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Tough (and scary) talk from Akio Toyoda

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Old 10-02-09, 06:32 AM   #1
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Default Tough (and scary) talk from Akio Toyoda

Toyota is ‘grasping for salvation,' risks 'irrelevance,' chief says
Founder's grandson says company is too big, distant from customers

by Hans Greimel - Automotive News

TOKYO -- Toyota Motor Corp. President Akio Toyoda said his money-losing automaker is “grasping for salvation” as it struggles to return to profit.

The world's largest car company was once targeting annual sales of 10 million vehicles but now expects sales of 7.3 million this year, down from 8.97 million in 2008, Toyoda said at a news conference here today.

Toyoda, grandson of the automaker's founder, said Toyota is on the brink of “capitulation to irrelevance or death” as he prepares for a second-straight year of substantial financial and unit-sale decreases.

Citing the five stages of corporate decline outlined by Jim Collins, author of How the Mighty Fall, the Toyota chief warned that his company has slumped to stage four.

“We are grasping for salvation,” Toyoda said, adding that the company has already spiraled through the first three stages: Hubris born of success, undisciplined pursuit of more and denial of risk and peril.

“Toyota has become too big and distant from its customers,” the chief executive said.

In the United States, Toyota's sales fell 13 percent in September from a year earlier as the market suffered a sharp letdown after the government-funded cash-for-clunkers program ran out. Total U.S. sales tumbled 23 percent. Toyota is down 28 percent for the year.

Currency problems
Separately, Toyoda called the current dollar-yen rate "very tough," saying the weak U.S. currency made it difficult to return to profit on an unconsolidated level.

"When you get to this level, it makes it difficult to return to profit on sales growth alone," he said.

Toyoda repeated Toyota's aim to return to profit at the parent level "as soon as possible," even as it expects global sales to fall 18 percent from 2008 to 7.34 million vehicles this year. That would leave about 30 percent of its production capacity unused.

Toyoda took the helm in June as the world's biggest automaker faced one of its biggest crises in history amid a global credit crunch and an industrywide sales slump that forced two U.S. automakers into bankruptcy.

For the financial year to March, Toyota has projected a consolidated operating loss of 750 billion yen ($8.4 billion), assuming a dollar rate of 92 yen. It has forecast a parent-only operating loss of 600 billion yen.

Recall regret
Presenting a further challenge, Toyota said this week it would recall 3.8 million Toyota and Lexus models in the United States -- its largest-ever recall -- because of a risk that a loose floor mat could force down the accelerator. The problem is suspected of causing at least one crash that killed four people.

“We would like to pay our deepest condolences for the loss of four precious lives,” Toyoda said. But because an investigation into the problem is still underway, he said he could offer no further details about plans to address the issue.

“Customers who chose Toyota and Lexus cars because those brands are safe and secure are now beset with anxiety. I regret and apologize for this development,” said Toyoda, who took office in June and is the grandson of the company's founder.

Helped by incentives
The Prius has helped fuel sales growth at Toyota especially in Japan, where the government is offering two sets of incentives to promote more fuel-efficient cars.

Toyoda said he would welcome an unlikely extension of Japan's cash-for-clunkers scheme beyond next March, while adding that it would not be prudent to keep depending on the government for help.

Shares of Toyota ended down 3.7 percent at 3,380 yen, mirroring a sharp fall in other auto stocks as the dollar traded around 89.40 yen, within sight of an eight-month low of 88.23 yen struck on Monday.

http://www.autonews.com/article/2009...310029966/1210
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Old 10-02-09, 06:38 AM   #2
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I just hope they continue the push for fun vehicles.....he is right that the yen/dollar conversion in itself is slapping all the Japanese brands
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Old 10-02-09, 07:06 AM   #3
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I am glad Toyota have realize they had become too big and have distant themselves from their core customers. Toyota need to get back to basics, which is building economical and yet high quality cars. Some Toyota cars and trucks are upward of $40000+, they need to keep the price in check. It seems to me their price have gone up faster than their quality. Also, all the Japanese car makers are facing stiff competitions from the Koreans and soon Chinese and India as far as labor cost. The Japanese car makers need to cut labor cost and benefits to their workers if they do not want to have the same faith as the American auto makers.

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Old 10-02-09, 01:24 PM   #4
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Sobering realizations.
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Old 10-02-09, 01:53 PM   #5
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Good to hear; Akio Toyoda is being very frank, blunt, and honest about Toyota's problems. Even though he is one of the youngest Presidents in Toyota's history, he knows where Toyota's roots are exactly, and knows how and why the company has strayed from it's roots. He definitely sounds like the right man for the job and let's hope he has a specific plan to solve all of these problems.
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Old 10-02-09, 02:25 PM   #6
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“Customers who chose Toyota and Lexus cars because those brands are safe and secure are now beset with anxiety. I regret and apologize for this development,” said Toyoda, who took office in June and is the grandson of the company's founder.
I just wanna give him a hug or something
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Old 10-02-09, 02:59 PM   #7
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he is right that the yen/dollar conversion in itself is slapping all the Japanese brands
I wonder, should this trend continue of the dollar becoming weaker, if some of the Japanese makes will do like most of the Germans did last year and increase prices by some small percentages to make up for the poor(er) conversion rates.

Also, I dont think he really pointed out anything that most of us didn't already see. What he did do though is come out, confirm, and validate those points; which is an open and honest approach which I think many will appreciate.
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Old 10-02-09, 10:55 PM   #8
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Interesting read. I wonder if Toyota can get back on track. There are few things that the company is doing that makes me question

1. The Sequoia vs Land Cruiser...either dedicate the Sequoia to worldwide sales or dedicated the Land Cruiser to North American sales. The sales of the current Sequoia SUCK....there really is not need for both...the advantage of the Land Cruiser is that 150+ countries sell the vehicle and Toyota just recently added another shift. The Sequioa on the other hand is sold in North American and Saudi Arabia and does very poorly.

2. Tundra disaster. The second gen tundra is an absolute disaster. Toyota is losing so much money by opening the 400,000k capacity San Antonio plant and modifying the plant again to use the indiana capacity which tundra was once built. And why aren't the Tundra/Sequioa built in the same plant? They were supposed to be built off the same platform and same suppliers. Postitive news is that Toyota will build the Tacoma in the San Antonio plant thus using some of the wasted idle capacity that is cost money.

3. Lexus F cars....sorry Lexus fans. I know this a Lexus forum but when the parent company is losing billions of dollars a year, its hard to justify money being spent on the F cars.

4. Lexus hybrids...Lexus really needs to rethink the GS and LS hybrid strategy. The new HS is a start and the RXh is an outstanding achievement.

5. Kill some these models already.

i: Camry Solara WHY WHY WHY? is this still built. toyota.com lists it as an 08 model
ii FJ Cruiser is pointless right now.
iii SC430....for god's sake. Just kill it and move on. I believe it that last new Toyota to still use a timing belt
iv: GSvsLS we really don't need both. One of the other.
v: Toyota does not need SCION...Scion is a failure.
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Old 10-02-09, 11:55 PM   #9
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refreshing that he is conceding the problems. while better than gm, toyota has in many ways become like gm of a couple of decades ago. cheapening its models, lots of arrogance, boring product line, increasing quality problems.

so now he must turn things around during a horrible global economic situation, combined with vast overcapacity, little excitement and a bad exchange rate.
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Old 10-03-09, 01:34 AM   #10
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I aint buying this cry. For one, Toyota just came out of several incredible years of historic profits and record sales. Are their bank accounts empty in one year? How can all those record-breaking years mean nothing such a short time later? Did Toyota suddenly not know how to manage money after 40 years? Something isn't adding up at all. Also, didn't they see some of this coming and adjust their output? If anything, Toyota is coming back down to more normal volumes, rather than record-breaking ones. I don't think normal means "near death," especially when today's sales are similar to how they were before their big record-breaking days. They managed just fine back then, they can adjust and manage just fine now.

Is there some common trait for Japanese car company executives to put on a scare show like this? Perhaps this is some sort of business tactic with a hidden benefit. Frankly, I think Mr. Toyoda is insulting people with his comments.
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Old 10-03-09, 04:10 AM   #11
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v: Toyota does not need SCION...Scion is a failure.
i think they should move the tC over to toyota, and kill the rest.

WTF is up with haggle-free car buying?

when you buy a car, you're supposed to haggle. that's the fun part.
stupid scion and their non-negotiating.
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Old 10-03-09, 05:14 AM   #12
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Is there some common trait for Japanese car company executives to put on a scare show like this? Perhaps this is some sort of business tactic with a hidden benefit. Frankly, I think Mr. Toyoda is insulting people with his comments.
He is instilling a sense of urgency and he wants the rest of the company to feel the same way. Stop resting on your laurels, living off of the companies history and achievements. It was great then but today, its just not good enough. They need to start/continue making drastic improvements. He is thinking long term. Its not like they will be at Step 5 next year, but if they keep operating at a loss, producing cars with questionable quality, overlooking vehicles that get people excited, then they will be.

I like his mindset. He's saying the right things and clearly points out some of Toyotas struggles (including the yen/dollar conversion), but now they need to back it up with action.
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Old 10-03-09, 06:01 AM   #13
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IMO, losing your core customer base because of growing pains is a lame excuse. Regardless of growth or size of a car company, it all boils down to the dealership experience and how well customers are treated there. Toyota needs to refocus at the dealer level to get back what they've lost. The dealer is where it all starts with the consumer.
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Old 10-03-09, 09:28 AM   #14
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Regardless of growth or size of a car company, it all boils down to the dealership experience and how well customers are treated there. Toyota needs to refocus at the dealer level to get back what they've lost. The dealer is where it all starts with the consumer.
actually it doesn't. TONS of people buy cars from dealers that treat them like shat. i don't think it's right that many dealers behave badly, and toyota dealers are not really much different from any other dealers these days. lexus of course, is in general much better.

what matters most is the PRODUCT. gm and ford learned this VERY PAINFULLY, treating customers with contempt, assuming they'd buy CRAP for a couple of decades. it's taken them another decade to BEGIN to get back on track.
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Old 10-03-09, 09:38 AM   #15
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I agree with you. However, the point of my post was more to do with the relationship between rapid growth and poor customer service, not product. We all know Toyota builds superior products but I don't agree that Toyota's drop in customer base has anything to do with the size of the company. Like you said, it's product, I simply added poor customer service at the dealer level. It's certainly not, as Toyota claims, because they're too big.
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Old 10-03-09, 09:38 AM
 
 
 
 
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