GM (GM) And Toyota (TM): 662,000 Recalls

April 10, 2008 by Douglas A. McIntyre

GM (NYSE: GM) and Toyota (NYSE: TM) are, between the two of them, recalling 662,000 cars in the US, a market where only 15 million vehicles will be sold this year.

Most of the problems are with power windows.

The recalls point to potential long-term problems in the car industry. GM’s issue is that it has cut down the number of plants it has and also laid off or bought out its most senior workers. Trying to produce a wide range of models, from Caddies to Pontiacs, is not as easy with a small work force and plants that have to be re-purposed to build multiple platforms.

At Toyota, the problem may actually be more difficult. Two decades ago, the company could satisfy most demand by building in Japan, where costs were low at that point, and shipping overseas. Controlling quality when the plants were across the street was not terribly difficult. Now those plants can be 10,000 miles away.

Car quality may never be the same again.

Douglas A. McIntyre