Competition versus protectionism: Destroying Toyota to save GM

The Toyota recall scandal might have been the best thing to ever happen to GM and the Big 3, but was there ever really a major problem with Toyota vehicles?

Getting too cozy?

Is the White House “too cozy” with GM?

As a Toyota hybrid owner, I was naturally very concerned when the Toyota recall scandal erupted. Yet, quite quickly, I began to have serious doubts about the veracity of the claims being made.

Something – actually a lot of things -  just didn't feel right.

For instance, if Toyota had some major glitch in their vehicles for many years, why wasn't the data more supportive of this great danger, a danger that prompted the Secretary of Transportation to tell the public that he wouldn't let his family drive in a Toyota?

Ironically, however, according to NTHSA data, far more consumer complaints had been lodged against every one of the Big 3 compared to Toyota before the scandal. Likewise, Consumer Reports – and most auto experts – called the Congressional investigation into Toyota an “over-reaction” not supported by the statistical data.

So, why were Congressional reps from Michigan and even the Secretary of Transportation attacking Toyota with such reckless abandon if there was no real evidence to support their claims, and if the historical data regarding unintended acceleration demonstrated the need for extreme caution, and the need NOT to jump to conclusions (Case in point, Audi)?

Obviously, it would be easy to say it was just politics. Not only is the auto industry a hugely critical important base for Democrats in Congress and in the White House, but the administration has invested a massive amount of money into the auto industry. A lot of skin is in the game.

Then again, however, even President Bush quickly ‘invested' $25 billion into the auto industry as the possibility of bankruptcy become reality. Thus, it seems regardless of whom took over the White House, saving the Big 3 would have been a top job.

But, how far should saving the Big 3 go?

On July 3rd, George Person, the chief of the Recall Management Division at the NHTSA retired after 27 years of service. According to Person the NTHSA has investigated a sampling of 40 Toyota vehicles, including 23 reported to have accelerated unintentionally. Every Toyota thus far has tested without problem and the data gathered from the 23 ‘problem' vehicles all suggest driver error as the cause of unintended acceleration.

So, why isn't the NHTSA being more forthright about its findings thus far?

Politics, according to Mr. Person.

Straightline has even even suggested that the NHTSA and the Department of Transportation have developed a “cozy relationship” with the Big 3. So, if GM, for instance, has the ear of the government, which it should since the government owns them, what might GM have told their bosses?

For years, I've been invited by GM to attend a number of different Chevy Volt events, at GM's expense. During that time I've been around many GM executives, including Bob Lutz and Rick Wagoner. At these events it always surprised me just how much Toyota and the Prius were always a topic of conversation. The Prius, for instance, infuriated Bob Lutz. Likewise, the more positive perception of Toyota quality compared to GM was another major concern.

Toyota, Toyota, Toyota. If only GM could some how trump Toyota.

Yet, until the recall scandal, the data from everywhere – JD Power, Consumer Reports, the NTHSA, and consumers themselves – always demonstrated that Toyota was doing a better job than GM, and the rest of the Big 3. Surely GM, and the rest of the Big 3, were making gains. Still, Toyota was becoming a bigger and bigger concern, and the success of the Prius, especially during the gas spike, made the Big 3 seem even more inferior.

Then came LaHood and the Michigan Congressional caucus and their campaign to save America from the dangers of Toyota. Suddenly, months later, perceptions have greatly changed for GM and the Big 3, largely at the expense of Toyota.

Unfortunately, however, the evidence still seems to suggest there was never a problem with Toyota safety, especially relative to the rest of the auto industry. Consequently, despite early calls from numerous experts that Congress was “over-reacting”, the evidence continues to suggest that Congress and the Secretary of Transportation attacked Toyota without any solid evidence, at least regarding safety.

Certainly, incompetence and ignorance perpetuated by a blood-thirsty media might account for what is shaping up to be the  real scandal – publicly slandering Toyota despite a lack of quantifiable evidence in the face of a mountain of contrary data. But, perhaps that's just politics as usual, and any other country would have done the same thing to protect such an important manufacturing base. To be sure, most of the Asian automakers do have overly-protectionist policies.

Still, is protectionism the key to a healthy US auto industry?

Whether judged by safety, fleet fuel economy, reliability, etc. – before Toyotagate – Toyota was doing a better job than the Big 3 according to essentially every data point. The Big 3 had not, and still were not, doing enough to fully compete. A certain amount of complacency was still inherent in the Big 3's DNA. In fact, Toyota was pushing the Big 3 to become better, to become more competitive, and the Toyota-way was very influential in Alan Mulally's reshaping of Ford – the only Big 3 automaker to avoid bankruptcy.

Ultimately, Toyota has been a good thing for the American auto industry and American consumers.

More important, however, even without Toyotagate, Ford seemed on a path to begin to legitimately challenge Toyota – not because of new protectionism or new political friendships, but because great leadership can still lead to great American companies that can compete. Inevitably, it wasn't protectionism that pushed Ford on a path to greatness, it was competition.

Today, the Big, collectively, are in the best shape they've been in for some time. However, it's been protectionism – and a lot of tax-payer money – that has saved them – not their ability to compete, and today's 'success' could still be short-lived.

Eventually, competition in the auto industry will intensify far beyond what Toyota brought to the game, and overly protectionist politics will only make US automakers less competitive in the long run.


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