Toyota's loyalty lead

"Toyota Motor may be experiencing its share of quality slips and bad press about not being as 'green' as its reputation suggests, but Toyota customers have been re-upping with the Japanese automaker at a rate that makes rivals envious..."

Business Week article:

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Reply to
Ed
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It took 20-30 years of the Big Three producing bad quality crap before they lost their loyal customer base. People aren't so trusting anymore, but I reckon that Toyota will still have about a decade that they can push crap into the customer base before they will start to feel kickback from it.

The thing is, though, is that the profits for selling crap on a good reputation are so high that companies that start doing this end up getting addicted to it. Toyota has slipped on quality before - the Tercel is a perfect example - but managed to pull back from the brink. This time around, only time will tell.

But this much I WILL say. If Toyota is able to maintain high sales volumes with crappy quality for 4 years, by then the internal hubris will be so high that they will never return to building quality until they lose the market and have to start over from scratch (much like the Big 3 are doing now)

Ted

Reply to
Ted Mittelstaedt

GM is only slightly behind Toyota in loyalty. You could have just as easily headlined the article:

"GM Beats Honda, BMW, Ford, Subaru, etc. in Customer Loyalty"

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Toyota Motor Sales USA, Inc. 68.9%

General Motors Corp. 64.7%

American Honda Motor Co. 63.3%

BMW of North America 56.9%

Ford Motor Co. 54.4%

Subaru of America, Inc. 51.2%

Hyundai Motor America 50.9%

DaimlerChrysler 50.2%

Nissan North America 47.6%

Maserati North America, Inc. 41.9%

Porsche Cars North America 41.6%

American Suzuki Motor Corp. 39.6%

Volkswagen of America 38.8%

Kia Motors America 32.8%

Mitsubishi Motors 31.7%

Isuzu Motors America, Inc. 1.6%

Reply to
John Horner

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Gets pretty bad down at the other end. I wonder how VW was back in the days of the Beetle and Rabbit.

Reply to
Edwin Pawlowski

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I owned a 56 VW cabriolet -- back in my college years. 36 hp and no gas guage. In those days, there were'nt very many options. For example, the Renault Dauphine, Hillman Minx, and of course the Corvair. The Toyopet was rarely seen in the States. Saw most of then in Japan. The mid to late 60s saw quite a change, though.

Reply to
tww1491

Sheep.

Reply to
Steve

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The Beetle was the best selling car in history, no shortage of loyalty there. The Rabbit also sold well and were fine to own and drive - unless you were fool enough to get a Diesel or gas fuel injected Rabbit. Of course, after about 10 years the window seals in the Rabbits all started leaking and the interior of the vehicle would fill up with a couple inches of water. Great for the travelling mold show.

Ted

Reply to
Ted Mittelstaedt

I work with a bunch of folks who would sooner die than drive something besides a WV. I think they think it "says something about them," but I have no idea what that something is.

I think it says" I like to pay too much for ugly, unreliable cars." Excepting the Beetle, of course... it's not ugly.

Reply to
Sean Elkins

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Isn't there another way to look at this? 45.4% of the people buying Fords are trading in something else. Isn't that possibly a good thing for Ford? Maybe the headline could have been "Ford Captures New Sales From Other Brands." Suppose 100% of the people buying your brand were people that owned your brand, would that be a good thing? It would show a lot of Customer loyalty, but it would also mean you weren't capturing new Customers. I have to wonder what the ideal number would be. Probably one reason Scion numbers were so low is that it is a new brand, so there are not many "old Customers" with cars to trade in.

I guess this is like a lot of statistics - the meaning is determined by the people reporting the statistics. Which brings me back to one of my perceptions - the press loves Toyota.

Ed

Reply to
C. E. White

the paradox is that the lower the price class of a brand's entry level car, the more important it is to build buyer loyalty. Hence, Toyota's attempt to go downmarket and attract youngers with the Scion......lots of years for repeat purchases.

How many Maybachs is someone likely to buy. At one time, Studebaker had one of the highest loyalty/repeat buyer rates in the business: unfortunately, they didn't attract new & younger buyers......and something happened to all their loyal buyers: they died.

Reply to
Itsfrom Click

Well, no. That's not what the numbers say. They're saying "of people whose last car was a Ford, 54.4% are buying a Ford this time" -- they're losing half their customers on the next purchase.

"Of people who bought a Ford, x%'s last vehicle was something else" would be a different statistic. And it's the other statistic the automakers want: capture from other makers.

Certainly true. But, really, the actual headline and story are very accurate and spin-free: they report both that Toyota's customer loyalty is No. 1 (excuse me while I go get some Tums -- my daughter loves the Damned Toyota truck that is the most reliable vehicle we've ever owned for 206K miles now, but is a bigger pain in the butt to fix when it does finally break than every other vehicle we've ever owned combined -- thanks, my heartburn is better now), and that GM's is, in their words "close behind".

Reply to
Joe Pfeiffer

They also built some of the most beautiful cars of the 1950s, with such thin metal in the frames that the cars died too. Early. Killing that beautiful customer loyalty they'd had.

Studebaker-Packard -- should have been a perfect match. Sort of like DaimlerChrysler, now that I think about it....

Reply to
Joe Pfeiffer

After reading the actual JD Power Press Release, I see that you are correct. It is not that 54% of the people buying a Ford traded in a Ford, it is that

54% of people who bought a Ford last time, bought a Ford again. I wonder how someone like myself figures into these statistic. In the last 22 months, I have bought three new vehicles, two Fords and Nissan. I didn't trade anything in. But one of the vehicles I sold was a Ford, one was a Pontiac, and one was a Mercury. Not to mention a couple of other vehicles I got rid of in the last three years (a Saturn and two other Fords). If they had surveyed me in Feb of 2006, I would have said I replaced a Saturn with a Nissan (but not exactly directly). If they had asked in July 2006, I would have said I replaced a Pontiac with a Ford. And if they had asked in December of last year, I would have said I replaced a Mercury with a Ford. I am getting ready to buy two more cars (one for my Sister and one for my older son). It is likely I'll get a Toyota for my Sister to replace a Honda, and a Mazda for my Son to replace a Honda. So am I personally destroying the Honda retention rate? Interestingly, if I was buying a car for myself, it is likely I'd replace a Ford with a Honda. And next year or the year after when I need a new truck, I'll probably replace a Nissan with either a Toyota or a Ford (depends on whether or not Ford can fix the F150 for 2009 - I hate the current F150, the only worse truck is the horrible carton Tundra - at least I could still get a Tacoma).

Ed

Reply to
C. E. White

So far, ALL of this supports my claim which I started realizing a few years ago: Toyota today is the GM of 1970. They have market dominance, they have repeat buyers, they have a long track record, but their product is declining at an incredible rate. Next thing you know they'll bring out their equivalent of the Vega (oh wait, they already have Scion), and they'll start putting small-car components in 3-ton vehicles ala TH-200 transmissions in Oldsmobiles (oh wait- they already have the Tundra with its crap brakes and defective camshafts...)

Reply to
Steve

Don't forget Toyota, like GM and Ford before, will soon start cost cutting measures to increase profits at the expense of quality and reliabilitiy - oh wait they are planning just that....

"Watanabe: Toyota will save $2.7 billion a year

Reuters December 11, 2007 - 6:50 am ET

TOYOTA CITY, Japan (Reuters) - Toyota Motor Corp. expects to accelerate its cost-cutting efforts next year to save more than $2.7 billion annually, its president said today, as the world's biggest carmaker seeks to offset rising commodity and development costs.

"We would expect to exceed what we've done under the previous plan," Katsuaki Watanabe told Reuters in an interview at the company's headquarters in Toyota City.

That amount should grow every year along with rising sales, he said, as cost reductions would be made on a per-vehicle basis.

Since 2005, Toyota has been working on a new cost-saving strategy dubbed "VI" for Value Innovation, which seeks to lump some of the tens of thousands of components in a car into modules and systems. The first car to incorporate the new scheme, a remodeled Crown sedan, is due out early next year.

"I believe the strategy is basically proceeding as planned," Watanabe said.

Toyota has given scant details on the program's target, saying only that it expected the impact to be faster and bigger than a previous plan to cut the price of individual parts.

That plan, called CCC21 (Construction of Cost Competitiveness in the 21st Century) and led by Watanabe as purchasing chief, shaved $9 billion off costs over five years, and executives have said it had the capacity to eliminate 300 billion yen in costs every year. That is equivalent to around

13 percent of Toyota's operating profit of 2.24 trillion yen last year.

The ability to reduce costs has been Toyota's forte, allowing it to pour money back into developing new models and attract drivers around the world. Toyota began selling the Prius, the world's first gasoline-electric hybrid car, 10 years ago and is still one of just a handful of carmakers to mass-produce the gas-sipping vehicles.

"The fact that they're planning to build on the CCC21 plan is remarkable, and attests to Toyota's unique strength as a high-volume carmaker and its group companies' solidarity," UBS Securities auto analyst Tatsuo Yoshida said.

"It'll give them a free hand to use their resources flexibly, including securing even more customers by building more attractive features into their cars," he said.

CRUCIAL 10 PERCENT

Slashing production costs is even more important as commodity prices keep climbing, environmental and safety standards rise and consumers migrate towards smaller and lower-margin compact cars to get better mileage.

At the same time, Toyota has promised to reach and sustain a 10 percent operating profit margin. Already its margin is the highest in the sector, at

9.3 percent in the year to March 2007.

Watanabe said reaching the 10 percent margin was "crucial" to be able to invest to the tune of 1.5 trillion yen a year each on facilities and R&D to develop safer and more environmentally friendly cars.

The VI project will be incorporated into each new model that Toyota rolls out from early next year, meaning the effect will grow from year to year, Watanabe said.

"The full impact will be seen probably around 2010," he said, adding that Toyota would step up its cooperation with North American and European suppliers to expand the cost-cutting activities beyond Japan.

TARGETING WEIGHT

Watanabe, known in the company for his "big-picture" vision, is looking beyond the ambitious VI project.

By 2010, the 65-year-old executive said, Toyota will likely have crafted a new scheme to replace the VI plan.

"By then we'd be looking at the car's design as a whole, for example by using lightweight materials," he said.

"I don't want to divulge too much, because this is really a corporate secret," he said, but added that there was a hint in the 1/X concept car shown at the Tokyo Motor Show which weighs just 420 kg -- one-third of the Prius, with twice its fuel efficiency.

Toyota is the world's most valuable automaker, with a market capitalization of more than $200 billion. Its revenue reached $215 billion last business year as sales grew in North America, Europe and China, although Toyota is conspicuously behind in the budding Indian market.

Toyota has forecast sales of 9.34 million vehicles this year, including units Daihatsu Motor Co. and Hino Motors Ltd., likely toppling General Motors as the world's top seller of automobiles. Excluding GM's minority-held Chinese joint venture, Toyota ranked first in 2006.

By 2009, Toyota aims to expand sales to 10.4 million a year.

Reply to
C. E. White

With the Beetle VW had the only low cost small car that stood up to NA highway driving at that time up to 65 mph and also had excellent straight ahead traction. Snow tires weren't necessary, but added weight in the small front trunk was necessary for front traction. The Beetle was loved by it's owners, me included, although it had several serious shortcomings. For example mufflers were good for only about 2 yrs. I haven't replaced a muffler since the stainless steel ones came out in the late 80s. When passing another VW Beetle it was common to wave.

I family near me drive two restored VW Beetles, I don't understand why, considering the number of much better small cars there are now days. In fact those polluting old VWs shouldn't be used as a regular car.

The coming of the Japanese cars in the 1970s had a serious negative affect on the Beetle. I loved my 1970 Datsun 510! So before I got into the Rabbit, I was gone to better cars.

We did have two Chrysler Horizons with the VW Rabbit engine that had valve seal problems; thank goodness Chrysler soon came out with their much better 4 cyl engine.

Reply to
who

When was that?

Reply to
Bonehenge (B A R R Y)

About 1979 or 1980- the 2.2L SOHC, although it continued to improve through the era of the 2.2/2.5L "common block" engines of the late

80s/early 90s. It was built for turbocharging from the get-go, and remains the most successful mass-produced turbocharged gasoline car engine to date. The main and rod bearing shells on the 2.2/2.5 are the same size as the 440 and 426 hemi main and rod bearings. You *CANNOT* destroy the bottom end of a 2.2/2.5 if you ceep the oil in it. FWD drag racers run the turbo 2.2 way up over 20 psi of boost and get 400 front-wheel horsepower pretty reliably- most failures are due to letting it lean out and burning a piston. The head clamping force is at its limit around there too, but the bottom end could probably hit 600 horsepower or so. Its a little brute of an engine.

The current Chrysler "world engine" 4-cylinder may be smoother and more refined, but ultimate strength-wise its a piece of play-doh compared to the 2.2/2.5 engines.

Reply to
Steve

It was a joke.

You're talking about the engine used in the turbo K-Cars, like the LeBaron. Easily recognizable by the trail of blue smoke!

Reply to
Bonehenge (B A R R Y)

Well, it was an attempt at one. :-D

No, you're remembering the Mitsubishi 3.0L v6 not the 2.5 turbo. You used to be able to pick 3.0 powered LeBarons and Minivans out of traffic when you couldn't even see the car! After, oh, 1989 or so about 90% of LeBarons and almost all the minivans got the Mitsu engine. The few people that sprung for the 3.3 v6 were MUCH happier with their minivan... and so were the people that had to drive behind them. Same for the small percentage that opted for the turbo LeBaron instead of the v6.

I'm not sure I've ever seen a smoking 2.2/2.5 unless it was the turbo itself, usually something causing back-pressure in the oil return line.

Reply to
Steve

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