JAPAN: A Break for Detroit

Published: January 28, 2010

By ROBERT CYRAN and ANTONY CURRIE

Reuters Breakingviews

Detroit’s Big Three must be breathing a huge sigh of relief. Toyota recently sped past General Motors to become the largest seller of vehicles in the United States.

But the Japanese carmaker, which cherishes its reputation for quality, has been forced to stop selling eight of its top models while it tries to fix a problem involving accelerator pedals that stick. This defect has caused 275 crashes and 18 deaths since 1999. Toyota is also recalling 2.3 million vehicles and halting production for a week.

American automakers, however, should not get too giddy.

First, it is not yet clear how much Toyota’s sales will be hurt. The news is likely to put off some current owners and prospective buyers. And Ford probably stands to benefit the most among domestic manufacturers, largely because it enjoys a better reputation and a more comprehensive lineup of competing vehicles than G.M. or Chrysler. But if Toyota can devise an effective fix quickly, that could prevent mass defections.

The opening provided by Toyota also comes with a lesson: the company’s woes have been exacerbated by its mass use of sharing platforms and parts across different vehicles and different geographies. Cars in Europe also suffered from sticky accelerators. In general, the measure is a smart one that can shave as much as 60 percent off engineering costs on similar vehicles, according to Barclays Capital.

Indeed, it’s one of the ways Toyota managed to overtake American rivals in their own backyard. Ford, G.M. and Chrysler have been playing catch-up for years. Ford, in particular, is making a big push to share platforms as it cranks up global production of the popular Focus.

But as the Japanese automaker is now finding out, the approach can prove incredibly expensive when something goes awry. That should serve as a timely reminder to Detroit that investing in quality control can be at least as important as cutting costs.

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