If you've merely done a moderate amount of Internet surfing or cracked open a newspaper lately, just about any newspaper, you've undoubtedly seen the news that Toyota has once again passed Ford in worldwide auto sales and may pass GM sometime this year.
But what you may not have seen is that Toyota has already passed both Ford and GM in a different category--automotive recalls.
Although we've barely passed mid-February, Toyota has already recalled 533,417 vehicles this year in a mix that, according to www.AutoRecalls.us, includes Tundras, Sequoias, and Camrys. That puts Toyota on track to recall more than the over 1.76 million autos they recalled in the U.S. and Japan in 2006 and the 2.2 million they recalled in 2005 when they recalled more cars than they built.
What's more, the current recall related to the Tundra trucks and Sequioa SUVs is similar to the same defect in 800,000 of the same vehicles recalled in 2005. Maybe somebody at Toyota isn't paying attention?
I hope that American consumers are. Recall numbers by domestic companies (GM and Ford) so far this year are as follows: Ford, 128,163; Chevrolet, 4,829; and Pontiac, 1,602.
Chrysler, a German company masquerading as an American company with plans to start importing cars from China in 2008, has recalled 77,432 vehicles so far in 2007.
To be sure, high recall numbers are not good. Auto companies would much prefer high sales numbers instead. As I've already mentioned, the media is abuzz that GM may lose its crown this year to Toyota in worldwide auto sales. But for that to ever happen in the U.S. sales category, it's going to take several more years since GM has a U.S. market share of 24.3 percent compared to 15.4 percent for Toyota. Even Ford, despite its recent troubles, has a higher domestic market share than Toyota at 17.5 percent.
But if GM loses its worldwide crown this year, it may actually turn out to be a blessing in disguise.
GM spent 17 percent less per vehicle this January, 2006, compared to last January, which means they are more profitable on a per-unit basis. In fact, GM expects to report a profit for the most recent quarter.
Second, it may be good for GM to step aside temporarily, for now, and let Toyota take all the ammunition that is always aimed at the top dog of the industry so there is less pressure and fewer distractions. And when GM combines its more solid profitability and its improved quality together, its public perception will also improve.
Then they can use these admirable qualities to prepare to surge back to the top at the precise time Toyota is in the top slot with its recall surge in the news. Toyota's timing at being number one worldwide would create further skepticism about whether they really deserve their reputation for untarnished quality.
According to Business Week's January 22, 2007, issue, Toyota has recalled 9.3 million vehicles in the last three years, which is nearly four times the number of recalls in the three-year period prior to 2004.
Other recent news that won't sit well with a Camry-conscious public is the class action lawsuit recently settled by Toyota regarding ruinous oil sludge build up covering 3.5 million Toyota and Lexus (yes, Lexus) vehicles.
Optimistic statements by Toyota executives aren't going to cut it for long, particularly when they don't match well with reality. Denial in the Camry company camp seems to be setting in. Toyota's North American president, Jim Press, recently disputed the suggestion that his company no longer enjoys a large lead in reliability over the American competition. Speculating on the thoughts of American car company well-wishers while speaking at the recent Chicago Auto Show, Press said, "I think there's some hope that the gap in quality is closing, but it really isn't."
Oh, really? That's a pretty strong comment considering Toyota recalled 1.27 million vehicles in one swoop in 2005, recording the biggest ever recall in history for a Japanese car company.
But, recalls notwithstanding, the evidence that the quality gap is closing is pretty indisputable, and the evidence has been piling up for more than just the last couple of years. With the following facts, you can make your argument for American car quality fully bulletproof, even among your most ardent foreign car defending friends.
* A February 10, 2003, Business Week article told of how undeniable it was that GM cars are better built than they used to be. The article cited an improved J.D. Power quality ranking and a Consumer Reports recommendation for 13 of GM's vehicles (equal to 41 percent of their sales volume) compared to just five recommended GM vehicles for the previous year. The Chevy Impala beat the Toyota Camry in a quality survey, and Buick beat BMW.
* Business Week also reported on September 23, 2003, that GM boosted its productivity 23 percent in six years while Toyota's productivity remained flat and that GM's most productive factories now beat Toyota's most productive factories.
* A 2004 Consumer Reports ranking selected the Buick Regal as the most reliable car among family sedans, beating the Toyota Camry, Honda Accord, and Nissan Maxima. They also gave recommended ratings for four Ford models, including the Ford Focus.
* J.D. Power and Associates awarded Cadillac's Lansing Grand River assembly center its highest honor, the Gold Plant Quality Award, in 2004.
* An August 4, 2004, Wall Street Journal article said that Toyota's lead in quality and reliability has narrowed in some segments and disappeared in others. Quality problems were reportedly "mushrooming."
* The Toyota Camry hasn't been awarded the best in its segment since the year 2000, but many Americans continue to regard it as the number one model in terms of quality. Toyota's Kentucky Camry plant was awarded with high initial quality rankings by J.D. Power from the late 1980s through the 1990s, but it plummeted to number 26 in 2002, improving to only number 14 in 2004, while two GM factories and one Ford factory took the top three spots that year.
* In a J.D. Power Initial Quality Survey of new 2004 cars, Chevy placed second behind Honda, and Toyota sank to number three.
* As far back as at least 2003, Business Week has reported that American consumers regard certain foreign cars as better built than American cars, even when facts prove otherwise.
* Fast-forwarding to 2006, J.D. Power shows Mercury, Buick, and Cadillac beat Toyota in a list of dependable cars. Two Buicks and a Mercury took the top three mid-size car awards; Mercury, Ford, and Buick took the top three large car awards; Ford took the mid-size van award and the mid-size truck award; and GMC and Cadillac took the large MAV (multi-purpose activity vehicle) and large premium MAV awards, respectively.
* In an article about trust issues, Business Week's December 11, 2006, issue stated "GM's quality nearly equals Toyota's." Perceived quality among the American public is another story, however. The difference between the actual quality of American cars and the perceived quality of American cars is the "perception gap."
* In the same article, J.D. Power's director for retail research said, "Actual quality is so close," discussing the quality rankings of GMC, Chevrolet, and Cadillac placing them on par with both Honda and Toyota.
* And most recently, of course, the Ford Fusion and Mercury Milan beat the Honda Accord and Toyota Camry, according to Consumer Reports.
What's needed among automotive senior executives, and much of the media as well, is a return to intellectual honesty. Everyone tends to have their favorites and biases (mine are pretty obvious), but I pride myself in sticking with the facts to back up my comments.
When Toyota's North American president says that the quality gap isn't really closing, he's not being intellectually honest.
Some editorial writers aren't, either. When Douglas Brinkley trumpeted Indiana's success in a Wall Street Journal article last year for attracting a Honda plant to their state, even though it took $140 million in tax credits and incentives, he wasn't what you would call "intellectually honest." In an apparent attempt to convince the reader that Honda doesn't send any automobiles to the U.S. from outside the country, he said, "Turning farm fields into factories, that's what Henry Ford used to do. Today, in the heartland, it's being done by Honda - a company that doesn't manufacture imports but builds American-made cars."
Such statements lead the reader to think that some Japanese companies make all of their cars in the U.S. Hardly. In fact, according to a January 8, 2007, Wall Street Journal article, the North American Production (NAP) ratio, a ratio that compares how many cars are built in North America versus the number of cars imported, is slipping for Toyota. And according to Toyota internal documentation, the ratio is going to get worse next year.
Occasionally I'll find an editorial writer that dares to step away from the foreign biases of others in the same industry and rates cars objectively rather than relying on the mindset of the question "Will American cars ever match the Japanese cars in quality?"
Editorial Director for Consumer Guide Automotive, Mark Bilek, departed from the typical mindset of his colleagues back in June 2005 by declaring that the Ford Five Hundred was the best car he'd ever driven.
That's good news for Ford, since the Five Hundred is being re-named the Taurus and will get several more second looks because of the Taurus' higher name recognition. Bilek said he judged the Five Hundred based on "what it is" and how well it "fulfills its mission." Based on this, his opinion was that the Five Hundred was "simply the best full-size sedan sold in America."
I am confident, however, that people like Toyota's Jim Press can be somewhat honest in their statements about the competition from time to time. He did say that the "car of the show" at the Detroit Auto Show in January 2007 was, for him, none other than the Chevy Malibu. Maybe there's hope for intellectual honesty after all.