Who's afraid of Toyota?

[tcbracing]

Kind of puts it all into perspective...

Who's Afraid of Toyota?
The Wall Street Journal
By Holman W. Jenkins, Jr. (Commentary)
Feb. 21, 2007
Edmunds.com for years reviewed the Toyota Echo, the company's entry-level vehicle, by describing it as the cheapest car in America and still overpriced.

Even after the Echo was finally dropped last year from the U.S. market, the authoritative auto site couldn't resist reminding shoppers it had once whispered in their ears, "Friends don't let friends drive Echos." And Edmunds offers only marginally more favorable comment on the Toyota Yaris, the vehicle that took the Echo's place, calling it a "decent subcompact" but advising shoppers to "keep an open mind" about competing vehicles, including the Chevy Aveo.

Or take the Prius, the car that made Toyota a star in certain circles and perhaps even began to redress its reputation for bloodless, uninteresting vehicles. The Prius has hardly been burning up the sales charts lately. With a ridiculous federal tax giveaway expiring, Toyota has been reduced to dangling incentives even in front of California buyers. All this transpires while the EPA is still putting finishing touches on new mileage ratings that will sharply downgrade the Prius's gas performance.

What Toyota really proved with the Prius, ironically, is that Americans have little appetite for high mileage vehicles - in fact, are willing to buy one only when the stars align briefly and inexplicably to turn a car into a Hollywood-accredited emblem of personal enlightenment.
To put it baldly, Toyota got lucky. Any motorist truly intent on burning less gasoline and saving the planet could have found a vehicle that produces mileage as good or better than the Prius's, without paying Toyota a premium for its busy "hybrid" technology. Designing a car that uses less gas, after all, is a snap. In the mid-1980s, Honda marketed a version of its sporty CRX that got an honest 50-plus miles to the gallon. In 1990, GM and Suzuki built the Geo Metro XFi, good for 53 in the city. But customers have to be willing to buy it. Detroit would have been only too glad to soak consumers for a high-tech, fuel-saving vehicle had consumers declared their willingness to be soaked. But apart from a few statesiders who might embrace such a car as a fad, it makes enduring sense only in markets where taxes keep gasoline prices in the stratosphere.

And forget the guff about Toyota investing long-term for the end of oil. Hybrid technology is a mere fuel extender, and a heavy, mechanically complex one for so modest a return in gasoline savings. It shrieks technological dead-end.

We offer these thoughts as corrective to the tendency to slobber over Toyota, on track to become the world's biggest car maker, especially given the rumored unraveling of DaimlerChrysler (though the real culprit there was the German side's consistent knack for screwing up a good thing). Yes, Toyota is an excellent company. Its commitment to disciplined manufacturing explains why in some developing countries the streets are jammed with Toyotas, especially its ubiquitous HiAce minivan. Toyotas often seem the only vehicles on the road - or perhaps the only vehicles still on the road thanks to their sturdiness.

But if being the biggest were such an asset, GM would be a world beater today. In fact, GM is shrinking on purpose, sacrificing market share for profitability, lessening its reliance on sales to rental fleets, which depress the value and image of all GM vehicles. As Edmunds recites in chapter and verse, Toyotas are far from being in a class by themselves in quality or value. A buyer who carefully, unemotionally weighs the trade-offs does not automatically end up owning a Toyota, or even a Japanese car - though shoppers whose perceptions are a lagging indicator still treat Detroit products as automatically inferior.

And Toyota has some disadvantages, while U.S. automakers have advantages. Having tradition and heritage to draw upon is an advantage. Toyota is singularly weak in this regard. Few signature cars come to mind through the decades. That's why Toyota's new FJ Cruiser has earned unprecedented gushing from the automotive press - Toyota ransacked its past for visual cues and, for once, was able to make a customer feel something for one of its vehicles.

Profits are not assured by economies of scale. That's one lesson of the DaimlerChrysler merger, which was supposed to shave a couple nickels off the cost of every component by spreading their development over a larger vehicle output. As important and becoming more important in a crowded marketplace is a knack for turning out cars with ineffable cultural appeal. Toyota's world-wide success so far has come without being strong in this department. And Toyota knows it: Hence its constant invocation of the word "emotion" in how it approaches marketing its important new Tundra pickup.

Cars are transportation: Buyers interested in a low-risk investment in transportation can seldom go wrong by buying Toyota. But car companies are profit-seeking organizations. Though it's popular to sneer at the Big Three, they raked in many billions correctly judging a consumer appetite for large SUVs and pickups, including millions of pickups purchased by cosmetic cowboys who drive them to their office jobs. These were and remain impressive feats in consumer design - as befitting products in which the Big Three were willing to invest precious capital, as distinct from the workaday sedans they churn out just to break even on their UAW labor contracts. And unlike Toyota with its Prius, the Big Three produce and sell their fashion statements at a profit, a goal that still reportedly eludes the Toyota hybrid.
The Big Three are far from incompetent car makers - or incompetent users of capital. Their big problem is that, thanks to their legacy labor issues, the financial markets simply will not afford them the leeway to make large capital investments in sedan styling and technology. These labor legacies are a product of history and a set of political and market arrangements. Fix that problem, and any Detroit car maker that's still around has plenty of potential to compete successfully with Toyota or anyone else.

[Corona67]

Isn't the Wall Street Journal some sort of news-reporting organization? Something to do with the stock market or corporate performance or something of that type? Someone seems to have missed the boat here...

C

[Tideland Prius]

LOL... blame Mercedes for screwing up Chrysler?? That's a good one. He has some good points but mostly it's subjective (and biased). Apparently, the Big Three are profiting well from SUVs and Toyota's losing money. What a stupid way to do business, Toyota.. yeah.. stupid... lol... no mention of DC's recent job cuts and what not and Toyota still raking in profits. If the Big Three profits from SUVs and still lose, then Toyota must be damn smart to get even MORE profit without relying soley on SUVs (correct me if I'm wrong but even though Toyota SUVs give the biggest profit margins, they're not the sole reason given that US is the only country that has so many SUV models). Also, the Metro had a 1.0 litre engine and ~50hp. Do that in the new Yaris and it'll get 50mpg (just look at the Yaris 1.0 in Europe with the CVT).

[Z28Wilson]

Originally Posted by Tideland Prius

LOL... blame Mercedes for screwing up Chrysler??

Actually, I agree with that. DaimlerBenz absolutely raided Chrysler for its large cash reserve in 1998. Chrysler was very profitable then. They took the money and used it to fund most of Benz's products, starving Chrysler of most new product until around the time the LX cars (300, Magnum, Charger) came out. And even in 2005 Chrysler turned a $2.2B profit, basically keeping DCX afloat. I'm still not sure why one bad year has the Germans in a panic.

The other thing I can agree with in this article is, why do the Big 3 get no credit for predicting, then capitalizing, on the North American market's demand for trucks and SUVs? Yeah, we look at them now as being wasteful, but this is business. In the business sense, it is no different than Toyota's Prius. And now, with Prius demand falling and their first incentives coming, the cycle could very well be repeating itself....especially if the Big 3 can be the first to the market with plug-in vehicles which use little or no gasoline (Chevy Volt concept).

The article was written almost as a Domestic rah-rah piece, but the way this business can turn on a dime (ask Nissan), I wouldn't count anything out for sure.

[Tideland Prius]

Originally Posted by Z28Wilson

Actually, I agree with that. DaimlerBenz absolutely raided Chrysler for its large cash reserve in 1998. Chrysler was very profitable then. They took the money and used it to fund most of Benz's products, starving Chrysler of most new product until around the time the LX cars (300, Magnum, Charger) came out. And even in 2005 Chrysler turned a $2.2B profit, basically keeping DCX afloat. I'm still not sure why one bad year has the Germans in a panic.

The other thing I can agree with in this article is, why do the Big 3 get no credit for predicting, then capitalizing, on the North American market's demand for trucks and SUVs? Yeah, we look at them now as being wasteful, but this is business. In the business sense, it is no different than Toyota's Prius. And now, with Prius demand falling and their first incentives coming, the cycle could very well be repeating itself....especially if the Big 3 can be the first to the market with plug-in vehicles which use little or no gasoline (Chevy Volt concept).

The article was written almost as a Domestic rah-rah piece, but the way this business can turn on a dime (ask Nissan), I wouldn't count anything out for sure.

Well if you are correct, then I stand corrected. I know Daimler Benz used Chrysler for its old platforms to cut down on R&D costs (e.g. the Crossfire is built on the old SLK platform). That is true. They did capitalize on the SUV craze but unfortunately didn't forecast the sudden fall. Now I'm not talking about the collapse of SUVs cause it's obvious they're still selling but not as well as before. IOW, they should've have put all their eggs in one basket.

[Rada]

What, Prius becoming less popular? I see at least 20 of them on my 10 min drive to work.

[Z28Wilson]

Originally Posted by Tideland Prius

IOW, they should've have put all their eggs in one basket.

There's absolutely no disputing that. They got greedy, shifted most of their resources toward trucks and let their cars wither. They have only pretty recently rediscovered the importance of the car.

[ShawnM]

The article does seem a little biased, but ive always felt that hybrids are just a temporary bandaid. They make even less sense when you consider that there are gas and diesel engines in non hybrid cars that do just as good if not better than hybrids as far as mpg. Now im not bashing toyota for making them, infact they should get the praise for it because they made the technology work in a mass produced vehicle. But 5 or 10 years from now who is going to want to pay thousands of dollars to repair a hybrid component when its technologically outdated. Granted there are always new things comming out, but I do think hybrids are just a temporary stopgap. We'll have to wait and see which company catches the next wave.

[dsmnick]

Originally Posted by ShawnM

The article does seem a little biased, but ive always felt that hybrids are just a temporary bandaid. They make even less sense when you consider that there are gas and diesel engines in non hybrid cars that do just as good if not better than hybrids as far as mpg. Now im not bashing toyota for making them, infact they should get the praise for it because they made the technology work in a mass produced vehicle. But 5 or 10 years from now who is going to want to pay thousands of dollars to repair a hybrid component when its technologically outdated. Granted there are always new things comming out, but I do think hybrids are just a temporary stopgap. We'll have to wait and see which company catches the next wave.

That's what I said months ago as well. Anybody who thinks hybrids are the future of the automobile is naive...you could buy cars in 1985 that got better MPG than the hybrids of today. The key to good fuel economy is building lightweight cars, but with all the safety requirements today, sound deadening, and all the added weight of a hybrid engine...you're back to where you started. Hybrids are cleaner burning, but as for fuel consumption vs. price, there are better options out there.

There's a reason that the majority of cars in Europe run on diesel and why you never see hybrids...they simply get better fuel economy for less cost. They aren't the "Hollywood fad / Save the Planet" status symbols like they are in America.

[Tideland Prius]

Except that diesels produce more NOX and PM. Granted, the new Bluetec diesels are pretty damn good (Tier 2 Bin 8 for the E-Class. Tier 2 Bin 5 is the ULEV status of most cars like the Camry and Corolla).

Hybrids are the bridge between where we are now and where we are today. But if you think about it, even in the future, whatever fuel you use, a hybrid will still get better mileage. Diesel vs. diesel hybrid, hydrogen ICE vs. hydrogen hybrid.

Again, I love it when people compare 80s cars to today's modern hybrids.

None of those 80s cars are as big or as powerful as the modern hybrid and most are slower (e.g. CRX or Metro) b/c of their smaller 1.0 litre engine. Now, they reason why they're so damn efficient is b/c of their small engine (1.0 litre) and their light weight (as dsmnick said).

The problem now is America doesn't one a 1.0 litre car. Heck, any car under 2.0 litres seem inadequate.

Also, 80s cars were thinner, less structural integrity, significantly less equipped and had less sophisticated engines.

[TravisAe86]

y is every thing always based around Toyota and what they do and dont do? they hundreds of other companies to talk about, but they always choose Toyota. There just jelious and trying to dig up reasons y toyota is doing good and turn it into something bad. Toyota 4 life

[Rada]

Hybrids ARE the future, because regenerative braking significantly increases economy no matter what method of propulsion is used. A vehicle that can reuse it's kinetic energy over and over again will always be more economical that the one that does not. The idea that works in hybrids have been around in common electricity-powered trains, and it's time they are used in cars and trucks.

Toyota will be on top again by anticipating the future, and helping consumers save huge sums of money once the hybrid technology becomes less pricey.

[Kevs Toy]

Basically a biased Toyota hating article. Fuck the haters

[CLIFFJONES]

Originally Posted by Kevs Toy

Basically a biased Toyota hating article. Fuck the haters

Nice language gi and its just a different opinion and since this is a AToyota forum its only natural for perople to get upset. However, some people that owe Toyata's also own the one of the big 3 that everyone here has been bashing so, they may say the same about you.
Oh and that was a really intellegent post ya made there,too.

[ECHOKnight2000]

Sure Edmuds didn't like the ECHO, then again not many people (those who didn't own one-GENERALLY speaking) or magazines liked it at least for the U.S. But Edmuds did like the Yaris, quite a bit more than the ECHO and I don't recall them praising the Aveo, maybe give it marginal stance. I agree with some of the articles points but most of it is garbage and not because they "bash" Toyota just their stance on some stuff but we all have opinions.