How Toyota is saving the American auto industry

Posted on Friday 29 January 2010 at 08:50 am in category: USA
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On January 21st, Toyota announced a massive recall of vehicles in the US, Europe and China, because of a sticky accelerator pedal. Although there is a very small amount of cars in which this might actually happen, Toyota has taken its responsibility, and offers to fix 2.3 million cars in the USA alone.

The American public has seen Toyota outselling the big American automakers in the last couple of years, and the media couldn't wait to jump on this news. In the past week, I have not been able to turn on the radio in my (American) car, and hear some kind of report on the dangerous faulty gas pedal in Toyotas. Toyota's stock has taken a little bit of a plunge, although probably not as big as a lot of people would have hoped. Finally, the press has found something bad to report on a Japanese auto maker.

Americans love their cars, and the country was more or less built around cars. You never have to leave your car if you don't want to. There are drive-thru's for everything, so you can eat, work, do your banking, sleep and attend a funeral in your car. One of the biggest employers in the USA has traditionally always been the automotive industry, so you can imagine how most Americans felt when the Toyota Camry was all of a sudden the best-selling passenger car, even better that the All American Ford F-150.

Although most of those Toyota's are build right here in the USA, and Toyota is among the top-employers, a lot of Americans feel that people that buy Toyota's are traitors. 'Buy American' is a popular slogan, and if you buy a Chrysler, Ford or Chevrolet, it makes you feel you have contributed to the American economy.

However, the reputation of Toyota for making reliable quality passenger cars has been eating away at the sales numbers of American automakers.

So now Toyota announced the recall, the media jumped on it, reporting about the dangers of driving your piece of sophisticated Japanese engineering down the highways of America, thereby conveniently forgetting that the accelerators in question are all built by CTS, a company residing in Elkhart, Indiana. While GM also did a recall on their Pontiac Vibe model (which is a Toyota Matrix with a different coat on), you don't hear a lot about that.

This will however help the auto industry and their suppliers in the US, because:

  1. People that want to buy a new car will be more likely to go shopping at a dealership that sells American cars in the next couple of months, until things settle down. GM is even offering an incentive for Toyota owners to switch to a GM car.
  2. CTS will build 2.3 million accelerators to replace the old ones, while their manufacturing process will be improved with the help of Toyota engineers, reputedly the best people to do so, which in return will give them a better position in the market of accelerator manufacturing.
  3. Toyota is going to spend millions of dollars in advertising, to save their reputation.
  4. In the mean time, people that have always believed in Toyota's quality, will most likely still believe in it, so Toyota won't get hurt too much. It will level the playing field a little bit in GM and Ford's favor though.

Finally the focus is off the American automakers getting bail-out money from the Obama administration. I'm curious to see how long the media will keep up bashing Toyota, and how it will affect the market shares in the coming months. This couldn't have come at a more convenient time for GM, the worst part of the recession seems to be over, and people would like to start spending money again.

I am guessing that GM and Ford will not forget Toyota's mishap anytime soon, and advertising campaigns will focus on the superb quality of American cars for a while.

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