• Jul 23, 2009
Three weeks into his new assignment as president and chief operating officer of Toyota North America, Yoshimi Inaba came to Detroit to talk about the state of the business. This is Inaba-san's third stint working for Toyota in North America after returning to Japan in 2003. This spring the senior management in Japan asked Inaba-san to return to North America and help turn the suddenly ailing giant around.

Those who have been watching Toyota in the past decade have observed the company grow at a tremendous and seemingly inexorable rate. When the big crash hit in 2007-8, Toyota proved to be no more immune than any other automaker and recently recorded the first full-year loss in 71 years. As one of the biggest markets for the company, the North American operations clearly played up part in that loss and will play a part in returning the company to profitability. Read more after the jump.

[Source: Toyota]

Inaba took on his new position at the same time that Akio Toyoda took over as CEO of the company in Japan. Inaba explained that Toyoda has highlighted just a few major high-level focus areas for returning to profitability. As Toyota has grown over the past two decades it has encountered the same problem that every other huge company faces. The bigger the company, the harder it is to manage. To that end, Toyoda doesn't want a major restructuring of the company. However, he is pushing more decision-making downstream to the various regions around the world. This should help speed up several processes and allow regions to focus on local needs.
Inaba-san acknowledged that while Toyota products have many fine qualities, they are "not exciting enough."

Inaba-san acknowledged that while Toyota products have many fine qualities, they are "not exciting enough." As an avowed car-enthusiast Toyoda-san has declared that Toyota needs to "re-ignite passion for the products." With a few exceptions (2000GT, the Celicas, Supras and MR2), passion seems to have long been in short supply for most of Toyota's mainstream products which in part might explain their widespread appeal. Inaba-san did not say anything about reviving any such products, but rather implied that some of that passion would be imbued in future products.

When asked about how the prolonged slump in Japan might give some lessons to the company about the current downturn in North America, Inaba highlighted the differences between the two markets. He explained that Japan, with its well developed mass transit system, poses a different problem for automakers. People there need personal transportation to get around, while in North America, except for a few urban centers, personal transportation is much more of a necessity and a quicker recovery is likely.

Inaba-san told the gathering that recent data indicates "there is a little bit of a pulse of improvement, consumer confidence is up." The situation remains difficult however, as people worry about their jobs. Inaba expects the US market to stabilize to a 10+ million unit sales level by the end of this year and hopes to see that rise to a 12-13 million unit level within the next couple of years. He didn't speculate on when or if we might ever return to the days of 17 million units.
Inaba hopes to have Toyota North America in a profitable position again by the end of the company's 2011 fiscal year in March 2011

Inaba hopes to have Toyota North America in a profitable position again by the end of the company's 2011 fiscal year in March 2011. Helping to get the company there will be increasing the flexibility of the plants allowing them to build more models. For example, the Princeton Indiana plant will soon be able to build body-on-frame Sequoias and uni-body Highlanders on the same line. Allowing individual plants to build more models will allow the company to respond to market shifts much more rapidly. Inaba also wants to increase the proportion of NA sales built here above the current 60% to help guard against currency fluctuations.

One place that seems unlikely to get new production however, is the NUMMI joint venture plant in California. Inaba said that "dissolving the joint-venture is a very strong possibility" and Toyota is in negotiations with Motors Liquidation Co. about the factory's fate now. He called the chances of Toyota taking complete control of the plant unlikely.
"Dissolving the [NUMMI] joint-venture is a very strong possibility."

On the subject of Scion, Inaba called it "a very good attempt and a good business model which will be valid and viable in the future." However, he acknowledged that product freshness is a key to the Scion strategy and that is something that he will be trying to address moving forward. Inventory of Scions is low at the moment and he wants to maintain a market-pull strategy rather than pushing the vehicles out. Inaba has set a goal of "reviving the Scion spirit."

Another product area that Inaba doesn't see much near-term potential for is battery electric vehicles. In spite of the enthusiasm from the likes of Nissan, Mitsubishi, Ford and GM, Inaba says, "we don't see in the near future, battery electric vehicles being mainstream." Instead, Toyota will focus on plug-in version of existing hybrids like the Prius and fuel cell vehicles. "We don't see the major advances in battery technology" that will be required to make EVs safe, reliable and affordable. Inaba stressed that "in terms of technology, we do not believe that we are behind, but acknowledged that Toyota is not ahead either." He did acknowledge that if competitors EV's take-off, Toyota would have to look carefully at the situation, but was reticent about being willing to take a large loss on EV's. "We believe hybrid technology" and it is "more realistic for at least the next four-five years.
"We don't see in the near future, battery electric vehicles being mainstream."

Inaba told the group that "unless the US comes back to profitability, it is really unlikely for Toyota to be profitable globally." He acknowledged that competitors are catching up in terms of quality and as vehicles get better overall, it is harder for everyone to continue getting better. Inaba, "sees signs that technical problems and recalls are coming down." Not so long ago a "GM bankruptcy and sub-ten million unit market were unthinkable events" to Toyota. However, everyone has seen the light and is moving aggressively to repair the damage.


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    • 1 Second Ago
  • 25 Comments
      • 5 Years Ago
      Well, it's official... Toyota's announced they're negotiating liquidation of NUMMI: http://abclocal.go.com/kgo/story?section=news/local/east_bay&id=6929632&rss=rss-kgo-article-6929632
      • 5 Years Ago
      Nice smile.
      • 5 Years Ago
      sukebe mitai na...ano yaji...
      • 5 Years Ago
      Att : The 4th Heat -

      Quality / Customer Satisfaction Surveys calculate the standing of a brand or a particular model by faults per 100 cars and no matter wether these surveys / analysis are conducted in North America, Asia, Europe or even here in Australia ... Toyota (and Lexus) consistantly and constantly rank amoung the most reliable, dependable and trouble-free motorcars in just about each and every report that is published and consistancy like that doesn't happen by mistake.

      Toyota makes good cars and any comment otherwise is simply wrong.

      I have driven Toyota's for 15 years and i have had a great run from all of 'em and my next car will be another.
      • 5 Years Ago
      Of course they will shut it down. What did Toyota ever get out of it? Just some UAW parasites and GM getting their re-badged cars.

      GM was supposed to learn how to make a successful small cars from this "joint" venture. Hows that workin out for ya, GM? Idiots.
      • 5 Years Ago
      Read this interview yesterday on yahoo, the not exciting enough quote stuck out, but im not sure it has anything to do with their decline honestly. Go look at the average camry driver. Go look at the average 'exciting' car driver. Toyota just became way to reliant upon the US for it’s primary revenue source. It seems everyone in that boat, domestic or foreign, have been hit hardest.
        • 5 Years Ago
        I'm not sure what you're speaking to specifically when you say "the US is no exception and by some accounts is making out better than others."

        I'm talking to the general market in the US and the effect sales of all manufacturers here have had on their companies. the US market is not making out better than china, or europe, or others, who have all show growth or substantially LESS shrinkage and whose car makers which are dependent upon them primarily are not as adversely affected by any means as those dragged down with the US car market shrink. The US has retracted significantly, this is a fact understood by everyone. This is why GM, Chrsyler and Ford all required hand outs, and this is why Toyota was caught with their pants down, because those four became dependent on sales in the US primarily to support their entire companies.

        If you'd be kind enough to explain how the US market, which was the focus of the comment you replied to, is 'making out better than others' I'd appreciate it. Thanks in advance.
        • 5 Years Ago
        "Around here, the average Camry, Corolla and Prius drivers are cab drivers."

        Huh? Where the heck do you live? The average cab I see around the U.S. is either a Crown Vic or a minivan.
        • 5 Years Ago
        Most of the newer cabs I've seen in NYC are either Camrys, Sienna's, a couple Priuses, a few Malibu's, and a few Impalas as well. I think the way they convert them makes the Malibu pretty terrible though-I had to ride up front once and with the taxi equipment and the interactive computers in that barrier both the driver and passenger seats end up being VERY close to the dashboard. Enough that anybody over 5'6" probably wouldn't be able to drive it. Haven't been in a Prius cab but I have seen a bunch of them around.

        The older Crown Vics are probably still the roomiest (well ok other than the Sienna) but people definitely started buying other cars to make into cabs. Even seen a few random hybrid SUV taxis.

        Frankly if I was a city cab driver I'd probably buy a hybrid too since taxicab drivers can easily go through an entire tank of gas in a day, and that money definitely adds up at 3 bucks a gallon (probably more if you're filling up in Manhattan). And it's hard enough to get an empty cab that people don't really care what kind of taxi stops for them, you could probably drive up in a Mini and people would still get in (although Mini's "reliability" makes them less than optimal for taxi use). So a cabbie driving a Prius can probably pocket quite a bit of extra cash over an Impala cab, and definitely way more money than a Crown Vic since it's almost all intense stoplight to stoplight city miles where the Crown Vic gets like 10mpg and the Prius gets like 60 mpg if you're basically alternating between going 15mph in heavy traffic and hitting the regenerative brakes. Drive 300 miles in a day and you're looking at $75 extra in your pocket which is a pretty big deal for a cabbie.
        • 5 Years Ago
        I'm gonna have to agree with zamafir but I don't think the reason is the average Camry driver in the way you intended. Around here, the average Camry, Corolla and Prius drivers are cab drivers. Toyota makes almost all the cabs I've seen in service and in a climate like this (especially after the gas prices we had not long ago), I wouldn't be surprised if the majority of cab companies are holding off on getting new cars. I see that kicking the crap out of Toyota more than the collective loss of individual buyers.
        • 5 Years Ago
        There are casualties all around the world, the US is no exception and by some accounts is making out better than others.
      • 5 Years Ago
      Just stop making ugly cars and trucks.
        • 5 Years Ago
        Actually Nightcrawler,

        Since the competiton has stepped up it's quality rep, the only point Toyota had to sell on, their lackluster design isn't cutting it anymore from a "I'll buy a Toyota because, even though it's ugly, it will last" standpoint.
      • 5 Years Ago
      The killer issue is consumers questioning if Toyota products still merit price premiums. Toyota/Lexus was the longtime automotive quality gold standard until value engineering resulted in a series of image crushing recalls. Repair shops that 15-years ago rarely saw a broken Toyota are now filled with them. Customer care is being sacrificed in a shortsighted effort to preserve emaciated bottom lines, and it’s not going unnoticed.
        • 5 Years Ago
        who is exactly questioning that? You? lol.
        Thing that hurt Toyota in USA is recession. Quality is actually on the up currently, it actually got worse during early 2000's.

        He is right about EV's too - i am not sure why is the writer thinking that Toyota saying that EV's are not going to become mainstream rules out iQ EV... hows that going to be mainstream? Hybrids are stuggling to become mainstream with almost one million of sales yearly, so EV's that might sell in thousands or tens of thousands at best are definetly not going mainstream yet.
      • 5 Years Ago
      There was a crash in 2007? Odd considering the billions in profit Toyota made that year. The crash of 08-09, well, that is another matter. markf
      • 5 Years Ago
      Toyota should revive the Celica and Supra. Those were nice cars back then.
      • 5 Years Ago
      He seems to be right-on. Electric vehicles will definitely NOT take off in the next 4-5 years. Likely there will be a few early adopters and fleets, and that's about it.

      He's right about Scion, too. They need to keep their products fresh. The new iQ will surely help, but they need to replace the tC yesterday. The xB and xD need an re-fresh to make them more fuel efficient and modern.

      Shutting down NUMMI isn't such a bad idea.
        • 5 Years Ago
        Tesla seems like a good fit for the NUMMI plant. Granted they would come nowhere near full utilization of it, but it is an existing auto plant and it is near Tesla HQ.
        • 5 Years Ago
        Shutting down NUMMI isn't such a bad idea for Toyota. Not that it's a bad plant or anything, but they can build those cars anywhere they want.

        For GM to get out the the NUMMI plant and the competitive Toyota-based small cars it provided seem pretty short sighted to me though. What small car do they have to sell right now that is better than the Vibe? Nothing. (Not that the Vibe is anything great, but it was better than the Cobalt and Aveo)
      • 5 Years Ago
      I'm sure Toyota's looking at all the issues in the North American market. I'm sure NUMMI is on the chopping block, because without GM involved, Toyota would be on the hook for all the costs associated with the plant. And I'm sure that Toyota wouldn't mind giving up their only UAW plant, given enough of an excuse.

      Of course, this would be a blow to California, what with the last auto plant in the state going bye-bye...
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