.

  • avatar
    akear

    Toyota is not bankrupt.

    Case closed.

  • avatar
    zaitcev

    There’s one thing GM will never be able to produce: a car made in Japan. I would never want to drive anything made by a union worker on a government plant. Had enough of that with Ladas.

  • avatar
    John Horner

    “Can any of you experts explain why VW – a major player on the world market for cars – seems to not view the current situation as a golden opportunity?”

    VW seems completely engrossed in a massive family feud between the Porsche and Piech sides of the dynasty. The soap opera there reminds me of the kind of nonsense FoMoCo has gone through from time to time over the years.

    Zaitcev, you do know that Toyota’s Japanese employees are unionized, yes?

    http://www.businessweek.com/autos/autobeat/archives/2007/03/toyota_pays_up.html

  • avatar
    cpmanx

    I don’t buy into Ken’s rosy scenario for GM and Chrysler, but I completely agree that Toyota is about to enter some tough(er) times.

    We can debate endlessly about how good the next round of domestic cars will be–they’re not here yet, so it’s a rather pointless argument. The relevant point is that the D3 are all about to have a much lower cost structure. At the same time, Hyundai/Kia is ratcheting up the price competition on the other side. Toyotas have traditionally commanded a premium price (try cross-shopping a Corolla and a Focus). Hyundai is going to make that premium hard to maintain, and lower costs among the D3 mean that they can continue to undercut Toyota prices while finally generating enough profit to support new product development.

    Toyota quality is still very high, but a few well-publicized glitches have tarnished the company’s rep. Toyota’s once-impeccable relationship with suppliers is running into problems (see the recent rankings in AutoNews). And from personal experience, I can tell you that the customer service I’ve seen in Toyota dealerships rivals the worst of the domestics. These are all major problems that a management shakeup cannot quickly cure.

    Ultimately, Toyota is the victim of its own success. It is now the conservative, top-dog company, trying to be all to everyone. Companies at the top often become complaisant and vulnerable to more nimble competitors–and Toyota is in that position now. It is far too early too know if GM and Chrysler will be among the nimble ones (or even if they will survive restructuring), but Hyundai, Honda, and Ford look poised to take some share domestically, while VW is on a roll globally. So yes, tough times for Toyota. Welcome to the #1 slot!

  • avatar
    bryan from alabama

    Lets let the public decide.

    You want to get up in the morning and start the car. The key turns over the engine every time for 7 to 10 years. Ooops-its Japanese designed. Built in the USA. GM took the last 50 years to piss off the public with junk, looked ok, but didnt work. Bottom line-vote with your pocket book. Everyone wants a car that doesnt crap out the first 150k miles. The one who makes it-USA, Japan, Korea, China, and does it at a good price= wins the war. And from an engineers perspective, we are talking about $200 in a vehicles cost to the manufacturer to make it happen, the problem is that the pinhead accounting /finance people and the MBA’s took GM into oblivion because they didnt have any hands-on experience with making cars and listiening to the consumer. They were too worried about mining data, wearing librian glasses, and giving in to any special interest group to stick to the core value of making cars, that is, providing a car that gives style, price, and confidence in performance to the consumer. Instead we let Wallstreet,& Washington dictate how we make cars, guess what- The Detroit 3 sucked at it. Only Ford decided to break free.

  • avatar
    Corky Boyd

    Toyota and Honda didn’t gain their dominance from exciting cars. It was from a reputation for well engineered, well built and long lasting products. You can’t earn that kind of reputation in 90 days of government/union ownership.

    GM and Chrysler will revert to form and try to move product with the same old financing, dealer incentive and other price gimmicks.

    Surely having the union unchallenged for control of the shop floor isn’t going to improve quality, especially knowing Obama will bail them out when they begin to fail again.

    Add to this a goodly portion of the market wanting to make a political statement of not supporting the administration’s moves, by not patronizing Obama Motors and you have recipe for disaster.

    You also also have to understand the mindset of government. It is risk averse. They can’t make exciting, novel cars. If they do and they bomb, they will have to face a Congressional committee to explain to the public why they failed and wasted taxpayers’ money. They will make “sure things” only. After they have gone through the inventory of preexisting new models, you will see only bland models with limited choices.

    You wan’t see “car guys” running the place, you will see accountants, lawyers and political hacks.

  • avatar
    redrum

    Looking at product, Ford’s passenger car line up just keeps getting better. The 2010 Taurus looks hot, the Fiesta test drive campaign is generating good press with the Twitter/Facebook crowd, and a new Euro Focus will be here in a two years.

    This is where, for me, the article lost a lot of credibility.

    I find it highly dubious any time someone has to resort to touting product that doesn’t even exist yet in production to back up their case.

    First, just because you’ve heard a lot of good things about something doesn’t mean the general public will agree. Second, (even if we accept it’s good) it doesn’t mean it will sell. The Flex (and before it, the Freestyle) were largely embraced by critics. Now one’s discontinued and the other’s been a big disappointment.

    And as others have said, it’s not like Toyota, et al are just sitting on their hands. The competition is a moving target. Case in point — Ford made a big deal when the 2009 Escape was released because the conventional 4 cylinder manual (which they probably sell very few of) got tops in its class fuel economy. A few months later Toyota’s 09 Rav04 matched that fuel economy — with an automatic. So much for that marketing campaign.

  • avatar
    Flipper

    The bankruptcy is only going to escalate the drop in GM’s resale values.This is only going to help Toyota & Honda as there values will remain stable, And there reputations will shine on.A smart consumer is not going to buy a car from bankruptcy motors just to flush his/her $$$$ down the toilet when it comes to trade in time.

  • avatar
    SpaniardinTexas

    Not sure, but I believe that Toyota is becoming the new GM:

    - Their line is bloated with products for the same customer Venza/Highlander/4runner/ same a GM did.

    -The cheap Lexus models are just rebadged Camrys.

    -Prius is selling good, but it is due to the people who wants the car for the image… (the new Fusion is a better drive).

    -The “new” Corolla is a big disappoinment… it is more expensive that its competitors and I have read that the quality is not really what you expect…

    -Bad service in dealerships… I went with some friends to buy a truck and we ended up buying a Ford, disappointed with out several Toyota dealers.

    -Some Scion models have lost a lot of sales, in the last months…

    -Tundra, big failure…

    -For young people, Toyota is the new Buick or Lincoln, is the car used by your grandpa to pick the grandchildren fron school…

    I am not sure that Toyota is doing so great, just a few months as number one in the world and they lose money… all companies are having very hard times.

  • avatar
    PeteMoran

    I apologise to any poster who has already made any of these points, but I think KE is flat-out wrong for three reasons;

    1. Toyota are internally extremely self-critical and wanting to incrementally improve. Bailouts have not, nor can they fix that for US domestics. Ford are only just finding that for themselves.

    2. Domestic resale values will take decades to normalise, after probably dipping on the glut of GM/Chrysler clearance new vehicles/re-po’s.

    and finally,

    3. From what I have seen personally, but not directly, Toyota have more than one plan ready, perhaps even combinations of plans including very suddenly hybridizing every vehicle (including Hino). Every vehicle on their road map can receive HSD tomorrow.

  • avatar
    Tricky Dicky

    @Hippo :
    Sorry to disappoint Hippo but there have been roads over 10,000ft in Europe since before most of the US was built. Of course, a very small proportion of people make it their daily business to drive up there, but European made cars can do it easily. When you consider that a European vehicle is designed to operate between the Artic Circle (Norway/ Finland etc), right down to desert conditions close to the African coast in Spain, Sicily etc, you’ll know the vehicles are rugged enough. 21% of European vehicles currently come with auto transmissions and that will rise to about 31% in the next 5 yrs – it’s no biggie.

    The service cycle on most European cars is set at the level to keep the retailers in business, rather than because of any great mechanical necessity. It’s pragmatism.

    And that’s what Toyota has in huge gobs. Recent buying trends in many regions suggest that consumers are less likely to use a vehicle to differentitate themselves from their neighbours – especially so with younger people. The car is becoming less the object of fantasy and more one of functional transportation, where cost of operation is a very important factor. Sure, Toyota lacks sex appeal. But it does look like the auto market is moving in the direction that Toyota already occupy – fuel efficient, functional vehicles.

    In terms of management philosophy, they may be slow paced when deciding direction, but they do embrace change as a way of being. Don’t underestimate the new President’s desire to make Toyota much more aggressively competitive. They have never been used to leading before, but it seems to me like that is what Toyoda really wants to do.

  • avatar
    thoots

    As usual, the anti-Toyota sentiment is largely thick enough you can cut it with a knife.

    The bottom line is that Toyota owners are satisfied, and have been satisfied for years — often decades — with their vehicles, far beyond what the naysayers could possibly comprehend.

    “Exciting cars” is just 100%, total hogwash. “Exciting cars” are loud, noisy, rough-riding, uncomfortable sports cars. Fun for maybe 1% or less of the driving that 99% of the population does. The naysayers will just never, ever get it through their heads that lots and lots and lots of people want a quiet, smooth ride for freeway trips, or good fuel economy around town, and, ultimately, reliability and durability that will keep their vehicles out of the shop and on the road with a minimal investment in maintenance.

    Toyota has been providing vehicles that meet these standards for decades, and they’ve been relatively successful at it, now haven’t they? Making vehicles that meet the needs and desires of a substantial percentage of the population is what has made Toyota successful — something that the naysayers will never comprehend, and everything that GM and Chrysler failed at so badly that they’ve driven once-great companies straight down the toilet.

    The “new” Big Three just have to do what they’ve always had to do: Simply compete with the rest of the market. Just compete. Compete in reliability. Compete in durability. Compete in refinement. Actually competition in “price” isn’t such a big deal — Toyotas have rarely been “cheaper” alternatives, but that has never seemed to harm sales.

    I expect that Toyota will continue satisfying customers while selling cars at a profit. It utterly remains to be seen what the “New Big 3″ will accomplish.

  • avatar
    CarPerson

    Don’t sing the praises of Hyundai too highly. They are putting cars into the rental fleets that will cause you to totally avoid a Hyundai dealership.

    I do not mind manual window cranks but manual door locks on all four doors and manual trunk release is a real annoyance. A Key-fob release is the norm in our daily life and super handy in a rental when your hands always seem to be full.

    If I recall correctly, about a year ago Allan Mullally laid down the law that Ford was ending the practice of selling cars into rental fleets that drove people away from Ford dealerships. Hyundai needs to follow this same advice.

  • avatar
    CarPerson

    Driving rain.

    Driver fumbles around with key to get door unlocked. Manages to get in and fumbles around getting right door unlocked.

    Both front passengers, one seated, attempt to negotiate the head rests and shoulder belts to unlock back doors. You cannot see the lock release so you are trying to identify what you are feeling by looking accross to the other door.

    All four people on way to important meeting are now drenched. Those four and the people they relate this to will now drive past every Hyundai dealership without stopping, regardless of product or price. For the lack of a key fob lock release on a Hyundai rental…

    The wisdom lost on Hyundai: A rental is hands-on advertising for your product. The rental agency could give a rip what car a renter may shop for the future but you as the car manufacturer certainly do. Using some of that advertising budget to ensure the car leaves a favorable impression on the several hundred that will be exposed to your product during the life of the rental is money well spent.

  • avatar
    menno

    I don’t think there is a need to start Toyota Death Watch, Robert and Ken.

    Essentially, I think Toyota will continue to succeed because the market is moving towards their strengths.

    Functional, smaller cars are a Japanese specialty, and reliability is still a Toyota and Honda specialty (as well as Subaru and Mazda).

    Toyota could improve a few things, like the interior plastics of the newest Corolla. Sure, their Scion sub-brand may not “make it”. But overall, GM, Ford and Chrysler executives could only DREAM about being in the position that Toyota is in at this time, compared to where they are in the Greater Depression.

    Put another way; during the depths of the 1930′s Great Depression, 1933, two auto companies posted a small profit while everyone else lost money. One was GM (biggest sales) and the other was Nash (competently run, and manageable size).

    Toyota also use their famous methods to adapt to reality. Something GM, Ford and Chrysler could well learn to do – and Ford may be doing just that. GM and Chrysler, not so much.

  • avatar
    Mark MacInnis

    I think the great American actor Jack Nicholson once said it best in a line from one of his movies….”Go sell crazy somewhere else….we’re all full up here!”

  • avatar
    Engineer

    GM under current management (that’s you, or at least your elected prostitutian) won’t threaten a fly. Read David Brooks’ column to see why.

    Ford may yet trouble Toyota. But that will take continued focus, something the D3 have not excelled at…

  • avatar
    Martin Albright

    Was this article intended to be some kind of deeply ironic satire? Something on the order of “Baghdad Bob” saying that American troops had been forced out of Iraq as the split screen showed M1 tanks cruising through Saddam International Airport?

    Yep, Americans will begin to come back to consider Detroit products (at least GM and Ford), and that’s not good for Toyota. And we’ve really never left Detroit for our big pickups and SUVs, whle the Japanese are still mostly playing catch up.

    Oh, man, that’s some good humor right there!

    But I’m disappointed. You should have thrown in a flat tax, an honest politician, and a couple of unicorns in there, too. Hey, if you’re going to dream, dream BIG!

    Incidentally, while I’ll grant you that full size trucks are (currently) dominated by the domestics, you do know that the best selling compact truck is a Toyota, right? And as for SUVs, have you never heard of the Toyota Land Cruiser, Nissan Patrol, Mitsubishi Pajero, the 4runner, the FJ Cruiser, the Nissan Xterra….I could go on but it would be pointless.

    Seriously, the only thing bankruptcy and Federal ownership will help is that it will let the domestics undercut the price of the foreign brands, but so what? Domestics already enjoy a significant price advantage over the likes of Toyota and Honda, and yet people are still buying the transplants because they’d rather pay $25k for a decent car than get a POS for $18k. Furthermore, that $25k Toyonda will still be worth $15k in 3 or 4 years when the domestic is worth $6 or $8k, maybe, if you can find anyone who wants it.

    In fact, I think the argument can be made that price cutting is one of the most destructive tactics the domestics have embarked on. Rightly or not, it conveys the message that price is the only thing the domestics have to sell, or as I put it in my first TTAC article 3 years ago, “Chevy: When you can’t afford anything better.”

  • avatar
    Cashmoney

    Count me as someone who thinks that by Labor Day,

    (1)GM’s BK filing will turn out not to matter to US car buyers. They may not be buying GM cars, but the reasons will have little (or nothing) to do with BK.

    This is a country full of people who will assume mortgages no matter how idiotic the terms if the monthly nut is low enough and who think that lottery tickets are a savvy investment. As soon as Americans can again afford new cars, GM dealers will have customers coming to kick the tires. GM’s BK is a non-factor.

    (2) GM will have a cost structure allowing it to be profitable in a 10-million cars/year market (assuming no loss of market share). Before, GM needed a ~16-million cars/year market just to have a shot at being profitable. I’ll even predict that within 12 months will report an EBIT>0 for the first time in maybe 5-10 years.

    (3) GM’s management will be the problem going forward, not the federal govt. Lots of the same old business practices, cars, marketing. No taking advantage of BK to rethink how it operates. White House will be too afraid of rightwing backlash to replace management.

  • avatar

    Sorry to burst your bubble Kenny, but GM, Chrysler, and Ford have lost me as a customer PERMANENTLY due to their product and dealership experiences.

    I don’t care HOW good their new vehicles are, they won’t even get a passing glance from me.

    And there’s an entire generation JUST LIKE ME who have been burned over and over and over again by the Big 3, and will never look back.

    The fact that they’ve stolen my tax dollars only makes me more infuriated – staying on life support for 6 months and draining our coffers, rather than simply filing 6 months ago – it incites rage.

    And I’m THE car guy people I know come to. They all ask me what to buy. I never have and never will recommend a Ford, GM, or Chrysler product.

  • avatar
    sumiko

    Hi Ken
    I saw your comment on Yahoo Japan news.
    Not because I am a Japanese, but I thought you are miscalculating about the automaker’s future.
    Indian automaker has been manufacturing a car cost just as much as $2K. If this last 5 years with long miles and good for environment, people will not care brand name anymore. If car has ability to carry people or things, spead is not nacessary to have in those. Japanese and American brands have a lot of chance to wiped out.
    What good about Cuba is they use an old car for over 2 decades. They use,fix, or maintain very carefully. May be they had to do from a situation. But still, I respect they did that.

    So, most automakers are facing a long long tough time that I think.

  • avatar
    davidrt

    Ahh Kevin, it’s interesting that your article is based on zero facts. You fail to realize that 30 days into a Chrysler bankruptcy and 2 days into a GM filing will not make these companies competitive overnight. What do you suppose is in that GM product pipeline? You also fail to recognize that while these companies are now “taking care of their customers,” it will not erase 20 years of pissing them off. Research has shown Gen X/Y will buy what their parents will buy. And, these domestic customers certainly have lost the Boomers…

    But, it seems like some good kool aid you’re drinking…

  • avatar
    51mustang

    A bad day for Toyota is a great day for GM. Toyota won the war.

    In the long run who really won the last great war.

  • avatar
    ohsnapback

    Oh what a feeling! Toy-YAWN-da!

    Looks like Toyota and Honda sales are plunging worse than GM, Ford &……GASP!…..even Chrysler!


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