If you've merely done a moderate amount of Internet surfing or cracked open
a newspaper lately - just about any newspaper - you've undoubtedly seen the
news that Toyota has once again passed Ford in worldwide auto sales and may
pass GM sometime this year.
But what you may not have seen is that Toyota has already passed both Ford
and GM in a different category - automotive recalls.
Although we've barely passed mid-February, Toyota has already recalled
533,417 vehicles this year in a mix that, according to www.AutoRecalls.us,
includes Tundras Sequoias and Camrys. That puts Toyota on track to recall
more than the over 1.76 million autos they recalled in the U.S. and Japan
in 2006, and the 2.2 million they recalled in 2005 when they recalled more
cars than they built.
What's more, the current recall related to the Turdra trucks and Sequioa
SUVs is similar to the same defect in 800,000 of the same vehicles in 2005.
Maybe somebody at Toyota isn't paying attention?
Hopefully the American consumers are. Recall numbers by domestic companies
(GM and Ford) so far this year are as follows: Ford, 128,163; Chevrolet,
4,829; and Pontiac, 1,602. Chrysler - a German company masquerading as an
American company with plans to start importing cars from China in 2008 -
has recalled 77,432 vehicles so far in 2007.
To be sure, high recall numbers are not good. Auto companies would much
rather prefer high sales numbers instead. As I've already mentioned, the
media is abuzz that GM may lose its crown this year to Toyota in worldwide
auto sales. But for that to ever happen in the U.S. sales category, it's
going to take several more years since GM has a U.S. market share of 24.3%
compared to 15.4% for Toyota. Even Ford, despite their recent troubles, has
a higher domestic market share than Toyota at 17.5%.
But if GM loses their worldwide crown this year, it may actually turn out
to be a blessing in disguise. Here's why:
First, GM spent 17% less per vehicle this January compared to last January,
which means they are more profitable on a per-unit basis. In fact, GM
expects to report a profit for the most recent quarter.
Second, it may be good for GM to step aside temporarily, for now, and let
Toyota take all the ammunition that is always aimed at the top dog of the
industry so there is less pressure and fewer distractions. And when GM
combines their more-solid profitability and their improved quality
together, their public perception will also improve.
Then they can use these admirable qualities to prepare to surge back on top
at the precise time Toyota is in the top slot with their recall surge in
the news. Toyota's timing at being number one worldwide would create
further skepticism about whether they really deserve their reputation for
untarnished quality.
According to Business Week's January 22, 2007 issue, Toyota has recalled
9.3 million vehicles in the last three years, which is nearly four times
the number of recalls in the three year period prior to 2004.
Other recent news that won't sit well with a Camry-conscious public is the
class-action lawsuit recently settled by Toyota regarding ruinous oil
sludge buildup
covering 3.5 million Toyota and Lexus (yes, Lexus) vehicles.
Optimistic statements by Toyota executives aren't going to cut it for long
- particularly when they don't match well with reality. Denial in the
Camry-company camp seems to be setting in. Toyota's North American
president Jim Press recently disputed the suggestion that his company no
longer enjoys a large lead in reliability over the American competition.
Speculating on the thoughts of American car company well-wishers while
speaking at the recent Chicago Auto Show,
Press said "I think there's some hope that the gap in quality is closing,
but it really isn't."
Oh, really? That's a pretty strong comment considering Toyota recalled 1.27
million vehicles in one swoop in 2005, recording the biggest-ever recall in
history for a Japanese car company.
But, recalls notwithstanding, the evidence that the quality gap is closing
is pretty indisputable, and the evidence has been piling up for more than
just the last couple of years. With the following facts, you can make your
argument for American car quality fully bulletproof - even among your most
ardent foreign car-defending friends.
* A February 10, 2003 Business Week told of how undeniable it was that GM
cars are better built than they used to be. The article cited an improved
J.D. Power quality ranking and a Consumer Reports recommendation for 13 of
GM's vehicles (equal to 41% of their sales volume) compared to just five
recommended GM vehicles for the previous year. The Chevy Impala beat the
Camry in a quality survey, and Buick beat BMW.
* Business Week also reported September 23, 2003 that GM boosted its
productivity 23% in six years while Toyota's productivity remained flat,
and that GM's most-productive factories now beat Toyota's most-productive
factories.
* A 2004 Consumer Reports ranking selected the Buick Regal as the most
reliable among family sedans, beating the Toyota Camry, Honda Accord and
Nissan Maxima. They also gave recommended ratings for four Ford models,
including the Ford Focus.
* J.D. Power and Associates awarded Cadillac's Lansing Grand River assembly
center its highest honor - the Gold Plant Quality Award - in 2004.
* An August 4, 2004 Wall Street Journal article said Toyota's lead in
quality and reliability has narrowed in some segments and disappeared in
others. Quality problems were reportedly "mushrooming."
* The Toyota Camry hasn't been awarded the best in its segment since the
year 2000, but many Americans continue to regard it as the number one model
in terms of quality. Toyota's Kentucky Camry plant was awarded with high
initial quality rankings by J.D. Power from the late 1980s through the
1990s, but it plummeted to number 26 in 2002, improving to only number 14
in 2004, while two GM factories and one Ford factory took the top three
spots that year.
* In a J.D. Power Initial Quality Survey of new 2004 cars, Chevy placed
second behind Honda and Toyota sank to number three.
* As far back as at least 2003, Business Week has reported that American
consumers regard certain foreign cars as better built than American cars,
even when facts prove otherwise.
* Fast-forwarding to 2006, J.D. Power shows Mercury, Buick and Cadillac
beat Toyota in a list of dependable cars. Two Buicks and a Mercury took the
top three midsize car awards; Mercury, Ford and Buick took the top three
large car awards; Ford took the midsize van award and the midsize truck
award; and GMC and Cadillac took the large MAV (multi-purpose activity
vehicle) and large premium MAV awards, respectively.
* In an article about trust issues, Business Week's December 11, 2006 issue
stated "GM's quality nearly equals Toyota's." Perceived quality among the
American public is another story, however. The difference between the
actual quality of American cars and the perceived quality of American cars
is the "perception gap."
* In the same article, J.D. Power's director for retail research said
"Actual quality is so close." discussing the quality rankings of GMC,
Chevrolet and Cadillac placing them on par with both Honda and Toyota.
* And most recently, of course, the Ford Fusion and Mercury Milan beat the
Honda Accord and Toyota Camry according to Consumer Reports.
What's needed among automotive senior executives, and much of the media as
well, is a return to intellectual honesty. Everyone tends to have their
favorites and biases (mine are pretty obvious) but I pride myself in
sticking with the facts to back up my comments.
When Toyotas North American president says that the quality gap isn't
really closing, he's not being intellectually honest.
Some editorial writers aren't either. When Douglas Brinkley trumpeted
Indiana's success in a Wall Street Journal article last year for attracting
a Honda plant to their state - even though it took $140 million in tax
credits and incentives - he wasn't what you would call "intellectually
honest." In an apparent attempt to convince the reader that Honda doesn't
send any automobiles to the U.S. from outside the country, he said the
following: "Turning farm fields into factories, that's what Henry Ford used
to do. Today, in the heartland, it's being done by Honda - a company that
doesn't manufacture imports but builds American-made cars."
Such statements lead the reader to think that some Japanese companies make
all of their cars in the USA. Hardly. In fact, according to a January 8,
2007 Wall Street Journal article, the NAP ratio - a ratio that compares how
many cars are built in North America vs. the number of cars imported - is
slipping for Toyota. And according to Toyota internal documentation, the
ratio is going to worsen next year.
Occasionally I'll find an editorial writer that dares to step away from the
foreign biases of others in the same industry and rate cars objectively,
rather than relying on the mindset of the question "will American cars ever
match the Japanese cars in quality?"
Editorial Director for Consumer Guide Automotive Mark Bilek departed from
the typical mindset of his colleagues back in June of 2005 by declaring
that the Ford Five Hundred was the best car he'd ever driven.
That's good news for Ford, since the Five Hundred is being renamed the
Taurus and will get several more second-looks because of the Taurus' higher
name recognition. Billek said he judged the Five Hundred based on "what it
is" and how well it "fulfills its mission." Based on this, his opinion was
that the Five Hundred was "simply the best full-size sedan sold in
America."
I am confident, however, that people like Toyota's Jim Press can be
somewhat honest in their statements about the competition from time to
time. He did say that the "car of the show" at the Detroit Auto Show in
January was, for him, none other than the Chevy Malibu. Maybe there's hope
for intellectual honesty after all.
Roger Simmermaker is the author of How Americans Can Buy American: The
Power of Consumer Patriotism. He also writes "Buy American Mention of the
Week"