So the other day I was driving down the road and looked in the rear view mirror. You know the feeling, the feeling you get when you see those ‘special lights’ behind you. Your heart beats fast and sinks with gut-wrenching fear. You ease up on the gas pedal and pull out of the fast lane, hoping you will survive the situation. Well, it happened to me yesterday; a Toyota was behind me! Ba-Da-Bing.
Now that the humor session is over, what do you think about Toyota? Do you think the Grim Reaper has got his hook in them? If there ever was a ‘perfect storm’ of issues, this company seems to have sailed right into the heart of the storm (or in their case – accelerated – Ba-Da-Bing). But, as time goes on, this perfect storm will be the business school case example for years to come. How did a foreign company, which overtook every domestic automaker and became the #1 auto brand in America, fall from grace? Was it the American labor pool building cars here on domestic soil which brought down the foreign giant? You know, there was the day, when they shipped all those Corolla’s over on freight boats and stacked them in ports of call in California, NY and Miami. But, as they got the taste of American dollars, and their currency devalued itself from a decade-plus long recession, it was necessary to build cars in the U.S. to keep their margins in check (and of course some marketing shrewdness to understand the advantage of diffusing the political hot potato by employing American workers, in American plants, to gain market share and pretend this was a U.S. company – now perhaps disguised in sheep’s clothing.)
But the story here isn’t so much the perfect storm of manufacturing malfunctions, but more of the blatant cover up, or better put, the refusal to take action (action which obviously would cost billions). These recent problems are anything but recent to Toyota. They have known of the floor mat and accelerator problem for years. The problem is they choose to sweep it under the mat, so to speak, and instead hope the problem would go away or was ‘contained’. It wasn’t until serious intervention by the National Transportation Secretary, and his department, put “extreme pressure” on Toyota did they buckle under and now have the largest recall…of multiple lines and models…of any auto manufacturer (the Ford Edsel probably would have rivaled Toyota but there weren’t enough made).
All that said, they will come back, just like Audi did with a similar issue (however, in the case of Audi, it was not that big of a mechanical problem and recall, but the press got a hold of it and almost put the manufacturer out of business as a result of water cooler chat which suppressed sales for years. Ironically, they now are the fastest growing luxury car). However, on the other hand, FIAT never did truly come back in the US, and I still recall the humorous acronym for the automaker…Fix It Again Tony. Now that truly deserves a Ba-Da-Bing…and no disrespect intended for my Italian friends in the above FIAT reference or the urban slang. But FIAT’s story isn’t all that much different from Toyota. They grew too fast here in the US, chasing profits, and couldn’t service their lines; hence they gained the reputation as a manufacturer with unreliable workmanship. Even their CEO, who took the reins in 2004, knew of the laughing stock reputation and pledged to recreate the brand. Now, they are returning to favor in their homeland, and actually might have some models for the U.S. soon. But it was a long, long, period of digging out of the trenches and one has to wonder if Toyota is going down the same path?
Now to switch gears (lame auto reference pun….Ba-Da-Bing), my avid readers might recall last week when I was beating my chest saying that a month ago I was on target predicting our next Dow downturn. In last week’s report I stated (from memory) that I thought the market would retreat to 9200. Well, in reviewing the facts this week, I found that I actually stated in my January 20th report that the Dow would retreat to 9600. That said, predicting is a sure way to failure, akin to predicting you have the best built cars in America, hence you seldom see any business reporters or analysts step out into traffic and make a prediction. However, I’m still considering this a successful predication, as I made my predication during the day of the recent period high of 10763 and the market did fall to a low of 9882 last week (February 8th, 2010); a decline of (8.2%) over the course of 3 weeks. I’m here to tell you, that’s not too bad of a prediction.
And, to follow up on that predication, I’m fairly convinced we have now covered our peak to low and therefore I believe it’s time to call off the bears and take a ride up, at least for a period time (exact ride length to be determined later). But…as my email invitation says in fine print each week…All views expressed herewith in, and linked, are solely the views of the author and are not intended as investment advice. Ba-Da-Bing.
Just to give you some insight into my on- the- spot literary genius, my intentions for this week’s report were to talk about some creative marketing successes, derived from people (and companies) challenged and responding in these hard economic times, but I will save that for next week (if nothing else pops into this crazy mind of mine). Have a great week. Comment freely. Advancing Tomorrow Today. Greg
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