Why Toyota made out like a bandit under the cash for clunkers program


Let me take you back in time for a moment.

It's April of 2009, just before the Denver Auto Show, and I'm sitting in a room full of local car dealers sporting designer suits and gold Rolex watches…and they are stunned, speechless, worried and breathless to tell me why consumers have almost completely stopped buying new cars.

The answer of course is that the music has died and the cheap credit party is over. People are terrified of losing their jobs and their homes which means a new car purchase seems like a pipe dream to most.

The dealers selling American cars, specifically GM and Chrysler are hurting the most. Toyota has just surpassed GM as the world's number one car manufacturer and the American guys can't seem to even give away cars.

So what's the problem?

My jaw almost drops to the floor as a local mega dealer says the real issue is that Americans just don't get the fact that American car companies are building great and reliable cars.

The real problem is not with the product, but with the perception of quality and value (or lack thereof) that car buyers still have when it comes to buying American. I listen in stunned silence to a long soliloquy about how much better American cars are now-a-days, and how the media (read me) needs to do a better job in reporting this fact.

April 1997 10-years earlier

I'm sitting at home watching the X-files when my new and slim Motorola StarTac cell phone bleeps like a sheep in heat.

I flip it open to barely hear (over the blasts of many angry car horns) my distressed wife tell me that our newish Audi A4 won't go into any gear, and by the way, I'm stuck in the middle (not before and not past) one of the busiest intersections in town.

I call the Audi emergency number and they promise to send a tow truck. I drive out to the scene of mayhem and manage to push (with some help) the crippled A4 out of the the intersection and into nearby gas station.

My wife goes from frazzled, to embarrassed, to angry in about 10 seconds.

The tow truck arrives, loads up the A4, and takes it to the nearby dealer who repairs a broken cable (or something) under warranty and gives the car back to us.

A few months later we sell the A4 and get a Toyota 4Runber instead.

To this day my wife refuses to even consider an Audi when shopping for a new car.

August 27, 2009

Reuters in a story entitled "Japanese, Koreans gain most from cash for clunkers" is reporting that:

"Toyota's "clunkers" market share was 19.4
percent, compared with its year-to-date U.S. share through July of 17
percent. Honda captured 13 percent of the "clunkers" market compared
with 11 percent for the first seven months of the year.

Ford's "clunkers" sales topped 14 percent, compared with a 15
percent share for the year through July. GM reported 17 percent of
"clunkers" business compared with 21 percent from January to July.
Chrysler's "clunkers" share was 6.6 percent, compared with 11 percent

In other words, Toyota did the best under the "cash for clunkers" program.


Because Toyota has a reputation for quality and reliability that the company has earned over the last 30 years of building solid and reliable cars.

Sure the Americans have gotten tons better over the last ten years, but that's simply not enough. The Vega and the Chevette and all of those countless nondescript Buick, Pontiac, Dodge, Ford and Chrysler rent-a-cars with cheap parts that broke and left their drivers stranded while on the way to an important family gathering or business meeting have done significant damage to the brands and to American reputation for building quality cars.

The lesson in my experience: Crap cars cast a significant shadow when it comes to new car sales.

The only exception being old British convertibles with Lucas electronics that are not only expected, but in fact encouraged to breakdown often giving their owners something to repair on long weekends.

I recently reviewed the new 425 horsepower Dodge Challenger SRT8 HERE and got 31 comments about the car including:

"Nice Car but lets look at the obvious, It's a new Dodge -It a piece of
junk. All these people on this post talking about its value in the
future. I'd like to talk to you in 10 years when your car starts to fall

Fair or not, the comment is typical of what happens over decades when a car company puts short term profit ahead of long term quality and reliability.

Roman Roman Mica is a columnist, journalist, and author, who spent his early
years driving fast on the German autobahn. When he's not reviewing cars
for the active set, you can find him training for triathlons and
writing about endurance sports for, EverymanTri.com. Mica is also the Endurance Sports Examiner.