The Finch Formerly Known As Gold

18 June 2006

Toyota plays hardball

Toyota passed Ford a couple of years ago and is now the world's second-largest automaker. Who, then, do they see as the biggest potential obstacle to world conquest? Number One General Motors? Not even close.

It's Hyundai.

No automaker in recent years has engineered a bigger turnaround than Hyundai, which landed Stateside in the 1980s as a purveyor of cheap Korean crap and now owns the low end of the American market, providing quality vehicles for ten percent less than the competition. In 1998, Hyundai sold about 90,000 cars in the US; last year, they moved 455,000, not counting sales by corporate cousin Kia (about 275,000), and hope to reach a million by 2010.

To do this, though, Hyundai had to banish forever that cheap-Korean-crap stigma, and one of the ways they did it was to upgrade their supplier base — in fact, they're now buying some parts from suppliers who also make parts for Toyota. Toyota is not pleased with this development:

"It's like fattening a rival company at Toyota's own development expenses," says [a] Toyota official. Some Toyota executives said, "We may have to pressure (the parts makers) not to do business with Hyundai. It may sound extremely drastic, but we may have to think of raising the stockholdings of our affiliates to make them do as we tell them."

Toyota hasn't always been this possessive:

Honda does not have its own affiliated parts makers and procures necessary parts mainly from Toyota-affiliated makers. Such Toyota-affiliated parts makers as Denso and Aisin Seiki Co., Ltd. have been supplying parts to Honda and Mitsubishi Motors Corp. As a result, production costs for the parts went down, consequently making it possible for Toyota to buy parts at lower prices. There was an indication that Toyota was encouraging its affiliated parts makers to sell their products to other automakers also. "There was ... a time when we were told to sell as much parts as possible to other carmakers, except for Nissan," one of the Toyota-affiliated companies said.

And now, apparently, except for Hyundai.

(Via Autoblog.)

Posted at 1:31 PM to Driver's Seat

How do they feel about whether their employees drink Coke or Pepsi?

Posted by: McGehee at 10:41 AM on 19 June 2006