Ford and Honda May Benefit as Toyota Recall Grows

Toyota's (TM) recall of cars with floor mat and accelerator problems has spread to Europe and where many of the same defects exist, bringing the worldwide recalls of vehicles made by the No.1 global car company to about 8 million, according to Reuters.

In most highly competitive industries when there is a loser, there are usually winners. Toyota has an extremely broad product line that includes luxury vehicles, SUVs, pick-ups, sedans, coupes and hybrids. So the competition for its customers will come from companies which sell a similarly broad spectrum of cars.The two firms with broad product lines, highly favorable customer satisfaction ratings, and significant U.S. market share are Ford (F) and Honda (HMC). GM may benefit from the Toyota recalls, but it still faces customer concerns based about its Chapter 11 filing and the mediocre reviews of its vehicles by major car research groups.

Ford's market share in the U.S. rose to 17.2% in December from 15.6% in the same month in 2008. The Ford Fusion was named "Car of the Year'" for 2010 at the Detroit auto show while the "Truck of the Year" honors went to Ford Transit Connect. Ford's reputation for innovation has helped it improve its standing among American car buyers and that standing is likely to grow in 2010.

Honda's December market share in the U.S. was 9.9%, slightly higher than the same month in 2008. JDPower ranks Honda high on its list for both "Initial Quality" and "Vehicle Dependability". Japanese car companies have based their images in the U.S. on quality car manufacturing. Now that mantle is likely to pass from Toyota to Honda.

It's likely that Toyota's U.S. market share will slip considerably from the 18% it had in December, and may not make it back to that level for years. Its reputation has been hurt that badly.

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