October 30, 2020

Battered by Crises, Toyota Declares a Rebirth

The Crown, the preferred ride of staid Japanese executives, had gotten an edgy makeover. With a new oversize grille, vamped-up hybrid engine and an unveiling at a fashion mall, there was nothing stodgy about this car.

“Reborn,” read a logo beamed onto a large screen.

“My initial reaction was: ‘You’re kidding! Please, not pink,’ ” Akio Toyoda, the Toyota chief executive and a scion of the Japanese automaker’s founding family, told reporters at the event. “But being reborn does mean taking on new challenges.”

Toyota has spent much of the last year trying to leave behind what has been a tumultuous four years in which the automaker booked its largest loss ever, became embroiled in a recall scandal, struggled with a decimated supply chain after the 2011 tsunami and weathered the punishing effects of a strong yen.

One by one, the pieces have been falling into place.

In 2012, Toyota leapfrogged General Motors and Volkswagen to regain its title as the world’s largest automaker, selling 9.7 million vehicles, a record for the company. Now the company is on the cusp of a recovery, analysts say, that could put it on track to post the kind of growth promised before the crises.

“Toyota is now in the position — for the first time in years — where it is beating market expectations while its peers are disappointing,” Clive Wiggins, a Tokyo-based autos analyst for Macquarie, said in a recent note to clients. “We expect earnings to continue beating expectations over the next three years.”

Last week, Toyota agreed to pay more than $1 billion to settle a class-action suit over claims that its electronic malfunctions caused its cars to accelerate without warning, one of the largest payouts ever for an automotive lawsuit. Toyota still faces personal injury and wrongful death lawsuits, as well as an unfair business practices case brought by 28 attorneys general in the United States. But the company’s $1.1 billion charge against earnings for the class action was seen as a significant step toward closing the chapter on its recall problems.

There have been other signs of change. The company supply chain bounced back more quickly than predicted, profits are on the rise and the yen has started to weaken after the newly installed prime minister, Shinzo Abe, promised to drive down that currency.

And there is a loud message of change being sounded through the stepped-up emphasis on design — with both Toyota and Lexus models getting new looks, including the pink Crown. “It’s actually a beautiful color,” Mr. Toyoda said.

Toyota’s rebound has been centered in the United States, where its sales increased 28.8 percent last year to 1.88 million vehicles through November. That’s more than double the industrywide increase of 13.9 percent over the same period.

The biggest contributors have been stalwart products such as the Camry, and the expanded line of Prius hybrid models. Through November, combined sales of Prius cars had risen 81.3 percent in 2012, as the company continued to dominate the hybrid segment.

The company is also betting on a revamped version of a perennial also-ran, the Avalon sedan. Sales of the current version of the car were down 5 percent last year. The new model, with its wide-mouth grille and sculptured headlamps, reflects the company’s efforts to appeal to younger buyers. Toyota is trying to shave 10 years off the average age of buyers, now in the mid-60s.

The Avalon, which was designed and engineered in Michigan and is being built at Toyota’s assembly plant in Kentucky, is also a test of how much Japanese officials can delegate decision-making to the company’s subsidiaries. Promoted as Toyota’s most American vehicle ever, the Avalon is the first Toyota prototype not developed in Japan but at the sprawling Toyota Technical Center near Ann Arbor, Mich., where 1,100 employees work.

Hiroko Tabuchi reported from Tokyo and Bill Vlasic from Detroit.

Article source: http://www.nytimes.com/2013/01/03/business/battered-by-crises-toyota-declares-a-rebirth.html?partner=rss&emc=rss

Toyota Says No Full Production Until Year’s End

The time frame was the longest yet described by a Japanese car company in assessing the continued effects of the supply chain disruptions caused by last month’s destructive  quake and tsunami. 

Though Toyota’s 17 plants in Japan escaped the disaster relatively unscathed, factory lines are working at only half volume here and at 40 percent overseas, as vital suppliers in Japan’s worst-hit areas struggle to restart operations.

Toyota had indicated this week that its Japanese operations would remain at half-speed through at least June 3, but was unwilling to speculate beyond that. And it had said on Tuesday that it would cut production at its North American plants by 75 percent in the next six weeks to conserve its limited supply of parts made in Japan.

The two other main Japanese automakers, Nissan and Honda, are also operating at only about half of normal production volumes in Japan.

At a briefing for reporters here on Friday, Akio Toyoda, president and chief executive of Toyota, said he expected to ramp up production gradually in Japan, starting in July, as more parts makers came back on line.

Toyota will raise production at its overseas plants a month later, in August, to allow for the parts to arrive from Japan, Mr. Toyoda said.

Production at home and overseas will return to predisaster levels at all factory lines and across all vehicle models by November or December, Mr. Toyoda said.

“The damage has been so widespread in this unprecedented calamity that its economic effect is being felt throughout Japan and in every industry,” Mr. Toyoda said. He added that the automaker had dispatched employees to help recovery work at some of its most vital parts makers.

The severe disruptions come as a painful blow to Toyota just as it had appeared set to shake off the effects of a sharp slowdown in sales after the global economic crisis, as well as its handling of a spate of recalls. The reduced production also highlights a downside to Toyota’s insistence on making almost half of its cars in Japan and shipping them overseas. Also, its celebrated just-in-time production system, which reduces parts inventories to a minimum, may have made the disruptions worse.

The automaker estimates that it faces shortages of about 150 critical parts, down from about 500 immediately after the March 11 quake. Atsushi Niimi, executive vice president in charge of production, said that Toyota had switched suppliers in some cases to speed the recovery.

He said it had been a bitter revelation to Toyota that its cars, even those produced overseas, still relied so heavily on Japanese parts.

“We need to procure more parts overseas, and we also urge our suppliers to make more forays outside Japan,” Mr. Niimi said. He added that Toyota would diversify its supplier base over all to make its supply chain more resilient.

“It’s something we don’t want to think about, “ he said, “but it is something we cannot avoid if we are to continue to do business in a quake-prone country.”

Mr. Toyoda, the company chief, said continuing aftershocks made the outlook uncertain. He declined to comment on the effect of the disruptions on the company’s earnings.

“We just had an aftershock yesterday,” he said. “As these continue, the rapid recovery we’ve seen can come undone. The future is impossible to predict.”

Another concern is the severe energy shortage brought by the crisis at the Fukushima Daiichi nuclear power station, 140 miles north of Tokyo, as well as damage to other power plants in the region.

To avert a power supply collapse, the Japanese government initially instructed companies to reduce their energy use by as much as 25 percent. But frantic efforts by utilities to increase power generation at plants outside the worst-hit zones, as well as a public drive to conserve energy, has eased the energy shortfall, allowing the government to lower its directive to 15 percent.

Mr. Niimi, the executive vice president for production, said that Toyota was discussing energy-saving measures with other automakers, like shutting production lines during the week and running them on weekends, when more electricity is available.

Still, Mr. Toyoda said, the company was committed to keeping production — and jobs — in Japan.

“Above all, we all love Japan,” he said. “As we face a national crisis, each company must do its part.”

Article source: http://feeds.nytimes.com/click.phdo?i=7c0f3ac23a9ecb8c7795bf3ed781b908