WSJ: Toyota should not be feared
Thread Starter
Registered User
Joined: Aug 2000
Posts: 6,165
From: Sterling Heights, MI
WSJ: Toyota should not be feared
Got this from another forum:
Who's Afraid of Toyota?
The Wall Street Journal
By Holman W. Jenkins, Jr. (Commentary)
Feb. 21, 2007
Edmunds.com for years reviewed the Toyota Echo, the company's entry-level vehicle, by describing it as the cheapest car in America and still overpriced.
Even after the Echo was finally dropped last year from the U.S. market, the authoritative auto site couldn't resist reminding shoppers it had once whispered in their ears, "Friends don't let friends drive Echos." And Edmunds offers only marginally more favorable comment on the Toyota Yaris, the vehicle that took the Echo's place, calling it a "decent subcompact" but advising shoppers to "keep an open mind" about competing vehicles, including the Chevy Aveo.
Or take the Prius, the car that made Toyota a star in certain circles and perhaps even began to redress its reputation for bloodless, uninteresting vehicles. The Prius has hardly been burning up the sales charts lately. With a ridiculous federal tax giveaway expiring, Toyota has been reduced to dangling incentives even in front of California buyers. All this transpires while the EPA is still putting finishing touches on new mileage ratings that will sharply downgrade the Prius's gas performance.
What Toyota really proved with the Prius, ironically, is that Americans have little appetite for high mileage vehicles - in fact, are willing to buy one only when the stars align briefly and inexplicably to turn a car into a Hollywood-accredited emblem of personal enlightenment.
To put it baldly, Toyota got lucky. Any motorist truly intent on burning less gasoline and saving the planet could have found a vehicle that produces mileage as good or better than the Prius's, without paying Toyota a premium for its busy "hybrid" technology. Designing a car that uses less gas, after all, is a snap. In the mid-1980s, Honda marketed a version of its sporty CRX that got an honest 50-plus miles to the gallon. In 1990, GM and Suzuki built the Geo Metro XFi, good for 53 in the city. But customers have to be willing to buy it. Detroit would have been only too glad to soak consumers for a high-tech, fuel-saving vehicle had consumers declared their willingness to be soaked. But apart from a few statesiders who might embrace such a car as a fad, it makes enduring sense only in markets where taxes keep gasoline prices in the stratosphere.
And forget the guff about Toyota investing long-term for the end of oil. Hybrid technology is a mere fuel extender, and a heavy, mechanically complex one for so modest a return in gasoline savings. It shrieks technological dead-end.
We offer these thoughts as corrective to the tendency to slobber over Toyota, on track to become the world's biggest car maker, especially given the rumored unraveling of DaimlerChrysler (though the real culprit there was the German side's consistent knack for screwing up a good thing). Yes, Toyota is an excellent company. Its commitment to disciplined manufacturing explains why in some developing countries the streets are jammed with Toyotas, especially its ubiquitous HiAce minivan. Toyotas often seem the only vehicles on the road - or perhaps the only vehicles still on the road thanks to their sturdiness.
But if being the biggest were such an asset, GM would be a world beater today. In fact, GM is shrinking on purpose, sacrificing market share for profitability, lessening its reliance on sales to rental fleets, which depress the value and image of all GM vehicles. As Edmunds recites in chapter and verse, Toyotas are far from being in a class by themselves in quality or value. A buyer who carefully, unemotionally weighs the trade-offs does not automatically end up owning a Toyota, or even a Japanese car - though shoppers whose perceptions are a lagging indicator still treat Detroit products as automatically inferior.
And Toyota has some disadvantages, while U.S. automakers have advantages. Having tradition and heritage to draw upon is an advantage. Toyota is singularly weak in this regard. Few signature cars come to mind through the decades. That's why Toyota's new FJ Cruiser has earned unprecedented gushing from the automotive press - Toyota ransacked its past for visual cues and, for once, was able to make a customer feel something for one of its vehicles.
Profits are not assured by economies of scale. That's one lesson of the DaimlerChrysler merger, which was supposed to shave a couple nickels off the cost of every component by spreading their development over a larger vehicle output. As important and becoming more important in a crowded marketplace is a knack for turning out cars with ineffable cultural appeal. Toyota's world-wide success so far has come without being strong in this department. And Toyota knows it: Hence its constant invocation of the word "emotion" in how it approaches marketing its important new Tundra pickup.
Cars are transportation: Buyers interested in a low-risk investment in transportation can seldom go wrong by buying Toyota. But car companies are profit-seeking organizations. Though it's popular to sneer at the Big Three, they raked in many billions correctly judging a consumer appetite for large SUVs and pickups, including millions of pickups purchased by cosmetic cowboys who drive them to their office jobs. These were and remain impressive feats in consumer design - as befitting products in which the Big Three were willing to invest precious capital, as distinct from the workaday sedans they churn out just to break even on their UAW labor contracts. And unlike Toyota with its Prius, the Big Three produce and sell their fashion statements at a profit, a goal that still reportedly eludes the Toyota hybrid.
The Big Three are far from incompetent car makers - or incompetent users of capital. Their big problem is that, thanks to their legacy labor issues, the financial markets simply will not afford them the leeway to make large capital investments in sedan styling and technology. These labor legacies are a product of history and a set of political and market arrangements. Fix that problem, and any Detroit car maker that's still around has plenty of potential to compete successfully with Toyota or anyone else.
Who's Afraid of Toyota?
The Wall Street Journal
By Holman W. Jenkins, Jr. (Commentary)
Feb. 21, 2007
Edmunds.com for years reviewed the Toyota Echo, the company's entry-level vehicle, by describing it as the cheapest car in America and still overpriced.
Even after the Echo was finally dropped last year from the U.S. market, the authoritative auto site couldn't resist reminding shoppers it had once whispered in their ears, "Friends don't let friends drive Echos." And Edmunds offers only marginally more favorable comment on the Toyota Yaris, the vehicle that took the Echo's place, calling it a "decent subcompact" but advising shoppers to "keep an open mind" about competing vehicles, including the Chevy Aveo.
Or take the Prius, the car that made Toyota a star in certain circles and perhaps even began to redress its reputation for bloodless, uninteresting vehicles. The Prius has hardly been burning up the sales charts lately. With a ridiculous federal tax giveaway expiring, Toyota has been reduced to dangling incentives even in front of California buyers. All this transpires while the EPA is still putting finishing touches on new mileage ratings that will sharply downgrade the Prius's gas performance.
What Toyota really proved with the Prius, ironically, is that Americans have little appetite for high mileage vehicles - in fact, are willing to buy one only when the stars align briefly and inexplicably to turn a car into a Hollywood-accredited emblem of personal enlightenment.
To put it baldly, Toyota got lucky. Any motorist truly intent on burning less gasoline and saving the planet could have found a vehicle that produces mileage as good or better than the Prius's, without paying Toyota a premium for its busy "hybrid" technology. Designing a car that uses less gas, after all, is a snap. In the mid-1980s, Honda marketed a version of its sporty CRX that got an honest 50-plus miles to the gallon. In 1990, GM and Suzuki built the Geo Metro XFi, good for 53 in the city. But customers have to be willing to buy it. Detroit would have been only too glad to soak consumers for a high-tech, fuel-saving vehicle had consumers declared their willingness to be soaked. But apart from a few statesiders who might embrace such a car as a fad, it makes enduring sense only in markets where taxes keep gasoline prices in the stratosphere.
And forget the guff about Toyota investing long-term for the end of oil. Hybrid technology is a mere fuel extender, and a heavy, mechanically complex one for so modest a return in gasoline savings. It shrieks technological dead-end.
We offer these thoughts as corrective to the tendency to slobber over Toyota, on track to become the world's biggest car maker, especially given the rumored unraveling of DaimlerChrysler (though the real culprit there was the German side's consistent knack for screwing up a good thing). Yes, Toyota is an excellent company. Its commitment to disciplined manufacturing explains why in some developing countries the streets are jammed with Toyotas, especially its ubiquitous HiAce minivan. Toyotas often seem the only vehicles on the road - or perhaps the only vehicles still on the road thanks to their sturdiness.
But if being the biggest were such an asset, GM would be a world beater today. In fact, GM is shrinking on purpose, sacrificing market share for profitability, lessening its reliance on sales to rental fleets, which depress the value and image of all GM vehicles. As Edmunds recites in chapter and verse, Toyotas are far from being in a class by themselves in quality or value. A buyer who carefully, unemotionally weighs the trade-offs does not automatically end up owning a Toyota, or even a Japanese car - though shoppers whose perceptions are a lagging indicator still treat Detroit products as automatically inferior.
And Toyota has some disadvantages, while U.S. automakers have advantages. Having tradition and heritage to draw upon is an advantage. Toyota is singularly weak in this regard. Few signature cars come to mind through the decades. That's why Toyota's new FJ Cruiser has earned unprecedented gushing from the automotive press - Toyota ransacked its past for visual cues and, for once, was able to make a customer feel something for one of its vehicles.
Profits are not assured by economies of scale. That's one lesson of the DaimlerChrysler merger, which was supposed to shave a couple nickels off the cost of every component by spreading their development over a larger vehicle output. As important and becoming more important in a crowded marketplace is a knack for turning out cars with ineffable cultural appeal. Toyota's world-wide success so far has come without being strong in this department. And Toyota knows it: Hence its constant invocation of the word "emotion" in how it approaches marketing its important new Tundra pickup.
Cars are transportation: Buyers interested in a low-risk investment in transportation can seldom go wrong by buying Toyota. But car companies are profit-seeking organizations. Though it's popular to sneer at the Big Three, they raked in many billions correctly judging a consumer appetite for large SUVs and pickups, including millions of pickups purchased by cosmetic cowboys who drive them to their office jobs. These were and remain impressive feats in consumer design - as befitting products in which the Big Three were willing to invest precious capital, as distinct from the workaday sedans they churn out just to break even on their UAW labor contracts. And unlike Toyota with its Prius, the Big Three produce and sell their fashion statements at a profit, a goal that still reportedly eludes the Toyota hybrid.
The Big Three are far from incompetent car makers - or incompetent users of capital. Their big problem is that, thanks to their legacy labor issues, the financial markets simply will not afford them the leeway to make large capital investments in sedan styling and technology. These labor legacies are a product of history and a set of political and market arrangements. Fix that problem, and any Detroit car maker that's still around has plenty of potential to compete successfully with Toyota or anyone else.
Registered User
Joined: Aug 2002
Posts: 3,650
From: Indianapolis, IN
I saw this earlier today and almost posted it, but I figured someone would get to it momentarily.
It's hanging outside my cube right now.
It's not a perfect article (I think Toyota did a bit more than "got lucky" with the Prius, for example) but I like the overall point.
It's hanging outside my cube right now.
It's not a perfect article (I think Toyota did a bit more than "got lucky" with the Prius, for example) but I like the overall point.
Registered User
Joined: Oct 2000
Posts: 2,402
From: Toronto, ON Canada
And forget the guff about Toyota investing long-term for the end of oil. Hybrid technology is a mere fuel extender, and a heavy, mechanically complex one for so modest a return in gasoline savings. It shrieks technological dead-end.
I don't understand. Why did it take 5 or more years of loving, praising, and tupping Toyota to realize this?
There were articles galore on what great things Toyota was doing for the world with Prius. Sure, they were (and are) one of the leaders for ultra low emissions vehicles, but it seems that while magazines and newspaper columnists were fascinated with Toyota, the car enthusiasts saw it for what it was (more or less). Now the slow realization, transcending to the general public, via those same columnists and journalists...
I don't understand. Why did it take 5 or more years of loving, praising, and tupping Toyota to realize this?
There were articles galore on what great things Toyota was doing for the world with Prius. Sure, they were (and are) one of the leaders for ultra low emissions vehicles, but it seems that while magazines and newspaper columnists were fascinated with Toyota, the car enthusiasts saw it for what it was (more or less). Now the slow realization, transcending to the general public, via those same columnists and journalists...
Last edited by muckz; Feb 21, 2007 at 03:27 PM.
Registered User
Joined: Feb 1999
Posts: 2,947
From: Springfield,OH. U.S.A.
Their big problem is that, thanks to their legacy labor issues, the financial markets simply will not afford them the leeway to make large capital investments in sedan styling and technology. These labor legacies are a product of history and a set of political and market arrangements. Fix that problem, and any Detroit car maker that's still around has plenty of potential to compete successfully with Toyota or anyone else.
Registered User
Joined: Sep 1998
Posts: 4,320
From: Memphis
Registered User
Joined: Oct 2004
Posts: 953
From: Granger, IN
And forget the guff about Toyota investing long-term for the end of oil. Hybrid technology is a mere fuel extender, and a heavy, mechanically complex one for so modest a return in gasoline savings. It shrieks technological dead-end.
I don't understand. Why did it take 5 or more years of loving, praising, and tupping Toyota to realize this?
There were articles galore on what great things Toyota was doing for the world with Prius. Sure, they were (and are) one of the leaders for ultra low emissions vehicles, but it seems that while magazines and newspaper columnists were fascinated with Toyota, the car enthusiasts saw it for what it was (more or less). Now the slow realization, transcending to the general public, via those same columnists and journalists...
I don't understand. Why did it take 5 or more years of loving, praising, and tupping Toyota to realize this?
There were articles galore on what great things Toyota was doing for the world with Prius. Sure, they were (and are) one of the leaders for ultra low emissions vehicles, but it seems that while magazines and newspaper columnists were fascinated with Toyota, the car enthusiasts saw it for what it was (more or less). Now the slow realization, transcending to the general public, via those same columnists and journalists...
just proving the average consumer is retarded
as anyone that has worked in retail should know
it seems as though most of their buying decisions are based on hear-say
rather than actuall fact / experiance
Registered User
Joined: Jun 2000
Posts: 3,463
From: SoCal
Good article that makes some strong points. I think they underestimate the sales power Toyota has since they only really take shots at the Echo, Yaris and Prius. Those are all low selling vehicles to Toyota, at least compared to the Camry, Tundra and Tacoma. I think Toyota would gladly take a sale of a Camry over a Yaris. So they are not as weak as this article makes them seem.
But the article is right on in regards to Toyota's lack of emotion on generally bread and butter boring cars and trucks.
As for the Big 3 or 2.5 or 2 yea they would be much better off w/o legacy costs but thats not reality. How does Detroit move past the legacy costs well thats the billion dollar question...
But the article is right on in regards to Toyota's lack of emotion on generally bread and butter boring cars and trucks.
As for the Big 3 or 2.5 or 2 yea they would be much better off w/o legacy costs but thats not reality. How does Detroit move past the legacy costs well thats the billion dollar question...
