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REPORT: Toyoda wonders aloud if Toyota has faltered by following GM's lead
During the reign of company President Katsuaki Watanabe, Toyota became the number one automaker in the world, along with amassing $52 billion in cash and marketable securities. That sounds like one of the most amazing runs in the history of the automotive industry, but it's more than a little disappointing to company scion Shoichiro Toyoda.The 84 year-old Toyoda is apparently the mild-mannered type, but Bloomberg is reporting that he read the riot act to Watanabe and his fellow execs. The news agency's sources say that Toyoda railed Watanabe for being "so anxious to boost sales and profits that he'd let Toyota emulate bankrupt General Motors." Toyoda also reportedly chastised execs for becoming too dependent on large and expensive cars, trucks and SUVs, saying, "customers need to save money."
Toyota may have made $17.7 billion in 2007, but the $4.5 billion it lost in 2008 and the $5.7 billion it expects to shed in 2009 shows that Toyoda may be on to something. If the company is to turn around in the next few years, though, it'll have to come at the hand of another Toyoda. Shoichiro's son Akio takes over as president on Tuesday.
[Source: Bloomberg | Image Source: AFP/Getty]
Reader Comments (Page 1 of 2)
WorksForMe 11:44AM (6/22/2009)
I really think Toyota's got the "Japanese Buick" image...check out all the older people driving Camrys and Avalons. Nothing wrong with "older" people (I'm fast becoming one myself), but I believe a more "youthful" image is required today for success.
Toyoda has a point about his cars becoming quite pricey.
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Randy 12:43PM (6/22/2009)
You know. At first I was going to say "I agree" but then I thought about it. They have always been plain cars and have recently added styling to offset that so I don't really agree. Yeah Toyota's are about as boring as watching pant dry, but I really don't feel they are "old man cars". Except for the Avalon! And with Ford's Taurus the Avalon will absolutely dropping in sales. Just a thought...
Redline 1:42PM (6/22/2009)
They could really use one or two nice performance cars IMO.
Lad 2:35PM (6/22/2009)
Toyota made the mistake of following GM's lead in building a big truck to compete in the market when they set the standard in mini-trucks. Now that people are not so into gas hogs, good luck selling them.
Another mistake: not leap-frogging over the technology of the mild hybrid and building a PHEV and BEV right now. Nissan/Renault has made the decision to build BEVs for a ready market set up by "Better Place." It's not too late if Toyota acts now. The future will be BEVs; sure the technology is new and hard for many to get use to; but, it will be the popular mode in the mid-century, if not before. And, that will be regardless of if GHGs are true or not. The momemtum has shifted toward developing and producing clean elecricity and clean automobiles. The fossil fuel giants can slow the clean movement progress down; but, they can't stop the hope by the world's people for a clean enviorment.
Tony 11:44AM (6/22/2009)
If you get past all the business lingo and whatnot, business is quite simple. For a company to survive, it must: 1) Sell products that it makes 2) Turn a profit on those products. If you can't do that selling small cars, you will have the same problem if you can't do it selling big cars.
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zamafir 12:19PM (6/22/2009)
yup, they became lazy selling larger products at a higher margin, just like GM, just as Toyoda is mentioning. It'll be fun watching them adapt.
Luis 12:50PM (6/22/2009)
I think they'll adapt much more swiftly than GM ever could. Toyota is a much more controlled company with a much more solid foundation than GM. GM did nothing but sit on it's ass for years until it was too late. Toyota now is where GM was 30 years ago.
I think they should make a statement and discontinue the Sequoia, and when they re-design the 4Runner NOT increase it in size and weight. My biggest disappointment with Toyota is that they've lost their market standing of having the most efficient, technologically advanced drivetrains in the segments they compete.
zamafir 1:35PM (6/22/2009)
"I think they'll adapt much more swiftly than GM ever could. Toyota is a much more controlled company with a much more solid foundation than GM. GM did nothing but sit on it's ass for years until it was too late. Toyota now is where GM was 30 years ago."
I totally agree, however toyota's very adroit at eking out the most efficient construction techniques so they're in a totally different world of hurt than GM. Rather than sitting on their asses they've been constantly refining and tuning, which is why I think it'll be interesting to see how they painfully adapt. It's not like they aren't already going at a very efficient pace. If you read between the lines, they're going to continue to focus on inexpensive cars and possibly even work on reducing the costs of their cars, which makes me wonder where that'll happen. They won't just cut production of big lumbering cars, they need to make up margin everywhere, and they're already lean as hell. It will be fun to watch for certain.
Ligor 11:50AM (6/22/2009)
and their claim that they can quickly shift production to fit what sells isn't as easy when you become a giant
it was when they were up adn coming, but now they just sell appliances as cars, cause they have nothing i'd like to have or that the competition isn't doing it better then they are.
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WorksForMe 11:51AM (6/22/2009)
One other thing:
Anyone see the news Lexus IS ad with the 4-days-without-a-shave idiot grinning while doing burn outs?
Big mistake, IMHO...My first reaction (and I love cars!) is that this guy has got to be a real a$$$$$$e. Why not something that shows how the IS handles on a road course?
Can anyone imagine a German automaker doing this kind of "burnout" ad?
Time for Toyota to look for a new ad agency.
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Other Man 11:54AM (6/22/2009)
".. becoming too dependent on large and expensive cars, trucks and SUVs .."
Nail on the head. They've allowed their low end models like the Corolla and Camry fall behind the class.
I've been saying exactly what he said for some time now.
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Alex 12:00PM (6/22/2009)
This has been my problem with major auto manufacturers for years. You do not need to be all things to all people. You do not need to be the largest car manufacturer in the world. You can be very profitable as a smaller or even i nich manufacturer.
I yearn for the day when Saab is a qwirky builder of turbo'd 3 and 5 doors that appeal to a small but ardently loyal following. When Toyota only builds the worlds most reliable and affordable sedans. When Porshce builds nothing but adrenaline filled sports cars.
I hate that companies have lost sight of building what they are good at all in the name of turning greater profits.
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BoxerFanatic 12:04PM (6/22/2009)
Agreed.
'Core competencies' and 'diverse product line' are two things that apparently aren't carrying much weight anymore.
Jim 12:16PM (6/22/2009)
Yep, as the detroit 3 found out (or in GM's case, are still finding out,) the "Sloan model" only works if you have commanding marketshare.
And while I think detroit will eventually stabilize and succeed, the Bloomberg article touches on the real threat to Toyota (and Honda, to some extent) - Hyundai.
tuxchown 12:20PM (6/22/2009)
I have been saying this for years. In their quest for world dominance, Toyota took more than the "world's largest automaker" crown from General Motors. They are becoming what their number one competitor is. Crap products with poor reliability and extremely serious quality issues will be Toyota's undoing.
petee209 12:20PM (6/22/2009)
well said. Let's not forget to add BMW to the list of car makers losing sight with the failmobiles they are pumping out now (X6, 5 series GT)
zamafir 12:20PM (6/22/2009)
@ Jim, very true, hyundai is a good example of a car company understandign their place and exploiting it, and doing so quite well
Jim 12:33PM (6/22/2009)
"Crap products with poor reliability and extremely serious quality issues will be Toyota's undoing."
Toyota will never produce "crap" (aside from the Tundra.) Even with their current difficulties, I still think they can and will learn and correct themselves far faster than GM could ever hope to. Proof is that their big swingin' dicks are already acknowledging their problems and are working to fix them, while Toyota still has a good reputation.
jpm100 12:49PM (6/22/2009)
"This has been my problem with major auto manufacturers for years. You do not need to be all things to all people. You do not need to be the largest car manufacturer in the world. "
This is the thinking that got GM in trouble in the 80's and early 90's. Focus on turning a buck even if it means you lose marketshare. Consequently they made some short term profitting and lost massive amounts of marketshare.
That came back to haunt them because their legacy costs were an absolute. The fewer cars they sold the fewer cars they could spread the legacy costs over. So when the legacy costs became bigger, their cars couldn't be competative at a profitable level.
GM bankruptcy will make it smaller and the only reason that might work is that the government has given them $50 billion and waved a wand on other obligations to get the legacy costs down to a manageable amount.
Joe K. 12:10PM (6/22/2009)
Honestly, the fact that it took them this long, to wonder aloud on this issue is indicative of their impending reckoning. I guess he read the comments here regarding the Camry refresh...
Refreshed 2010 Toyota Camry to start at $20,115
Joe K. 12:45PM (2/14/2009)
I was working at a Toyota Dealer for the launch in 02 and 06. The quality difference between an 01 and an 08 is astounding. It is so clear that this car was built en masse to get Toyota to #1 in the world in sales, versus their old model of building solid cars and building sales through reputation.
The new Camrys are the withdrawal by Toyota on their savings account that was invested in Quality, dependability and reliability...
Len_A 3:39PM (2/14/2009)
Which reinforces what many of my relatives who work for one of the Detroit 3 said when I would raze them about GM, Ford, and Chrysler's quality verses Toyota's - the universal response was "Wait until they try hit our production numbers." I used to think it was just sour grapes, but your comments back up what they said eight years ago. Doing a Yahoo search on the word "Toyota Engine Sludge" yields even more information on bad Toyota's quality has fallen.
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