Asian carmakers not invincible

Drive along the 401 in Toronto and you begin to get a feel for the dominance of Asian automakers–Civics, Accords, Sentras, Elantras, Camrys, Corollas, Kias, wait, what was that? An Impala? A Chevrolet? Oh my, how retro.

I admit to being old enough to remember when the Impala was in the vanguard of a corps of models most desired by middle-class families. My dad purchased an Impala, and for a number of years, it was our family’s transportation workhorse. Big, roomy, heavy, the car, as I recall, was a bit of a brute. On idle, lean on the accelerator just a touch and you were sure to hear the telltale squeal of rubber on cement that is music to a teenager’s ears.

In a sense, the story of the demise of the Impala and cars like it, is the story of the decline of the domestic automakers. Detroit-Oshawa-Oakville has never entirely outgrown the mindset that a car is, first and foremost, the high-horsepower plaything of a young, hormone-pumped male. Yet, as a number of high-level designers at this year’s SAE show (see cover story) indicated, today’s car buying public is much different than it was 20 or 30 years ago. Women and people under the age of 35 are much more interested in a reliable, fuel-efficient ride than a power statement. Nonetheless, the old-boy domestic carmakers–GM, Ford, Daimler-Chrysler–appear to have written off whole chunks of this large and growing segment of the market.

As a result, the present perception is that the Asian carmakers (Honda and Toyota, most significantly) can do no wrong, and Detroit-Oshawa-Oakville can do nothing right. This, of course, is a gross simplification.

Certainly the old boys have made their share of blunders, as noted more than once in this column. They have also managed to institute many wrenching but necessary changes in their corporations, as well as chalk up a few wins

The domestic car companies are building cars and trucks that, for the most part match, or in some cases exceed, the quality ratings for vehicles built by Asian companies. They have offloaded many high cost, unproductive business units. Additionally, there are promising signs that management at these behemoths is being more aggressive in finding solutions to their high and uncompetitive health care, wage and pension costs.

On the flip side, not every Asian carmaker has the golden touch. Mazda, Nissan and Hyundai have all had their struggles. Nor is the common truism, ‘Asian companies are winning market share simply because they are more technologically advanced’ entirely valid. Honda and Toyota in particular are winning market share, but technology superiority has hardly been the most important factor. The most important factor is, and always has been, cost.

The Japanese government has doggedly pursued a low yen policy for the past 30 years. This policy basically lowers the standard of living for the Japanese citizens, but ensures a cost advantage for the country’s products on the world market. Likewise, non-unionized Asian transplant facilities in North America enjoy a huge cost advantage over unionized domestic assembly plants.

The belief that Asian car companies are technologically superior has become one of those widely accepted, yet essentially apocryphal, tales. There have always been chinks in the armor of this tale, especially since 99% of technology is universal, purchasable at a price. Also, no one has a monopoly on perfection. As I write, Toyota is looking into complaints that its widely acclaimed Prius hybrid car is stalling at highway speeds.

In the car world it’s all about cost. For domestic car companies, solving the cost problem is the key to winning new customers, repairing their relationship with suppliers, and reversing declining market share. It’s not rocket science. It’s human science.

Michael LeGault, editor

e-mail: mlegault@canplastics.com