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Toyota as Titanic?

#Honda #Nissan #Toyota


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In a report released this week, “Toyota: One Year Later” by Kelley Blue Book’s kbb.com, Jack R. Nerad, executive editorial director and executive market analyst, Kelley Blue Book’s kbb.com, opens the discussion of the post-recall Toyota by harkening back to last January when it was, as he puts it vis-à-vis the movie Titanic, “King of the World.” Nerad writes, “Just like Jack Dawson on the bow of the Titanic in the top-grossing movie of the 1990s, the carmaker had everything going its way.”

And Nerad goes on to say, “Then, just as Jack Dawson’s passenger liner hit an iceberg, Toyota crashed into an iceberg of its own in the form of an ‘unintended acceleration’ and safety recall problem that, for a time at least, threatened to spin out of control. But unlike the Titanic, we don’t believe that the recent rip in its hull in the form of the 2010 crisis will send it to the bottom. Instead, Toyota got the watertight doors shut in time to allow it to repair its image and return as robust as ever. “

In other words, whereas the ship was down and out, Toyota has proven to be somewhat unsinkable. Make no doubt that the company, to stick with the metaphor, took on some water in the context of reduced sales. But it is also worth remembering that they took down production for about a month, trying to assure that they were building cars and trucks that were without the seemingly questionable parts.

Nerad and his colleagues do a careful analysis of the performance of Toyota in the market during 2010, looking at everything from residual values—according to Eric Ibara, director of residual consulting, Kelley Blue Book, “Overall, Toyota’s values navigated the gauntlet of the recall well, with little lasting effects on its residual values”—to overall performance in the new car market.

And a point that is strongly made regarding Toyota’s overall performance is that factors unrelated to the recall may have had a bigger effect: factors including an aging lineup for many of its vehicles; the fact that gas prices were comparatively low during the past year so fuel-efficient cars were really not all that hot; strong entries from a number of competitors, both U.S.- and otherwise-based; and, of course, the perennial “conservative styling” problem.


Akio Toyoda at the 2011 North American International Auto Show with the Prius family-in-becoming.

There are a number of new products coming from Toyota, not the least of which is a new Camry, so it will be interesting to see if they’re able to shrug off that whole design albatross that they’ve been carrying around (note how we’re cleverly keeping with the nautical theme).

Having covered Toyota for nearly 20 years, I must admit that I never had a single person who worked for the company bust out with a “I’m the king of the world” claim or anything like it. There is always a sense that they can do better and that they’re appreciative of what they’ve achieved, not arrogant about it.

But there are words and there are deeds, and as the industry recovers throughout this year—although rising gas prices could have an impact on sales of trucks, which will have a bigger negative impact on the Domestic 3 than Toyota, Honda, Nissan, Hyundai, etc.—it will be interesting to see just how Toyota performs.

Design. Quality. Fast time-to-market. Value. These are things that they really need to execute well.  And safety goes without saying .