Toyota recall could help North American automakers regain market share

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TORONTO - Toyota could be just the thing General Motors needs.
Despite a wide array of new products that have been acknowledged with several industry awards, GM is still having a hard time convincing consumers to come back into the fold after a brief stint under bankruptcy protection last year.
But the negative publicity has suddenly shifted to the industry's former golden boy, Toyota.
A massive recall of millions of Toyota vehicles in Canada, the U.S. and overseas due to a faulty accelerator, could be just the opportunity GM - and its more successful rival, Ford - need, analysts say.
"It's a good opportunity for particularly Ford and GM, who have been moving up in quality ratings in all of the surveys, moving up in customer satisfaction ratings, to once again say, 'Look, we're here, we've got darn good product, all the ratings of our products say so. Give us a chance,"' said Tony Faria, co-director of the automotive research centre at the University of Windsor.
While it's unlikely former Toyota lovers are going to defect in droves to GM and Ford - it's much more likely disillusioned customers will turn to other Asian manufacturers like Honda, Mazda, Nissan and Hyundai - the recall will open up doors for the North American automakers.
Long before the recession hit, the Detroit Three - GM, Ford and Chrysler - were already suffering from the growing popularity of Japanese cars and a reputation for less-than-stellar quality. This allowed Toyota to gain market share until it became No. 1 in the world, a fact that may have indirectly led to the recall, said industry analyst Dennis DesRosiers.
"I think their lesson here is that bigger isn't better," DesRosiers said.
"The bigger you get, the more expansive you get, it's harder to stay on top of everything. This is a complex industry. And in some respects, they had to grow at the expense of something. Something had to give," he added.
"Toyota may end up a point or two of market share lower as a result of this."
That market share will be scooped up by someone, and GM and Ford are doing what they can to get their piece of the pie. Both companies are offering incentives to customers who want to trade in their Toyota due to the recall, and GM said it has received "thousands" of calls from interested Toyota owners.
These incentives will likely be supplemented with marketing campaigns from Toyota's rivals, said Bill Pochiluk, president of industry adviser AutomotiveCompass.
"I think you're going to see a lot of sales and marketing by Toyota's competitors in the very near term to remind the world that they're still in business and they've got great products with great quality," Pochiluk said.
Pochiluk predicted that the recall will have a "serious" impact on Toyota's near-term sales, and said he expects "substantial conquest sales" by the automaker's rivals as a result.
While it is by no means assured that the North American automakers will see a noticeable boost in sales due to the Toyota recall, this is an important opportunity for GM and Ford to continue to improve their reputations.
Ford has been very successful in this endeavour so far, due in large part to the fact that it didn't file for bankruptcy protection and didn't ask for a government bailout, unlike GM and Chrysler. New models like the Taurus and the Fusion have also helped Ford to improve its popularity among North American consumers.
GM, on the other hand, received billions in government loans from the U.S., Canada and Ontario and is now majority owned by the public. However, new CEO Ed Whitacre said he expects to completely repay the governments by June and has predicted that GM will be profitable this year.
Chrysler's future is less certain. There is no doubt the automaker has a lot of work to do to develop new, smaller products in conjunction with its new partner, Italian automaker Fiat. CEO Sergio Marchionne has said Chrysler could turn a profit in 2010, but only if it boosts its global sales by 27 per cent, which is unlikely.
Toyota has recalled 2.3 million vehicles in the U.S. and 270,000 in Canada due to a faulty accelerator pedal that can stick. That announcement followed a larger U.S. recall months earlier of 4.2 million vehicles because of problems with gas pedals becoming trapped under floor mats, causing sudden acceleration. That problem was the cause of several crashes, including some fatalities.
In 2009, Toyota garnered 13.0 per cent of the Canadian market compared to 12.8 per cent in 2008. GM had 17.2 per cent, down from 21.7 per cent, and Ford had 15.4 per cent, up from 12.9 per cent.

Organizations: Toyota, General Motors, North American Ford University of Windsor Mazda Nissan Hyundai

Geographic location: U.S., Canada, TORONTO Detroit Ontario

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