After more than seven decades on top, General Motors Corp. is no longer the world’s top-selling automaker. Toyota sold2.35 million cars and trucks in the first quarter of 2007, while GM sold 2.26 vehicles. Besides having relied too much on the SUV market, GM faces retiree pension and health care costs that Toyota doesn’t — so a comeback could be difficult. But Toyota’s biggest competitive advantage and its key to success, BusinessWeek reported, is its "deeply ingrained commitment to manufacturing excellence."
Posted by Phillip Brownlee
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57 Comments
…. well that and cheaper labor ????
ken, not sure what the compensation packages in the Toyota U.S. plants (one of which, from the TV ads, is in Indiana, I believe) look like, but in Japan I’m sure the labor costs are less. The retireee benefits packages mentioned in the OP do raise costs for GM, among others; Toyota, being new to plants in the U.S. doesn’t have this “sunk cost” yet, and depending upon the contracts with the appropriate unions, may never have it in the U.S.
One of the reasons for less expensive labor in Japan surely deals with the externalization of the cost of medical care there, as opposed to internalization, via insurance, here in the U.S.
We’ve had Toyotas for the past 24 years. They build good cars and trucks. Our first was a 4×4 p/u. Went on amazing trips in Baja and in the snowfields of the West. In 1985, I drove it up into the high Wasatch of Utah, and cut a beautiful Christmas tree. After driving through a gorgeous snowscaped Yellowstone, and sleeping in my sleeping bag in the shell-canopied bed of my p/u outside of Driggs, Idaho.
Don’t get me wrong. I purchased a nice Ford F-250 diesel in the late 1980’s, and a GMC Sub in the 1990’s. The Ford had premature-breakdown problems, the GMC none, but despite putative “4-wheel-drive” it let me down a couple times, off-road. Our original 4×4 p/u, Landcruiser, 4Runner and Sequoia, as well as my spouse’s Camrys have been really reliable. Excellent-quality design and manufacture are why Toyota has become #1.
Toyota trucks dominate the NASCAR Truck circuit. Their new cars have been embarassed in NASCAR Nextel and Bush. Give them a few years, and they will do in car racing what they’ve done in truck racing.
GM’s problems have to do more with their belief that Americans still wanted gas guzzling vehicles when gas prices hit over $3 a gallon. GM also supported Republicans who opposed a national healthcare system that would reduce company costs associated with health care.
Simple: they make lightweight cars and trucks that get good gas mileage.
GM makes giant behemoths that suck gas like there’s no tomorrow.
Stupid is as stupid does.
The fact that Gm and other American automobile companies cars don’t meet cafe standards in much of the world is a factor in the decline of GM and Ford.
American automakers’ problems represent both management and union foibles. The leaders developed a “new style” marketing concept that tried to convince (and succeeded at it) that”a new look” trumped mechanical reliability.
Then the UAW blocked robotics and other lower-cost production, lower worker-number-needed methods, while striking for higher wages, in the absence of incresed productivity, and healthcare benefits that were mushrooming as the UAW workforce aged from young adulthood to middle-aged and older. The companies became saddled with unaffordable pension costs.
GM is losing North American sales money. It’s making a profit in China. Lower production costs, plus big market = Ca-Ching.
I spent 10 years in the car business selling and managing dealerships. I sold Nissan, Honda, and used vehicles. The facts are simple and undeniable. Imports are more reliable and hold better resale value than the domestics. Simply put they are a better value dollar for dollar. The big 3 made a critical mistake in the early to mid 90’s with their throw away mentality. They figured Americans would be loyal and replace their vehicles at 100K. Tragic mistake, being Americans wised up and went with the better long term value. Combine that with the big 3 selling millions of rental cars every year at a big discount which caused the depressed resale value for the individual buyer. It’s their own fault that Toyota has beaten them like a red head step child.
It’s about time the big three had their asses handed to them. Americans need this as a wakeup call. You can’t get to the top of the game, then just sit back and chant “we’re number one, we’re number one” and not expect to get toppled.
We need to produce long lasting efficient cars. Period. If we can’t then we deserve to get beat.
Continue boycotting pro-sodomy Ford Motor Co.
Say what, Parkay? I have heard of people getting screwed by a car company, but I didn’t think it went quite that far.
Parkay,spread your ignorant hate somewhere else.
Bob
With every poignant comment — I like you more —- funny !!
Ford Motor Co. treats all their employees fairly, even their gay and lesbian ones. Parkay hates that. Fair treatment should only be reserved for radical fundamentalists, right, Parkay?
should have nuked the japs off the planet while we had the chance
Did Parkay get “sodomized” by a Ford vehicle? I’ve heard about being rear ended but Parkay takes it to a whole new level.
Doug,
I drive a Ford.
::wink wink nudge nudge::
Last time I bought a new car (almost 6 years ago) there was not a GM product on my ‘long list’; mush less the 4-car ’short list.’ I was looking for a fuel-efficient 4-banger that would also go fast enough for my tastes. GM didn’t have anything in that catagory for me. At least Ford had the Escort for me to look at although it did not make the short list.
The Detroit Three need to start competing head-to-head with Toyota, Honda, Nissan, Mazda, etc.
I have been quite happy with my American-made (Marysville Ohio) car; when time comes to replace it I will again consider numerous makes and models; however from what I have seen GM still does not rank very high.
American car makers: “We can’t possibly build an electric car. The technology is just not there yet.”
Here it is: The Tesla Roadster0-60 in 4 seconds, 100 percent electric, looks like pure adrenaline, and proves that American car-makers are full of crap
http://www.teslamotors.com/index.php?js_enabled=1
A couple of things, I wanted to buy an American made pick-up and found a Ford Courier that fit the bill.I felt great as I trusted Ford and worked with a guy who drove a Toyota P/U who was quite proud of it.Sigh, the first time I went to buy some parts for my Courier I learn a hard lesson. My Ford was made in Japan by Mazda! To add insult to injury, the co-worker’s Toyota was build in the U.S. This was over fifteen years ago.
Next, Chevy wanted to sale their vehicles in Japan, you may or may not be aware that in Japan they drive on the left side of the road. Chevy refused to put the steering wheel on the right side! Saying that if the Japanese wanted a Chevy they would have to learn to cope. Farther in their negotiations with the Japanese government they insisted that their dealership be given prime locations with in the country.
the other side of the coin… Toyota while still building their vehicle in Japan and wanting to sale them in the U.S. Build them with the steering wheel on the left side! Know your customers huh?
Too bad GM made the corporate decision to scrap the EV-1. They might have had a car to offer me for purchase.
I did see a guy running out of a Ford Dealership today squealing like a pig. He had a deer-in-the-headlights look on his face.
Maybe Parkay was right about something.
Holy crap Capn! $92,000 for the base model of the Tesla. $30,000 just to get in line. The technology may be there for an electric car, if you don’t have to drive very far. But it looks like affordability is a little ways off.
When does yours come in?
Mike is right, we don’t want throw away cars. But we do want CHEAP cars and safe cars.
Does anyone remember when Acura came out and they were losing so much money on repairs because the cars held up so well that they began to make them more unreliable?
Remember when you could work on a car and it could last a lifetime?
They want all this money for repairs on our vehicles. I’m tired of it.
My 1999 Grand Caravan (flex fuel) is running fine at 180k, but I’m waiting for the tranny to start going out. And the paint…why can’t they make paint that sticks to the vehicles anymore?
Non-union is the better choice.
Sorry, Joe.
Just because you enjoy getting reamed by your employers doesn’t mean the rest of us do.
“I tell people, ‘to hell with charity. You only get what you’re strong enough to get.’” Saul Alinsky
outlander–
It blows the doors off of Ferraris and Porsches that cost 400,000 dollars.
I’m obviously not getting that particular automobile anytime soon.
But the point is that the people who say it can’t be done are wrong.
It can be done. It is being done.
The Tesla was built from the ground up, totally from scratch. Of course, the first ones coming off production are expensive.
It’s like a color TV in 1964–it cost 600 dollars or the equivalent of 4000 dollars in today’s money.
But it proves the technology works.
Unions are against technology.
By the way, Engineers and Technical Workers are going to try another shot at decertify the SPEEA union representation in Wichita.
I hope they do. It will be good news for Wichita. More work and employment will come there way.
What sad but true is where the big 3 in relationship to the imports. Way off.
I was watching TV here a couple of months back. On the news they were talking about how much trouble Ford was in and that Toyota was getting ready to surpass GM. Then the commercials came on and one was a GM, I think, and the gist of the commercial was that the SUV now had electric fold down rear seats.
All I could do was hang my head. Here the imports are doinking us left and right and the best we can come up with is electric fold down seats. How sad is that.
(Unions are against technology.)
Where did you get that?
Technology gets rid of jobs (so the Union says).
Plus high tech jobs are non-union.
In one of my classes at Newman we looked at a car plant in Illinois and how the unions there worked WITH management to bring in improved technology. By doing so they increased the plant’s efficiency and saved their jobs. Read that again Joe! UNIONS WITH MANAGEMENT FOR TECHNOLOGY!
Gene – my Civic uses very complex bioengineering to fold down the rear seats. It uses a complex series or contractile bio-materials, connections, levers, etc. In fact, I don’t really understand exactly how it works.
It is called my arm and hand …
;^)
Ben! What plant and source please.
Like your sources above in your union bash? The class was a bit over a year ago; I think it was Normal Illinois.
The striking thing about the robotics they used was that it could quickly switch vehicle models being built. This allowed the plant to quickly respond to changing demands.
I am not sure but think it was Chrysler. Might have been driven at least in part by the Germans (Daimler)
“Combine that with the big 3 selling millions of rental cars every year at a big discount which caused the depressed resale value for the individual buyer.”
You hit upon a big thing here. The fact is that Toyota and probably Honda too surpassed GM long ago if you take out the millions of fleet and rental cars that GM supplies every year (and Ford to a lessor extent). And they do suppress resale values which is why Nissan, Toyota and Honda do not do fleet programs.
“Unions are against technology.”
Oh yes..let us bash the unions and blame them! Let’s see, the unions oppose technology. I guess that is why unions from the IBEW, Teamsters and CWA pay millions of dollars to train their members on new technology. Here you can see a sample of just one union here where I live:http://www.cwanett.org/courses.aspx
“By the way, Engineers and Technical Workers are going to try another shot at decertify the SPEEA union representation in Wichita.”Only if they are dumb and stupid.
“I hope they do. It will be good news for Wichita. More work and employment will come there way.”I certainly hope more work will come “there” way.
3 reasons why GM is in trouble:Reason number 1 is their healthcare cost. Companies in other countries don’t have to pay healthcare cost for their insured and millions of uninsured people which is why National Health is way past due here.Reason number 2 is because they make shit nobody wants. Their cars look like ugly fleet cars and the SUVs drink gas like no tomorrow. And they rely way too much on TV ads to sell what they make. Make a good product that has a reputation for reliability (Honda Accord, Toyota Camry) and you don’t have to constantly hawk them on TV. They sell themselves.Reason number 3 is because foreign governments- including Canada- whom we trade with require metric parts therefore GM and Ford have to essentially design and build 2 cars of the same kind- one for the US market and another for export while Honda and Toyota only use metrics (the USA has no requirement that they use fractional parts), Americans should quit being so dumb and lazy and learn metrics.
Technology gets rid of jobs (so the Union says).
Plus high tech jobs are non-union.
High tech jobs ARE union.
“Sorry, Joe.
Just because you enjoy getting reamed by your employers doesn’t mean the rest of us do.”
Most people that bash unions are people that could not get or keep a union job. They are jealous and envy the pay and benefits of those who do.
Kev – “Americans should quit being so dumb and lazy and learn metrics.” Is there anything else?
Funny thing is, I learned all of my science in metrics and Centigrade/Kelvin. Our space program is based mostly on metrics. (However some SNAFUS have resulted from mixing units)
One wierd exception: making automotive emissions catalysts we referred to the loadings of washcoat and catalysts in grams (or milligrams) per cubic inch. Figure THAT one out!
Hey Ben! Found it!
Mitsubishi Motors North America said that it will cut manufacturing at its Normal, Illinois plant from 2 shifts to one beginning October, and cut 1,200 jobs in the process. Currently it employs 3,150 workers, 2,670 of whom are members of United Auto Workers Local 2488
oop!
Guess they should have been non-union like Toyota. They’re hiring and building plants.
Mitsubishi – perhaps that was the one. At the time they were increasing output. Like I said, it has been a while. However, I thought it was one of the ‘three’; I don’t know that Mitsubishi is unionized.
One thing I will say is this – I don’t know that their products are competing as well as Toyota, Honda, etc. And product line-up is not something the union dictates.
Most people that support unions are people that could not get or keep a job, if it wasn’t for a family member or somebody they know. They are jealous and envy the pay and benefits of those who are not unionized. Because they are still employed and make more money and benefits.
Well! Should be non-union. Perfect example: Go to Cessna and compare the Union People to non-union who do the same work. (Experimental Department as an example of a non-union shop that have sheet-metal assemblers that do the same work as union guys in production.) Not only do the non-union guys make more money an hour, they get merit raises, better benefits and working conditions.
Compare! Then live, read, learn.
Unions are an antiquated system that no longer helps employees anymore. Too bad! Unions weren’t like they used to be.
While I have never been in a union I believe there is definitely a place for them. Particularly for factory-type jobs. One thing they can offer is job training, apprenticeships, and portable pensions.
I worked for a union shop in California; I learned a lot there. Since I was ‘management’ I was not in the union (OCAW) but I did work with them a lot. I got along fine with the shop steward; although I tended to ’stretch’ the rules a bit he told me that as long as I was fair he would look the other way.
He looked out for his people; he also gave me flexibility.
It’s the classic case of careful what you wish for. The auto companies wanted to sand bag on the mpg requirements, and got it for the most part, no doubt with the help of their ‘business friendly’ Republican politicians. Wanted tax breaks for the Hummer type vehicles, got it. Now they’re paying the piper. Except, that here in the Good Ole USA, it is the production workets who will pay the price, while the executives who demonstrated such narrow vision will still take ever increasing bonuses and golden parachutes.
Joe, your little one note song is getting a little old…as are your comparisons.
Move your experimental guys out to the floor where they have to do the job the people on the floor do in the pressure cooker time frame and poorer working conditions. Then see how they fare!
BTW, why do the experimental guys have better pay and better working conditions? Because the prima donnas are called “engineers”?
Just remember, when the down turn comes, the guys on the floor have some job protection and will be recalled to their jobs when business gets better. And your prima donnas will be, how do you say, FIRED!
Oh, and back to the issue at hand:
GM has problems because they did not have the foresight to design vehicles that people really want, and are willing to pay the price for. Along with several other things that have been mentioned like failure to move into the expanding world market, failure to respond to customer demands, and selling in markets that undercut their main sales drive (rentals).
Note that NONE OF THESE can be blamed on the guy on the floor doing the dirty job of building the cars. But, as usual, they are the first to get blamed by both management and the public.
Toyota can build cars in the US cheaper than they can in Japan, and our EPA is less strict. That’s the only reason why they build them here. It’s a simple real estate solution. Japan is a tiny island with limited ammounts of land, and many people packed on it.
The pensions will drag Toyota down in time just as it did the big 3. Then it will be the Korean’s big shot at fame.
GM has done a GREAT job, quality is through the roof, their cars a economical, and when comparing apples to apples, and oranges to oranges, just as efficient as a Toyota, with the exception of Toyota’s up and coming fleet of hybreds. However these hybreds did not push them over the edge by any means. YET!
GM/FORD/DODGE took a shit because they are whores. A dealer every 2 miles in some cities, they glutted the market, and ruined their resale value. I can trade a Toyota every 3-5 year for another cheaper than I could a “domestic” car.
All GM is getting as far as clientele is the moron’s with the “what’s your very best price” mentality, while Toyota’s getting people who can think beyond the next 5 minutes, and are less likely to burn $100 in gas to find a price $50 cheaper. As a business one can build a relationship and work out a reasonable deal with someone who is intelligent.
Toyota/Honda have a totally different concept on marketing. Build a damn good product, and treat it as if it’s plated in gold. GM/Ford/Dodge prostitute themselves, “love u cheap… long time” mentality will only cause people to think of you, and treat you like, and you actually are a 2 bit whore.
“GM has done a GREAT job, quality is through the roof, their cars a economical, and when comparing apples to apples, and oranges to oranges, just as efficient as a Toyota”
freedomfreak – tell me what GM car I might have bought instead of the Civic I did buy. Toyota had the Corolla as a close competitor on that; Ford had the Escort. What did GM offer?
Hyundai Sonata
Toyta and Honda – too expensive.not nearly good a warranty
Sonota looks just as goodLoves to go on tripsSips fuelComfortable on long trips
I’m content.
Still no GM product to consider?
How about that ugly little Chevy PC cruiser ripoff?
PT Cruiser? Too expensive. Not very good mileage. Not very reliable. In fact, I think it is a poster child for GM’s woes.
OOPS! That’s a Chrysler. Has GM come out with a knock-off?
Ben, you hit a sweet spot where GM is light on value/quality. That Civic is hard to beat. The Cobalt? I guess that is their answer, and it is no where near the car of a civic.
However, you might have considered moving up in size a tad, and going to a Malibu. It is a solid car, not as highly rated in quality, but their is something you have to keep in mind when using “Consumer Reports.”
The publishing company that is consumer reports is owned by a Japanese trade organisation. Let’s take a look at the Geo/Chevrolet Prism, and the Toyota Corolla for example. It was the same car. Built on the same assembly line, and didn’t become one or the other until the badging/interior installation. One received very mediocre ratings, and the other perfect. Why? Because Toyota’s dealer network supports a perception that the customer buys into lock stock and barrel, and because CP isn’t “really” an unbiased neutral source of information. It’s quite a bit MORE tanted than even auto magazines that accept advertising revenue from automakers.
You make a great point over all, GM/FORD/DODGE are soft on that small car market. But it doesn’t matter. It is the end of the market that the big 3 wish they could completely disregard without losing face to import competetors. They make no money on those cars. They loose money on them. For a 35% increase in cost, they can sell cars that costs 400% more in price. Why screw with it? Well, only because they have to in order to balance their CAFE, possibly recruit buyers who are going to move up one day.
Honda does make a little on the small vehicles, but they charge more money for the car. They do not flood the market, offer very little incentives (Civic/Accord tend to be the only ones that receive any marketing support), and they do not have 5 retirees collection pensions and receiving full medical benefits for every working on the assembly line.
All the lumps the big 3 are taking will also hit Toyota/Honda. Sooner than later I might add. That is when the Korean auto makers will have their day in the spotlight. At the same time, maybe China will become a player.
I can buy an awsome domestic auto for half what it cost 2 or 3 years earlier when it was new. To me, that seems like the real value. Or, I can lease a new one (something I’ve done). GMAC runs specials to offset looses for a few years and boost production, I leased a $25k Pontiac for about $300/mo. A 4 cylinder Camry was in the same ball park. I’ll take the size and horsepower! Thank you very much!
Cobalt might be a possibility in the future; I will likely consider it next time around. It did not exist when I was last in the market.
Too bad GM made the decision to abandon the EV-1. That might have at least gotten me into the showroom.
I do not rely solely on Consumer Reports. I also talk with friends who are mechanics. They ahve been rather ‘unimpressed’ with the car offerings of the Detroit Three.
“I can buy an awsome domestic auto for half what it cost 2 or 3 years earlier when it was new” The flip side of that is that if I buy new I get shafted. I can sell my Honda for over half of what I paid for it – after FIVE years!