Toyota Motor Co., the world’s largest automaker, has been producing cars for more than 70 years. It wasn’t until after World War II, however, that production started to pick up. Toyota went from making 8,500 cars a year in 1955 to 600,000 in 1965. Models like the Toyopet and Land Cruiser hit the United States in 1957. Today Toyota is among the leaders when it comes to hybrid technology.
Toyota, the automaker of choice for the green movement, is under fire by the green movement. It seems that the company wants to turn 1600 acres of cedar forests and 17th century rice paddies into a research center that’ll include 10km of road courses. The problem—in addition to the historical value of the area—is that it’s the habitat of the endangered gray-faced buzzard and oriental honey buzzard. In total, Bloomberg reports, the project will deforest 691 acres, fill in rice paddies and raze mountains. Shigemi Oda, chairman of the “Society to Consider the Large-Scale Development Project of the 21st Century,” summed it up: “Most people think of Toyota as an environmentally friendly company. Crushing mountains is environmentally destructive.”
Freedom. It’s a blessing and a bitch. As graduates of the 21st century, the average Jane and Joe are loaded with expectations aplenty. Cell phones, computers, and iPods® are a given these days. Credit cards? Perhaps only for gas and groceries. But that’s on the list also. The expenses of the young are laden with a thousand cuts of consumerism. But none of them compare to the cost of a car. So, what should all the members of the family do? Think. Think. Think.
GM is shutting down production of the Pontiac Vibe at the New United Motor Manufacturing, Inc. (NUMMI) plant in California. GM has sold some car or another based on the Corolla ever since they jointly opened the plant with Toyota. GM doesn’t need them to produce another small car, as they’re looking at plants in Michigan, Wisconsin and Tennessee for that. That’s the first dot. And away we go!
Toyota spent $1.3 billion to build and man a new plant in Blue Springs, Mississippi. Originally, Toyota Motor Manufacturing Mississippi (TMMS) was set to construct Highlanders. And then the SUV market crashed. As gas prices rose, ToMoCo couldn’t import enough fuel-sipping Priora to satisfy demand. In July 2008, they announced a change in plan. The Hospitality State facility would be converted to Priora production. And then gas prices cratered. As did the entire US new car market, including the Prius. With all excess capacity in other factories, Toyota’s mothballed the half-built Mississippi factory.
Then Toyota released the 2010 Prius. Despite the depressed global new car market worldwide demand for the model is strong. Toyota needs more manufacturing capacity to meet that demand. It’ll take a while to finish the on-off-on Mississippi manufacturing plant. Dot two.
Third dot: The new Prius shares some parts (such as underbody frame) with the Corolla. In fact, they could be built at the same facility. Rumors are flying that Toyota will add the Prius to NUMMI’s repertoire. It makes sense. NUMMI has the capacity to build Priora; all the high-tech parts they’d need will come from Japan to the west coast. Toyota would cut shipping costs considerably by parts close to their west coast port of entry.
Now here’s where it gets interesting.
GM and Toyota still jointly own NUMMI. GM’s historically sold a Toyota-based small car since they started the venture. Will Toyota build another? We’ve href=”https://www.thetruthaboutcars.com/toyota-to-gm-need-help-say-the-magic-word/”>reported that Toyota’s President Katsuaki Watanabe said, “If some talk about supporting GM comes up, we would like to consider it earnestly.”
It’s the same party line ToMoCo adopted back in ’05, when GM first acknowledged that it was kinda maybe heading for disaster. In fact, as we reported at the time, GM CEO Rick Wagoner flew to Tokyo and met with Toyota’s CEO. Although the substance of those talks was never revealed, it was widely speculated that Wagoner was exploring the possibility of licensing Toyota’s hybrid technology (if only).
Dot four.
New CAFE regulations are full of loopholes, but Government Motors has to do something to at least appear to be satisfying their high mileage provisions. They need to fulfill the “greener” part of their short-lived “Leaner, Greener, Faster, Smarter” reinvention campaign.
GM’s going to build the Cruze, their own small car, in Lordstown Ohio and Son of Aveo somewhere (where the tax breaks are easy). But their dance card at the hybrid car cotillion is empty. The General’s pulling the plug on their light hybrids (VUE, Aura and Malibu) and put the PHEV drivetrain for the Saturn VUE on hold (the model’s going bye-bye). The Hail Mary plug-in hybrid Volt has been conspicuously absent from the news and press releases lately. So there’s no telling what’s going on there. GM needs hybrid help to appease its new government overlords post haste.
Final dot.
So . . . what are the chances of Toyota building a small hybrid vehicle for GM when they gear-up to start Prius production at NUMMI? Connecting all the dots shows it would fill an important niche for GM, give them sorely-needed green creds and would improve capacity utilization at NUMMI.
“No way” you say? That’s exactly what they said about the idea of GM and Toyota cooperating on anything before NUMMI opened a quarter century ago. Stranger things have happened. Given the state of the auto industry, anything’s possible now.
The GM/Toyota partnership known as NUMMI builds but one vehicle for GM: the Pontiac Vibe. And it will continue to do so. Until the end of August, that is. GM’s announced that’s when they’ll cease production of the Toyota Matrix’ platform mate at the California plant. The press release states “While no replacement for Vibe production has been determined, GM and Toyota remain in active discussions regarding potential future production at NUMMI.” What’s next for NUMMI?
Cleveland Business News reports that ChryCo will cancel its contract with Cummins for diesel engines slated to power its Ram 1500 line of pickup trucks. This news comes as OEMs are abandoning diesel trucks in droves. Ford and GM have recently backed away from diesel light-duty trucks, while Toyota and Nissan have canceled heavy-duty diesel truck plans. “From a business case, I don’t think anyone can make one right now,” says IHS Global Insight’s Paul Lacy. “We are still negotiating with the new Chrysler group,” retorts Cummins spokesman Mark Land optimistically. “I don’t think they’re forever gone. I don’t think they’ll just throw all of this investment money away.” Right.
The so-called “Cash for Clunkers” legislation demonstrates everything that’s wrong with a political process playing in the market arena. It’s legislation that will do little to improve car sales. But it will drive traffic to dealers—mostly credit bandits scurrying around trying to buy new cars they can’t really afford.
There is one fundamental issue which restricts the usefulness of either the House version or the Senate (Feinstein-sponsored eco-version) of the legislation. Simply put, many current owners of low-value vehicles are unlikely to possess the resources to acquire outright for cash or qualify for financing on a new vehicle. Such owners are typically used car buyers, not new car buyers, and are likely the second, third, or later owner of said vehicle.
The benefit of the voucher diminishes as the value of the new vehicle increases (on a percentage basis), so customers with larger passenger vehicles or trucks looking to buy new of comparable size receive less perceived value from the voucher.
And worse, the value of the voucher limits qualifying vehicles to those which have an actual cash value (ACV) below the voucher value and also have EPA combined mileage rating low enough to meet the required mileage threshold gain or the limit to qualify in the first place (18 mpg for passenger cars in HR2571 or 17 mpg for all classes in the Feinstein bill).
The combination of these two factors limits the pool of vehicles to mostly older large passenger cars, SUVs, and trucks. Smaller vehicles, such as more recent vintage Honda Civics and Toyota Corollas, would not qualify for vouchers, as their combined mileage rating exceeds the maximum threshold value already in either bill and are likely worth more than the voucher anyways.
One key provision is that the vehicle traded must be owned and insured by the current owner for at least one year and must be in “drivable condition.” This will limit the formation of a “secondary market” of voucher-eligible vehicles and hence will not raise the minimum value on clunkers sitting on dealer lots. (It cannot be assumed that everyone will be honest and it’s not far fetched to believe that there will be fraud on the ownership requirements.)
The one category of vehicles that will likely gain the most from this program: the compact truck segment, such as the Ford Ranger, Toyota Tacoma, Nissan Frontier, and, perhaps, the Chevy Colorado. The base models of these vehicles tend to be relatively inexpensive, with four-cylinder engines. Owners can maximize the value of the voucher on a percentage basis on a price basis, especially when manufacturer rebates and dealer discounts are included.
And the maximum voucher could be obtained by buyers coming out of larger engine passenger vehicles (such as an old Monte Carlo) trading for a new light truck to gain the bigger mileage boost to qualify for the biggest voucher. These buyers need transportation (and financial assistance) in order to get a new vehicle – and the type of vehicle may be less important to them.
While this “cash for clunkers” program appears to be successful in Germany, there are other factors at work there. For example, small cars are more prevalent in Europe than in the USA (due to energy costs). Then there’s the qualifying restriction; it’s simply based on vehicle age: nine years or older. And the fact that the rebate is equivalent to the German VAT paid on smaller mass-market cars. Many manufacturers also matched the government rebate, making lower cost vehicles even more affordable. [NB: larger vehicles, particularly in the luxury class, saw very little benefit from the program.]
The net benefit of this program will not necessarily come from sales of new vehicles, but rather a government-sponsored marketing effort (courtesy of the news media and dealer promotion) to drive traffic to new car dealers. Without a doubt, owners of low value vehicles of any type will consider exploring a new car purchase in response to the hype of vouchers providing a minimum value on their existing vehicle. But most of them probably can’t qualify for financing (and don’t have the cash anyways), so they’ll either leave disappointed or end up driving home in a newer used car.
All in all, don’t expect the proposed Cash4Clunkers legislation to create a big boost in U.S. new car sales. It’s just a promotion by the government to make it look like it’s a good thing for the environment and the economy. But what’s really scary: it foretells a future where the government will really start to modify our taste for fun, powerful (but less fuel efficient) vehicles through coercive taxes and penalties—while promoting Pelosi-cars through government giveaways.
The Senate should kill this wasteful legislation now before things really get crazy. May I suggest you call yours?
Our fine government is a model of efficiency. Why just a week ago, the statistics for year 2007 vehicle thefts were published in the June 10, 2009, Federal Register. I’d hate to think how long these stats would have taken to compile without the advantage of computerization. I digress. Let’s take a look at the data.
Let’s get one thing straight: There are very few inanimate objects which inspire my personal distaste, contempt, and revulsion as much as the Toyota Prius does. It’s a sad, sick, suppository-shaped little plastic box which exists for the sole purpose of letting spoiled, faux-progressive Americans feel virtuous as they continue to consume the lion’s share of the world’s finite resources. I will go to my grave believing that the Japanese Government subsidized its development for the purposes of economic warfare on the United States, and that the Prius lost money for years in a way that no automotive nameplate that does not begin with “Aston” would consider even vaguely defensible. Sometimes, the Prius even kills its own assembly-line workers. In my perfect world, it would extend the same service to its smug, open-mouthed, emo-glasses-wearing, lane-blocking owners.
I could go on, but you get the point: I hate the car. And yet, when I read Jay Shoemaker’s infamous single-star review of the latest model, I cannot help but think that in his place, I would have given the blandmobile from Toyota City four stars . . . or, whisper it, five.
TTAC stands virtually alone among major automotive news sources in providing its reviewers carte blanche to review a vehicle as they see fit. The flip side to this is that the reviewer is understood to speak for himself, not for the site as a whole. The road tests in magazines like Car and Driver are intended to represent the opinion of that magazine, not that of Tony Swan or Patrick Bedard in particular, so the opinions of the individual writer are smothered beneath a leveling flow of groupthink. The reader is therefore reassured that Car and Driver conducts all its reviews using approximately the same standard, and that one may read individual reviews of competing products and obtain a useful comparison by doing so.
Bland consistency is the secret behind Ray Kroc’s billions and billions served, but it holds no sway on this website. Our reviewers judge cars by widely different standards. The new Mustang? I loved it, but Farago thinks it’s lousy! Our methodologies differ widely. Sajeev Mehta examines assembly quality, Robert considers market positioning, I recently took a drum-rear-braked Ford Focus to a public trackday and passed an Exige by cutting an entire corner on the track and showering the Hethel hearse with dirt and rocks. We’re all different and we’re all permitted to have our say.
With this in mind, I’d like to receive some guidance from TTAC readers as to how I rate cars, and if the other reviewers choose to take heed as well, that is up to them. From my reading of the comments surrounding Jay’s test, I have concluded that there are three major suggested rating methodologies:
1. Rate the car in accordance with how well it performs its particular intended mission. We rate the Prius on its efficiency, the Veyron on top speed, and the Sonata on how well it matches up to the Accord.
2. Take the core qualities of a car for granted and rate it on its ability to perform other tasks. We assume the Prius is efficient, so we judge it based on excitement or aesthetics. We know a Veyron is quick, so we rate it based on its usability.
3. Consider how the vehicle stands within the overall automotive marketplace and rate it accordingly, adjusting for price or not as you see fit.
Let me take those in reverse order. I’m not a fan of “overall rating”. Consider the Honda Civic. Compared to a BMW 335i, the Civic is a piece of garbage. Compared to an Elantra . . . not so much. Which comparison is more important? Nor do I like the idea of rigorously price-adjusting ratings, because it leads to comparison tests where the Infiniti G37 “beats” the aforementioned 335i despite being wholeheartedly inferior.
The second idea, advanced by several TTACers in the Prius-test comments, also leaves me a bit nervous. I don’t like the idea of rating a Lotus Elise on storage capacity. You could argue that most of the major magazines use #2 as their guide, which leads to universal praise for well-rounded cars like the Honda Accord. The Accord’s a great car, but for some people the Altima is better and for others the Camry would satisfy more, precisely because those two vehicles stray from the “all-rounder” idea to emphasize individual features.
Which leaves us with #1. That’s how I like to rate a car. The Mustang GT500 is a five-star car because it’s the best ponycar you can get, the Prius is probably a five-star car because no other hybrid delivers the unique features and experience to the same extent, and the BMW Z4 is not a five-star car because it falls short to the Boxster in all the ways that really matter.
What do you, the TTACer, think? I’ll read all the comments, attempt to figure out what the majority opinion is, and deliver my next review (the 2010 Ford Fusion SE Duratec six-speed) to your specifications.
Hello Sajeev, I’d like to ping your automotive wisdom with the following question. Soon I’ll be looking for a new car to replace my leased Corolla. I love power moonroofs (which my Corolla also has). My next car will be a long-term keeper, and even though I’d love to equip it with a roof orifice, I’m not sure about the longer-term reliability of power moonroofs. Are they known to start leaking, to require expensive repairs? Or is it better to buy a car without a moonroof and then have a manual sunroof installed; and would it void the car’s warranty?
I’d like to keep my next car until it falls apart — 10 years or longer. Thanks muchly for your time.
I was expecting to dislike the new E-Class Coupe from Mercedes. AMG versions aside, the outgoing CLK was about as interesting to drive as a Toyota Solara, and Mercedes has already announced that there would be no AMG versions of the new car. From the early photos of E-Class Coupe, I had already determined that the large glass sunroof with its meager mesh sun protection would curry little favor with me, and the little rear quarter window spoiled the look of this frameless coupe. To make matters worse, the 2010 E-Class Coupe’s engines are carryovers from the CLK. Mercedes claims our fuel quality isn’t suitable for the new direct injected engines offered in Europe. (Translation: the US is a dumping ground for some old engine inventory.) The E-Class nomenclature is another sleight of hand, as the chassis is still derived from the C-Class. Harrumph.
Review: 2010 Mercedes E-Class Coupe Car Review Rating
China’s auto industry has more than 100 companies. The Chinese government has been strongly suggesting that this number gets more manageable through mergers and acquisitions. One of these mergers seems to be on its way.
If China’s 21st Century Business Herald (translation via Gasgoo) is not mistaken (and the Herald is far from infallible) FAW and Brilliance are talking about a wedding.
China is becoming the new America, while America is becoming the old China. Jack Perkowski thinks it’s happening right now. Jack is an Old China Hand and a colleague in the automotive parts business. He’s an American and a Yale graduate. Fifteen years ago, he came to China and started ASIMCO, an auto component manufacturing company. In January, Perkowski left the company. The global decline in the business didn’t spare ASIMCO. Perkowski is a true Lao Wai, which literally translates into “Old Foreigner” in Mandarin. From one of the first in China, we inherited a lot of his experience. Some is chronicled in Perkowski’s book Managing the Dragon, which made the bestseller lists. Most is regularly updated in Perkowski’s blog that goes by the same name. In a recent post, he left us some interesting thoughts. Some may find them revolting, even seditious.
During my time here, China has become the third largest economy in the world, the world’s largest market for cars, computers, cell phones and a host of other products, and the country has accumulated $2 trillion of foreign currency reserves. China is now the single largest investor in the United States, unthinkable in 1994 when China had less than $50 billion of reserves.
As the single largest creditor, is China worried about where the U.S. of A. are going? Perkowski sure thinks so:
Given all that has transpired, the leaders at Zhongnanhai must be scratching their heads, wondering what their counterparts in the United States are up to. It began with Enron, Worldcom, Tyco and a host of accounting scandals. In a flash, the financial statements of Chinese companies were just as believable and just as transparent, if not more so, than those of U.S. companies. Then it was Bear Stearns, Lehman, AIG, Bank of America, Freddie Mac, Fannie Mae, Citicorp and the meltdown of the U.S. financial industry. Hoping to learn how to develop its own financial system, China encouraged investments in its state-owned banks by leading U.S. players. Maybe they aren’t such good examples to follow after all?
While China is trying to divest itself from state-owned companies, what is China’s largest debtor doing? Just the opposite.
But the sharp left turn that the Obama Administration has taken since coming to power must really have China’s leaders wondering. Not just the banks, but now large industrial companies, are owned by the U.S. government, and the United States is doing what any government does when it owns companies—it meddles, and political, not economic, considerations are taking precedence.
The takeover of the car industry by the US government reminds Perkowski of the bad old days in China. The courts ignoring the law? Employment for the working masses trumps turning a profit? Where does one still find these egregious practices?
Rather than let the bankruptcy system work as it has over the years to restructure companies, billions of dollars, much of which will never be recovered, have been pumped into General Motors and Chrysler, two companies that represent less than 30 percent of the U.S. automobile market and have been losing market share to foreign-owned companies that now also happen to manufacture in the United States-all in the name of saving the jobs of the United Auto Workers, whose support played an important role in getting the current administration elected.
Central planners deciding the direction of the companies? Heads of state-owned enterprises serving at the pleasure of party bosses?
An administration-appointed car czar, not the company’s board of directors, has fired the General Motors chairman and CEO and installed a new CEO, president and chairman. General Motors is told what plants it cannot close and where its offices should be located. Barney Frank personally called the General Motors CEO to reverse a decision to close a GM distribution facility in his district, and President Obama himself assured Detroit’s mayor that GM’s headquarters would remain in Detroit, rather than move to a neighboring suburb. Undoubtedly, the Obama Administration and Congress will tell their management appointees what types of cars GM should produce. Toyota, Honda, Nissan, Hyundai and their U.S. workers must be delighted with this turn of events.
At least we can find solace in the fact that there still is justice in America. Perkowski is beginning to have his doubts.
As for the vaunted ‘rule of law’ that the United States has been known for, ask the GM and Chrysler secured bondholders what they think. And as for manufacturing statistics—Americans are being told that the administration will ‘save or create’ 600,000 jobs this summer, a statistic that the Wall Street Journal has labeled an ‘immeasurable metric.’
I there anything that doesn’t remind Perkowski of the times before Deng Xiaoping? Yes. China was never ruled by Russian Emperors, who were famous for mistreating their serfs:
A newly appointed pay czar (there are now more than 20 such ‘czars’ in Washington) will now review the compensation of the top 100 managers of any company that has received support from the government.
So what does Perkowski suggest?
Somewhere along the line, the United States picked up that socialist economic playbook that Deng Xiaoping was smart enough to throw away. Perhaps the U.S. should ‘follow Deng’ and go back to what got the United States, and now China, to where it is today?
GM dealer Jack Fitzgerald is not happy about losing some of his franchises. Unlike GM CEO Fritz Henderson, Fitzgerald has set forth a graphic-laden argument (PDF viewable online here) defending his position on the dealer cull. Here’s why Jack reckons we need H.R. 2743, mandating car dealer-protection:
As Congress and the Administration consider various proposals to restore the rights of affected auto dealers, I want to share with you the context for making such decisions. We believe that there was a fundamentally flawed analysis of the domestic auto industry that led to a misguided decision to close numerous dealerships and which will add to the nation’s unemployment misery.
Right now, Congress has before it a legislative proposal that would restore dealers’ economic rights and permit a case-by-case assessment of our dealerships. It is the best way to correct what has occurred and to put our industry on a path to growth and employment opportunities instead of the path of cannibalism, economic dislocation, and a downward spiral for the U.S. auto industry as a whole as consumers react to being abused.
Ever since Farago’s fateful appearance on Autoline After Hours, I’ve been hooked on the weekly spectacle of Detroit-think. Talk about a fly on the bunker wall. Anyway, the Vines’s and DeLorenzos of this world never tire of talking about how the recent economic collapse was the sole cause of Detroit’s downfall (not true—see TTAC archives up to last year) and how “everyone is hurting right now.” The first assertion seeks to absolve Detroit of its systemic failures, while the second hopes to show that every automaker has sunk to the depths of, say, GM and Chrysler. Of course the second point is more true (for what it’s worth) than the first, but a few news items show that Toyota is succeeding admirably where GM and Chrysler have abjectly failed.
In yesterday’s NYT Magazine [sub] (theme: Infrastructure: it’s more exciting than you think), Transportation Secretary Ray LaHood talks bridges, behavior and Buick Regals in a short interview entitled “The Road Warrior.” And at the risk of reigniting an overly-political discussion, the man’s opinions are indicative of where public policy is headed (regardless of where the debate here at TTAC ends up). It’s easy to take LaHood’s talk of “livable communities,” and praise for light rail and one-car families as proof that he (per George Will’s judgment) is the “secretary of behavior modification.” But it’s important to remember a few key points . . .
4/5 Stars 
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