By on April 2, 2009

The morning after U.S. new cars sales fell prey to the ides of March, ToMoCo’s MD sent General Motors a get well card. Yasuhiko Ichihashi told the AP that “Toyota was only hoping for an overall recovery for the U.S. auto industry, including GM.” Mr. Rising Tide Lifts All Boats (a.k.a. We’re All In This Together-san) said what’s bad for the U.S. auto business is bad for Toyota, as they share parts-makers. (A popular meme amongst the Bailout Buffet crowd.) What’s more, Ichihashi reckons GM’s collapse would depress “consumer sentiment.” GM’s filed for C11, I’m too bummed to buy a Toyota? Huh. Not mentioned: GM sets the floor for U.S. car prices and quality. If The General takes a powder, Toyota’s prices will fall, profits will sink and quality would have to rise. Honda had nothing to say about yesterday’s bloodletting, but previously, on “who wants to enlarge its U.S. market share,” HoMoCo president Takeo Fukui noted, “[it] has been a rare exception among Japanese auto executives in acknowledging publicly that weaker competition could in the long run present an advantage for Honda.” Ya think?

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19 Comments on “Toyota to GM: Get Well Soon. Honda to GM: Drop Dead...”


  • avatar
    ConspicuousLurker

    Toyota and GM are also business partners. NUMMI is a jointly operated production facility in California that produces Toyota and GM vehicles (i.e., the Pontiac Vibe, a rebranded Toyota Matrix/Corolla).

    In the scheme of things, it’s small potatoes, but I can see it necessitating niceties that Honda wouldn’t be motivated to give.

  • avatar
    Airhen

    Good for Honda! Great cars and union free.

  • avatar
    jolo

    “GM sets the floor for U.S. car prices and quality.”

    I thought that was Chrysler? At least in the quality department. And don’t they put more cash on the hood of all their vehicles than GM?

  • avatar
    toxicroach

    Yeah, but Chrysler is the metaphorical basement of the car world.

  • avatar
    MrDot

    Toyota has the advantage of being the world’s largest carmaker. Honda is an also-ran in most markets, so it makes sense that they’re rooting for the reaper to increase their share.

  • avatar
    windswords

    “I thought that was Chrysler? At least in the quality department. And don’t they put more cash on the hood of all their vehicles than GM?”

    If you’re talking relaibility, over the years Chryslers have scored in the middle of the pack in JD Powers surveys, sometimes above the industry average, sometimes below it. GM, because they have so many brands have done very well (Caddy and Buick) average (Chevy, et. al.) and worse than average (often Pontiac but I think that’s because of the kind of customers they attract).
    In March the average incentive for Chrysler was $91 more than the average for GM.

    GM, because they have so many brands and the largest market share, they set the floor for U.S. car prices and quality. If it was just lowest make in those categories then it would be Kia for prices and VW and Land Rover for quality (reliability).

  • avatar
    psarhjinian

    re: NUMM: In the scheme of things, it’s small potatoes, but I can see it necessitating niceties that Honda wouldn’t be motivated to give.

    Toyota also makes Matrixes and Corollas in Cambridge, Ontario. NUMMI could hit the skids and it wouldn’t hurt them nearly as much as it would GM/Pontiac.

    From what I can see on the road, the Vibe must be damn-near Pontiac’s best-seller.

  • avatar
    no_slushbox

    Lack of competition is bad for prices and quality.

    The automotive industry has higher barriers to entry than any other non-utility industry, so it’s not likely that new players will soon enter to challenge the surviving Japanese companies.

    If the Detroit automakers go away there will be much less incentive for the Japanese to make inexpensive quality cars. It’s not like they have to worry about price or quality competition from the Europeans.

    Korea is a threat, and eventually the Chinese will enter the US market, but if the Detroit automakers go away the prices of Japanese cars will go up significantly, and quality will probably decline.

    Does that mean that the US should put the Detroit automakers on permanent life support just to put competitive pressure on Japanese prices? No.

    But “GM sets the floor for U.S. car prices and quality. If The General takes a powder, Toyota’s prices will fall, profits will sink and quality would have to rise.” does not make any sense to me.

    I’m all for tinfoil theories (I think that the government supports the FIAT-Chysler partnership only because it will keep Chrysler’s distribution and NHTSA/EPA approved platforms out of Chinese hands).

    However, in this case Toyota’s claims, that GM going away would disrupt the supplier base and hurt consumer confidence, are really all there is to the story.

  • avatar
    no_slushbox

    Actually, as much as I hate to admit this, if I buy a new Japanese car this year the deal that I get on that Japanese car because of price competition from Detroit will probably make up for the share of my taxes that have gone to the Detroit bailout several fold.

  • avatar
    Pch101

    Toyota is a much larger company than Honda, with twice the revenues. They really are in different places from each other.

    A rapid GM failure would present more of an opportunity for Honda than for Toyota. For Honda, it provides a chance to move up and gain share. For Toyota, the world’s largest automaker, it creates more vulnerability to potential new competitors.

    Toyota would be better off if GM would die slowly. That would allow Toyota to continue to grow organically and chip away at GM’s share as it dwindles, turning much of GM’s loss into Toyota’s gain. A quick failure would create a vacuum, which would allow many competitors to share in the spoils, and would probably motivate more foreign (read: Chinese) companies to jump in as they also try to take advantage of it. I can see why Honda and Toyota wouldn’t see things the same way; the results wouldn’t be the same.

  • avatar
    John R

    @Pch101

    Yeah. I can subscribe to that.

    I’m sure Honda would be fine with GM going away, but Hyundai probably dreams about it. Toyota has admitted in the past that it has the most to worry from Hyundai.

    I’d wager that if you couple the vacuum created by GM simply falling out of the sky with Hyundai’s marginal losses (what is it? like -4.6% for March?) relative to the rest of the market so far, the Korean’s definitely “got next” in terms of rapidly gaining market share.

  • avatar
    Pch101

    I’d wager that if you couple the vacuum created by GM simply falling out of the sky with Hyundai’s marginal losses (what is it? like -4.6% for March?) relative to the rest of the market so far, the Korean’s definitely “got next” in terms of rapidly gaining market share.

    Hyundai is in a unique position from everyone else, because it built its US capacity before there was demand to support it, and because it has substantial revenues from non-automotive businesses to carry it along.

    Hyundai wanted to have the chance to grow quickly, so it created the volume capacity before it had the customers. Its strategy has been to sell the cars into fleets in the short term while it expands its retail customer base, with the goal of shifting fleet sales over to retail.

    If Hyundai’s plan were to succeed, that is a real threat to Toyota, which is more conservative and wouldn’t take risks like that. A firm such as Hyundai has more than enough capacity to fill a GM-created vacuum in a way that Toyota could not; they have plenty of factory capacity to do it.

  • avatar
    BDB

    I think it’s safe to say that Toyota is becoming the new GM, and Hyundai is becoming the new Toyota.

    Especially among the younger crowd. I’m in my mid-20s, and a Toyota is seen as your parents car, the same way our Toyota driving parents saw a Chevy or Olds as their parents car. And nobody wants to drive what their parents did!

    Hyundai doesn’t have that stigma, nor does it have baggage among Gen Y as being cheap since we’re too young to have first hand experience with the horrid 1980s and early 90s Hyundais.

  • avatar
    RedStapler

    The other big winner if GM and/or Chrysler were to die tomorrow would be Ford. Most of the car sales would go to Toyota, Honda and Hyundai. Most of the Government fleet, SUV and Pickup sales would flow to Ford.

  • avatar
    ponchoman49

    Me to Honda: go fu** yourself. I’ll never buy one of your hideous overpriced tin cans. And that goes for a good friend too that almost died when his Pilot almost killed him as it burst into flames as he was driving down the highway and a fellow co-worker whos Odyssey left him standed in PA because the transmission burned it’self up and the power doors kept failing. The days Americans open up there eyes and actually do a little reserach before they blindly plunk down there hard earned cash for the same old Toyota and Hondas will not last forever. The gneration from the 70’s and 80’s that swore off anything but an Asian brand will be aging and buying cars less frequently giving hopefully smarter younger buyers the option to buy what they have researched and what they REALLY want, not what some clueless clown told them to buy or what mom and dad kept buying.

  • avatar
    wsn

    ponchoman49 :
    April 2nd, 2009 at 2:33 pm

    Me to Honda: go fu** yourself.

    ———————————————–

    Obama to Chrysler: go fu** Fiat
    Obama to GM: be patient, you are the next

  • avatar
    wsn

    ponchoman49 :
    April 2nd, 2009 at 2:33 pm

    Me to Honda: go fu** yourself. I’ll never buy one of your hideous overpriced tin cans. And that goes for a good friend too that almost died when his Pilot almost killed him as it burst into flames

    —————————————–

    You sure that was not a Ford Exploder?

  • avatar
    ihatetrees

    I don’t know about Honda and Toyota, but I’d like to see Mazda and Subaru thrive. So I guess the sooner GM is six feet under, the better.

    A long, drawn out GM death would really benefit Ford. But it’d be best for everyone if GM were restructured quickly.

    My fear is that Obama allows bankruptcy and/or subsidies to drag out Delphi-style – to the point where the make of car you buy becomes much more political.

  • avatar
    PeteMoran

    It’s cheap for Toyota to appear as a concerned and patient team player.

    Their business continuity and supplier failure/support plan is all ready to roll.

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