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Why Honda and Toyota Are Slipping

Instead of taking advantage of U.S. automakers' woes in the past few years, the Japanese automakers let themselves slide.

By Claire_Martin Apr 9, 2012 2:09PM
Honda Civic photo by Honda.Formerly the Teflon Dons of the auto industry, Honda and Toyota dominated in innovation, quality and profits for the past 20 years. And when Detroit went into distress in 2008, it would have been reasonable to expect them to take advantage of things such as General Motors' downsizing to four brands from eight. But they didn't. And now Toyota's share of the U.S. market has dropped by nearly 3 percent since 2009, and Honda's by almost 2 percent.

"Ten years ago, Toyota and Honda had the lead and everybody else was behind," Dave Sargent of J.D. Power & Associates told US News & World Report. "That gap has narrowed to pretty much nothing."

Why the decline? The Japan earthquake of March 2011, which seriously disrupted the supply chain, is one reason. But also, Volkswagen, Hyundai and Kia have gotten more aggressive, while Toyota and Honda -- once leaders in customer service and safety -- have become complacent on those issues and others, according the report.
In 2009, 8 million Toyotas were recalled and the company was hit by a massive fine and several lawsuits. Honda, meanwhile, simply seems to have slipped behind the times. It debuted a redesigned 2012 Civic that failed to wow critics who had routinely sung its praises. For only the second time in the car's history, it didn't receive Consumer Reports' vaunted "Recommended" rating (nor did the Insight or CR-Z). 

Meanwhile, Detroit has pumped out zippy new cars to compete with the Japanese automakers' bread-and-butter vehicles. The Chevy Cruze and Sonic and the Ford Focus and Fiesta are new standouts in the field of small, inexpensive and fuel-efficient vehicles -- once the nearly exclusive purview of the Japanese automakers. At the same time, Hyundai and Kia are building cooler cars at a better price point than some of the stodgier models put out by Honda and Toyota.

But all is not lost for the Japanese pair. On the bright side, hybrid sales have been hot for Toyota so far this year, and Honda's new CR-V crossover has earned high points from critics.

45Comments
Apr 10, 2012 4:00AM
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The reality is GM employs more Americans than Honda and Toyota combined

 

That trend is about to change since GM's new plant in China will be opening sometime in 2012. There is no such thing as an auto company that is 100% American anymore. What needs to happen is new auto companies need to be started up here in the US and then it's truly a US company.

 

I will admit the japanese companies have not been putting out cars that are not exciting but it looks like this year and next year are looking much better. With the rash of recalls coming from the big three it may make many people rethink about what they just bought.

Apr 10, 2012 3:39AM
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Troy, for you to whine about American companies building some vehicles abroad, mostly for foreign markets by the way, and then hold up Toyota as an example of what American companies should be doing is ludicrous.  Consider only 10% of Toyota's employees are in the U.S. but they derive almost 40% of their revenues here.  At Honda, only 17% of their workforce is Americans yet they derive 54% of their revenues here.

If you want to talk about unfairness, you should be whining about 40% of Toyota's revenues coming from inside the U.S. yet only 10% of their employees are Americans.  GM, on the other hand, gets half its revenues outside of the U.S. but more than half of their workforce is here.  Seems that GM is doing a MUCH better job creating jobs for Americans than Toyota or Honda.  Ford and Chrysler are in the same situation as GM, more Americans are employed HERE than anywhere else on the globe.  Those are hard working, tax paying Americans.  Buy a Toyota and $9 of the $10 you spend are creating paychecks for non-Americans to be spent and invested OUTSIDE the U.S.  Doesn't sound very American to me.
Apr 10, 2012 2:03AM
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Troy,

I agree that US companies should bring the jobs back home but the only way they will is if we the consumer force them to by buying American made American owned. The reality is GM employs more Americans than Honda and Toyota combined (don't take my word for it look it up). These are the jobs we send our kids to college to get. We can't afford to give any more jobs away.

Apr 9, 2012 5:54PM
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Andy,

 

I think many American companies could show some economic patriotism by pulling their foreign investments and outsourced jobs back to America.  Just because you buy an American branded product doesn't make it American. Last year, as an example, the Toyota Camry was the most American car in America as far as assembly, part content and American labor goes. Based on this fact, what does that say for the patriotism of Detroit automakers who import their parts, assemble in foreign countries and invest in foreign labor?

 

 

 

Apr 9, 2012 3:59PM
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I think one reason Honda and Toyota are slipping is that more Americans are practicing a little economic patriotism (it's about time). We need to wake up to the fact that we need to buy the things our neighbors make to keep good jobs here. Buy American the job you save could be your own.
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