Are Car Manufacturers and Dealers “Grasping for Salvation?

Last week Akio Toyoda, the CEO of Toyota, apologized to his customers, employees, and stockholders. He said that Toyota had suffered from “hubris” [Overbearing pride or presumption; arrogance], “undisciplined pursuit of more” and “denial of risk and peril”. He said that Toyota now is “grasping for salvation”. Akio Toyoda who is also the grandson of Toyota’s founder then said “Toyota has become too big and distant from its customers”. His confession and apology is courageous, refreshing, and encouraging. If GM and Chrysler had had a leader like Akio Toyoda, they wouldn’t find themselves where they are today. Mistakes don’t cause failures; Denial of mistakes does.

I ordered Jim Collins’ book, How the Mighty Fall, on Amazon. The author postulates that big companies don’t die suddenly but rather through five stages: (1) Hubris born of success. (2) Undisciplined pursuit of more. (3) Denial of risk and peril. (4) Grasping for salvation. (5) Capitulation to irrelevance or death. I must say that these stages describe General Motors, Chrysler, Ford, and even Toyota to a T. In fact GM and Chrysler may be in, or too near, the final stage 5, “capitulation, irrelevance, or death.

I was a Pontiac dealer in West Palm Beach from 1968 to 1999. I have lots of memories of those times, good and bad. The good times were when Pontiac was the 4th largest selling brand in the world, behind Chevrolet, Ford, and Oldsmobile. Pontiac and GM thought that Japanese cars were inferior and no threat whatsoever. I still remember the day in 1970 when the Pontiac zone manager, Murph Martin, visited my dealership and told me to get that “Jap” car off his showroom floor. He was referring to a Mazda as I had just signed a franchise agreement with that Japanese auto manufacturer. Today Pontiac no longer exists but Mazda is still going strong.

My regular readers will sense where I’m going now. Nobody can argue that car manufacturers, including Toyota, the mightiest of them all, have fallen precipitously in the past 3 years. I want to believe and I do believe that the new CEO of Toyota, Akio Toyoda, “gets it”. For him to publically apologize and acknowledge that his company was one step away from “capitulation to irrelevance or death” took great self awareness and courage. On the other hand, Ed Whitacre, the Chairman of GM, is doing TV commercials comparing GM cars to Toyota and Lexus, saying “If you can find a better car, buy it”. I have to say, “Hey Ed! Be careful what you wish for!” I would also recommend that Ed check out Consumer Reports, 2009 Best and Worst Cars, the April issue, page 17. All 34 car brands sold in America are ranked by Reliability. There is not one GM brand listed in the top half. Buick is 18th. The top 10 brands are all Asian. The bottom 10 includes GMC truck, Pontiac, Cadillac, and Saturn. Chevrolet is #24, 11th from the bottom.

But what about car dealers? In my opinion, we car dealers also have succumbed to the same temptations as manufacturers. Great success brings on hubris/arrogance. Big is never big enough and so we strive for more in an undisciplined fashion. When you make a lot of money and get lots of recognition, you feel “bullet proof”. Can you say “Bernie Madoff”? How many of us find ourselves in stage 4 “grasping for salvation”, like Akio Toyoda now? In order to successfully manage stage 4, a business owner or CEO must be courageous, but more importantly, he must have self awareness. Mark Twain said “It ain’t what you don’t know that gets you in trouble; it’s what you know for sure that just ain’t so”. I have to confess, that occasionally I start to feel a little “full of myself”. I’ve grown to be the largest seller of automobiles in Palm Beach County, the 5th largest Toyota dealer in the southeast USA. When I go out to a restaurant or shopping, lots of people recognize me and shake my hand. Now, when I get that feeling that I’m a “big shot”, I simply remind myself who it was that “brung me to the dance”… my customers.