advertisement
They ignored the seriousness of the challenge from their Japanese competitors for so long that by the time they woke up to the reality of what was happening, it was way too late.
The Japanese products were better, more reliable and -- before their inroads into the luxury market -- often cheaper than anything from the traditional Detroit automakers. In most cases, this is still true, because although the quality "gap" has grown smaller between domestic and import manufacturers, the fact that the Japanese can build their vehicles for far less means that the domestic manufacturers from Detroit will always be playing catch-up in a market that has no time for catch-up.
Worker costs weigh down Big Three
Every day of every week, Detroit auto executives get up to face a daunting disadvantage against Toyota.Toyota's cost structure allows it to operate with a revenue-per-vehicle number that is as much as $6,000 per car better (depending on the vehicle) than that of the typical U.S. automaker. This is a result of Detroit's daunting health-care-cost burden of $1,500 per car, its monumental legacy costs from thousands of retirees' pensions and the oppressive union contracts negotiated in Detroit's last heyday that prevented the automakers from closing plants unless they paid the displaced workers 85% of their wages. Detroit's inability to cut costs enough prevents it from even remotely competing with the Japanese cost structure.
Add the Japanese government's orchestrated manipulation of the yen designed to benefit Japan Inc. at every turn, and you have a laundry list of horrors for Detroit auto executives that is crushing in its scope. But Detroit is culpable, too. As a matter of fact, Detroit has hastened its slide to oblivion at every turn. So really, it's not that hard to see why Toyota has supplanted Chevrolet as "America's car."
More from MSN Money and Autoextremist.com
GM's dismal handling of its passenger-car brands over the past 20 years has permanently damaged the one brand it absolutely couldn't afford to damage: Chevrolet.
GM siphoned off huge amounts of dollars from Chevrolet marketing and advertising to prop up Saturn's remarkably average product lineup, a lineup that it could not, or would not, figure out how to expand. I saw for myself while at Chevrolet's ad agency how major Chevrolet product launches were given a token amount of money, almost as an afterthought, just so Saturn could get one more enhanced promotional program under way.
And I was there to see Chevrolet's market share (except for trucks) literally fall off the radar screen in California as Toyota basically became the "people's car" for a majority of consumers on the West Coast. GM's willful and intentional dismantling of Chevrolet has to be one of the most egregious mishandlings of a brand in automotive history. GM marketing blunders literally destroyed the quintessential American automobile franchise in less than 20 years.
But GM wasn't alone. The domestic manufacturers squandered their dominant position in the U.S. market en masse because they were consistently the highest-cost, lowest-quality producer in a game that the Japanese had single-handedly redefined to be one of lowest cost, highest quality. And now we are well into the second generation of buyers who, thanks to the Toyotas of the world, have never owned a domestic brand of car or truck.
Winning over the public
During this time, Toyota never wavered from its game plan. It slowly and methodically wove itself into the U.S. economy.Complaints of taking American jobs away were met with an emphatic rejoinder: The company simply built plants here and hired American workers. And its suppliers built plants here, too -- and hired American workers. And local business people were recruited to buy and run Toyota's dealerships. The company sponsored motor-sports and other sporting events on a national level. And it sponsored Little League teams on the local level. It sponsored the arts in cities across America and contributed to a range of charities and educational programs.
Toyota has done an absolutely superlative job of winning the hearts and minds of the American people. It's no wonder people consider Toyota to be an "American" car company -- because for their money, their communities, their educational and cultural institutions, and their charities, Toyota, for all intents and purposes, is an American car company.
Continued: Toyota has ingrained itself into American life
< previous | 1 | 2 | 3 | next >
Rate this Article
High