Toyota’s Pain, Motowns Gain?


The great speculation in the Business and Automotive Press is how much gain will Motown get out of Toyota’s costly and embarrassing recall of 9++million cars
plus the halt in sales of more than 60% of its fleet worldwide. There is a superb summary of the problem here. The argument is that the quality chart above from Consumers Reports has to change fundamentally for there to be lasting change . And  Reuters BreakingViews Alex Currie starts with a similar cautionary note:

The glitch that forced the Japanese carmaker to halt sales of 63 pct of its U.S. fleet should benefit Motown rivals. But shared platforms exacerbated Toyota’s pain. With the Big Three making greater use of the cost-saving measure, they may want to invest more in quality control.

However, Ford which is profiting in the shor term also appears to have taken M. Currie’s viewpoint well ahead of time as reported in the Kansas City Star:

Ford’s quality has been rising, and consumers are taking notice. Consumer Reports rates Ford’s quality as better than Toyota’s. The Fusion rated higher than the Toyota Camry and Honda Accord.

So perhaps Ford is reasonably well positioned to move up and to the right on the Consumer Reports chart. But look at the problems confronting both GM and Chrysler.They are in the bottom 3 positions and they both have the stigma of having gone bankrupt on the taxpayers dime.  Forbes has some telling commentary[my emphasis]:

… there will be a great cost: incentives to get customers buying Toyota’s again when the problems have been solved at the factory; money to keep the wounded dealers alive, and money to pay for the recall work. We’re probably talking about a cost in the billions–not millions–counting those incentives. That’s money that won’t go to developing new models, new hybrids, new electric cars. And we’re not talking about the lawsuits, which will go on for years…. The Camry, which is among the cars in trouble, has been the nation’s bestselling car for years. It’s less likely to be the No. 1 this year. Figure Honda’s Accord will be No. 1 this year, and other family-size models, such as Ford’s Fusion and Hyundai’s new Sonata, will take bites out of the wounded Toyota. The smaller Corolla could be hurt by other competitors, like Honda’s Civic and Ford’s Focus and a new Chevrolet Cruze coming this fall. Too bad for Chevy that it’s not ready now.

In addition, to not being ready with its newer models GM has the problem of a recall of its own – the Vibe 2009-2010 models have to be recalled because they use the Toyota Matrix base. So will Vibe owners get the $1000 incentive to Toyota owners to change to another GM car? Notably in all the Web reports, Chrysler/Fiat barely gets a mention. Neither do Kia or Hyundai despite the fact that both Korean automakers have seen both sales gains and improved auto reviews.
Summary

It is clear that the hurt for Toyota is not going to be temporary and Honda may take a slight hit for its own recall. Motown will gain but it appears to be Ford that is positioned to profit the most while Chrysler appears still licking its wounds. However, other foreign vendors – notably the Koreans and the always highly rated German manufacturers may also pick up. But the real lesson here is a)the ugly PR emanating from months of not biting the bullet by Toyota on a serious safety problem, b)how quickly the Web spreads the word [just google “Toyota pain”], and c)how well positioned Ford and the Korean automakers are to take advantage of Toyota’s pain … or a slip by anybody else.

Leave a Comment

Your email address will not be published. Required fields are marked *

Pin It on Pinterest