Is Toyota in Trouble?

[Intrepidation]

Full Article: http://www.thecarconnection.com/Auto_News/...173.A13529.html

Even the best brands will occasional make a mistake, and anger a customer. But over the years, Toyota 's reputation and market share has grown based on a reputation for bulletproof products that give owners little reason to get upset. Suddenly, more consumers find themselves experiencing problems, often with Toyota 's best-known and normally most reliable model

Nagging issues with the latest version of the mid-size Camry, the new full-size Tundra pickup, and the all-wheel-drive version of the maker's highline Lexus GS sedan, led the highly influential Consumer Reports magazine to issue a stern rebuke. Declaring " Toyota is showing cracks in its armor," the magazine has pulled those three models from its "Recommended" list, a sought-after rating that Toyota and Lexus products have normally won automatically.

A number of huge recalls over the last three years, have further tarnished Toyota 's reputation for building cars, trucks, and crossovers with the reliability of the best appliances. That may be one reason why the automaker, despite record U.S. market share, is working a little bit harder to complete every sale.

While conventional wisdom would suggest that Toyota doesn't need to use rebates and other giveaways, the truth is that the maker's incentives have increased by roughly 250 percent over the past three years. In September, the average Toyota giveback was only marginally less than the struggling General Motors, $3752 per vehicle versus $4326 at GM. In September 2004, the U.S. maker laid out $5168 in incentives compared with $1506 at Toyota , according to CNW Marketing, an automotive research firm.

While Japanese makers have steadily gained ground in the SUV and crossover segments, they've repeatedly failed to crack the full-size pickup market, dominated by the likes of Ford's F-150 and Chevrolet's Silverado. But that was supposed to change with last year's launch of the new Tundra.

The new model is bigger and more powerful than ever, with more variants aimed at distinctly different sets of pickup buyers. Toyota even built a new assembly plant in San Antonio, Texas, the heart of U.S. pickup country. But the plant was beset with problems, running well over budget and rolling out vehicles with a series of snags, including a reported engine defect.

There have been numerous demands for a recall of the V-8-powered Tundra, which is now on Consumer Reports' "Least Reliable" list. But for the moment, "We're still investigating that issue," and have not made a decision on whether to recall the truck, said Toyota 's John Hanson. The automaker's spokesman insisted that overall, Toyota has a lot to be proud about, but he acknowledged, "We didn't do as well as we did last year," and are in the process of trying to get to the heart of the worsening quality issue.

On top of all that, Toyota has begun to experience an unexpected and unprecedented series of defections at its senior ranks, including its top American executive, Jim Press, who is now the number two at Chrysler; Deborah Meyer, who was a top marketing manager; and Jim Farley, seen by many as a fast-rising star at Scion and Lexus. The losses have almost certainly distracted management attention.

Further complicating matters, Toyota has been rapidly expanding its model lineup, adding new trucks, like the Tundra, crossovers, hybrid-electric vehicles, all-wheel-drive luxury sedans and more, each creating new opportunities for things to go wrong.

The problem is clearly not limited to the U.S. At the same time Consumer Reports took Toyota to task, the automaker was announcing the recall of 470,000 vehicles sold in Japan for problems including defective engines, steering, and fuel pumps.

The work in progress didn't seem to help Oshry, which only underscores the danger Toyota faces. For nearly two decades, the Japanese maker has built a reputation for doing the right thing: building reliable, if somewhat bland, products, and then standing behind its customer. Word-of-mouth, as much as all its corporate ad campaigns, have turned Toyota into the force to be reckoned with in the U.S. market. But if the current spate of problems continues, the automaker's momentum could reverse.

Has that process already begun? The automaker's U.S. sales dipped a slight 0.6 percent in September. But it's easy to read too much into those numbers, especially when compared to the all-time record the maker set a year ago, cautions analyst Spinella.

But even so, he insists that, "Frankly, this is the downside of the slope for them. If they're unable to fix this, in five years, I think their position in the U.S. could resemble GM's, with shrinking market share."

Edited October 22, 2007 by Dodgefan

[cire]

I say that if they don't fix the quality/reliability issues with the vehicles and their dealer's nonchalant attitudes, they will be in a world of hurt. Toyota built their reputation and status on reliability (they certainly are not passion purchases). If they lose this, they will definitely be in the same boat as the Big Three.

I was a die hard Ford loyalist until the mid 90's. I had very bad reliability issues with a Ford product. The vehicle was purchased new and had reliability issues consistently during the 2 years I owned the vehicle. With less than 15,000 miles on the vehicle and still supposedly under a 3 year/36,000 mile warranty, 3 different dealers refused to fix a warranty problem. All 3 dealers claimed there was nothing wrong with the car and gave me lame reasons for the problem. I called the corporate customer service line to ask for help to get the vehicle repaired. The corporate customer service representative informed me that Ford must back its dealers and there was nothing that could be done about the situation. I told the representative that it wouldn't take long for Ford to lose its market share with unreliable vehicles and an indifferent attitude toward their customers' needs. I promised the representative that I would get rid of the vehicle and never purchase any vehicle that had F-O-R-D (or Mercury or Lincoln) on the front of it. I also promised to tell everyone about my experiences with Ford's vehicles and service. The representative repeated the "back the dealers" ridiculousness. Anyway, the moral of the story is that a car company cannot build up or retain a loyal customer base without a strong combination of reliable vehicles and excellent customer service. Toyota had better take these issues very seriously and work diligently to fix the problems.

Edited October 23, 2007 by cire

[aldw]

The way Toyota dealers treat customers, things may occur sooner rather than later...

[A Horse With No Name]

The way Toyota dealers treat customers, things may occur sooner rather than later...

Toyota and Honda have become overconfident.

Chris

[CARBIZ]

Toyota and Honda have become overconfident.

Chris

Toyota and Honda are doing nothing wrong. I am serious in this. Again, the media has put them on an undeserved pedestal and now that the truth is coming in an overwhelming avalanche, the media can no longer ignore the cracks in the foundation. Managing more than one brand and dozens of models is bound to be challenging. To really look at it, neither Honda or Toyota have been full line car companies until recently. In fact, it could be argued that HOnda still isn't (no serious pick up truck.)

Welcome to the big leagues, Toyota.

[Newbiewar]

Toyota and Honda are doing nothing wrong. I am serious in this. Again, the media has put them on an undeserved pedestal and now that the truth is coming in an overwhelming avalanche, the media can no longer ignore the cracks in the foundation. Managing more than one brand and dozens of models is bound to be challenging. To really look at it, neither Honda or Toyota have been full line car companies until recently. In fact, it could be argued that HOnda still isn't (no serious pick up truck.)

Welcome to the big leagues, Toyota.

let the hazing from the media begin

[I hope GMRULES again]

Toyota is not in trouble. Their recent troubles are just small speed bumps that come with the rapid growth they've been experiencing in the last few years. That doesn't mean I haven't enjoyed their recent problems and I do hope they continue but I wouldn't bet on it.

[ToyoTommy]

I'm not worried. They'll be fine, and will continue to dominate. That red Camry is beautiful.

[Oracle of Delphi]

Great article DF, it seems Toyota dealers need some customer service training!

[siegen]

I'm not worried. They'll be fine, and will continue to dominate. That red Camry is beautiful.

Beauty is in the eye of the beholder after all. Let me be the first to welcome you to the site. :AH-HA_wink:

And yes, I don't think their recent trouble will cripple them by any means. It may slow their growth and give them a little awakening though. I think GM is being more competitive than ever, and Toyota isn't going to be able to dominate as easily as it was able to during its rise towards the top.

[K.C.]

Beauty is in the eye of the beholder after all. Let me be the first to welcome you to the site. :AH-HA_wink:

And yes, I don't think their recent trouble will cripple them by any means. It may slow their growth and give them a little awakening though. I think GM is being more competitive than ever, and Toyota isn't going to be able to dominate as easily as it was able to during its rise towards the top.

I think in this case, beauty's in the eye of the BEERHOLDER , and the Camry only dominates in sales, and nothing else. Not looks, not refinement, not reliability, not anything. The Toyota reliability marketing scheme is the second most successful to those that the diamond industry created for weddings (Diamonds are a girls best friend) and the retail industry created out of Christmas.

[aldw]

An Accord at this point seems a much nicer purchase than a Camry, particularly wrt performance and appointments.

[regfootball]

I think in this case, beauty's in the eye of the BEERHOLDER , and the Camry only dominates in sales, and nothing else. Not looks, not refinement, not reliability, not anything. The Toyota reliability marketing scheme is the second most successful to those that the diamond industry created for weddings (Diamonds are a girls best friend) and the retail industry created out of Christmas.

toyota's appeal is one dimensional. take away the reliability card, and they do not have much else to stand on.

[grandmarquis]

Beauty is in the eye of the beholder after all. Let me be the first to welcome you to the site. :AH-HA_wink:

And yes, I don't think their recent trouble will cripple them by any means. It may slow their growth and give them a little awakening though. I think GM is being more competitive than ever, and Toyota isn't going to be able to dominate as easily as it was able to during its rise towards the top.

Yes, beauty is indeed in the eye of the beholder..... and somewhere in this big world there is someone that thinks Rosie O'Donnell is hot. Doesn't make it so.

BTW, I took a little time to read Yahoo Auto reviews of the 07 Camry... not good. Not good at all.

[K.C.]

toyota's appeal is one dimensional. take away the reliability card, and they do not have much else to stand on.

Agree, one dimensional like the products they are selling.

[Ravenfreak13]

MWAHAHAHAHAHAHAHAHAHAHA!

[FUTURE_OF_GM]

This piece is FULL of errors and blatant fabrication.

Japan didn't "dominate" passenger car market in the 80s.

Detroit doesn't need incentives "just to get people in the door"

Toyota has never "stood behind their customers" Has this guy even experienced customer service at a Toyota dealer?!?!

Not to mention, the whole article features a 'yes, but' mindset similar to the one used in the reviews of GM's new models. Excepting the fact that this 'yes, but' is in favor of Toyota as opposed to the anti-GM 'yes but'

Then, to top it all off, the Toyota spokesperson BLAMES the problem with the initial car on someone else. That's both typical and a sign of just how arrogant Toyota is now.

Take it for what it's worth I guess... Toyota definitely appears to be slowing down and/or breaking down, let's just hope they can't fix it.

It's sad that the media can't even write a bad article about Toyota without adding a 'yes, but' or smoothing things over for fear of being a black sheep organization in this country.

BTW, as for the incentives, this local dealer is advertising $8000 rebates, 0% financing, no payments 'til 2008 and;

"We have rebates galore" as well as, "If you buy a cheap piece of merchandise with incentives, it's just cheap. But if you buy a quality piece of merchandise with an incentive; it's just a bargain."

http://www.harrelsontoyota.com/

Edited November 4, 2007 by FUTURE_OF_GM