Collapsing Empires: GM and now Toyota

I have been under an awful halo of the two giants. Reasons are obvious. I worked for the automobile industry and a company that had a long tie with General Motors. I had contacts with many from GM, US as well as its subsidiaries in UK (Bedford), Europe (Opel), and Japan (Isuzu) in my years of professional activism.

And though I never came anywhere near Toyota Motors at work, but Toyota was so impressive in developing its production system that I could remain passive about knowing it. Toyota Production System evolved as the most impressive system in operation management for manufacturing sector with Total Quality Control, Kanban or Just-in-time, Total Productive Maintenance, and many techniques for shop floor management.

The emergence of Toyota Motors as the largest automobile manufacturer of the world was the headline a year ago when it surpassed the US giant General Motors. And then the world saw the collapse of General Motors. Even after significant financial aid from US government, it had to resort to bankruptcy route for revival. Many opine that American giant will never be back to its old position. But still perhaps GM must be owning the maximum number of IPRs in auto technologies in the world.

And now comes the news, ‘Toyota Motor that earned $18.8 billion only two years ago is floundering’. Toyota expects a record loss of 450 billion yen ($5 billion) for the 2009 fiscal year that will end in March, on top of a similar loss for 2008. Some analysts are forecasting the company could again lose money in 2010.

Unfortunately, Toyota is not the same what it stood for-the company of total quality. The company underwent a spate of recalls in the middle of the decade. Has the scale betrayed its roots as a quality leader in auto business?

Last week, Toyota announced its biggest recall ever in the United States after a crash in August in which a California highway patrol officer and three family members were killed.As reported the trouble was with some floor mat.

Even till last year, I had been advising my children in US to go for Toyota. What has gone so much wrong?

As conceded in media, even in the domestic market, Toyota is no longer producing cars that excite the customers. Auto sales have fallen in recent years, partly because of a growing disinterest in cars among younger Japanese buyers. Can the auto leader come out something that can delight the next generation?

Both the giants provide some lessons for those aspiring for the top position. It’s difficult to remain at the summit. Can the premier management schools in world over provide the answer to get over the problems Toyota is facing or will it make these failures only their case studies? Will or can Toyota have confidence in their ability to suggest the reliable roadmap?

Interestingly, both, GM India as well Toyota Kirloskar India are planning big in India with significant amount of investment. Both are interested to be in small cars in India. GM India has gone for a tie up with Reva Electric for producing the green cars in big way.

India is doing great in auto manufacturing and if the sector gets sufficient government support, it can excel and go ahead of China in at least some segments.

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