The writer is a Los Angeles freelancer and former Detroit News business reporter. This column first appeared on his blog, StarkmanApproved.com.
By Eric Starkman
Back in 1986 when I got rid of my defective POS Chevy Citation and bought a Toyota Celica, there was a stigma in America buying Japanese-made vehicles, particularly in Detroit where I moved from Montreal to work for the Detroit News. A few years earlier, a Chinese American named Vincent Chin was murdered by two auto workers because they believed Japanese automakers would eliminate their jobs. The two men targeted Chin because he was Asian, unaware he was from China.
The stigma was such that when I had interviews at Ford, I always used a Detroit News car when I visited the company’s Dearborn headquarters. Until I purchased my X-body Citation, Chevy’s first front-wheel-drive cars, I, too, preferred to buy American-made cars, but my loyalty to U.S. automakers waned when GM refused to heed NHTSA warnings to recall the problem-plagued Citation.
My disdain for GM today stems from my Citation experience four decades ago. It’s still the same ethically challenged company, except the CEO now wears leather jackets rather than suits and ties.
The acceptance and popularity Toyota, Honda, and Subaru enjoy in America today represents three of the greatest brand transformations of all time. Axios/Harris recently released the U.S. reputation rankings of 100 high profile companies, and I’m heartened that I’m not alone in my respect for Japan’s leading automakers.
Honda ranked #7, Toyota #12, and Subaru #15. By comparison, GM ranked #40, Ford #55, and Tesla #63.
Honda, Toyota, and Subaru didn’t achieve their success because of brilliant marketing, although Subaru’s early embrace of the lesbian community and appealing to dog and cat lovers played a role. The companies owe their successes to fostering a reputation for making quality and reliable vehicles and selling them at reasonably affordable prices. Notably, the motivation to sell superior vehicles wasn’t a marketing decision, but rather Japan’s culture where honor and reputation still very much matters.
Japan’s honor-bound culture was manifested in recent days with news that Nissan CEO Makoto Uchida voluntarily returned 30% of his $4.3 million annual salary since April after antitrust regulators reprimanded the Japanese automaker for cutting payments to suppliers. Nissan was chastised by the Japan Fair Trade Commission in March over slashing payments to top suppliers by about $20 million between January 2021 and April last year. While the automaker said it refunded the monies last January, the antitrust regulator urged Nissan to conduct regular audits and training to prevent future violations.
“The fact that our business partners are sharing concerns shows we have not been doing enough to listen to their challenges,” Uchida said. “I take the matter seriously.”
Ford CEO Jim Farley lacks Uchida’s sense of honor.
The consulting arm of Michigan-based Plante Moran recently published a closely watched annual survey of leading automotive suppliers asking them about their relationships with six major North American automakers across eight purchasing areas. Toyota and Nissan knocked it out of the park with 30 point-gain improvements, followed by Honda with a 13-point improvement, Stellantis with a 7-point improvement, and GM with a 2-point gain.
Ford suffered a 22-point decline. Since Farley was named CEO in 2020, Ford’s relationship with its suppliers has declined 45 points. Troubled supplier relationships are no doubt a contributing factor to Ford’s myriad manufacturing issues, which explains why Ford far-and-away is the industry leader for safety recalls. Although Farley is typically available to appear on CNBC and speak with reporters faster than his electric Mexican-made Mustang can go from 0 to 60, he let one of his spinmeisters address the issue.
“The most important feedback we receive comes directly from our suppliers,” Ford spokesperson Jess Enoch told the Detroit News. “We are resetting our relationships with our existing suppliers and simultaneously introducing new suppliers into our product portfolio. Our focus is on working with suppliers that can deliver best-in-class quality and cost, on time, to Ford.”
Underscoring the disingenuousness of Ford’s PR statements, here’s what spokesman Ian Thibodeau – Ford has a brigade of spinmeisters – told the Detroit Free Press last year when the company’s ranking plummeted 23 points.
“We’re working more closely than ever with our suppliers to create value through the Ford+ plan,” the automaker’s overall business plan. “Together, we’re taking bold actions to improve quality and reduce costs.”
Despite bombing miserably on his promised EV transformation, Ford awarded Farley $27 million for his 2023 performance – more than six times the comp of Nissan’s CEO. Ford chair Bill Ford received $21 million for his failed oversight of Farley.
Nissan’s Uchida isn’t alone among Japan’s automakers who values his honor.
When news broke earlier this year that one of Toyota’s affiliate companies had submitted false certification engine testing and other bogus inspection results, CEO Koji Sato didn’t defer to his spinmeisters to issue a statement. Instead, Toyota hastily called a news conference where Sato bowed before reporters and issued an apology, acknowledging Toyota’s culpability.
“Perhaps we pushed them too hard,” Sato said.
CEO Mary Barra has yet to apologize for the havoc and harm caused by GM’s driverless taxi Cruise unit, which resulted in one of the company’s robotaxis hitting and seriously injuring a pedestrian. Regulators had repeatedly warned that Cruise’s vehicles were unsafe, and an anonymous whistleblower told them management knew that was the case.
GM subsequently fired nearly a dozen top Cruise executives, saying the company’s internal culture was responsible for the company’s safety lapses and disregard for regulators. GM promptly settled with the injured pedestrian and agreed to pay her somewhere between $8 million and $12 million dollars, no doubt to avoid the legal discovery process allowing lawyers to subpoena internal documents and possibly deposing Barra.
Barra is chair of Cruise’s board, as well as chair of GM. Despite failing miserably and missing every target that she outlined, Barra was awarded $28 million for her dismal 2023 performance. I was unable to determine the compensation of Toyota’s Sato, who was named CEO a year ago last April, but his predecessor Akio Toyoda was paid $6.9 million in fiscal 2022, compared to Barra’s $29 million.
Toyota is bigger, more profitable, and is valued considerably more than GM.
Speaking of Toyoda, who is credited for transforming Toyota into the powerhouse it is today, he resigned because he refused to embrace calls from investors and environmentalists that Toyota accelerate its EV transition plans.
“People involved in the auto industry are largely a silent majority,” Toyoda told reporters. “That silent majority is wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly…The right answer is still unclear (but) we shouldn’t limit ourselves to just one option.”
Toyota is making a killing selling hybrids, which account for one third of Toyota’s sales. According to Adam Simon, professor of earth and environmental studies at University of Michigan, Toyota’s hybrid Prius has a slightly better impact on the environment than a Tesla.
According to the EPA, Toyota’s carbon emissions between 2017 to 2022 decreased more than any other automaker, and the company’s overall fuel economy improved. What makes these results so remarkable is EPA says that Toyota during this period increased its share of the truck and SUV market to 38% from 27%.
By comparison, GM’s carbon emissions increased during the same period. An environmental group says GM’s EV Hummer is more harmful to the environment than a gas engine vehicle.
Barra hasn’t apologized for GM’s EV failures, nor for the company’s increase in carbon emissions, despite repeatedly professing a commitment to reduce them.
As for eliminating U.S. jobs, Toyota has committed to more than $18 billion in EV investments in the U.S. Honda is building EV plants in Ohio because CEO Toshihiro Mibe said the company “has a traditional quality to manufacture where demand exists.” Subaru last month announced it would build its next-generation Forester and hybrid in the U.S.
GM builds its EV Equinox and Blazer vehicles in Mexico, where it is that country’s biggest automaker. Ford proudly builds its electric Mustang south of the border, as well as its Bronco Sport and Maverick pickup, despite claiming it is “All In On America.” At least half of Ford’s employees are located outside the U.S.
U.S. taxpayers heavily subsidize GM’s and Ford’s Mexican-made EVs.
Farley and Barra have done masterful jobs convincing the U.S. media they are capable executives, but the findings of the Harris/Axios poll makes clear that most Americans instinctively know that Toyota, Honda, and Subaru are better run companies and far better corporate citizens.
Reach the writer at eric@starkmanapproved.com. Confidentiality is assured.
