Toyota’s (TM) US Problem

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Toyota (TM) says that its growth in the US will slow over the next several years. Toyota has 17% of the market, so that may have something to do with the law of large numbers. The company plans to introduce some smaller cars for younger drivers and those living in urban areas. That may keep growth rates up.

But, the announcement by the Japanese company may signal something else. In June 2000, GM (GM) had a 34% share of the US market. Toyota is at half of that, so why should its sales slow.

There may be several reasons. At Toyota has grown, it quality control may have slipped. The company has had several recalls in the US over the last two years.

Toyota may be hitting a "Buy American" wall. With tens of thousands of workers being pushed out at the Big Three, there are bound to be some people who read the headlines and decide that buying a Japanese car is not patriotic.

US car quality has risen sharply. In the new JD Powers reliability survey, Buick tied Toyota luxury brand Lexus for the top spot. Buicks sell for a good deal less than the Japanese brand.

Toyota’s sales in the US are not slowing because the car company has too much market share, They rate is dropping off because the company is hitting more than one head wind.

Douglas A. McIntyre