Toyota Down, Ford Up

Buying & Leasing a Car

Toyota Down, Ford Up

U.S. automakers -- particularly Ford -- are poised to gain from Toyota’s defect problems.

Look for Ford to recapture the No. 2 spot in U.S. auto sales on the heels of Toyota’s recall woes, which come as a gift to beleaguered U.S. car companies. Ford, which last year recorded its first annual net profit -- $2.7 billion -- since 2005, was already well on its way to doing so, riding a tide of anti-General Motors consumer sentiment.

Ford and GM are moving swiftly to grab sales lost by the Japanese giant. They’ll reap huge benefits, though Honda, Nissan and Hyundai/Kia will gain as well.

“With a perennial leader taken out of the competition, the field suddenly is wide open” for a variety of competing models, including Ford’s Escape, Fusion and F-150 truck, Chevy’s Malibu, Honda Accords and CRVs and Suzuki’s new Kizashi, says Rebecca Lindland, director of automotive research for North and South America at IHS Global Insight, an economics consulting firm.

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Overtures to Toyota owners are already in the works. GM will offer Toyota and Lexus owners a choice of incentives if they buy new GM vehicles through Feb. 28. Other automakers are likely to do the same.


The recall to fix defects that have caused vehicles to accelerate unexpectedly -- and the resulting sales halt -- will deal a mighty blow to Toyota, crippling production for at least a month and damaging sales for years to come.

Plants in Kentucky and Indiana, where Camrys and Highlanders are produced, don’t expect layoffs, but suppliers will feel the pain since Toyota has closed production lines that make the recalled vehicles. Weaker suppliers may go bankrupt before lines are restarted.

Toyota dealers will also take a big hit. The sales stoppage affects at least 65% of the company’s vehicles, which must now sit on dealers’ lots until replacement gas pedals can be manufactured and installed on more than 3 million vehicles.

In the long run, Toyota won’t tumble to also-ran status among auto manufacturers, though it could slip to the No. 4 spot, behind Honda. Toyota’s sales will be depressed this year; a flurry of sales promotions and incentives won’t be enough to salvage the year.

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