Toyota (TM) To Spend $1 Billion To Get Back US Momentum

When the history of the US car market over the last decade is written, it will be a story of the rise of  Toyota (TM) and the demise of the Big Three, especially Chrysler. Toyota has used its low manufacturing costs and obsession with quality to steal market share from the American car companies and hold off Asian rivals, particularly Honda (HMC) and Nissan.

Toyota has stumbled over the last year. It has not been able to keep improving its market share which is about 16%. It is no longer at the top of many customer satisfaction surveys. It has had several recalls for product defects.

The world’s largest car company means to rectify its problems starting with the expenditure of $1 billion for marketing in the fourth quarter. The Wall Street Journal reports that, “The $1 billion marketing and advertising plan is 30% to 40% more than Toyota typically spends in the quarter.”

The question is whether Toyota is too late. It has the advantage of several popular models including its Prius hybrid which is the largest selling alternative energy vehicle in the US. But, the Japanese company is up against the improving fortunes of GM and Ford (F), which have both cut costs and debt levels and are introducing new models at a mile a minute.

Toyota also has to face the popularity of new rivals, particularly Korean car company Hyundai, which has gained domestic market share throughout 2009.

Toyota may be the largest car company in the world, but it may no longer be the most nimble.

Douglas A. McIntyre