Monday, February 1, 2010

Don't expect Detroit to gain from Toyota's troubles

Can the Detroit Three make inroads in the wake of Toyota Motor Corp.'s recent troubles? That is a question that has occupied some in the automotive industry, with Jack Fisher, senior automotive engineer at Consumer Reports, writing that Toyota's troubles with its faulty accelerator pedal design opens a "huge opportunity for Detroit." Fisher, along with several other analysts and automotive industry watchers, suggest Toyota's accelerator pedal troubles strikes at the heart of the company's much-vaunted reputation for quality. The accelerator pedal problem, along with the possibility of class-action lawsuits being filed in the United States to an earlier recall with problem-plagued floor mats, could open the door to rivals as Ford and General Motors. Both North American car makers have offered rebates to Toyota and Honda owners.
While all of this makes for some great and entertaining speculation, I'm not so sure Detroit's automakers will be able to make significant gains against Toyota. One reason is that the Detroit Three have a long history for many North American car buyers of poor quality, starting from the 1970s. The Japanese brands have a solid reputation amongst many car buyers of quality and reliability.
Certainly Toyota's troubles have given the company a black eye, and it has been suffering quality issues for several years, but there has not been a mass exodus of Toyota buyers to other brands. That could change with the lawsuits or if the acceleration troubles involve something more serious, say the vehicle electronics. However, if car buyers do switch, it will likely be to other Asian car makers, such as Honda or Nissan. Detroit still has a long way to go with its own quality issues and with the lingering effects of bankruptcy for two of the three auto giants before it can begin to significantly take away major auto sales from its foreign competitors.

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