The Toyota Effect Positive for the U.S. Auto Industry

Final U.S. auto sales for 2007 have been tallied, and Toyota has overtaken Ford at #2 in sales behind General Motors. Toyota demonstrates a textbook approach to building a business. Several qualities exhibited by Toyota can be pointed to as keys to its success, but one that impresses me is its commitment to improvement. It would be very tempting for Toyota to rest on its laurels as it has grown market share in recent years. However, top management insists on staying hungry and not being complacent with past success. Toyota's focus on delivering quality automobiles as well as striving to introduce new products to market that respond to current market conditions (e.g., hybrid vehicles) are strategies that serve it well in both the short-run and long-term.

Many American consumers thumb their noses at foreign made cars (although several "foreign" brands are now manufactured in the U.S.), but foreign competitors create a significant positive effect. The presence of companies like Toyota in the U.S. make all auto manufacturers better because they have raised the bar in terms of customers' expectations of quality and value. The growing market share of Toyota means that it is imperative for the Big 3 to improve their product quality and bring new models to market faster. Link