Experts: Toyota Deserves Criticism for Plight

Saturday, 06 Feb 2010 09:13 AM

By Dale Buss

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Federal regulators and Congress have savaged Toyota in the last few days over the Japanese automaker’s mishandling of its growing safety-recall problems. Does that mean the Obama administration and Democrats on Capitol Hill are persecuting Toyota for the sake of political opportunism?

Some conservative critics say so, pointing to the federal government’s control of Toyota archrival General Motors and of Chrysler, and President Obama’s clear willingness to fulfill political obligations to industrial unions.
But while circumstances on the surface may suggest that conclusion, the underlying realities argue otherwise.

“I’m as conservative as they come, but I don’t buy that theory,” said George Magliano, director of automotive research for North America for IHS Global Insight, a Lexington, Mass.-based market-research firm. “Toyota has invited this reaction by the government by how poorly they’ve been handling it. It has to get corrected and fast, and the stonewalling by Toyota can’t work.”

Talk-show host Rush Limbaugh and others have made much over the notion that the White House, Transportation Secretary Ray LaHood, and the National Highway Traffic Safety Administration may be trying to help the state-controlled automakers by nailing Toyota over its monumental botch job.

The recalls already have cost Toyota tens of thousands of vehicle sales, this argument goes, and government accusations that the company was slow to address safety concerns are sure to make more American consumers wary of the company and its products.

There’s also the United Auto Workers. Toyota long has been Public Enemy No. 1 to the UAW because the company successfully has resisted unionization efforts at its teeming U.S. operations for more than two decades. So now, the UAW is trying to leverage Toyota’s quality problems into opposition to the company’s plan to close its plant in Fremont, Calif., that has been a unionized partnership with GM.

But overall, this ideological argument comes up short for a number of reasons.

First, no matter how deep Toyota’s troubles now go, the biggest beneficiaries of them will continue to be other foreign-owned brands and Ford -- not Chrysler and not even GM – no matter what the Obama administration might do.

Honda is the brand most synonymous with Toyota’s long-time attributes in the minds of American consumers, for example, and the likeliest immediate beneficiary of Toyota’s troubles. And Hyundai has picked up a lot of momentum recently as a Korean Toyota-wanna-be.

But Chrysler’s product cupboard is so bare that it would take practically Toyota’s complete collapse to benefit the company, which is now being rebooted by Fiat. And GM “may benefit only a tiny bit,” said Michelle Krebs, senior analyst for automotive web site Edmunds.com, which analyzes vehicle consideration and purchase intent.

“Ford is going to be the biggest [domestic] beneficiary, but they didn’t take a government bailout,” Krebs said. “Plus they’ve been on a roll. Whoever had momentum going into [last summer’s] Cash for Clunkers program, and now this, is going to pick up more.”

Krebs also noted that Toyota actually first encountered reports of a sticky-accelerator problem in Europe. And U.S. regulators have been accused, especially by consumer activists on the left, of being slow to hold Toyota to account for the problems that led to the recall.

Another factor suggested by Krebs is that Toyota’s crisis isn’t the company’s alone. “Any kind of massive confusion in the marketplace like this isn’t good for sales at all; it causes consumers to freeze,” she said. Krebs figured that maybe one-half of current Toyota intenders will just wait for the company to straighten things out or put off buying a new car altogether.

While critics believe that Obama administration officials are tone-deaf about or disregarding of economic dynamics, it’s questionable whether they want to see the U.S. automotive market tank again just as they assert that a nascent recovery is gaining steam.

Yet one more, probably underappreciated, element is the role of the American news and entertainment media in the still-unfolding drama. They’re certainly piling on Toyota now, making it seem to conservative skeptics as if they’re doing the bidding of the Obama administration in punishing the Japanese company.

On the Comedy Central network the other evening, for instance, Jon Stewart performed a stinging, five-minute piece titted “Toyotathon of Death.” Among other things, it featured a show “correspondent” seeming to drive a runaway Toyota Camry and careening to his presumed demise.

However, for decades, American trade, business and general news media have demonstrated practically unflagging adoration of Toyota, its quality, its overall consistency, and even its production methods – in most cases painting a direct contrast with U.S. automakers. And there’s been an entire cottage industry of books analyzing Toyota’s success.

American journalists give up their heroes grudgingly, like everyone else. But even they can’t ignore Toyota’s debacle.

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