Toyota Not Bold Enough?

Robert Farago
by Robert Farago
toyota not bold enough

This morning’s Automotive News [sub] carries a highly critical report on Toyota’s reaction to the worldwide automotive meltdown. The bottom line: the Japanese automaker is too damn slow and overly cautious. “Toyota Motor Corp. is famed for its advance planning, obsessive attention to ‘what if’ scenarios and continuous improvement,” Hans Greimel writes. “Yet with the market collapsing, the world’s top automaker is stunned to a near standstill by an astonishing plunge from record profits to record losses in 12 short months.” That’s quite a statement, especially as it seems to be based on a single analyst’s analysis. Greimel trots out JPMorgan’s Takaki Nakanishi, who complains that there’s “nothing remotely innovative” in ToMoCo’s recent plans to cut $5.11 billion in fixed costs by the end of the year. What, no feng shui?

“The company has not made any attempt to address the core strategic elements of production structure realignment or its product, regional and platform profile,” Nakanishi said.

By comparison, Nissan is dumping 12 new models that had been planned for the next five years. It also plans more production abroad to counter the effects of the soaring yen.

So Toyota’s decision not to cut its investment in new models—or at least publicly announce it—is a weakness? You could see it as a sign of strength. You know, if you were so inclined. Nor does the following assertion strike me as the truth about Toyota.

“Exports are an unaffordable luxury now,” said Christopher Richter, an analyst at CLSA Asia-Pacific Markets. Toyota should close plants at home and move volume overseas, he said.

“The time to fix it is now when you have all of your factories in the world operating under capacity,” Richter said. Toyota could boost profits by slashing its ratio of imported cars in America to 9 percent, from a current level of 45 percent, with minimal investment, he estimated.

Apparently, Toyota is . . . waiting.

[Incoming President] Akio Toyoda has pledged to be “as bold as possible in pushing ahead with reforms.”

The problem is that he’s not president yet. And current President Katsuaki Watanabe is unlikely to announce major overhauls before the changeover, for a couple of reasons.

First, the current boss doesn’t want to saddle the next one with any policies that may backfire. Second, he doesn’t want to steal Toyoda’s thunder as leader of the company’s comeback.

So Toyota’s current boss is playing CYA, and the company lets personal politics interfere with its survival. No sense of urgency? Toyota as the new GM? Anyway, Greimel is no stranger to CYA, as his backpedalling conclusion demonstrates.

As cautious as Toyota’s approach is, there are signs that change is afoot.

In late February, the company said it is bringing back Yoshi Inaba, 62, the former U.S. sales chief who left the automaker to run an airport. He will join Toyoda’s administration in June and oversee North American projects. The company hasn’t given details.

A few days later, Toyoda pushed aside three executive vice presidents who had led the company through its rapid expansion—including Kinoshita, who will retire in June.

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  • Dastanley Dastanley on Mar 02, 2009

    Bunter1 : March 2nd, 2009 at 12:35 pm Stewart Dean-The big oops at Pearl (for the Japanese) was that the carriers were not at home. It turned out that battlewagons were history and airpower was everything. Adm. Yamaoto did note that “I am afraid we have awakened a sleeping giant”. Also, a third Japanese attack wave that was scheduled at Pearl Harbor was called off. Had that third wave gone down as planned, it would have allowed the Japanese to bomb and destroy the rows of large land based oil tanks at PH (thus crippling ALL US Navy ships in the Pacific). The Japanese also could have conducted submarine attacks of US oil tankers from Long Beach to Pearl Harbor, thus crippling our Navy for far longer than the 6 months or so that it took us to bounce back and go on the offensive. Now back to cars.

  • Nino Nino on Mar 03, 2009
    but didn’t Toyota just burn $2 billion on the Tundra? (And $400-plus million on F1?) How’s that working out? Both the Tundra and Formula 1 (and NASCAR, too) are part of a long term Toyota strategy to open up new markets and appeal to customers different than the ones they have now. Formula 1 is seen as a playground for elite, top notch automotive companies. With Toyota planning on expanding the Lexus line world-wide, they need the prestige that comes from F1 in the many markets where they compete with Mercedes and BMW. NASCAR and the Tundra are part of a long term plan to develop customers in the US midwest and south that have been somewhat resistant to Toyota products and imports in general. The thing with Toyota is that they are willing to take a short term loss for greater long term gains and mark my words, the endeavors Toyota is a part of now, will pay big dividends for them down the road.

  • Scott ?Wonder what Toyota will be using when they enter the market?
  • Fred The bigger issue is what happens to the other systems as demand dwindles? Will thet convert or will they just just shut down?
  • Roger hopkins Why do they all have to be 4 door??? Why not a "cab & a half" and a bit longer box. This is just another station wagon of the 21st century. Maybe they should put fake woodgrain on the side lol...
  • Greg Add me to the list: 2017 Sorento EX AWD w/2.0 Turbo GDI 68K miles. Changed oil religiously with only synthetic. Checked oil level before a rare long road trip and Ievel was at least 2 quarts down. That was less than 6 months after the last oil change. I'm now adding a quart of oil every 1000 miles and checking every 500 miles because I read reports that the oil usage gets worse. Too bad, really like the 2023 Tuscon. But I have not seen Hyundai/Kia doing anything new in terms of engine development. Therefore, I have to suspect that I will ony become a victim of a fatally flawed engine development program if I were to a purchase another Kia/Hyundai.
  • Craiger 1970s Battlestar Galactica Cylon face.