Toyota Quitely Wins #1 Spot

Something quite extraordinary happened last week and hardly anyone noticed. Toyota became #1.

There was no fanfare. No press release. No party. It just quietly happened.

For 77 years General Motors had been the world's largest motor vehicle manufacturer. But on Wednesday, January 21, GM received the second installment of its federal survival loan and quietly slipped from the #1 spot to #2. That day, it rewrote the "end tag line" on its letterhead to read "One of the world's largest automakers."

Making the best of it, a GM sales analyst remarked that he didn't think being #1 means anything to consumers and that the focus is on "viability and profitability."

Meanwhile over at Toyota they announced that they will have their first year of annual operating loss in 70 years. That's when you know the economy is lousy: when the company that becomes #1 is still losing money. And on the tube? There's more rebates and incentives and zero interest rate loans from all of them.

Detroit, I know you're losing money, but giving away the inventory isn't the way to make a profit. Only a company accountant can make sense of this but one thing's for sure. What's good for GM is good for the country make not have been a true maxim, but it is true that what's bad for the country is bad for GM.

Maybe it's time to throw away the rebates. Maybe it's time to simply cut the price to the lowest it can get and just sell. All the game playing with rebates and incentives and all the rest just seems to be so much smoke and mirrors. And the rebate game became addictive to American car buyers. And that became addictive to Detroit. Now Detroit thinks that rebates are the primary way to sell cars and consumers have come to expect them.

It won't be easy to wean consumers off the rebate drug, but if Detroit provided the credit on fair terms (stop letting dealers play with the interest rates), increased quality, warranty coverage and length, and cut prices, we think American buyers would appreciate the honesty and come back.

American workers still know how to build better cars. If Detroit wants to survive, it better figure out how to sell them.

Burdge Law Office

Helping consumers protect themselves since 1978.

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