Rick Newman

For years, the American automakers studied Toyota, trying to mimic its engineering and manufacturing success as their own sales plunged. Now, Detroit may finally be able to teach its Japanese rival something in return.

Toyota's legendary quality control has obviously slipped, with the worldwide recall of more than 8 million vehicles for problems ranging from minor to dangerous. But Toyota also seems to have some cultural and leadership problems that are making its predicament worse. For the past month, since American regulators forced a huge recall to address "sudden acceleration" in eight popular models, Toyota has failed to make a convincing case that it has the situation under control. Headlines demonize the automaker, even though it can still boast more satisfied customers than most of its competitors. And executives in suits making meek apologies seem tone-deaf to what people really want to hear: contrition, yes, but also some passion about their product and a fighting spirit.

[See 6 myths about car recalls.]

Continue reading »

The history of recessions offers some unwelcome news for all those in Washington who think they have the power to boost hiring.

Jobs used to return quickly after recessions. After the downturn that ended in 1975, it took only two months for the unemployment rate to peak and then start falling. In 1982, unemployment peaked the very same month that the recession ended and then dropped as sharply as it had risen. That was when the U.S. economy was less globalized and more self-contained. Foreign companies found it difficult to compete with American ones. When recessions ended, things went back to normal and many employers simply rehired the people they had laid off.

[See 21 things we're learning to live without.]

Continue reading »

General Motors might not seem like a model bureaucracy—but it could teach the U.S. government a thing or two about denial, disaster, and survival.

GM's last year of business-as-usual was 2006, when the bloated automaker sold 9.1 million cars worldwide and brought in $206 billion in revenue. But like the government, GM was operating at a loss in 2006, and it ended the year $2 billion in the red. While company leaders insisted that a turnaround plan was working, GM's losses swelled to $39 billion in 2007 and $31 billion in 2008. In 2009, of course, GM declared bankruptcy.

[See 8 sneaky ways to raise taxes.]

Continue reading »

By now, the irony is obvious: The automaker that trounced rivals with top-tier quality and reliability is embroiled in a series of massive recalls to fix problems other vehicles don't have. All told, Toyota has recalled about 4.5 million vehicles in the United States since last fall—and nearly twice that number worldwide—for at least three distinct problems involving gas pedals and braking systems. The recalls affect top models like the Camry, Corolla, RAV4, and Prius, and there's no guarantee that the worst is over. 

[See 15 cars fueling the auto recovery.] 

But there's plenty of room for Toyota to recover. Sales have tanked and its reputation has suffered, but Toyota remains filled with engineering and management talent. Plus, it's not broke the way General Motors and Chrysler were before declaring bankruptcy last year. And most of its customers still like their cars. "Toyota is in a very difficult position right now," says Jack Nerad of Kelley Blue Book, "but it also has a big bank of goodwill and an excellent reputation with American consumers." Regaining their trust, however, depends on what the company does next. Here's how Toyota can get its mojo back: 

Continue reading »