Saturday, August 10, 2013

And so the Dying Phoenix Begins to Burn

          Mighty Toyota currently finds itself in an unenviable position and one that would have been unfathomable twenty years ago; the stigma of being branded with the image of an 'old person's' car. This image crisis has been years in the making and is symptomatic of a quandary very familiar in the car business, the fear of and outright refusal to evolve, innovate, and take risks. To look into why Toyota's brand image continues to decline, we must wind the clock back to the years following World War II and look at Ford, Chrysler, and General Motors.
          After the war ended and the troops came home, the economy boomed and people moved out of the cities and into the suburbs. Interstates were constructed and the United States changed as a whole, becoming a society that revolved around and depended increasingly on the automobile. It was an exciting time in the American automotive industry as the Big Three and other now-defunct brands battled it out to compete for business, making changes every model year to keep the offerings fresh and the customers coming in. Among the two most well-remembered attempts at innovation and customer retention were peddled by Ford and Chrysler in the mid-to-late 1950s when Ford introduced the Edsel brand and Chrysler pioneered the 'Forward Look', both seriously risky moves and both would ultimately have lasting consequences on the corporate culture on both sides.
         As we all know now, the Edsel was a colossal failure. Derided as ugly and irrelevant, the brand was priced too near similarly-equipped offerings from the Ford and Mercury lines to remain a competitive entry. Coupled with a nationwide recession, production of first-year 1958 Edsels only reached 63,107 units, well shy of the 200,000 units Ford was hoping to achieve. Sales continue to decline to just under 45,000 in 1959 and by 1960, only 2,846 Edsels were made before the brand was dropped entirely. Ford had gambled and lost.
          Chrysler's risk with the Forward Look was already internally tainted by the failed Airflow of the late 1930s but nevertheless, it succeeded at first. With modern styling and crisp lines, the Forward Look styling and revolutionary new features vaulted Chrysler to grab nearly a quarter of the American new car market by the end of the 1950s. Like the Edsel, though, the Forward Look was destined for failure. With so much revolutionary and untested equipment on the all-new models, many cars were rushed into production and as a result, quality control suffered enormously. The Forward Look models rusted out within two or three years, trim pieces fell off brand-new cars and the revolutionary styling risk that took Chrysler to the top was soon tainted by poor quality and tarnished the brand's image for decades to come.
          For the next twenty years or so, the Big Three retreated into a shell of conservatism and continued to make pretty much the same cars they had always made; large, thirsty whales with big engines and tiny fuel economy ratings. When the public clamored for small, fuel-efficient vehicles in the wake of the 1973 Arab Oil Embargo, Detroit didn't listen. Henry Ford II took great pride in the size of his cars and once said, "Small cars, small profits." Not finding what they wanted at home, Americans began turning to the well-made, fuel efficient Japanese cars being offered by Toyota, Honda, and Datsun. They were the cars Americans wanted in a time of uncertainty about the price and availability of fuel. It would take a billion-dollar federal loan, the charisma and vision of Lee Iacocca, and Chrysler risking it all (literally) in the early 80s with the front wheel drive K-Cars and the all-new minivans to bring not one but two revolutionary offerings back to the American automobile marketplace. Not only that, but the two revolutionary designs managed to rescue Chrysler from the brink of complete dissolution, reteaching the company that in order to survive, sometimes you have to take risks and while nothing is guaranteed, in the world of the automobile especially, regardless of brand, you evolve or you die.

          For Toyota, its current troubles date back to the early 1990s when the company was on a hot streak. Toyota could do no wrong. The American car companies (GM in particular) had run through a majority of their great 1980s renaissance ideas and somewhat returned to tradition of just producing whatever they thought would sell. Toyota was still a fairly small power in the American game but had a diverse range of products to suit every consumer demographic known to man. The modern and aerodynamic Camry was the reliable, well-built alternative to the boxy GM offerings of the time while those looking for a bit more zest could always find themselves in a Supra Turbo. An F-150 it was not but Toyota even offered a pickup truck in the form of the T-100. All in all, Toyota's line-up had something for everyone; sedans, coupes, station wagons, sporty cars, a convertible and even a minivan. It didn't matter what you were in the market for; if you wanted something reliable, modern, and stylish, chances were good that your local Toyota dealer was the place to go for one-stop car shopping. Toyota also spent a majority of the 90s reveling in and tinkering with the success of its newly-born Lexus brand (a huge risk in itself) and glowed in the praise of the LS400. But then, in the late 1990s, a fundamental shift began to take place inside Toyota's corporate structure that seemed to omit anything resembling a fun car from the company's lineup.
          The first to hit the chopping block was the ludicrously powerful but lounge singer-svelte Supra which departed the US market after the 1998 model year. Next to go was the MR2 roadster that bowed out in 2005, followed shortly by the Celica coupe. No more convertibles, no more sports cars, Toyota was then left with a lineup of reliable but completely forgettable sedans and minivans in vanilla white and monotone beige interiors. For the two years prior to the departure of the Celica and MR2, Toyota had been pushing the Scion brand as an attempt to get younger generations into Toyota products. Now, ten years later and it's safe to say that the bet Toyota made on the Scion brand was likely not worth the risk and that boils down to what the cars are like. They're forgettable...completely and utterly bland.
          The Scion tC was intended to be the spiritual successor to the Celica but wound up being just another 2-door coupe with anonymous rental car styling and, thanks to aggressive teenage drivers wrapping them around trees on almost a daily basis, eye-wateringly steep insurance rates. Nobody could really work out what the small xA hatchback was for but meanwhile, the boxy little xB wormed its way into the hearts of a demographic completely the opposite of what Toyota had intended: retirees and the elderly. Honda faced a similar dilemma with the Element (also targeted towards the 20-something crowd) and before you knew it, both it and the xB soon found themselves in the handicapped spaces in front of the bingo parlor instead of the front spaces outside the Aura Night Club. It's not hard to see why the old crowd fell for the xB as hard as they did; it was a Toyota underneath so it meant it was reliable, it wasn't particularly fast, it got good fuel mileage and had a great deal of interior space. But the fundamental mistake Toyota made with Scion was pushing these products under a different brand name. Even though they're sold at Toyota dealers and have all-Toyota parts, the average consumer, much less a 17 year old, fails to understands this and if Toyota wanted to save their brand image as youthful, sporty, and fun, they'd have done the smart thing and marketed their Scion models as Toyotas.
          The company's risk with Scion, much like Chrysler's with the Airflow and Ford's with the Edsel, flopped. It missed the target so completely that Stevie Wonder might as well have been aiming the gun and in doing so, it engrained the idea that risk and revolution were dangerous ideas no longer to be meddled with at the Toyota Motor Corporation. As a result, Toyota has stopped innovating and risking almost completely. As far as I can tell, not one single news-worth innovation or bold new idea has come from the house that Kiichiro built for the last ten years or so. Every new Camry looks almost exactly like the one that came before and even the all-new 2014 Corolla will come standard with a 4-speed automatic transmission! Excuse me? A FOUR SPEED?!
          You may cry foul and ask me, "But Andrew, what about the Prius?" Bah. That car has little to offer the world in the grand scheme of things other than the fact it was the first mass-market hybrid and was also the first to crack 1,000,000 worldwide sales. Boo-hoo. Yes, it was revolutionary when it was introduced in Japan in 1997 but the world has moved on. Hybrids are not a viable long-term solution to our energy problems but are merely a stepping stone to the next energy revolution, involvement in which Toyota seems completely disinterested. They are very happy to continue riding along on technological advances from the last century and meanwhile, across the Sea of Japan, the Koreans have been advancing steadily on the market share that Toyota once held as its own, the younger generation now known as 'Millennials'.

          Hyundai and Kia have been slowly advancing on Toyota with lower prices, a superior warranty, and modern but handsome styling while the Japanese giant continues to march on, doing exactly what the Big Three did in the 1960s and 1970s. As others continue steal their market share, Toyota is building what they know they can build; bland, vanilla transportation appliances under the mistaken belief that Millennials will flock to Toyota showrooms simply because it's what their parents drove. Nobody ever thought that Toyota's quality would hurt them but in this case, it has because in many cases, the parents of the generation that Toyota is targeting are still driving their Toyotas and the last thing a young person wants to be seen in is the same beige Camry or Avalon their parents are driving to golf every Thursday.
          Kia has pushed the Soul as 'a new way to roll' for younger drivers and Hyundai is selling every single Elantra compact that it can make. In fact, over 200,000 of them found new homes in 2012 alone. Want something sporty? Hyundai can sell you a Genesis Coupe or a hot hatch Veloster Turbo while Kia can offer you an Optima with a turbocharged engine and more luxury and technology than an Avalon at a lower price without giving your neighbors the assumption you'll probably be putting plastic on your sofa any day now. Even the Americans are catching up to Toyota. Chevrolet has pushed the refresh of the Malibu forward after only year because they didn't feel the original look was competitive enough and the new Impala will not be sold to fleets to avoid the dreaded 'rental car' stigma. Ford's Focus and Fiesta compacts are the same award-winners that Europeans have been getting for years and Dodge's new Dart comes with that sublime Italian handling DNA with a superb value to boot. Hybrids are no longer only Toyota's game, either. Honda, Hyundai, Kia, Ford, Nissan and even Chevrolet currently offer or are planning hybrid models.
          In closing, Toyota is not the only kid on the block peddling a quality product anymore and those days of exclusivity are gone forever. The other brands that Toyota once marched past are now preparing to overtake again, offering a model for everyone, regardless of demographic while Toyota now only seems to sell cars to people who don't care about cars.

          What does the future hold for Toyota? We don't really know right now. But if one looks at the lifeline of an automotive brand, there is always the era of ugly cars, closed-minded thinking and out-of-touch management before the new blood comes in and the genius returns. There is brilliance inside every car company in the world today and that next great idea rests in the mind of a designer or an engineer who has the audacity to step forward and say, "We can do better." The mark of a truly great car company is management that listens to its people and takes great ideas seriously, even though they may be frightening and come with some risk. If you think of Toyota as a phoenix, the giant bird is now starting to catch fire and within five years or so, the flames will extinguish and a new life will arise from the ashes; a lighter, younger Toyota with fresh new ideas and a company that will help lead the world into the future of the automobile.