Toyota Survives A Year Of Disasters, Anticipates Big Reward
As I walk into Toyota’s basement-bunker Tokyo conference room for the annual results conference today, the Toyota people are all smiles. Genuine smiles. Not the frozen polite smiles so common in Japan. Happy, relaxed smiles. Looking in their faces, I read that this will be a day of good news.
Today’s amazing story number one is that Toyota made a profit at all. Profit before taxes was 432.9 billion yen ($5.4 billion). That’s not as high as last year’s number (563.3 billion yen, or $7.1 billion.) Considering that the March 11 earthquake and tsunami had hit Japan with the force of 31,250 Hiroshima-Nagasaki nuclear bombs (if some scientists are right,) considering that Japan’s production hub in Thailand had been under water for months, and considering that the high yen turns exports from Japan into a loss-making exercise, the fact that there was a profit at all is short of a miracle.
Toyota CEO Akio Toyoda regales the audience with a Charlie Chaplin story. Asked which of his films was the best one, Chaplin answered: “The next one.” The next year is today’s most amazing story number two. Toyota expects a trillion yen in operating profits when this fiscal year is over, which will be on March 31 2013. Currently, a trillion yen are worth $12.6 billion.
Toyota wants to do this the old fashioned way. Again and again we hear today that Toyota wants to develop better cars which increase sales and profits which then can be reinvested into developing more better cars. At the same time, Toyota wants to cut costs and eliminate waste.
Toyota sticks to its plan to keep production for 3 million cars in Japan. That’s a holding action, expansion will be elsewhere. Toyota sees half of its sales in emerging markets in the near future. Instead of cars, jobs will be exported. Or rather, as CFO Satoshi Ozawa calls it, “human resources will be reallocated to emerging markets.” Toyota currently makes most drivetrains at home. This will also change. Toyota is looking at ways that makes production of engines in lower volumes profitable, “which allows us to deploy engine production to emerging countries as well,” says Ozawa.
As far as the production and sales volume goes, Toyota reiterates the 2012 sales plan published in February. Actually it increases it slightly, from 8.58 million units for Toyota and Lexus alone to 8.7 million units. Leaving the numbers of Daihatsu and Hino what they were, the new plan now calls for 9.7 million units. That’s for the fiscal year (April to March), not for the calendar year.
Toyota always budgets carefully. As noted yesterday, piercing the 10 million mark in this year is absolutely doable as long as there is “a peaceful and normal year,” as Akio Toyoda hopes .
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Everyone can learn a lesson from Toyota. Build a better mousetrap. Adapt to conditions rather than complain about barriers. The public doesn't want the holy grail, they want something a bit better than the competition, priced fairly. I think a while ago the Western media said the "Toyota method" is dead. Is it?
Akio Toyoda is a beast.