Akio Toyoda Vows Quality Before Quantity

Bertel Schmitt
by Bertel Schmitt

Volkswagen may be much closer to its goal of surpassing Toyota as the world’s largest automaker. In an exclusive interview with The Nikkei [sub], Akio Toyoda said, Toyota will make its top priority the quality, not the number of the cars it makes.

So far, VW wanted to subjugate Toyota by 2018. But Toyota has decided to go slow. Said Toyoda-san:

“Instead of aiming to sell 10 million cars, I think the sounder approach is to provide in a timely way high-quality cars that 10 million people want to buy. When our annual output surpassed 6 million units, we started moving so fast that we didn’t have time to bring up our workers the right way. The result is that we got swept up in a current that was more about making money than making cars.”

When asked about cost cutting, Toyoda made a very valid point:

“The essential point is that raising quality lowers costs. The two can’t be thought of separately. You have to make progress on safety, quality, volume and costs together, not individually.”

The “raising quality lowers cost” part is little understood in the industry. Quality by inspection is a very costly and wasteful process. Once a faulty car escapes the factory, warranty costs can be and often are a huge drag on profitability. However, beyond postulating “do it right the first time,” the matter is not as easy as it sounds. And a focus on cost cutting may be one of the reasons for Toyota’s current problems.

Akio Toyoda took over in 2008 after Toyota registered its first postwar loss. Says the Nikkei: “Toyota returned to the black in the July-September period of the current fiscal year and booked a profit of nearly 200 billion yen in the following quarter. A regime of cost cutting that included suppliers has sustained the recovery. Toyota officials say the firm was on track to a certain full-year operating profit before the recalls.”

That was before the recalls. This is now. According to Associated Press, lawyers involved in class action suits “have estimated Toyota could have to cough up more than $3 billion, assuming a conservative $500-per-owner payment.” However, there is a push underway for fraud claims under the federal Racketeering Influenced and Corrupt Organizations or RICO law. If successful, this could “push total Toyota class-action damages above $10 billion,” said Northeastern University law professor Tim Howard, coordinator of the Attorneys Toyota Action Consortium, or ATAC.

According to the Wall Street Journal, J.P. Morgan estimates that Toyota’s total, one-time recall related costs could total $4b, plus an additional $1b for settling litigation-related costs (Morgan obviously doesn’t take Howard seriously.) As Toyota’s current fiscal year ends March 31, there will not be a huge impact on 2009 profits. Toyota is still expected to report a net profit in the neighborhood of $900 million. The new year will be far more challenging.

Bertel Schmitt
Bertel Schmitt

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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  • Robert Schwartz Robert Schwartz on Mar 18, 2010

    I don't think anyone is going to collect big money from Toyota in the absence of death or bodily injury.

  • Jakboyz Jakboyz on Apr 13, 2010

    Master Toyoda. USA has been relentless. Their tyranny non-stop. Obama has decided to utulize every communist key, his control backed through unmentionable factions, has not only targeted you, sir. The U.S. government has fallen as blind sheep to the 'staff' he now holds. The secret power's remain. Only the chosen shall overwhelm this primitive evil. Yet, the awakening remains delayed. Master Toyoda, I beg for help, I supplicate your power to accelerate our process, eliminating the 'noise' and enhancing through 'ancient' cultural techniques the abilities we continously have deadened and delayed. Please, oh, Master Toyoda, consider extending your hand of great power, towards those in desperate need. The U.S.A's constant financial attacks, reckless charges and setbacks, have proven your value. The 'chosen' are lost and suffering, searching for the savior land. Master Toyoda, if the Atom bomb was not inspired by Satan, the U.S.A would be at your mercy, the 3 'subs' would've ended the evil empire's control and manipulation. Only evil saved them. Master Toyoda, please now help the 'chosen' to find peace in your history of courage, respect, and Samurai way of dedication. Oh great Master Toyoda please find pity and belief in your soul, to accept the words of mere Obamized simple humans, needing freedom of body and mind to release this life's evil controls, and find the needed ancient peace and mindsets of ancestors awaiting our spirit. Master Toyoda, in the end of days, only those blessed will 'understand.' I am a Canadian/American 'slave' searching for the absolute reclusion and escape from mental slavery and abuse. Master Toyoda, may this message fall into the hands of the blessed. May it reach your attention and it's message touch/awaken in your heart, the truth unspoken for centuries, and carry it's empathy. Master Toyoda, you must know more! Please direct my way.

  • ToolGuy This might be a good option for my spouse when it becomes available -- thought about reserving one but the $500 deposit is a little too serious. Oh sorry, that was the Volvo EX30, not the Mustang. Is Volvo part of Ford? Is the Mustang an EV? I'm so confused.
  • Mikey My late wife loved Mustangs ..We alway rented one while travelling . GM blood vetoed me purchasing one . 3 years after retirement bought an 08 rag top, followed by a 15 EB Hard top, In 18 i bought a low low mileage 05 GT rag with a stick.. The car had not been properly stored. That led to rodent issues !! Electrical nightmare. Lots of bucks !! The stick wasn't kind to my aging knees.. The 05 went to a long term dedicated Mustang guy. He loves it .. Today my garage tenant is a sweet 19 Camaro RS rag 6yl Auto. I just might take it out of hibernation this weekend. The Mustang will always hold a place in my heart.. Kudos to Ford for keeping it alive . I refuse to refer to the fake one by that storied name .
  • Ajla On the Mach-E, I still don't like it but my understanding is that it helps allow Ford to continue offering a V8 in the Mustang and F-150. Considering Dodge and Ram jumped off a cliff into 6-cylinder land there's probably some credibility to that story.
  • Ajla If I was Ford I would just troll Stellantis at all times.
  • Ronin It's one thing to stay tried and true to loyal past customers; you'll ensure a stream of revenue from your installed base- maybe every several years or so.It's another to attract net-new customers, who are dazzled by so many other attractive offerings that have more cargo capacity than that high-floored 4-Runner bed, and are not so scrunched in scrunchy front seats.Like with the FJ Cruiser: don't bother to update it, thereby saving money while explaining customers like it that way, all the way into oblivion. Not recognizing some customers like to actually have right rear visibility in their SUVs.
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