THE AUTOEXTREMIST

September 30, 2009

Et tu, Toyota?

By Peter M. De Lorenzo

(Posted 9/30, 7:30am) Detroit. At one point it was the most dominant automotive enterprise on earth, a monolithic juggernaut that swallowed markets whole. So dominant in fact that it could dictate the tempo of this business with impunity, right down to taking over any segment it chose to compete in with a cunning mix of marketing guile, laser-focused pricing, remarkable product content and a rock-solid reputation for nearly flawless quality that preceded itself with legions of customers across the country.

Specializing in terrifically competent but relentlessly bland machines that never offended, never broke down - and never failed to elicit yawns from the enthusiast community - this car company was nevertheless on an upward trajectory that was undeniable and unstoppable, a brash rocket soaring into the stratosphere unimpeded by capable rivals or even the whiff of real competition.

Oh, how times have changed.

A funny thing happened to Toyota and its overlords on their way to world domination of the automobile business. They got greedy, pure and simple. They became obsessed with surpassing GM as the No. 1 global automobile manufacturer, and in doing so they took their eye off of the proverbial ball. While they added new factories at a dizzying rate in their quest for more capacity, their heretofore unimpeachable quality ratings slipped, and recalls mounted (another 3.8 million U.S. Toyota vehicles were recalled late Tuesday afternoon for driver's side floor mat entanglements with the pedals that could cause unintended acceleration, but in Toyota's defense, more on that in this week's "On The Table").

All of a sudden dealers that were used to being on cruise control while busily filling orders had to get back in the actual business of selling again, something they hadn’t had to do for the better part of a decade at least.

And the final blow? In the midst of a global recession Toyota’s mojo disappeared, leaving its formerly glowing image flat-broke and busted by the side of the road. So much so that even the squeaky green, holier-than-thou Prius couldn’t make up for the dramatic swoon in the company’s rapidly declining fortunes.

And the most amazing thing about all of this? It all happened in just the last 30 months.

Toyota now finds itself scrambling in an intense effort to extricate itself from this swirling maelstrom of mediocrity that has seemingly swallowed the company whole overnight.

Akio Toyoda, the 52-year-old grandson of the company’s founder, has taken over a company that suffered its first operating loss in 70 years for the fiscal year ending last March. His task is huge because he not only has to get Toyota refocused and reenergized, he has to decide what Toyota will be in the future.

Will it be the benevolent Jolly Green Giant of a car company that will spread its goodness around the world like the touchy-feely, Shiny Happy minions worshiping the sun in the TV spots for the Prius?

Or will it be the “back-to-basics” car company that returns to its roots and humbly goes about the business of restoring its reputation in the automotive world through hard work, diligence and attention to detail?

I don’t envy Mr. Toyoda, because the landscape has changed considerably for Toyota, especially here in the U.S. market. Yes, Chrysler is a non-entity and GM is still reeling from its bankruptcy hangover – despite its stellar product lineup – which should give Toyota a running start back to its leadership role here. But all of a sudden Ford is a serious player, complete with something Toyota used to take for granted, and that is big-time momentum.

Whereas before Toyota could just blithely count on delivering its usual gangbusters sales numbers in the U.S., now it’s a real battle, and Ford is very capable of giving Toyota all it can handle, and on several market segment fronts too.

But the real obstacle standing in the way of Toyota returning to its position of dominance?

Hyundai.

The Korean manufacturer is Toyota’s biggest threat in the U.S. market, hands down. Boasting the quality numbers that Toyota used to deliver on a regular basis, and a rapidly expanding lineup of ever more impressive models, Hyundai is more than yapping at the heels of Toyota, it’s about to take a nice big chomp out of its reputation and market standing.

Hyundai is the new force, while Toyota is out to recapture the magic. Hyundai bristles with new model after new model - each more impressive than the one before it - while Toyota struggles to find its sense of self once again.

Needless to say it has been fascinating to watch as Toyota dances about the rim of mediocrity and Hyundai cranks it up.

Is Toyota going to shrivel up and shrink from the challenge from Hyundai or anybody else? Of course not. Toyota will be a formidable player for the foreseeable future.

But there is a pronounced difference now that wasn’t there before. Toyota isn’t the invincible, infallible player that it once was. Everything Toyota management touches doesn’t necessarily turn to gold, like the old days. As a matter of fact Toyota has become so frighteningly ordinary that it’s threatening to become – heaven forbid – just another car company, a dreaded fate previously reserved for only the most mundane and mediocre car companies that exist in the world.

Yes, Toyota, even you are susceptible to mediocrity and turmoil.

Even you can be caught wildly flailing away hoping that something, anything sticks.

If this was a horse race, it would be easy to place a bet on Toyota to place or to show.

But the days of picking Toyota to win automatically are long gone.

Thanks for listening.

See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, October 1, at 7:00PM EDT at www.autolinedetroit.tv.

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