Toyota recalls and emerging rivals

By: Alfred-Charles Co (许有泉)

The auto industry was one of the worst hit during the economic crisis because automobile expenditure was among the first to be cut from most people’s budget.

Toyota emerged from the crisis and remained on its thrown as the industry’s leader despite huge blows on its finances and reputation – caused by a massive recall due to factory defects. Its recent recall of over 1.5 million vehicles from the market as a result of brakes and fluids problems has added another challenge on Toyota barely months after a massive recall of the company’s brands from the Chinese market.

Plagued by a series of recalls, Toyota would have to face the tenacity and resilience of its emerging rivals – most particularly Volkswagen and Hyundai.

Volkswagen’s Bold 2018 plan.

“The People’s Car” Volkswagen just recently made public its bold plan to be the number one car in 2018. Its strategies and current perceived strength include a strong foothold in Asia supported by its head start entry in China, the world’s largest market for cars.

With an eye on Asia, and a reputation of being a car company that originated from a country which sells precision and quality, number 4 seeded VW might have just exploited the chink in Toyota’s marketing armor.

Hyundai: rising from nowhere

Another formidable player in the industry is new comer Hyundai. With a weak brand, a sharp contrast between its flashy designs and its poor durability, and services way below the league of the industry’s big players, Hyundai was a virtual nobody. Many people knowledgeable about the industry or otherwise would readily admit that the possibility of Hyundai becoming the fourth largest and one of the most resilient car companies in five years could have been ridiculous.

The Korean Government has however been eager and has effectively been supporting its tech-industries. The merging of Kia and Hyundai only served to strengthen the attention it gets from the government as the sole competitive Korean auto brand in the world.

Moreover, Korea’s geographic, historical and cultural proximity to the rising Asian countries may give it an edge over its western counterparts depending on how it plays its cards.

If recent developments are any indicators, Hyundai would only strengthen its position in the market and would probably continue to climb the auto-industry’s hierarchy.

China’s auto industry: a rising competitor

The Chinese’s auto industry is also rising. China’s auto brands are on the rise and are penetrating the world market. Benefitting from a strong support of government, low production costs, a huge capital, and the weakened state of US car brands, the Chinese brands are aiming to compete with the more established players in the industry, and even buying out some of the biggest names in the industry.

In the meantime, Toyota’s stalwart performance throughout the decades has spawned the interests of managers and the business academia toward its culture and management style. The increased frequency of Toyota’s mishaps and the steadfast rise of numerous rival companies may dampen the near unassailable brand of the company.

So far, with its strong brand recognition, and image as an affordable and practical car for the masses, and with Japan’s renewed efforts to support their industries, Toyota still has considerable momentum behind it.

Furthermore, its strong efforts to plug its recent loopholes have helped in minimizing the damage to its image, bank accounts and its overall profitability.

The champion cannot bank on these buffers to cushion its fall however, as it is now being surrounded by big players poising themselves to usurp the throne.

* Alfred-Charles Co (许有泉) is an international reporter at M4 Media

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