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Why It's Getting Harder for Toyota

Toyota's Avalon used to lead Consumer Reports' large-car rankings, but now it has been outclassed by both the Chevy Impala and Kia Cadenza. Photo credit: Toyota

Not long ago, for a certain type of buyer, car shopping was simple: Check out the latest from Toyota (NYSE: TM  ) , maybe look at a Honda (NYSE: HMC  ) , and write a check. Toyotas dominated the Consumer Reports rankings for years, and the company built a large global following of loyal customers who saw Toyota's cars and trucks as a safe, dependable choice.

But those times are fading -- not because Toyota is slipping, but because the competition has caught on to Toyota's secrets. This past week brought news that Toyota's mainstay Avalon sedan, shown above, had fallen behind in Consumer Reports' latest rankings -- losing ground not to another Japanese brand, but to cars from America and South Korea. Meanwhile, Toyota is losing market share here in the United States.

Is Toyota in trouble? In this video, Fool contributor John Rosevear looks at Toyota's fight to keep pace with its rivals and offers his take on how Toyota will turn things around here in the United States.

Ford has made more gains on Toyota than most this year, and its stock price has risen nicely. But for Ford's stock to soar, a few more critical things need to fall into place. In The Motley Fool's special free report titled "5 Secrets to Ford's Future," we outline the key factors every Ford investor needs to watch. Just click here now for your free report.

Read/Post Comments (5) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 25, 2013, at 12:50 PM, hmsthehood wrote:

    It all goes in cycles.

    Toyota came to the US in 1957 and struggled.

    It wasn't until the 1970's when America started looking for smaller cars because of fuel prices that Toyota started to catch on.

    But the quality wasn't there. They were rust buckets to say the least.

    In 1980 Toyota started upping their game and started producing more quality.

    It took until 2000 before GM, Ford and Chrysler decided they have to up their quality rating to compete and lower the cost of manufacturing these cars.

    Hence we are where we are today.

    There is a lot of history here and it all has to been taken in to account.

    Also it doesn't hurt when Toyota isn't reporting all it's quality issues to the NHTSA ie: the acceleration problem was reported only as a couple of bad accidents and then later it was found there were more reports then Toyota was admitting.

  • Report this Comment On August 25, 2013, at 4:41 PM, rawkhrd1 wrote:

    Toyota has been building merely mediocre vehicles for almost 10 years and people are finally waking up and realizing that fact and that there are many far better choices in every segment than some lackluster Toyota.

  • Report this Comment On August 25, 2013, at 6:40 PM, elvisghaw wrote:

    Toyota can no longer build quality cars anymore; forget about the boring styles, the parts simply go bad way too fast. As a mechanic, I've seen too many Toyotas produced in last few years need quite a large repair, such as: water pump, rack and pinion (steering), alternator, etc.

  • Report this Comment On August 26, 2013, at 10:22 AM, AcuraT wrote:

    Toyota cut its team of six sigma specialists a while back and as a result, their quality has suffered. They lived off their repuatation but they found out (like the American brands before them) that only works for so long. While Toyota still does well, they face additional competition from the American brands which have caught up in quality and in desirablity. Not to say Europe (especially German brands) are not standing still either. Toyota has already announced (the CEO announced) of their renewed focus on quality and while the competition is not going away, Toyota will be better positioned to match it in the near future. Meanwhile the consumer benefits having real choices outside of Toyota and Honda - and those consumers that take advantage of all the good cars out there - they can save money. For those who post on here that "x brand" is so much better than the others, they are just hurting their wallets. I have lived by this for years now and my Honda is no more reliable than my GM car. Both are well over 100,000 miles and neither has had many issues (well, the Honda had a bad initial 5 speed automatic transmission - but since then, has been very good).

  • Report this Comment On August 26, 2013, at 1:11 PM, ParrisBoyd wrote:

    Learned my lesson about Toyota when the engine suddenly disintegrated in my MR2 Spyder. Lost $8,500 and found out I was one of many Spyder owners who lost bug bucks via a defect in the 2000 thru 2002 engines. This issue is all over the Internet and has been addressed by two major MR2 clubs - Spyderchat in America and MR2 Roadster Owners Club in Europe - but Toyota continues to stonewall. Toyota's sales problems are attributable to the Recall King's lousy products and equally lousy attitude toward customers.

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