Cornered Toyota Begins To Battle Back

It probably should have not gotten to this point, but the Toyota Motor Corporation now finds itself battling its critics in order to salvage its once golden reputation.

Toyota Responds

After weeks of relentless government and media pounding, Toyota has been responding to these complaints by showing statistical proof that its cars are well within safety guidelines and that is has responded aggressively by temporarily removing from the market eight affected models and making repairs to customer vehicles.

In the Feb. 22, 2010 issue of “Automotive News,” Toyota division chief Bob Carter explained that it took just 13 complaints about sticky accelerators to lead Toyota to recall 2.3 million vehicles, suggesting that the criticism far exceeded what was warranted.

At the same time Carter made no mention of some 2200 other cases of vehicle acceleration dating back at least a decade. Research by consumer advocates including Sean Kane reveal at least two hundred Toyota wrecks over that time leading to as many as 19 fatalities.

Toyoda Testifies

Toyota President Akio Toyoda is set to testify this week before a House Oversight and Government Reform Committee this week about the recall which has now reached some 8.5 million vehicles globally.

Perhaps most damning for Toyota is an internal document submitted to the oversight committee where the company boasted that it saved itself $100 million by negotiating “an “equipment recall” of floor mats involving 55,000 Toyota Camry and Lexus ES350 vehicles in September 2007.” (see ABC News: Documents: Toyota Boasted Saving $100M on Recall) Critics have fastened on that memorandum as proof that Toyota placed profit ahead of customer safety.

Social Bomb

Toyota’s unfolding crisis points to a weakness that goes beyond safety. And that is the company’s handling of a response in the face of withering criticism. Ever since the runaway Lexus story erupted last August, killing a California family of four, the automaker has been playing defense if responding at all. That poor response and lack of preparation has fueled criticism as Toyota has given people the impression that they are above the law or simply do not care.

While some of the criticism suggests opponents are piling it on, Toyota waited months while their critics mounted a serious challenge to the way the automaker goes about doing its business. Twitter became the launching ground for attacks against Toyota with Toyota’s PR team offering a tepid response or watching silently as a handful of tweets soon became a torrent.

Photo Credit: Wikipedia Commons

Cash For Clunkers Doesn’t Go Far Enough

I am not one for seeing the federal government create endless taxpayer assistance programs, believing that the consumer is the best party to determine what he or she should buy. However, I’ve resigned myself to seeing Congress and the Obama administration spend money like no administration before it, supposedly in a bid to rescue us from the current economic slump or to pass new programs designed to expand government control.

Older models like the Ford Bronco may qualify under the federal government's Cash For Clunkers law. However, your old ride must be scrapped or recycled and you'll get just $3500 to $4500 toward a trade in.

Cash For Clunkers is one program that I want the federal government to spend money on for the simple reason they have been spending money everywhere else, but with little impact on the economy. Any program that actually puts cash in the consumer’s hand is better than tossing those funds at bankrupt financial institutions, car companies and other larger businesses who have failed. At least with the consumer you have someone who isn’t as likely to squander their monies, carefully choosing what they want to buy and how much they’ll pay.

House Bill Doesn’t Go Far Enough

However, I am disappointed by the Cash For Clunkers bill (H.R. 2751) that was passed by the US House of Representatives yesterday, one that will barely have an effect on the auto industry. True, eligible buyers will be able to use a voucher worth $3500 to $4500 toward the purchase of a new, fuel efficient vehicle, but the vehicle they must trade in has to get under 18 mpg.

Consider this — over the past decade or so, there have been only a handful of vehicles that return such awful gas mileage. Heck, even some editions of the Corvette get up to 28 mpg on the highway! Sure, a few newer models like the Ford Excursion and Hummer H2 qualify, but if you think that someone will trade these vehicles in for a paltry credit, that’s crazy.  After all, qualifying vehicles must be scrapped or recycled and no additional monies will be given even if the book value is well above $4500 as it is for some newer versions of these models.

Your Dead Clunker Doesn’t Qualify

Lest you think that you can take that beater sitting in your back yard and trade it in, you’ll need to think again.  An important requirement with this program is that vehicles must have been registered and insured for the past year to avoid having people push in inoperable cars for credit.  Congress may have set aside four billion dollars for this program, but they’re not about to let unregistered and uninsured junkers qualify which is actually a good thing.

There is a chance that as the U.S. Senate takes up this bill, that some of the parameters will be changed. I believe sales would be stimulated if just about any older vehicle, let’s say eight or ten years or older was included in this program. As it stands right now, the law will provide a little bit of help, but nowhere the results that Germany and other European countries have experienced since launching their own scrappage programs earlier this year.

Cash For Clunkers is one of the better ideas floated in some time. I only wish that our elected representatives planned to offer one that would truly stimulate the economy as this version of the bill will have little or no effect.

Source: Detroit Free Press

See Also — Recapping The First Quarter Of The Year

Can Chrysler Survive Without Fiat?

News that Chrysler and Fiat have signed a non-binding strategic business relationship is something that should warm the hearts of Chrysler faithful everywhere. Just a few weeks ago it looked as if Chrysler would fail, perhaps be forced to liquidate its assets after ceasing production.

A Chrysler failure would be devastating as tens of thousands of jobs would evaporate, manufacturing plants would be shuttered, and millions of Chrysler, Plymouth, Jeep, Dodge, Eagle and AMC owners would be left without a company to support them long term.

But the Chrysler deal with Fiat isn’t a given.

First of all, Chrysler must present a recovery plan to Congress by March 31st, one that outlines the direction of the automaker. That requirement was put in place by Congress as part of its $17.4 billion loan package to the auto industry.  Chrysler won’t see additional funds without a plan in place and it had better be a good one.

Second of all, there are some rumblings from politicians who are contending that supporting Chrysler is the same as supporting a foreign car company. 19.9% owned by German automaker Daimler AG, Fiat is set to gain a 35% share in Chrysler, putting most of the ownership in foreign hands.  The loan package is for the American industry only; some Congressmen are openly objecting to helping Chrysler if the company is controlled by Fiat, Daimler and others.

All may not be lost if the Fiat deal sinks, however. Chrysler already has a pair of alliances in place with Volkswagen and Nissan, arrangements which could be expanded if each party agrees.

Right now, Chrysler is supplying Volkswagen with a minivan, the Routan, but they are not receiving a vehicle from VW. VW will be opening a plant in Tennessee in 2011, so perhaps a model built there for VW dealers could also be built for Dodge or Chrysler dealers.

Nissan and Chrysler have inked several deals recently, including a pair which would bring two new models to Chrysler by next year (including the pictured Dodge Hornet). In addition, Nissan has decided that building its big Titan truck on its own isn’t worth it and had signed an agreement with Chrysler whereby the next generation Titan would sit on the Dodge Ram platform. Talk of Nissan supplying a midsize car for Dodge and Chrysler has also surfaced in recent months.

You have to think that Chrysler is in talks with other automakers even as it awaits approval for the Fiat deal. Time is of the essence for America’s third largest automaker, a precious commodity the company certainly does not have much to spare.