But there is still reason for caution. The Detroit Three’s impressive gains came during a year when foreign competitors hit uncharacteristic road bumps. Toyota, in particular, was forced to recall millions of vehicles because of sticky gas pedals and poorly designed floor mats. The ordeal shook customers’ faith in Toyota’s painstakingly built reputation for quality.
With the crisis still fresh in North American consumers’ minds, Akio Toyoda, grandson of Toyota’s founder and its current CEO, made his first-ever visit to the Detroit auto show this week. He participated—however awkwardly—in the unveiling of a new “family” of hybrid and plug-in electric vehicles wearing the Prius badge. Later, in a discussion with reporters, he compared Toyota’s current challenges to a popular Japanese snack. He held up a package of rice balls, available at convenience stores all over Japan. While they are good to eat and definitely safe, Toyoda said through a translator, they will never be as desirable as homemade onigiri, made with love by Japanese mothers and packed in schoolchildren’s lunches—which is how he said Toyota intends to make its cars. It may be an odd analogy to North American ears, but most analysts agree that Toyota is a company that delivers on promises, regardless of how they are expressed.
At the same time, other Asian automakers are also making strides. Despite posting weak U.S. sales last year, Honda Motor Co. is likely to have a winner on its hands after unveiling a more aggressive looking 2012 Civic “concept” in Detroit that is expected to hit showrooms later this year. Meanwhile, Korean automaker Hyundai Motor Co. has boosted its U.S. market share to nearly five per cent. “The Japanese build really good products and the cars from Korea are getting better,” says Tony Faria, an automotive expert at the University of Windsor. “And in a few years we will be seeing Chinese cars coming on strong.”
For the Detroit Three, meanwhile, the transition to smaller, more fuel-efficient vehicles remains a work in progress. And that could be a problem as government fuel-efficiency standards become stricter. Ford is leading the charge, with about 55 per cent of 2011 vehicle sales in Canada to come from cars or crossovers, compared to 40 per cent in 2005. GM, meanwhile, says cars and crossovers accounted for 52.6 per cent of Canadian sales last year. As for Chrysler, the small car strategy is falling largely to Fiat. “Chrysler’s strong suit historically has been big cars and trucks,” says Chrysler Canada president Reid Bigland. “Not everyone wants to get crammed into a small car.”
Indeed, American consumers have long associated small and fuel-efficient with cheap and wimpy—a perception GM, Ford and even Chrysler are working hard to change. They are also hoping that the development of hybrids and electric vehicles will help bridge the gap. But while there’s plenty of “green” vehicles on display at the auto show—even Porsche displayed a hybrid race car, while Mercedes unveiled a neon yellow, electric version of its gullwing SLS—there is so far relatively little evidence that consumers are willing to pay extra for the technology, with hybrid sales currently accounting for only a few per cent of overall sales.
Detroit also needs to be careful not to overreach. “The big challenge is for them to maintain this new-found discipline as the economy recovers,” says Edmunds’ Anwyl. “And that’s because there’s always going to be scrappy competitors looking to pick up market share, and they will be more aggressive.”
Back at the Chrysler display, hip-hop music is thumping and Eminem’s lyrics are quoted. “It may seem strange to hear hip hop in a French accent,” says Chrysler’s Francois, an executive who came from Fiat. “But to me, the words still ring true. This is a story that resonates with people on every side of 8 Mile Road. This is a story of how people react when their backs are up against the ropes.” Of course, picking yourself up off the mat is one thing. Delivering a knockout blow of your own is quite another.
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