Toyota Downplays U.S. Headwinds, Highlights New Quality, Manufacturing Onslaughts

Toyota Downplays U.S. Headwinds, Highlights New Quality, Manufacturing Onslaughts

By Bill Visnic

NEW YORK –- During a presentation for the U.S. financial community and journalists this week, not one of Toyota Motor Corp.’s Japanese and U.S. executives uttered the phrase, “Global domination.”

They didn’t have to. They mostly let the numbers –- and the promise of a host of proposed new processes -– do the talking.

Like the Golem-like robot in “The Day the Earth Stood Still,” it’s beginning to look like Toyota can simply raise its helmet visor and ray-beam any obstacle out of existence.

Peerless quality slipping a bit? Zzzzap –- we’re way ahead of you, and have a butt-kicker program in place that’s already boosting initial-quality and long-term durability back to our historic standards.

Chinese and Indian competitors threatening with ultra-cheap cars? Zzzzap –- we’re working on a few of those, too.

Just lost Jim Press, your longtime sales guru in America? Zzzzap –- we’ve got plenty of talented people capable of taking over.

Competitors meeting –- and surpassing –- your vaunted manufacturing productivity? Zzzzap –- let’s see those Harbor Report numbers after our new production system hits full stride.

Subprime fallout in the U.S.? Zzzap -– subprime people aren’t really our customers, anyway.

What, Me Worry? We’re Going To Be the World Leader

And so it went for most of this meeting in which Toyota outlined its sales and financial performance and gave broad details of near-term technology, manufacturing and sustainability strategies.

Toyota projects it will sell 9.34 million vehicles (including the closely held Hino and Daihatsu brands) globally this year -– a number that almost certainly will force General Motors to relinquish, for the first time since 1931, its title of the world’s largest-volume automaker.

From there, it only gets worse for GM and the rest of Toyota’s global competition, as Toyota intends to add another million units of worldwide sales, for a total of 10.4 million, by 2009.

That includes China, where Toyota’s Mitsuo Kinoshita, executive vice president and CFO, said the company will be selling more than 1 million vehicles by “the early 2010s.” Toyota will sell roughly 870,000 units in China this year. Toyota is “focused on quickly establishing a business infrastructure,” in China, said Kinoshita.

Toyota also has targeted Russia as one of the world’s strongest emerging markets. Kinoshita said the company is hastening to respond to “rapid market expansion” in Russia. It has a new assembly plant ready to come on stream in December, and it is increasing its sales network. To give some idea of Russian citizens’ headlong rush into automobile ownership, in 2000, Toyota sold a paltry 2,000 vehicles there; in 2006, it sold 106,000.

Headwinds? What Headwinds?

Equally illuminating, perhaps, is Toyota’s unflustered view of the slowing U.S. market. Company executives refuse to go along with widely accepted projections U.S. sales will lag 2006 by several hundred thousand units.

Jim Lentz, executive vice president, Toyota Motor Sales U.S.A. Inc., expressed optimism the market   won’t finish the year as badly as many analysts predict.

Highlights of the presentation, minus the tedious financial stuff –- everybody already knows Toyota is staggeringly rich and getting staggeringly richer:

• On the affect of the blowup in subprime mortgage lending: “We do very little business in the subprime arena,” said Lentz. “As a result, we really haven’t seen an impact at all from subprime. Credit availability really hasn’t impacted the sales side at all thus far.”

• Regarding widely held perceptions of slipping quality, Kinoshita says:

Toyota has initiated a “customer first” process to reestablish Toyota’s benchmark “built-in quality with ownership.” Figures presented here indicate improvements in vehicle initial quality since 2005, the year when Toyota quality “issues” peaked, according to the company. The new customer-first initiative encompasses the design and manufacturing processes, as well as Toyota’s suppliers and dealers.

• Look out on the manufacturing front, particularly, as Kinoshita and Kazuo Okamoto, executive vice president responsible for vehicle engineering, R&D for design and other technical and product areas, briefly mention the company’s new “slim” body line that improves efficiency and markedly reduces the footprint of the main component of the vehicle assembly process, the body shop.

The new body line, just now ramping up at Toyota’s crucial Takaoka plant in Japan that makes the seminal Corolla and other models, is the centerpiece of a new, more efficient process that gradually will be adopted throughout the Toyota global manufacturing empire. Toyota execs promise the “slim” line –- which improves upon the already highly efficient Global Body Line the company currently has used since as early as 2002 in the U.S. –- is more flexible and incorporates smaller, less-costly tooling and equipment.

• Toyota executives here say the company is working hard to evaluate how best to respond to indications from Chinese and Indian automakers that say they are working to produce vehicles for emerging markets that could cost the equivalent of $3,000 –- or less.

The company is developing the broad parameters for an ultralow-priced vehicle, said Kinoshita, but hasn’t determined what price point would be required to satisfy hallmark Toyota quality, refinement and fit and finish. Moreover, he says, such a vehicle would have to be “a viable business venture,” i.e. not a loss leader simply to hold market share.

Okamoto adds that developing a mega-cheap vehicle is more difficult for Toyota because it also doesn’t want to compromise on safety or environmental attributes.

But he said the company is working diligently on development of such a vehicle because if it can make a profit at ridiculously low selling prices, the lessons can be applied to development and manufacture of all Toyota vehicles.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.