I love what you do for me, Toyota

Details of the firestorm Toyota finds itself in have been screaming in from every angle at a dizzying pace. What began as a floor mat recall has exploded and now encompasses computers that pin the throttle, computers that spin the steering wheel, insufficient brakes, scams by the media, scams by customers, congressional hearings, and Saturday Night Live spoofs. Jalopnik.com has one of the most comprehensive collections of articles on the subject, which is why most of the links (and the image) are theirs.

As a Ford enthusiast, I admit to initially reacting with a smirk. I have been generally aware of my automotive surroundings for 15 or so years, and those 15 years have not been kind to Ford. I'm happy to see this happening to someone (anyone) else, and it brings me even more joy to see it happening to a foreign company.

Unfortunately, I can't gloat at Toyota's misfortune. Not because of any pity I may have for them, but because of the endless stream of misinformation and deception that I think ultimately helps Toyota more than it hurts. I should have seen this coming, of course, as all the same songs were played when Ford (and GM and Chrysler) was in the crosshairs: the overblown reports of the recalls (recalls happen all the time), the congressional hearings (where the cluelessness of our congressmen and women was embarrassingly apparent), the suspicious media replications of problems. The customer scam angle is at least relatively new, but serves the same purpose.

In my opinion, these things don't help. Much of what I think is wrong with cars and the auto industry revolves around the lack of accurate information. Consumers make mis- or un-informed purchasing decisions, then drive their cars without sufficient knowledge of how to do it safely or efficiently. Feeding more mis-information into the fire certainly won't fix the problem. Giving a false reason for a real problem makes it all-too-easy to dismiss both.

If someone passes up a Toyota in favor of a Ford, I would much rather it be because they found that one of Ford's vehicles was better-suited for their purpose than any of Toyota's, or that they preferred not to send thousands of dollars overseas. While I'm happy to hear that membership in the Toyota Is Always Better Club is dwindling, it's unfortunate that the reasons for it are just as hollow as those that The Club was founded on to begin with.

Prius = Cool

Wait, what?

Speed:Sport:Life has taken a few minutes out of their usual pompous arrogance to produce a frighteningly lucid explanation of why "Prius" = "cool." I expected to be angry, or to be able to argue with them. I can't.

Some choice quotes:

"If you asked Prius owners why they made the choice to buy their car, I imagine you would hear a lot about the environment, sustainability, reducing dependence on foreign oil, blah blah blah. That's all crap. I know that's all crap because the Honda Insight is rusting on dealer lots as we speak."

"If you buy an Insight, you'll have to explain why you didn't buy a Prius. People will ask you if you own a Zune. If you buy a Civic Hybrid, then some self-righteous woman in cat-eye glasses will stop you in the university parking lot and tell you that your sports car is killing the environment."

"Don't bother to "think different" here. Put an iPod and an iPad in your Prius and relax, knowing that you are just as unique as everyone else in your social group."

And finally, "The Lexus HS250h is a Prius with a trunk. Don't buy one. Nobody's buying one. Toyota is learning the hard way what Honda, Ford, and GM already know. "Hybrid" is a pretty meaningless badge. It's the "Prius" one that counts."

I don't normally agree with the SSL guys, but in this case, I have no choice. The idea that people are buying the Prius to save the world, to use less oil, to save on gas money, or even because it's better than other options is absurd. People are buying the Prius because it's the car they want, and it's the car they want because it's the car "cool," "hip," "eco-conscious," and "::insert other flattering adjective here::" people want.

There are a lot of good reasons why Toyota isn't doing well lately, but on occasion it's definitely better to be lucky than good.

Toyta Recalls

According to a January 19 article in Brandweek,Toyota has launched a recall of over 500,000 vehicles due to a steering system fault. Bill Kwong, a Toyota representative, attributes the high number to Toyota's platform sharing, wherein various models share parts and structures.
Toyota, long seen as a bastion of quality and pioneers of manufacturing technique, have battled recalls for years; In 2005, the automaker recalled a whopping 2.4 million vehicles, 200,000 more than it sold. The numbers appear to be moving in the right direction, however, as recalls dropped to just over 750,000 last year while sales cleared the 2.5 million mark. This latest recall, and a recent class action lawsuit settlement over engine sludge allegedly affecting over 4 million vehicles, seem to indicate Toyota is far from in the clear, even after implementing stricter internal quality mandates following 2005.
As Toyota aims to overtake Ford to become the 2nd-largest automaker in the U.S., their ability to expand effectively and continue to maintain their image of quality will be crucial.

May be a good time to recall?

Toyota announced a huge recall involving 986,000 cars worldwide. 320,000 of those include the Priuses sold in America. Toyota says the steering wheel on these cars will lock up if the wheel is turned too hard or if the car strikes a curb. No injuries have been reported. About this same time last year Toyota recalled 750,000 Tundra, Tacomas, and 4 Runners. I wonder what will get recalled next year in May.

Truth In Advertising

One of Toyota's latest campaigns calls attention to their huge number of U.S. employees, and together with their pending participation in the NASCAR Nextel Cup works to portray Toyota as America's Car Company. Some people have taken exception to this claim, including The Level Field Institute.
The LFI is running TV and print ads that look at the numbers from a different perspective: According to them, Ford and GM both each employ more Americans than all foreign auto manufacturers combined, and together with Daimler Chrysler account for 8 out of 10 U.S. autoworker jobs. The Level Field Institute's website has several graphs and charts detailing the specific differences between the domestic and foreign manufacturers.
It is worth noting that the LFI was founded by retirees of The Big Three, shedding some light on their motivation. The numbers they present are nonetheless powerful, and as stated by them they should be taken into account when shopping for a new vehicle.

Price Gap More Like Price Chasm

It is known that Toyota vehicles sell for about $1500 more than GM products. Of course, GM sells more high price vehicles where Toyota sells more low priced smaller vehicles. This makes it hard to just go to the dealers and calculate yourself. There are three factors for this $1500 price gap: resale value and market perception. The first factor is a concrete fact where a consumer can actually see the benefit of buying a Toyota (of course I would tell the person trying to make money reselling a car to invest in mutual funds). The second factor is more abstract: It is a result of good marketing by Toyota and a vengeful market place. For example: "I bought a Ford Escort in 1980 and it really sucked, so I'm not going to buy any more American cars". The third factor is the perception that Toyota's cars have more quality and reliability, which has yet to be proven by J.D. Powers. Consumer Reports doesn't count because it's based on public opinion (refer to second factor above). So now that we see there is a $1500 price gap you would hope that GM could produce their cars at a $1500 discount. Unfortunately this is not true. Because GM is paying for 5 retirees per every 2 workers on an assembly line their costs are high. GM says in 2004 that its health care costs were $1,528 per vehicle and their pension costs were $695 per vehicle. This comes up to $2,223. Toyota's comparable costs are about $201 for healthcare and $50 for matching 401k, for a total of $251. This means that Toyota on a playing field is going to have a $3500 advantage. At best if GM works out a plan with U.A.W., they may be able to drop their costs to $1100 per car. This still leaves a gap of $2400 per car. Don't expect GM to start walking all over Toyota just because it has its labor prices under control. The only way that everyone is going to benefit (and when i say benefit I mean the US consumer, GM workers, GM retirees, and investors) is if GM can make headway in the original $1500 perception gap. This doesn't mean GM needs to go convincing every Camry owner to switch to an Impala. What it does mean is that when a GM customer goes into a dealership, they would think, "Wow I'm getting a great deal, and this is a nice car!" GM can then sell the car for more which would help resale value as well. If you take a look at other technology segments such as the Apple iPod and Google, my best guess on how GM would be to able to "WOW" the customers is to seduce them with engineering and features. Combine that with some top notch marketing and things could come around.

Domestic v. Foreign

Jeff Olsen recently published an article on SpeedTV.com discussing Toyota's entry into the NASCAR world and the fan reaction to it. Mr. Olsen notes that this reaction has been mostly positive, and he surmises this is because NASCAR fans, "perhaps better than any demographic group - understand what's happening in the automotive industry," which is that Toyota is now manufacturing models in Indiana, while Ford and GM have plants outside the country. Mr. Olsen concludes that the line between foreign and domestic manufacturers has been blurred, and buying a Toyota is just as helpful to the American economy as buying a Ford or Chevy.
What Mr. Olsen doesn't seem to take into account is the difference between assembly line jobs and upper level (R&D, management) jobs. While Toyota may have factories in Indiana, their corporate offices are in Japan, and Toyota is certainly a foreign company.
Buying a Toyota is hardly the same as mailing cash overseas: many mutual funds include Toyota stock, and Toyota pours a fairly large amount of cash back into U.S. operations. However, the majority of Toyota's profits go home to Japan.
While the UAW may be thrilled that Toyota has opened so many jobs for them, the overall state of the U.S. economy is not aided by the proliferation of Camrys and Corollas, while it is rather directly linked to the success of both GM and Ford.
Mr. Olsen seems to share the rather popular opinion that the American auto industry is in no real danger, nor is it linked in any real way to the U.S. economy. The reality of the situation is that stereotypes brought on by inferior product in the 80's, along with aggressive and deceptive marketing by Toyota and other foreign manufacturers today, have put Ford and GM in very real financial danger. Further, the health of these two companies is extremely important to the health of the U.S. economy as a whole.
As always, chosing a vehicle that is the best solution for your particular needs is a smart move. Perhaps, however, country of origin should carry more weight in the decision than has previously been necessary.

Totaled Up

According to Autonews GM has sold almost more than double the amount of cars and light trucks than Toyota has in the US in 2005. 4,454,385 to 2,260,296. Worldwide GM has sold 9.17 million vehicles. Toyota which sold 8.1 million cars. Worldwide sales figures, however, are misleading whereas Toyta sells lots of small cheap cars not seen here in the states. Even if toyota overtakes GM in total sales GM will still be king of gross, the total amount of money, sales.

Now its trivia/google search time. Please guess or find the total number of Lamborghini sales for 2005. Please email entries here with subject as Street Level Trivia. A winner will be announced Jan 24th.
*Edit* Total number of Lamborghini's sold in 2005: 613.

Toyota Sued For Patent Infringement

Solomon Technologies, Inc. has filed a complaint against the Toyota Motor Corporation with the US International Trade Commission in addition to action already filed in the US District Court for the Middle District of Florida. According to the claims, technology used in Toyota's hybrid powertrains infringes on a patent held by Solomon.
The end result may see Toyota unable to import its current hybrids, which would of course be a fairly serious blow. While a monetary settlement is much more likely, this should be interesting to watch in any case.

Toyota gets a taste of the union pain

So get this, Toyota's labor union is seeking a pay increase next spring. This will be the first time the Toyota union has asked for an increase in pay in four years. There are 58000 Union members waited so long due to the Japanese economy. Will this lead to more expensive cars and SUVs being built? We'll see...

This request is actually being driving by the living expenses that are expected to rise in Japan. Toyota's growth and the possibility of becoming the world's number one auto maker may have influenced the union as well. I really want to see how this unfolds, hopefully this can lead the American car market on an uprise and maybe create some new jobs here in the States.