Posts Tagged ‘Toyota’

Honda recently announced that it will begin selling a hybrid version of its popular Fit subcompact car in Japan and Europe starting next year. With a starting price of 1.59 million yen ($19,310), the Fit Hybrid will be the most affordable hybrid in Japan. But what about bringing it here to America?

The entry-level Honda has enjoyed great success in the States thanks to a hugely flexible interior and sub-$15k price tag. In reviews on Honk, Fit owners rave about the high fuel economy, EPA rated at 27 miles per gallon in the city and 33 on the highway.

At current exchange rates, the Fit Hybrid would add about $3,000 to the bottom line but would boost fuel economy into the 40 mile-per-gallon range. That’s on par with the Fit’s big brother, the Honda Insight, but still below the 50 mile-per-gallon rating of the best-selling Toyota Prius.

The Fit Hybrid uses the same 1.3-liter hybrid powertrain that’s found in the Insight. On the road, its 98 horsepower and 123 pound-feet of torque should match up closely to the standard Fit’s 117 horsepower and 106 pound-feet.

Honda so far won’t commit to selling the Fit Hybrid in the US, the obvious fear being that a Fit Hybrid would cannibalize sales from the already slow-selling Insight.

But the longer Honda delays, the more hybrid sales they risk losing to Toyota. And with Toyota’s CEO, Akio Toyoda, announcing the company’s intention to be a leader in hybrids and all things green, it doesn’t seem wise for Honda to hesitate.

Let’s hope that Honda chooses to bring this fuel-sipping Fit Hybrid to market before competitors makes them green with envy.

In time, this may become known as the worst deal of the century.

Toyota and electric car maker, Tesla announced yesterday a new partnership to develop electric vehicles and the necessary engineering and manufacturing support to back them.  As part of the deal, Toyota will purchase $50 million of common stock in Tesla as soon as the fledgling automaker goes public.  Tesla also takes over Toyota’s recently shuttered NUMMI manufacturing plant in Fremont, California for an undisclosed sum.

This is great news for Tesla.  But what’s not clear is why Toyota would agree to such a hugely lopsided deal.

Akio Toyoda and Elon Musk pose with California Governor, Arnold Schwarzenegger at a press conference Thursday (Photo: SF Chronicle)

Tesla has burned through $236 million in capital since it’s 2003 founding.  The Silicon Valley automaker has so far delivered about 1,100 of its $109,000 Roadster electric sports cars and hopes to produce its next vehicle, the Model S electric sedan, by the end of 2012.  Tesla also qualified for $465 million in federal loans last year to be used to purchase a factory and get the Model S to market.

The new deal gives Tesla a fresh infusion of capital and a deal to produce a Toyota-branded vehicle with a Tesla electric powertrain by 2012.  This gives the young automaker a vote of confidence from a major global player and a steady stream of revenue until the Model S comes to market.  Investors will no doubt be salivating in anticipation of the IPO.

Tesla also receives a modern factory with a trained workforce that’s eager to return to work.  Tesla has never manufactured a vehicle from scratch – the Roadster’s chassis and body is built by Lotus Cars in England – and Toyota will supply critical engineering support to get the two new models to market.  Toyota’s manufacturing expertise will allow Tesla to overcome an enormous hurdle that may have otherwise delayed the introduction of the Model S by many months.

Global recall scandal notwithstanding, Tesla also stands to benefit from Toyota’s reputation for quality and efficiency.  And since the Toyota-branded product will launch first, Tesla has time to iron out the kinks in their processes before the Model S comes to market.

The Tesla Model S on display next to the company’s $109,000 Roadster

But why would Toyota willingly enable a competitor with such a generous offer?

From a dollars and cents standpoint, the Japanese automaker will gain virtually nothing from this deal.  Toyota saddling up to Tesla is the automotive equivalent of MIT developing curriculum for the University of Phoenix.

Toyota does not need Tesla’s help to develop electric vehicles.  They’ve already proven their basic competency with the RAV4 EV of the 1990’s and are the undisputed market leader in gas/electric hybrid technology.  Toyota also has a joint venture in place to produce battery packs with Panasonic and has shown working prototypes of plug-in hybrids and hydrogen fuel cell vehicles.

Put simply, Toyota already knows how to work magic with electrons.

Is this partnership perhaps motivated by guilt from shutting down the NUMMI plant earlier this year?  Toyota CEO, Akio Toyoda reportedly met with Tesla CEO, Elon Musk for the first time six weeks ago, right around the time the NUMMI closed its doors.  Toyoda, himself, apprenticed at the NUMMI plant years ago and said that he, “learned much about working in America (there) so I feel a personal attachment to the plant.”

Though the CEO is obligated by Japanese business culture to provide for his workers, he must know that a niche manufacturer like Tesla is only capable of hiring a handful of the thousands of workers who were laid off at NUMMI.

The truth may be less about money and more about company culture.

Since coming to power in June of 2009, Toyoda has made it clear that he is unhappy with the trajectory established by his predecessor.  He berated his senior managers for allowing the company to grow too quickly, sacrificing quality and customer satisfaction along the way.  Weeks later, Toyota was drawn into a global recall scandal that has so far affected over 9 million vehicles worldwide.

The partnership may signal the fresh direction that Toyoda has been seeking.  The San Francisco Chronicle reports that Musk and Toyoda spent their time together talking and driving around Los Angeles in a Tesla Roadster.  It was a pivotal day for Toyoda, who said, “Simply put, I felt the wind, the wind of the future.”

“He really sees value in understanding how a fast-moving Silicon Valley startup operates,” Musk revealed of Toyoda. “He’s sort of looking at this and saying, ‘We need to go back and remember what it’s like to be a startup.’”

In a press release, Toyoda referenced his own company’s roots and said that by partnering with Tesla, “my hope is that all Toyota employees will recall that ‘venture business spirit,’ and take on the challenges of the future.”  But if a startup spirit is all that the CEO is in search of, why not just hire some senior managers from Silicon Valley and allow employees to wear jeans every day?

The partnership instead removes an enormous barrier for Tesla, teaching them world-class techniques for how to build cars with impeccable quality.  The student will quickly become master and may soon threaten its own teacher.

For Mr. Toyoda’s sake, let’s hope that the inspiration he feels from this deal will translate to his own company’s products.

Ford Motor Company released first quarter results yesterday, posting profits of $2.1 billion.  CEO Alan Mulally predicted a “solid” year for the Detroit-based automaker, though CFO Lewis Booth warned of several challenges ahead.

“We’ve got a lot of new product launches, so you’ll see some launch expense and we do expect some headwinds from commodities,” he said.  Reminding reporters of the still fragile economy, Booth cautioned that the company will likely post more modest profits for the rest of the year.

The CFO’s comments are a reminder that although the car market is showing signs of improvement, the industry isn’t out of the woods yet.

Nonetheless, strong sales of the F-150 pickup truck and Fusion midsize sedan have encouraged Ford to charge ahead with a second quarter production plan that is five percent higher than the plan it released at the beginning of March.  The much-anticipated Fiesta subcompact will go on sale next month and the next-generation Focus compact will launch in early 2011, completing Ford’s dramatically-overhauled lineup.

“The most important thing Ford has done is invest heavily in new product during this down cycle,” noted Erich Merkle, president of Autoconomy LLC. “As we’re coming out, they’ve got all this new product coming out in just about every category.”

Mulally famously maxed out all of Ford’s credit lines in 2006 to finance a massive restructuring of the company.  The $23 billion it borrowed gave the automaker a cushion to develop new models and withstand losses during the recession.  Ford was the only domestic automaker to avoid a government bailout, though the debt load now puts the company at a competitive disadvantage to rivals, GM and Chrysler, who had their slates wiped clean in bankruptcy.

The lack of government intervention may be helping Ford from the standpoint of consumer sentiment, though.  The company’s market share is up to 17.4 percent from 14.7 percent a year ago, the largest rise since 1977.  Ford also notes that many new customers have defected from Toyota following the Japanese company’s global recall scandal.

“The landscape might become more competitive as Toyota fights its way back and GM launches a lot of new products,” notes Joe Phillippi of AutoTrends Consulting.  In line with Booth’s projections, he warns,“The first quarter could turn out to be their best.”

Consumer Reports has announced a rare “Do Not Buy” rating for the Lexus GX460 sport utility vehicle. While performing a standard handling test, CR found that the GX460’s electronic stability control was extremely late to intervene.

The maneuver tests for a condition called ‘lift-throttle oversteer’ which is the tendency for a vehicle to fishtail when a driver steers the vehicle into a turn and then lifts off the accelerator pedal suddenly. Drivers in the real world may face this same condition if they veer onto a highway exit ramp too quickly and then try to slow.

The Lexus GX460, which is mechanically similar to the Toyota 4Runner, comes standard with an electronic stability control system that is supposed to detect a slide and then carefully activate the brakes to help the driver regain control of the vehicle.

Consumer Reports found that the electronic stability control system in the GX460 was extremely late to intervene. So much so that the vehicle was almost completely sideways before the system activated.

Curiously, the Toyota 4Runner had no such issue when it was run through the same test by Consumer Reports.

The magazine notes that in the real world, a GX460 may come into contact with a curb or slide off the pavement, which may “trip” the vehicle and cause a dangerous rollover crash. CR notes that ‘tripping’ is the number one cause of rollover crashes.

Consumer Reports goes to great lengths to remain objective, even purchasing its test vehicles from dealerships anonymously, so as to avoid foul play. (It’s rare for a manufacturer to specially-prepare test vehicles for the media, but several enthusiast magazines have reported this happening in the past.)

The magazine tested their own GX460 and then paid Lexus to borrow a second vehicle from the media test fleet. Tests on the second vehicle produced the same fishtailing outcome.

For its part, Toyota’s luxury division is responding quickly. Lexus has announced a stop-sale for all GX460 models and is offering free loaner cars to its affected customers. The company states that its, “extensive vehicle testing provides a good indication of how our vehicles perform and we are confident that the GX meets our high safety standards.”

Nonetheless, the company has dispatched engineers to investigate the claim and potentially develop a fix.

For embattled Toyota, this is the latest in a long string of serious safety issues and the price tag for recalls, government fines, lawsuits, and lost consumer confidence is likely to continue climbing.

Chevrolet’s Great Engine Warranty

Hyundai, who made a name for itself by offering the longest warranty in the car business, quickly revealed that a great warranty is the secret sauce in changing the way people think about a brand’s quality.  But Hyundai was not the first car company to leverage this tactic.  Back in 1975, Chevrolet knew it had one up on their competitors.  Their amazing Dura-Built 4 cylinder engine was “so amazing and durable”, it boasted a warranty that was 11,500 longer that the 4 cylinder warranties offered by Toyota, VW, and Datsun (that’s the old name of Nissan for the youngsters).  It’s almost a it comical to think that Toyota and Datsun actually gave warranties of 12-20,000 miles on their engine, but they did. These cars are so classic.  I wonder what people would say about these new cars today?

I love this ad for a lot of reasons.  First, I love how they shot the cars in the Mojave Desert, with all its dried up dirt, to drive home the point that it can even last in the desert with not a gas station, human, or restroom stop in site.  It’s just you and your Monza!  But have no fear, the car won’t let you down.

Second, is that it reminded me how cool it used to be that we all described engines in cubic inches, not liters of cubic centimeters.  Since when did we Americans start to care about the metric system and why do we use it for wine, booze, soda, and engines? I loved those days when people talked about their 302 Boss and the 426 Hemi.  America used to be so proud of those big numbers.   Now, we talk in 3.0 and 4.6s.  I liked the big numbers better as it’s simply more American. Maybe Government Motors will push this initiative.

Third, I love how we used to be limited to an “engine warranty” rather than an entire powertrain warranty, which may include the transmission and drivetrain as well. Certainly, this progression of quality and competition over the consumer has benefited all of us.  This ad really reinforces this truth.

Finally, I like the fact that there was no fine print, so they had to be pretty descriptive in the main copy. In fact, advertisers seemed to use the main body of copy as the fine print. Today, there’s so many stipulations and restrictions that we have three areas of text…. the main headline, the copy, and the little print that tells us they may have quite possibly misled us with all their above statement.

Note: Hyundai’s 100,000 mile warranty is Non-Transferable

Speaking of warranties and disclaimers….

A Hyundai buyer recently told me how excited to find out he was buying a 2010 Hyundai Sonata.  He was especially gushing about his warranty and that he will never have to worry about his car again.  Yes, that’s a bit bold, but he was excited and so was I.  And while I was very congratulatory, I had to quickly warn him that her 100,000 powertrain warranty does have a small wrinkle in it. The big 100,000 warranty that is so well advertised is(a) for the powertrain only; and (b) the warranty only covers the original owner.  If you sell the car, the 100,000 warranty is reduced to 60,000 miles – which is the same as their still fabulous bumper-to-bumper warranty.  He didn’t know this, but was still thrilled.  After all, he felt amazing about his purchase and deserved a new car.  You can read his and other consumer car reviews on various Hyundai cars on Honk! Yes, I dropped in a shameless plug