TOYOTA’S MARKET SHARE AND THE JAPANESE BUICK

6/13/13

Toyota’s North American boss Jim Lentz said yesterday that Toyota (TM) is unlikely to reach its peak U.S. market share (17% in 2009) this year.   Some observers had expected, or at least hoped, that Toyota could reach this milestone after having a great 2012 after a series of sudden acceleration recalls in 2009 and 2010 and tsunami related supply disruptions in 2011.  These expectations, or hopes, have been dashed as sales have been up by only 5.2% in 2013, not enough to coax TM’s market share beyond the low 14% handle.   The problem seems to have its core in slow sales of the Camry, the Yaris, and the whole Scion line.

So why isn’t Toyota reaching its former market share glory?   The answer is two-fold.

First, Toyota is a successful car company, both here and abroad, because it makes, with a few exceptions, reliable and boring transportation.  In this context, boring is not exclusively a negative; it can be taken in the context of

“This car gets 30 miles per gallon (starts on the coldest of mornings, doesn’t burn oil, never has an electronics problem, etc.) with boring regularity.”

Most people like, or at least will certainly accept, boring with their transportation, and not only in the context of their car providing no surprises.   They aren’t in it for excitement; they want reliable transportation and will accept, or even embrace, boredom for such reliability.   Even though most car guys don’t understand this, this set of preferences is perfectly understandable.   For most drivers, cars are not sources of recreation, or even outright joy, as they are for yours truly.  They are a means of getting around in comfort, a place of temporary much welcomed solitude, and a tool for navigating the roadways of life, literally and figuratively.   They aren’t meant for flinging into curves, apex hunting, rev matching, or other such activities that occupy the time and thoughts of those of us who look to our cars as ways of life, or at least a means of enjoying ourselves.

While those of us who seek outright excitement, exhilaration, and never ending entertainment in our cars constitute a very small minority, there is a substantial subset of people who, while not seeking out excitement in their cars, would certainly tolerate, or even seek out, a little excitement if it requires little or no sacrifice in reliability.   That excitement can come in many forms, be it styling, handling, power, or interior features.  With the vast improvement in cars of late, car buyers are increasingly finding that they don’t have to put up with the boredom of most Toyotas and Lexi in order to enjoy, well, boring reliability.   The Camry and its competitors immediately come to mind.   While the Accord has traditionally been the slightly more fun alternative to the Camry, the Ford Fusion, the Mazda 6, and the Subaru Legacy (See my 5/31/13 piece “OOH, OOH SUBARU…THERE’S SO MUCH THAT CAR CAN DO…”) are all capable of nearly, or completely, matching the Camry in reliability while providing a measure of excitement in styling, handling, power, or some other aspect or combination of aspects of the driving experience.   The same argument can be made to an even greater degree regarding the Lexus ES350 and the BMW 3 series, the Caddy XTS, the Audi A4, and even the Mercedes C Class.

So one doesn’t have to drive a boring Toyota to achieve boring Toyota reliability.

Second, Toyota has been effectively “Buickized,” a phenomenon I’ve been talking about for years.   Toyota is seen by GenXers, GenYers (or millennials or whatever one calls kids born in the ‘90s) as old guys’ cars, much as our generation regarded Buicks.  (Things are changing at Buick in this regard, but not many people seem to notice, but I digress.) This trend was arrested dramatically  in 2012 when the new body style of the Camry, which looks sharper but is still, at least of on a relative basis, a wallowing mattress on wheels, was reducing the average age of its buyers to the mid ‘40s from the (obviously intolerably old!) mid ‘50s.   But that reduction, while dramatic, may prove to be temporary and is reversing in 2013, with the average Toyota buyer’s age stabilizing in the mid 50s.

This is not necessarily a bad thing; there are a lot of people in their mid 50s and we are all getting older (if we aren’t dying) and we all spend money, even if we don’t have it.  (See my 5/29/13 post SAVING FOR RETIREMENT, PAYING FOR EDUCATION, AND TALKIN’ ‘BOUT MY GENERATION.)  Why car buyers feel compelled to constantly go after the younger consumer, even as the legions of older consumers keep growing, is beyond me.   Note, for example, that Pontiac, GM’s division that supposedly aimed at younger buyers, is a memory while Buick soldiers on.   That had more to do with China than the U.S., but that is another story.  The point is that selling to older consumers when the population is aging does not seem to be a bad strategy to yours truly, but those who are smarter, or at least who make a lot more money, seem to think so.

So there are two reasons that Toyota, while seeing increasing sales and consistently being among the top selling manufacturers in the U.S., is not likely to reach its peak 2009 market share in 2013:   more interesting, exciting competitors can match, or nearly match, Toyota and Lexus for reliability and Toyota and Lexus remain old people’s cars.   But don’t make too much of the latter.