Competitive Connection

November 26, 2007

Then and Now
Toyota’s use of incentives
Toyota, which never used to discount its cars, now gives its dealers almost as much money to help close sales as GM does. According to Art Spinella, of CNW Marketing Research, Toyota's dealer incentives “have more than tripled in the last three years” to an average $3,752 for each vehicle. —Source: The Economist, November 8, 2007
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A look at the competition
Details from a Toyota factory
Miyata on Kyushu, the southernmost of Japan's islands, is where Toyota builds the smaller Lexus sedans, the RX350 premium crossover and the Toyota Highlander mainly for export to North America.

Everywhere at the Miyata factory are examples of Toyota's fabled kaizen (continuous improvement) approach. As in all its plants, behind every worker hangs the andon cord, which, when pulled, instantly summons a supervisor with the power to stop the line before any error is passed on. Each defect is measured and logged for the systematic hunting down of quality problems. Rather than parts being piled up at each point in the line where they are fitted, a fleet of electric vehicles refreshes the supply constantly—not just lean production, but leaner.

Typical of the commitment to creating the best possible product is the water polishing of every car body during painting, which may be unique to Lexus and provides advantages visible only to the trained eye. Even so, up to 30% of the vehicles made at Miyata don't get past the inspectors without some tiny fault, usually slightly less than perfect paintwork, requiring painstaking rectification. A lot of the work on Kyushu is carried out by skilled employees rather than by machines. Managers at the factory talk constantly about “craftsmanship,"  while the slogan, “we put our entire soul into each and every car,” is never far away.

Perhaps Toyota's greatest achievement is to have proved that it could export its production system, principally to North America, Britain and France. Essential to doing so has been the availability of skilled Japanese engineers, known as sensei, who act as team leaders to inspire new recruits and inculcate the “Toyota Way” from Kentucky to Derbyshire.—Source: The Economist, November 8, 2007
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What others are saying . . .
Can going green help Chevrolet gain traction in California?
GM is counting on a Chevy lineup that includes the economy-class Aveo, the new Malibu hybrid and the Volt plug-in hybrid -- a mix seemingly tailor-made for eco-conscious California drivers.

GM's concern about the West Coast cachet of the brand that accounts for 58% of its sales is understandable. In recent years, California has been a not-so-golden state for Chevy.

The brand -- in a virtual tie with Toyota for the title of No. 1 nameplate in America with a 14% market share -- sells one-third as many cars in California as its Japanese rival, according to figures from data tracker AutoCount. With a 7.6% market share through the first three quarters of 2007, Chevy ranks fourth behind Toyota/Scion, Honda and Ford in California. Worse, that's down a full percentage point from a year ago.

There are bright spots. The Corvette is the top-selling sports car in the state, according to AutoCount, and Chevy sells more of them here than anywhere else. The brand also boasts the state's best-selling large sport utility vehicle in the Tahoe, and the Chevy Silverado is No. 2 among full-size pickups behind the Ford F-Series.—Source: The Los Angeles Times, November 17, 2007
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What others are saying . . .
Pacts may turn UAW into top stockholders
The UAW could be on the brink of a new role: the U.S. automakers' biggest stockholder.

New four-year labor agreements that UAW members ratified with the Detroit automakers shift retiree healthcare costs to a Voluntary Employee Beneficiary Association. The VEBA, an independent trust under the auspices of the union, could take control of hundreds of millions of shares of General Motors and Ford.

The fact that the UAW could virtually be holding almost one-sixth of the equity in the nation's two biggest automakers could drive profound changes for the union.

"Equity as part of the VEBA does bring the UAW membership into being an investor group," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "What we are witnessing is the transformation from a confrontational way of working to one of collaboration, which is absolutely necessary." —Source: The Detroit Free Press, November 17, 2007
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What others are saying . . .
Detroit can build a world-class sedan
Motor Trend magazine has named the new Cadillac CTS its 2008 car of the year, saying it is proof that Detroit can build a world-class sedan.

The car's appearance and performance rival those of its German and Japanese competitors, said magazine Editor-in-Chief Angus MacKenzie.

"There's really not a lot of difference at all between BMW, Mercedes and Cadillac," he said.

The CTS beat out the Honda Accord and new Dodge and Chrysler minivans.—Source: The Associated Press, November 20, 2007
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