GM says Toyota quality is down
Top exec says the Japanese auto maker's recent recalls have tarnished their reputation for quality.
September 21, 2005: 7:09 PM EDT
DETROIT (Reuters) - A top official at General Motors Corp. said Wednesday that rival Toyota Motor Corp.'s reputation for quality was no longer as rock solid as it once was, citing a rise in the number of product recalls at the top Japanese carmaker.
"For a long time, they've lived off a well-earned reputation, say in the area of product quality," said John Smith, GM (down $0.38 to $30.70, Research) Vice President of global product planning.
"But if you look at the objective data in the last three years, that well-earned reputation isn't as well-earned in recent years," Smith said at the Reuters Autos Summit, held in Detroit.
Toyota (down $0.63 to $86.89, Research) is racking up market share in the United States largely at the expense of GM, which has consistently lagged Japan's top automakers in key quality studies.
"I'd say objectively that while I still think they're living off the reputation, I don't think it's being earned every day as it used to be in the past.
"And whether or not that catches up to them -- that remains to be seen," said Smith.
Toyota's Lexus luxury brand remained the top nameplate in an annual quality by J.D. Power this year.
GM had two brands in the top five, but its Chevrolet, Pontiac, Saab and Saturn scored below the industry average.
GM leads the industry in product recalls, having called in 2 million vehicles in April, and another 804,000 units last month.
Toyota has also had its share, recalling 978,000 pickups and sport utility vehicles this month.
"(Recalls) didn't seem to be something they did very much of in the years past, but they've been doing it a lot these days," Smith said.
"We seem to attract more attention when we do things of that type ... I'll be interested to see whether they get the same kind of coverage that we used to get," he added, referring to the latest Toyota recall.
As Toyota, which recently eclipsed Ford Motor Co. (down $0.10 to $9.66, Research) as the world's second-largest automaker, carves out a bigger share of the U.S. market, most industry watchers expect it to unseat GM at the top in the next several years.
Smith expressed confidence, however, that GM would retain the top spot as far out as 2015, when he projects new car sales in the world to reach 85 million units a year, up from around 63 million now.
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