How Toyota Conquered the Automotive World
The Dear Friend & Conscience is a good example of why Toyota has just passed General Motors as the world’s No. 1 manufacturer of cars and trucks.
The DF&C drove a GMC Jimmy when we started hanging out together. Through pampering and frequent oil changes, she was able to nurse 350,000 miles out of the beast before it quit, but the experience was daunting. Even when new, the Jimmy shook, coughed and rattled, was rough-shifting, had backbreaking seats and a problematic four wheel drive system. It was delivered from the factory in white over red mufti, but by the time it went away there was almost as much orange from rust.
The DF&C looked at new Jimmys, but they seemed to be little more than prettied-up versions of her old truck. She ended up buying a Lexus RX300.
The Toyota-built Lexus is closing in on 200,000 miles. There is the occasional rattle now, but it runs and shifts as smoothly as the day the dealer delivered it along with a cut-crystal vase full of long-stem roses. One of the fuel pumps quit at 140,000 miles, but it has otherwise been trouble-free. The DF&C is given a loaner car whenever maintenance is scheduled, most recently a spanking new RX400 Hybrid.
Sooner or later – and the latter is more likely – the DF&C will need to replace her Lexus. Care to guess what she’ll buy?
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12 Responses to “How Toyota Conquered the Automotive World”
For U.S. automakers, yen misalignment is far from a mere illusion, as Tamny writes, or a financial technicality. The impact of an artificially low yen is a major competitive factor and distortion in the whole automotive industry. The misaligned yen gives the average imported Japanese car a major windfall cost advantage over U.S. automakers and other competitors in the U.S. market. This ‘yen effect’ also crosses over to Japanese vehicles made in the U.S. thanks to the high level of imported and subsidized auto parts used in their U.S. plants.
Few Japanese automotive companies are making any profits in Japan, where demand for new cars has been declining for some time. Toyota, Honda, Nissan and other Japanese automakers earn almost three quarters of their worldwide profits from the U.S. market, with a major portion coming from vehicles they export to the U.S.
http://www.realclearpolitics.com/articles/2007/03/how_the_misaligned_yen_hurts_u.html
I’m not knocking the quality/longevity of their autos by any means, just that those factors are hardly alone in the overall equation.
Casualobserver:
You are correct to a point. That point is reached when you factor in the many Japanese assembly plants in the U.S. where the majority of their vehicles are manufactured.
I laughed my ass off when GM was complaining about their health care costs being responsible for them not being profitable anymore. Granted, its a HUGE cost, but really when your vehicles suck and you are still pushing Hummers 3 years into $3/gallon gas you really should stop and take a hard look at what are the real problems.
Hats off to Toyota, lets hope GM and other American auto companies get their shit together.
Sam:
Many biz writers have bought into the canard that enormous health care and pension costs are what ails the General. That is true as far as it goes, but as you correctly note the real reason is that GM vehicles by and large are not competitive.
What will happen to Chrysler once someone buys it? Who will buy it?
What will happen to the JOBS bank and other legacy costs that are far out of line during the upcoming negotiations with the UAW?
Will Ford and GM ever speed up meeting customer desires by selling here in the USA some smaller vehicles that have done well abroad and which knowledgeable people would love to see and buy here in the USA? This is something that can be done long before better-designed new products hit the showroom floors.
The automobile industry in the USA is thriving, just not in Detroit.
http://www.autoblog.com/category/chrysler/
http://www.autoblog.com/category/daimlerchrysler/
http://www.autoblog.com/category/ford/
http://www.autoblog.com/category/gm/
http://www.autoblog.com/category/gmc/
> The Toyota-built Lexus is closing in on 200,000 miles.
I got 372,000 out of my foreign car (on its second engine and third clutch, still on its original transmission) before it crashed and I had to replace it.
In all fairness I’ll say that the earlier US vehicle I got as the replacement was still on its original clutch at 225,000 when it was struck and I had to replace it — now at 120,000 and going strong with the same kind of US vehicle.
(I’d like another like my earlier foreign car but the price needs to come down by 1/3 or more first!)
DLS:
I did not mention that Lexi are not cheap. The RX400 Hybrid is flirting with 50K. As in dollars.
My own experience with clutches and cars is pretty darned good:
1982 Volvo wagon: 289,000 miles; clutch replaced at 219,000.
1991 Audi wagon: 230,000 miles; original clutch.
FYI, the DF&C’s Jimmy went through three clutches and she is an extremely able driver.
But didn’t the GMC cost around half of what the Lexus did? I happen to agree that Toyota makes better cars than GM but a better comparison would have been at least cost comparible. Myself, I’ve been buying American for almost 20 years and, for the most part, I’ve been happy with the bang for the buck I’ve gotten. But then again, I only tend to get around 75K miles out of a car before I get a new one.
JC:
A good point that sent me to the Inflation O’Meter.
The DF&C’s Jimmy cost about $20,000 in 1995. Adjusted for inflation, that would have cost about $24,000 in 2001 when the Lexus was purchased for about $35,000.
That said, the $11,000 in so-called savings evaporates pretty quickly when you consider that the Jimmy ate clutches, got awful gas mileage and had a migraine-inducing suite of vibrations and noises and in later years sprouted large areas of rust.
Shaun Mullen said:
> I did not mention that
> Lexi are not cheap. The
> RX400 Hybrid is flirting
> with 50K. As in dollars.
Oh, that’s just like loaded SUVs. Yeech. It’s the price of Porsches and Mercedes back when I got my (much, much) cheaper foreign sports car, when $50,000 (for a Porsche or a Mercedes) could get you a house in many places outside of California.
Side note:
> The DF&C’s Jimmy cost
> about $20,000 in 1995.
> Adjusted for inflation,
> that would have cost
> about $24,000 in 2001
I believe this should be about the number for the modern poverty level in this country (boundary between low and middle income if you want to describe it different) and about the point below which income should be exempt from taxation (the size of the personal exemption).
(Low-middle boundary: price of ordinary automobile. Middle-high boundary: normally, median price of a home, must adjust for still-too-high bubble price levels. For federal levels, should be the overall USA averages of these things)
> My own experience with
> clutches and cars is pretty
> darned good
Translation: You know what you’re doing with them and you don’t abuse them.
I got 150,000 out my original clutch in LA (yes, with lots of stop-and-go traffic). Second clutch was at between 200-300K and I was still on #2 when the car was lost finally (front end failed, steering went out).
First US vehicle, still on original clutch in the 200s; its replacement vehicle has an auto trans. (I miss shifting.)
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