The U.S. Government Controls GM; Do They Have the Guts to Go After Toyota?

Toyota's massive recall is an unprecedented opportunity for GM to paint a stark contrast between its commitment to making great cars and Toyota's sloppiness in pursuit of global dominance.
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It's the biggest post-bankruptcy gift GM can get.

Toyota's massive recall of five million cars - nearly half of the total number of cars it sold worldwide in its peak year - could be a turning point in the public's perception that Japanese cars win the quality Olympics, while American models are tinny junk.

The AP is blunt in its assessment:

"A flood of recalls in the U.S. shows Toyota compromised on quality control in an overzealous drive to cut costs and expand sales during its climb to the top of the world auto market."

Meanwhile, American cars have dramatically improved their quality ratings. The gap between imports and domestics is lower than it's ever been, and American cars have improved their "initial quality" ratings more than imports, says JD Powers. But perception has lagged, and that continues to be a huge problem for Detroit.

The massive Toyota recall is one of those high visibility moments that can be a catalyst for a profound realignment of consumer thinking. GM needs to use the recall and the massive news coverage it has generated to re-activate the latent but recoverable archetype of "Made in Japan" standing for cheap and unreliable stuff.

This is an unprecedented opportunity, a moment for GM to paint a stark contrast between its commitment to making great cars - a new era of American quality - and Toyota's sloppiness in pursuit of global dominance.

Take everything Toyota stands for and turn it upside down and inside out. Remind us that cheapness has a price, and that price can be life-threatening. And use every communication channel in your arsenal to pump this out - advertising, PR, social media, your employees, your dealer network, happy owners. The UAW.

This would be smartly opportunistic, given not just the recall, but the mood of the American people. We're looking for glimmers of American resurgence, and we want our investment in GM to pay off. We want to believe that a smaller, tighter, more quality-obsessed GM is prepared to beat the global, grow-at-any-cost monolith that Toyota has become.

The question is, would the GM have the testosterone to do this, and would the U.S. government approve a big, bold, feisty campaign that strikes directly at the business practices of an iconic Japanese company, and could have geopolitical consequences?

I can imagine the firestorm this species of government-approved trade warfare would trigger. Prime Minister Hatoyama would be on the phone with Secretary of State Clinton before you could say "accelerator pedal."

After all, this wouldn't be just a competitive strategy for GM. It would be an effort to bring the perception of Japanese quality tumbling down by seizing this national embarrassment and turning into a broader indictment.

The unacknowledged truth is that United States Government has an inherent conflict-of-interest problem. There is an undeniable structural stress between its role as the controlling shareholder in GM, and its global economic needs.

So the law of unintended consequences appears once again. The loan guaranteed to GM restricts its ability to seize opportunity, so the gift of the recall will remain unopened.

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