The curse of being the world’s largest car manufacturer

Early in the 20th century, automobiles were manufactured in a tedious process. A group of workers would crowd around a single car and put it together for more than half a day. The craft was hard but meticulous. And had car-making continued at this pace, it was highly unlikely that the world would have been motorized in its entirety. Thankfully, Henry Ford perfected the concept of the assembly line.

The seamless, moving assembly line was born in 1913 at Ford’s Highland Park facility in Michigan, five years after the Model T had been introduced. The assembly line, of course, meant faster production time. It featured workers that performed the same tasks on slow-moving cars over and over again. Because a worker merely repeated a single task assigned to him (or her), he (or she) achieved the fastest possible time to finish it. Try it. Remove the lace of your shoe and put it back again. Do this a dozen times and clock yourself each time. I guarantee you that your time on your 12th try will be significantly faster than your time on your very first attempt.

Indeed, the assembly line greatly hastened the manufacture of the Model T. In 1908, when the car was launched, Ford workers took 12 hours and eight minutes to produce one unit. With the advent of the assembly line, the unit production time was drastically cut to one hour and 33 minutes. Model T units rolled off the factory so fast that the body-paint section couldn’t keep up--at the time, paints didn’t dry as fast as they do today. Only black paint had a decent drying time, prompting Ford to stop offering other colors. This is the story behind Henry Ford’s famous quote: “The Model T is available in any color you choose, so long as it is black.”

In 1914, a year after the inception of the assembly line, Ford was able to produce a total of 308,162 cars. This number was remarkable because it was more than the total of all the other carmakers in the world combined. Thanks to the assembly line, Ford practically owned the automotive market. Soon, its rivals had no choice but to adopt the same manufacturing process. It is said that those who refused to follow suit eventually went out of business.

Apart from the faster production time, the assembly line yielded another important benefit. And that was the reduction of production costs. In 1908, at the Model T’s launch, the car had a price tag of $825 (around $19,000 or P885,000 today if adjusted for inflation). Thanks again to the assembly line, the Model T would cost just $260 in 1924 ($3,300 or P154,000 after inflation). Imagine that! As a result, even Ford’s own factory workers were soon able to afford a Model T themselves--which was Henry Ford’s vision to begin with.

But Ford was forced to retire the Model T in 1927 after having produced 15,000,000 units. That was because its sales had been rapidly declining--understandable for a two-decade-old model. To further complicate matters, Ford had nothing to replace the Model T with, due in large part to Henry Ford’s stubborn refusal to develop a new car that would succeed his beloved Model T. He probably thought it would sell forever. Such is the first curse of being a global leader: complacency, or the unwillingness to innovate. Ford would hastily roll out the Model A, but by then Chevrolet had quickly established itself as a serious threat to Ford’s market dominance.

Since then, car companies have continuously refined the assembly line and shortened the vehicles’ development time in order to cope with global demand and also to outsell each other. Ultimately, the focus shifted on volume rather than quality. Bragging rights were earned by the carmaker that produced the most number of vehicles in a year. For the better part of the last century, that distinction went to General Motors. But as the sad fate of GM proved, just because you manufacture and sell the most number of cars doesn’t mean you’re successful. Because sooner or later, as you get more and more intoxicated with sales figures, you will begin to lose sight of the important things: innovation, customer satisfaction and high quality. All that really matters to you now is to keep churning out those cars.

This, I believe, was the major factor that did GM in. It became obsessed with sales data, believing that market leadership rested on numbers instead of consumer trust. To sell more units, the company acquired as many brands as it could. Sadly lost in all this expansion was quality control. A number of cars made by GM from the Seventies to the Nineties are now regular fixtures on any “Worst Cars Ever” list. Chevrolet Caprice and Citation, anyone?

Enter Toyota of Japan. For a carmaker that almost folded in the early Fifties, Toyota has done pretty well. It went on to expand outside its home country and develop a solid presence in the world’s most important market, America. From its launch of the luxury brand Lexus in 1989 to its introduction of the youthful Scion division in 2002, Toyota made it clear that it was out to become the biggest carmaker in the world.

While Toyota bosses didn’t want to admit it--perhaps for fear of a backlash in the US market--the goal all along had been to supplant GM as the global industry leader in terms of production volume. Toyota ultimately reached that goal in 2007, when it finally surpassed GM’s vehicle production by some 200,000 units, effectively ending its American rival’s 76-year reign as the undisputed global leader in vehicle assembly.

But now, finding itself at the top this time, Toyota apparently has compromised a few things and overlooked a couple of values that brought it to its current status in the first place, just to keep up with production demands. Those few things include bulletproof quality and an exacting attention to details. This, I believe, is where Toyota committed some of its missteps. Everyone’s favorite car company suddenly forgot its priority--which is customer satisfaction, not global market leadership.

If you’re manufacturing around nine million vehicles a year, it’s very easy to commit mistakes here and there. That’s the problem with being a giant car manufacturer. Hyundai could be headed in that direction as well if it isn’t careful. What Toyota needs to do now is to go back to the very basics--back to when it knew how to treat every single car as a masterpiece. Yes, back to when it didn’t care about market shares as much as it did about pleasing the customer.

If it’s any consolation to Toyota, at least it can learn from this debacle a very important moral: It’s infinitely better to manufacture few but excellent vehicles than to produce countless but mediocre ones.