What a difference a year makes. The domestic auto industry (forgetting Fiatsler for a moment) is seemingly firing on all cylinders, while Toyota and Honda are hitting road bump after road bump. Which begs the question, can GM take advantage?
For years a trip to the doctor or dentist’s office meant the forced perusal of endless stacks of historical Consumer Reports magazines (unless you really fancied reading May 2006 Issue of Soap Opera Digest). This also meant you were generally treated to a glowing report on Toyota’s latest people mover (unless you were talking about the Tundra), which was usally summed up by a comparison to a similar, but ultimately unfavorable product from Detroit.
To be fair, a good bulk of the criticism was well deserved, but most would agree that the gap has narrowed significantly over time as Toyota has struggled with pressure of being both the number one manufacturer in the world and holding onto the crown for quality and reliability.
Very often public perception is a market-trailing result, gained from a historical experience with a product and does not accurately reflect today’s reality. It takes time for sentiment to change, and in the auto business that can be a very, very long time. A fact GM knows all too well…but sometimes a perfect storm of events lead to things changing in a hurry.
Enter a nationally focused recall and production shut down at Toyota, coupled with a resurgent Detroit auto manufacturing base, and you have some real momentum to change the public’s mind.
Toyota has been dogged by claims of a stuck accelerator pedal for months leading up to this week; at first they claimed it really wasn’t a big deal, didn’t exist, that no real accidents of any significance had occurred, and that maybe it was just floor mat in the end…basically they did whatever they could do to contain the damage.
However, the floodgates opened when the National Highway Traffic Safety Administration got involved and claims started coming to the surface on hundreds of accidents. Eventually, millions of cars were recalled, and contrary to what Toyota would have you believe, they were federally mandated to stop production on 8 models until a fix was submitted and approved by the NHTSA.
Throwing even more gasoline on the fire, we now have a House panel holding a hearing at the end of next month, requesting documents from the automaker and the NHTSA about everything they know on it, referencing “persistent consumer complaints of sudden unintended acceleration,” all but guaranteeing the issue stays at the forefront of the news.
When you start hearing statements from the Energy and Commerce Committee Chairman Henry Waxman like, “I am concerned by the seriousness and scope of Toyota’s recent recall announcements…our hearing will help us better understand how quickly and effectively Toyota and the NHTSA responded to consumer complaints about the safety of the recalled Toyota vehicles,” you know it has gone past the point of no return.
These 8 production halted models at Toyota account for roughly 6 out of every 10 vehicles sold by the Japanese automaker…which means if you have bought a Toyota car in the last half decade or so, the thought of involuntarily charging into traffic has, at the very least, crossed your mind…and that is not a good thing for Toyota. The only thing worse for Toyota would have been if the recall/stop work order included their flagship Prius…or if Michael Phelps was in a head on collision in one and could never swim for the US again.
Has the focus and criticism of Toyota gotten out of control? Yes. Is it fair to Toyota and the image they have worked so hard to gain over the past couple decades? Probably not. But that is the way it is…and that is the business reality that GM knows all too well of late.
Couple the hit Toyota has taken on its image, with the massive loss they took last year fiscally, along with its gloomy forecast for the coming year and put it up against Detroit’s new found renaissance and you would think it was Toyota that was in trouble.
Conversely, GM now has a clean balance sheet, a forecast of profitability, and potentially a car in the Volt that could steal the thunder from the leader of ‘all things green’ in the Prius. While, the other half of the Detroit equation (Ford) also just finished reporting a 2.7 billion dollar profit for 2009, increased market share, and had a fantastic 4th quarter. (although don’t look behind the curtain too much at that gross negative cash flow, or 1.3B loss from automotive operations…but I digress)
Toyota’s Japanese counterpart Honda has had its own share of troubles. On Friday it announced the recall of some 600,000 cars and has been soundly panned for its abysmal attempt in the strong hybrid market with the Insight (I myself walked from a $500 deposit at my local dealer when specifics/reviews on the car began coming to light). Not to mention introducing what I feel is the ugliest car of the new millennium, the Crosstour. (what the heck is that thing anyway?) Lets just say the new Civic can’t come soon enough for them, and leave it at that.
By no means is General Motor’s all the way back, and I don’t expect to see them atop all the JD Power ratings next year, or even on the cover of Consumers Reports the next time I sit down at my dentist’s office, but they have come along way in a short time.
How has GM reacted to the touble at Toyota? Well…while Toyota has been in a production shutdown, they have been adding salt to the wound by offering (albeit on the ‘down-low’) an additional $1,000 to any current Toyota owner to make the switch…on top of the (on average) $4,000+ in incentives already in play.
/twist the knife GM…twist the knife
Sidenote: It is reported that Toyota believes they have a solution for the gas pedal problem; a small spacer that would increase tension on the accelerator and (hopefully) cause it to not remain in a depressed position. Due to the NHTSA’s involvement, it must first be approved by them before production will resume.
