THE AUTOEXTREMIST

October 13, 2010

A tale of two lost automakers in search of their mojo.

By Peter M. De Lorenzo

(Posted 10/12, 12:00 p.m.) Detroit. No, I’m not going to write about the Chevrolet Volt this week in this column, although I do have a mini-rant in this week’s “On the Table” if you just have to read more about it. I’d rather talk about two Japanese car industry stalwarts – Toyota and Honda – and where they’ve been, where they are now and where they need to go given increasingly stiff competition from Ford and the Hyundai-KIA group, etc.

Five years ago you could pretty much predict the tone of any article mentioning either Toyota or Honda, the two most successful Asian automakers of their time.

In Toyota’s case you’d read terms such as “Asian juggernaut” and “force to be reckoned with” to describe the Japanese automaker’s inexorable climb on the way to becoming the world’s largest automaker. Toyota’s market share was on an unstoppable upward trajectory, their profits were mind-boggling (helped in no small measure by Japan, Inc.’s direct manipulation of the yen), their cash on hand was staggering to contemplate, and with the U.S. automakers imploding – GM in particular – there was nothing standing in their way of world domination.

As for Honda, it was the feisty automaker that marched to a different drummer. Fiercely independent and proud that its full name was the Honda Motor Company, its specialty was visionary, innovative thinking and products that bristled with engineering creativity and overall efficiency, cars that for the most part attracted hordes of enthusiastic customers.

Today, Toyota’s squeaky-clean, greener-than-thou image has been decimated by a series of recalls and humiliating public rebukes from the U.S. government, which, incensed with what appeared to be a habitual pattern of denial - if not an outright refusal to deal with reality - when it came to anything to do with product flaws or the potential need for recalls, didn’t hesitate to pummel the automaker for myriad sins, both real and imagined. And the American consumer public took notice.

Make no mistake, these revelations about Toyota revealed a soulless, insular culture run by bean-counting bureaucrats that rivaled the worst corporate practitioners in Detroit’s “bad old days.” Hell-bent on world domination, the executive leadership at work at Toyota at the time completely took their eye off of the ball, and walking away from its founding principles of disciplined product improvements and relentless adherence to quality embarked on a program of more - as in more factories and more volume - all in the interest of eclipsing GM as the world’s largest automaker. And it blew-up in their faces.

Honda didn’t have a grand plan for world domination but they, too, took their eye off of the ball, walking almost completely away from the innovative, risk-taking creativity that was their hallmark, instead unleashing products that were weighed-down with a leaden conservatism and a shocking - for Honda - tone of sober mediocrity that was almost unfathomable given their history.

In short, both companies completely lost their mojo.

Now granted, neither company is starting from scratch, as Toyota’s loyally conservative multitudes have basically ignored all of the bad press and returned to their Toyota dealers en masse, finding comfort in the blandtastic appliances that they’ve grown to love. And though Honda’s fortunes aren’t looking nearly as rosy, they have enough left in their tank to muster a pulse at least.

But it’s not enough and both companies know it, which is why today they’re scrambling to reinvent themselves.

Toyota is now being driven by Akio Toyoda, a confirmed hot-rodder at heart and one known to dabble in racing on occasion. Toyoda was the prime mover behind the $375,000 Lexus LFA super car - Toyota’s new image-enhancing flagship - and he is behind Toyota’s new emphasis on creating hip and cool cars that are actually fun to drive. They’ve even formed a new company division to address just that. Called the Sports Vehicle Management Division, these are the guys and gals who will be charged with injecting life into the moribund Toyota product line.

But churning out the upcoming new FT-86 Sport Coupe and a hipper Scion tC does not constitute a head start on transforming Toyota’s image, at least here in the U.S. It will take much more than that. And running in NASCAR to affirm the company’s perennial wannabe quest to become part of the American fabric isn’t going to cut it for Toyota either. And besides, any of the really new products – the FT-86 in particular - allegedly planned by Toyota to ratchet-up their hipness quotient aren’t going to trickle in before 2012 at the earliest, so excuse me for looking at my watch and saying, “really?”

Besides, Toyota’s image of solid predictability has been so burnished into the American car-buying consumer’s brain that any of their forays into building sporty cars and racing have always been viewed as fringe behavior and not the real Toyota. And it’s hard for me to view this latest revitalization program as being any different.

To make real inroads Toyota will have to get back into grassroots racing in this country while engaging in other high-visibility professional racing programs of significance as well. (Why Toyota doesn’t have a high-profile presence in the American Le Mans Series is beyond baffling to me, to say the least.) And it will be a long, difficult slog to convince consumers that Toyota is the maker of hip, desirable cars. We’re talking years – as in a half a decade at least – before Toyota can expect to see any needle-moving results.

Needless to say Akio & Co. has their work cut out for themselves, big-time.

Honda is even in more dire straits given the monumental task ahead facing the company. And it’s even worse than that since it’s a challenge entirely wrought of its own making. Honda hasn’t just squandered its considerable legacy of maverick innovation in this country among its hard-core constituents, the company has unleashed a brace of piss-poor monuments to mediocrity that don’t deserve to wear the Honda badge, and it is killing them.

The current Accord is woefully uninspired, the Crosstour is a flat-out abomination, and the new CR-Z is a major miss, just to name a few. As a matter of fact the CR-Z is the car that worries me the most in considering Honda’s immediate future. If this was the car that was supposed to bring the Honda Faithful back they blew the opportunity to smithereens. Honda used to be the  car company that delivered efficiency as a matter of standard operating procedure, but it was the way they went about it and the way they instilled dynamically exciting feel and responsiveness into their cars while doing it that created legions of passionate fans.

The CR-Z seems to indicate a massive internal fight within Honda for the very soul of the company. There’s a faction of downbeat and downtrodden Practicality Believers, minions who have given up the fight and want Honda just to follow the rest of the pack in terms of delivering efficiency in expected ways. Those are the ones who watered-down the CRZ-s performance, leaving it to be unimpressive as a hybrid in terms of mileage and as a sports car.

And there are the Honda True Believers, the ones who know what Honda was and is supposed to be and who believe that Honda can not only get there again but that they must get there again if they are to survive with the company’s founding mission intact. These are the people who want to build a drop-dead gorgeous ultra-high-performance, ultra-high-efficiency successor to the NSX sports car, a machine that would encompass the principles of the company founder while establishing a new vision for the Honda of tomorrow.

I hope the latter faction wins for Honda’s sake and for the throngs of enthusiasts everywhere who can’t wait for Honda to shake itself out of the doldrums of mediocrity that have plagued the company for far too long now.

Make no mistake - both Honda and Toyota have reasons for getting their collective acts together and finding their mojo again. Internally they both have to focus on a direction and run with it before it’s too late, because both companies now realize the high cost of taking their collective eyes off of the ball.

Externally, the global competition keeps getting tougher. With a re-energized Ford and to a lesser degree GM, and an ultra-aggressive VW Group making inroads in the market at every turn, it’s growing exponentially more difficult to compete. And companies that go through the motions while just phoning it in are not going to succeed.

But by far the biggest threat to both Honda and Toyota is the Hyundai/KIA group. Efficient when they have to be, luxurious where they need to be and sporty when they want to be, Hyundai/KIA isn’t just in Honda and Toyota’s rearview mirror, they’re in the back seat and about to climb over the front seat to take the wheel.

As the Wicked Witch of the West once famously said, “Oh what a world, what a world...”

And that’s the High-Octane Truth for this week.

 

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