Toyota not looking so shiny now

November 26, 2009

Howes: Toyota not looking so shiny now


Is the Toyota Motor Corp. juggernaut losing its conqueror-of-the-world mojo?

Because if it was a Detroit automaker that was recalling 4.26 million vehicles to repair accelerator problems, or if it was a Detroit automaker that had broken its historic no-plant-closings pledge, or if it was a Detroit automaker that had recalled more vehicles (2.38 million) in 2005 than it sold in the United States that year (2.26 million), the answer would be an emphatic yes.

The answer also would be yes if Toyota, an earnings powerhouse, suddenly stopped minting cash — notwithstanding the three-month period ended Sept. 30 — and was on track to lose billions more this year. The answer would be yes if its exponential market share gains suddenly slowed, or if its national rival, Honda Motor Co., kept delivering profits despite a global auto recession and its new South Korean rival, Hyundai-Kia, continued to grab precious U.S. market share.

News flash: The men running Toyota appear to be mortal. They overreach and make mistakes. Their vehicles are not flawless. Their engineers cut corners, at least in ways that garner the attention of the National Highway Traffic Administration. Their Camry no longer is the undisputed king of midsize cars, now that rivals Ford Motor Co. and even General Motors Co. are proving they can produce world-class metal, too.

This isn’t new, either, suggesting that Toyota’s troubles may be more of a developing pattern than a one-time aberration. Two years ago, before two-thirds of Detroit’s automakers were tempered by the fires of bankruptcy, the editor of the ostensibly "Japanese-loving" Consumer Reports apologized to readers for recommending the problem-plagued Camry V-6.

He also said the magazine had decided new Toyota models could no longer be given the benefit of the doubt — or its prized "recommended" label. And Toyota’s V-8 powered Tundra four-wheel drive pickup was labeled "unreliable" by the magazine, the unofficial Bible to discerning car and truck buyers.

Two years before that, the global industry’s gold standard for quality recalled more vehicles in the United States than it sold in the United States. There have been running customer complaints about sludge in its engines, and, more recently, growing federal skepticism over Toyota’s response to the unintended acceleration probe.

‘Grasping for salvation’

Infallible they aren’t, as CEO Akio Toyoda, a scion of the founding family, conceded last month. Toyota, he said, is nearing "capitulation to irrelevance or death" and is "grasping for salvation." He also said the still cash-rich automaker has grown too arrogant on "the hubris born of success" and the "undisciplined pursuit of more."

Even adjusting for the Japanese cultural proclivity for excessive apology freighted with humility, those are stunning statements coming from a Toyota CEO. Considering that his name, save one letter, is on the proverbial building, the admissions are even more revealing.

Which means what, exactly?

That the Great Recession, the accelerant that pushed GM and Chrysler Group LLC into bankruptcy and fueled Ford’s evident resurgence, also is rebalancing the automotive landscape in ways that seemed impossible just a few years ago.

Fresh from federally induced bankruptcy, GM’s labor costs are competitive; its product portfolio is solid; its footprint in developing markets is impressive; and its debt load is enviably small, making it a potentially formidable competitor able to generate cash once the worst of the auto sales depression passes.

Ford arguably is building its best vehicles in a generation, if not a whole lot longer. The Blue Oval is booking monthly gains in its share of the U.S. market, an accomplishment seemingly reserved exclusively for Toyota not too long ago.

And Toyota’s position as the undisputed quality leader and industry juggernaut clearly is in jeopardy. That’s change you can believe in.

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