New Feature- The Insider
Driven now has it’s own bona fide editorialist. The Insider is an auto industry veteran who knows the intricacies of this turbulent world and has a definite view of it. We at Driven are honored to have The Insider posting weekly opinion pieces.
Just like the legalese on DVDs, The Insider’s opinions may or may not reflect the views of Driven Car Reviews. We’re giving this executive full license to speak freely. Could get interesting. Feel free to chime in below.
It’s All Downhill From Here
My bold proclamation for today, Toyota has peaked in the US market. I don’t think they will ever reach their 2009 total of 17% market share. I’m not saying that they won’t sell more cars then they did in 2009 because everyone needs to sell more than they did during the worst sales year since the Disco years. I do think, however, that Toyota has lost their reason for being, their defining characteristic.
All great car companies have one thing that they can hang their hat on, a niche that people always think of when they think about that brand. For BMW, it’s the driving characteristics. For Mercedes, it’s presence and substance. The first thing that comes to mind with Volvo has always been safety. For Honda, it’s efficiency. Ford is rebuilding their brand around electronics, hoping to become the iPod on wheels (iCar?). Hyundai has become synonymous with value, although they’re trying to change that already.
For Toyota, it’s always been about the quality. People put up with the appliance on wheels experience of owning a Toyota because they never break. People that don’t like cars love Toyotas. No one ever took a risk walking into a Toyota store. In fact, the only risky thing about buying a Toyota was the danger of being lulled to sleep by the blandness of the product.
Now, that reason for being, that defining characteristic that Toyota built their business on has come into question. This is earth shattering stuff for the folks at Toyota because no one ever questioned the quality of a Toyota. Even when the cars weren’t that good, people gave Toyota a pass. Loyal owners wouldn’t even consider another brand. If it said Toyota, all was good. Toyota was masterful at honing this image, establishing themselves as the leaders in quality and environmental responsibility. Everyone drank so much of the Toyota kool-aid that no one made a peep when Toyota built a plant to crank out 300,000 full sized pickups and SUV’s, or when they joined the domestics to fight fuel economy standards.
Now Toyota’s free pass has been revoked. The fog has lifted and people are starting to realize that Toyota is just another car company. And as the biggest one in the world, they are prime targets for everyone that believes that the auto industry is the source of all evil in the world. To prove this point, Toyota launched a massive incentive program in March to jump start sales that had taken a beating thanks to weekly recalls and congressional inquiries. While the program provided a short term burst, spiking March sales by 41% over last year, the long term effects are not good for the brand. Toyota has always remained about the fray, letting the domestics and the Koreans battle it out in the incentive trenches. Now they are spending more than GM, creating a fire sale mentality and drawing in the bargain hunters looking for the deal of the week. This is not how to protect a brand built up over decades.
Toyota executives tell us that these programs are only a short term shot in the arm to help the dealers weather the storm of bad publicity and stop the market share losses. They tell us they can quit at any time, it’s not a problem. But we know that as soon as they let up on the juice, sales will come to a halt and the dealers will cry out for a fix. If you need proof, just look at GM in the wake of 9/11. What started out as a well intentioned response to stimulate the economy turned into a decade long battle to kick the incentive drug, and we all know where they ended up. I think Toyota is going to have a hard time kicking the habit, judging by the increased incentives they just announced for April.
So now we have just one more car company looking for a quick fix to their sales problems. Toyota has lost the ability to sell their product on its merits and has resorted to selling the deal. And those loyal owners driving their fifth or sixth Camry just might decide to see what else is out there and check out the new Hyundai or Honda. That is what would keep me awake if I was Toyota because once Toyota owners realize that they don’t have to sacrifice fun to get a good car, they will have a whole world to choose from.