Toyota brief history and operations in U.
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The official Toyota history is, like that of most companies, fairly glossy and barebones. Sakichi Toyoda, a prolific inventor, created the Toyoda Automatic Loom company based on his groundbreaking designs, one of which was licensed to a British concern for 1 million yen; this money was used to help found Toyota Motor Company, which was supported by the Japanese government partly because of the military applications. Toyoda's car operations were placed in the hands of Kiichiro Toyoda, Sakichi Toyodas son; they started experimenting with two cylinder engines at first, but ended up copying the Chevrolet 65-horsepower straight-six, using the same chassis and gearbox with styling copied from the Chrysler Airflow. The first engine was produced in 1934 (the Type A), the first car and truck in 1935 (the Model A1 and G1, respectively), and its second car design in 1936 (the model AA). In 1937, Toyota Motor Company was split off. From 1936 to 1943, only 1,7,57 cars were made 1,404 sedans and 353 phaetons (model AB), but Toyoda found more success building trucks and busses. The Toyota KB, a 4x4 produced starting in 1941, was a two-ton truck similar to the prewar KC; it had a loading capacity of 1.5 tons and could run up to about 43 mph. The GB was based on the peacetime, 1.5 ton G1 truck, which in turn was based on the Model A1 cars. The first Toyoda truck was roughly a one-ton to one and a half-ton design, conventional in nature, using (after 1936) an overhead valve six-cylinder engine that appears to have been a clone of the Chevrolet engine of the time: indeed, a large number of parts were interchangeable, and Toyoda trucks captured in the war were serviced by the Allies with Chevrolet components. There was also a forty-horsepower four cylinder model, very similar to the six cylinder in design but rather underpowered for a truck with a full ton of capacity.
In December 1945, Toyota was given permission by the United States military to startup up peacetime production. Toyota Motor Corporation had learned from the American War Departments industrial training program, which worked on process improvement and employee development; the program, abandoned in 1945 by the United States, lived on in Japan as Taiichi Ohno built kaizen and lean manufacturing around it. In 1947 it began making the Model SA, called the Toyopet, a name to stay with Toyota for decades, albeit attached to different cars. In the five years the SA Toyopet was made, 215 were made. The SD may have been more successful; this taxi version saw 194 copies in just two years. Then comes the SF model the first truly popular Toyota car, with a modified engine and a taxi version.
In addition to all these cars, Toyota started producing a civilian truck named the Land Cruiser. Styled like Jeeps, the original Land Cruiser. They used a bigger engine than the Jeep a size and configuration more like the Dodge weapons carrier, whose capacity it shares. In 1955, Toyota produced its first luxury car, the Crown, powered by a four cylinder, 1.5-liter engine with a three-speed column shift, followed by the 1-liter Corona. The start of Toyota's international sales Toyota set up a headquarters in Hollywood in 1957; the first Toyota car registered in the United States was a 1958 Toyopet, sold in 1958; the California license plate was installed by Toyota Motor Sales (USA) president Shotaro Kamiya himself, in front of the California DMV. In 1959, the company opened its first plant outside Japan. Toyota maintained a philosophy of localizing both production and design of its products. This builds longterm relationships with local suppliers and local labor. By 1967, Toyota had become well established in the United States, albeit as a niche player. The Corona four-door sedan was seen as competing mainly against the Volkswagen Beetle. The Corona was known from its early days for quality as well as a low price. The first Americanized Toyota the Tiara, otherwise known as the Toyota Corona PT20 came out in 1964. The six-passenger car had a 90 grosshorsepower engine (probably about 60-70 bhp net); it could reach 90 miles per hour, and was comfortable inside. One year later, the Corona was added at under $2,000; it offered an automatic and factory air as options, very unusual in imported small cars at the time (as was the engine's horsepower rating). Sales hit 6,400 in 1965, and reached 71,000 by 1968, nearly doubling each year until by 1971 Toyota was selling over 300,000 vehicles per year, a far cry from 1964's 2,000. Toyota itself was very small in the late 1950s by world standards, and in 1963 was the 93rd largest nonAmerican corporation in the world but in 1966 was already 47th (in that time it went from being the 9th largest Japanese corporation to the 6th largest, and for that matter the tenth largest auto manufacturer in the world it would steadily move up to the #3 position and will soon challenge Ford for #2). In 1967, the Corona sold for a reasonable $1,760 - a little below the smallest Big Three sedans with a good balance of performance, gas mileage, and comfort. Toyota introduced another new car to the US in 1967: the Crown, available as a wagon or a sedan. The Crown was never a big seller but it certainly did better than many foreign cars in the segment; the sedan sold for $2,635, the wagon for $2,785.
Toyota affected constituencies and its current reputation
By Paul A. Eisenstein
It can take ages to build a reputation. Now Toyota has to wonder and worry how quickly an image can be shattered. This should have been a great year for the Japanese maker, which knocked down kingof-the-hill General Motors in late 2008 to become the worlds best-selling automaker. But Toyota hasnt had much time to celebrate. The carmaker has been plagued by a variety of setbacks, including slumping sales, under-utilized assembly lines and multibillion-dollar losses. But perhaps most worrisome of all are signs that the companys vaunted quality has been slipping. Long hailed as the industry benchmark, some key Toyota products have suffered quality snags in recent years. That includes the new Tundra pickup, which Toyota had hoped would finally give it a foothold in the full-size truck market, the last segment controlled by the Big Three. On Wednesday, The National Highway Traffic Safety Administration said it has launched a probe into Toyota's 2000 and 2001 model year Tundra pickups after authorities received complaints alleging that "severe frame corrosion" caused brake system failures or spare tire separation. While the company insists it is getting its quality control sorted out, last weeks recall of 3.8 million Toyota and Lexus-badged vehicles certainly doesnt help on the image front. The recall is meant to replace floor mats that can unexpectedly snag the accelerator pedal, making it difficult to slow a vehicle down. It was ordered after a California state trooper and three family members were killed in a related accident involving a Lexus. Company President Akio Toyoda, the scion of the founding family who took over this year in a management shake-up, offered his condolences to the victims' family last week and warned that the company was in a "near rock-bottom crisis." The automaker could be in for an even worse time if it cant find a way to shut down attorney Dimitrios Biller. Hes the former national managing counsel who oversaw the company's National Rollover Program from 2003 to 2007. Now he's a whistle-blower claiming the Japanese giant has been hiding potentially damning evidence that should
have been provided to owners whove sued the company over allegedly defective products.
AP file
Toyota's recent recalls of the 2005 Toyota Prius, top, and 2007 Toyota Camry, bottom, have hurt its vaunted reputation for quality.
Toyota has tried to place a gag order on Biller and to paint him as a disgruntled former employee with a history of suing his employers. But last week, a federal judge in Texas issued a temporary restraining order to keep the carmaker from destroying any evidence regarding the crashworthiness of its vehicles. Some observers suggest Biller could become the Ralph Nader of Toyota, a reference to the longtime consumer advocate who shattered GMs reputation back in the 1960s when he revealed safety problems with the small Chevrolet Corvair. He very well could be, and depending on how the media handles this, this could incite something very negative in terms of public perception, says George Peterson, chief auto analyst with AutoPacific Inc., a California-based consultancy. Their image will hinge on how they handle things. If they try to hide things, this could hurt them. Even if the storm over the recalls and rollover lawsuits blows over, theres no question that Toyota is in for a rougher time than its had in years. While AutoPacific data shows that the Toyota brand has one of the highest consideration levels the percentage of motorists who would consider purchasing its products its U.S. sales are off by nearly a third since the recession began at the end of 2007. In turn, that has forced the automaker to ramp up incentives, something it normally avoids whenever possible. According to the research service Autodata, Toyota's various North American brands have been spending almost $2,000 a vehicle on rebates such as zerointerest loans and other incentives, nearly as much as Ford. I think everyone expected Toyota to walk on water during this recession, says Peterson, but this recession has spotlighted that they have weaknesses, after all.
The decline of the U.S. market has been particularly troublesome and was the primary source of Toyota Motor Co.s worldwide loss of $4.4 billion for the fiscal year that ended on March 31. Another big loss is expected for the current year. Toyoda who has a penchant for motor sports is well aware of the fine line between winning and losing, but the executive has repeatedly cautioned, in recent months, that a turnaround will take some more time. (The company started out in the textile business, but changed the spelling of the company name when it began building cars.) One reason for Toyoda's caution is the breadth of the trouble facing the company. While quality may be the word consumers are most likely to associate with the brand, productivity is the term you would most likely hear from competitors, many of whom have worked to copy the company's vaunted manufacturing systems. Yet the most recent Harbour Report, an annual measure of factory floor productivity, found that Chrysler had tied the Japanese maker and GM was coming up close behind. After emerging from bankruptcy proceedings heavily influenced by the federal government, those two makers have shed their least efficient operations and, along with Ford, have won major union concessions that could let them leapfrog their Asian rival when it comes to productivity. The troubles with the Tundra only underscore Toyotas perilous situation. The automaker spent $1.5 billion to build an all-new plant in San Antonio, Texas, to produce the truck, twice the original budget. But its running at a fraction of planned capacity. Indeed, slumping sales forced Toyota to put on hold what was to be the newest of its expanding production network in North America, a partially completed facility in Tupelo, Miss. All is not doom and gloom, of course. After an unexpected slump in demand when fuel prices fell sharply early this year, a new, third-generation version of the Prius hybrid has been gaining market share rapidly. So has the new Venza, an entry-level crossover vehicle. But for much of the past decade, Toyota has been used to setting goals and then exceeding them. Now, Toyoda and his management team are forced to rethink even the most basic corporate fundamentals. Every company faces these sorts of problems, says Peterson, but Toyotas have hit all at once.
Getting to the top might seem to have been relatively easy. The challenge is going to be staying there. Reuters contributed to this report.
Toyota still has the best reputation in the automobile business
Whether Toyota has been a downfall over the past years but it still has got best reputation in the market recently. Some sanity is finally creeping to into the media free-for-all surrounding the Toyota accelerator and brake recalls. Curiously, the piling-on seems to be continuing in the business pundit world, with one after another declaring the death of the Toyota brand. Those with a better understanding of how consumers buy cars seem to be less apocalyptic. [Link], for example, analyzed National Traffic Safety Administration data over the last ten years and found that Toyota had had 9.1% of all the complaints in the database, but 13.5% of the U.S. market. That was good for 17 out of 20 (here a lower rank is better), bettered only by Mercedes, Porsche and Smart. Compare Toyota to the worst brand on the list Land Rover which received 0.6% of the total complaints in the database, while its sales amounted to only 0.1% of all new cars sold in the United States. Of course, anyone who drives by a Land Rover dealership on a Saturday morning already knows that. As we pointed out in a recent post entitled Five Reasons why Toyota will be OK, people buy cars via comparison shopping. Our most recent ranking of automobile companies (shown at the top of this post) still has Toyota on top. Toyotas overall reputation including customer and employee satisfaction, community involvement, the environment and social responsibility has dropped a bit recently, but has consistently tracked ahead of competitors like Honda. Thats not to say the recalls involving floor mats, accelerator systems and hybrid brakes coupled with and a slow and clumsy initial public response by Toyota senior management havent taken a toll. In the graph below, its clear that Toyotas reputation for customer satisfaction as reflected in online stories and commentary has dropped significantly in recent weeks. But notice that Honda has also seen a drop most likely associated with their own recalls. Ford is seen as having recovered somewhat in recent months after a bout of mis-association with the other American automakers involved in government bailouts. And their reputation for customer satisfaction did NOT follow Toyota and Honda down in recent weeks.
[Link]