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Toyota Taking On Rivals With Efficiency, New Designs

Mon, 04/08/2013 - 2:15pm
The Associated Press

NAGOYA, April 6 (Kyodo) — Having drawn lessons from a series of predicaments since the 2008 global economic downturn, Toyota Motor Corp. is focusing on lowering its production costs worldwide and improving its competitiveness in product design as it faces intense competition from overseas rivals.

"We are finally getting out of a long tunnel after the Lehman shock," Akio Toyoda, president of the Nagoya-based automaker, told some 230 graduates of the Toyota Technical Skills Academy in February, a training institute within the company.

But Toyoda has repeatedly warned against complacency even after his firm regained the world's top position in new vehicle sales in 2012.

In 2008, Toyota surpassed General Motors Co. in sales to become the top seller for the first time. But its reign was short-lived.

Sales soon plunged in the wake of the global economic slowdown triggered by the collapse of the Lehman Brothers Holdings Inc. Toyoda, a scion of the automaker's founding family, had to deal with a massive recall in the United States shortly after becoming the president in June 2009.

The company's hardship was compounded by natural disasters. The March 2011 earthquake and tsunami devastated northeastern Japan and caused a disruption to the supply chain of Toyota and other Japanese automakers, and massive flooding in Thailand severely hit its parts suppliers there months later, prolonging production cutbacks.

Japan's auto industry continued to face a difficult business climate in 2012. The yen's rise to a postwar high against the dollar as well as anti-Japanese demonstrations and an ensuing boycott of Japanese products in China triggered by a territorial row further weighed on Toyota's business.

Still, the Toyota group, including small-car maker Daihatsu Motor Co. and truck-making unit Hino Motors Ltd., took advantage of improved sales in North America and other Asian markets to boost its global sales to a record 9.75 million units in 2012.

At home, its Aqua compact hybrid model -- made in the northern Japanese prefecture of Iwate which was hit hard by the 2011 disaster -- saw robust demand.

Toyoda views ongoing business improvement measures as key to making the automaker resilient to changes in market conditions and capable of sustaining growth when it faces challenges from GM and Volkswagen AG of Germany, which are stronger in the Chinese and South American markets. South Korea's Hyundai Motor Co. is also catching up fast, with its strategies including recruitment of designers from European manufacturers proving successful.

Toyota will spare no efforts to improve its products and profitability "without getting carried away" with the new sales record, Toyoda said in a recent interview with Kyodo News.

The automaker now strives to adopt advanced technology that enables it to manufacture a relatively small number of vehicles cost efficiently. It has developed an assembly line whose size can be adjusted corresponding to demand fluctuation, to help control fixed costs. Such a line has already become operational in some factories in the United States.

When the Lehman shock hit the global auto markets hard, Toyota's aggressive expansion of production lines backfired as output falls magnified the burden of fixed costs.

While the automaker is expanding sales in emerging markets, it plans no new plant construction over the next three years, except those already announced for Thailand and Indonesia.

Instead, the company aims to "make the most out of existing plants and facilities to control fixed costs," Executive Director Takahiko Ichiji said recently.

As for product development, Toyota's move to put more emphasis on car exterior design is evident in new models.

In December, Toyota launched a fully remodeled Crown sedan, the company's long-running model targeted at conservative customers and corporate users. Featuring a larger front grille than that of the previous model to give it a more aggressive look, the sedan mainly sold in the Japanese market is regarded by the Toyota chief as "the symbol of Toyota being reborn."

Hoping to transform the model's conservative image, Toyota also offers the model in pink, among other colors.

"It's been said Toyota cars lack character. Our rivals have strong vehicle designs. We'd like to make the design of the front section, which catches people's eyes the most, distinctive," said Tokuo Fukuichi, the company's design chief.

Toyoda, who has experience participating as a driver in the 24 Hours Nurburgring endurance race in Germany, plans to play an active role in developing new models.

"We'll make better, more attractive vehicles. Japanese are capable of doing that. I want to keep up the challenge in the global market," Toyoda said.

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