Slow and steady' drives Toyota's growth
12-31-05, 01:29 PM
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Slow and steady' drives Toyota's growth
http://www.usatoday.com/money/autos/...ota-usat_x.htm
'Slow and steady' drives Toyota's growth
By Chris Woodyard, USA TODAY
TORRANCE, Calif. — Toyota Motor (TM) made a routine announcement in Tokyo on Tuesday that has monumental significance.
By Robert Hanashiro, USA TODAY
Toyota said it will boost worldwide production of cars and trucks 10% next year, to a company record 9.06 million. That means it could slip past ailing General Motors (GM) to become the world's biggest car company. (Photo gallery: Big moments in Toyota history)
GM, the undisputed production leader since 1931, is expected to manufacture 9.08 million vehicles this year. GM doesn't forecast annual production, but analysts foresee 8.85 million to 9.15 million next year.
CSM Worldwide predicts that GM will crank out 208,459 fewer vehicles than Toyota next year.
What should be good news for Toyota puts the automaker in a tough spot. Its corporate culture embraces humility. And its political sense shuns anything that could create a backlash that, Toyota fears, might spark a boycott of its products.
"We try to prepare our production and sales to respond to customer needs in every region," Toyota President Katsuaki Watanabe told reporters in Tokyo. "I am not thinking much about whether we will become No. 1."
Yet, if Toyota overtakes GM, it will be just another in a growing line of superlatives that enhance the car company's image and, presumably, draw more customers into its showrooms.
While being biggest can help strong-arm lower costs in dealing with suppliers, it's mainly a matter of boasting rights.
"It's largely just symbolic," says Jeffrey Liker, a University of Michigan professor and author of The Toyota Way.
GM lost $3.8 billion the first three quarters of this year and recently announced that it will close nine assembly plants and cut 30,000 jobs to restructure its U.S. operations, where the biggest losses are.
Toyota has prospered by growing slowly and steadily. Today, Toyotas can be found in 170 countries, from the grand boulevards of Europe to the rutted roads of rural China. The company sometimes is late to join segments — its first full-size pickup, Tundra, didn't show up in the USA until 1999 — but wins notice when it eventually arrives. Honda beat Toyota into the U.S. market with a gas-electric hybrid, but Toyota now sells more, and its Prius has become almost a synonym for hybrid.
New opportunities, including cutbacks among the Detroit automakers, are forcing Toyota to quicken its pace. It has set a target of 15% worldwide market share in the next decade, up from 10% today. When growth of the worldwide auto market is taken into account, the increase would amount to 5 million-plus vehicles a year, more than half again as many as it sells today.
New plants on the way
To get there, Toyota faces the ambitious prospect of opening at least five new plants, from Thailand to Texas, by the end of the decade. And there are risks to increasingly fast growth. Already, twice as many Toyotas have been voluntarily recalled in the USA this year as were recalled last year to fix possible defects. Competitors are making inroads in quality surveys.
"Their next evolution is to become a global company. In order to do that, they are going to have to fall and hurt themselves and pick themselves up," Liker says.
Toyota generally doesn't stumble. The company's careful approach — jiwa-jiwa, Japanese for slow and steady — has served it well.
Toyota didn't start selling cars in the USA until 1958. It began with a small sedan and the rugged off-road Land Cruiser. Toyota's breakthrough in the U.S. came after the 1965 introduction of the Corona, a feisty little sedan that sold for $1,760. The smaller Corolla followed three years later and would become the company's all-time best selling car.
The big selling point then, as now: quality.
To Detroit in the 1980s, gripped by fears of Japan Inc. and enthralled with the notion of automated assembly lines, the answer to quality appeared to be factory robots. Toyota, however, has looked to the human factor.
It is a "people business, from top to bottom," in which senior managers are encouraged to visit production lines or otherwise learn firsthand how to fix a problem, says James Womack of the non-profit Lean Enterprise Institute, a management think tank, and co-author of the book Lean Solutions.
Toyota profit promotes interest in stock
Investors value Toyota Motor's stock because of the company's strong profit, pushing up the automaker's value to several times that of other car companies. Revenue, net income are for the four most recent quarters. In billions:
Automaker Market capitalization Total revenue Profit/loss
Toyota $166.4 $179.4 $10.7
Honda $55.4 $83.7 $4.5
DaimlerChrysler $52.3 $194.1 $3.1
Nissan $46.7 $83.4 $4.7
BMW $28.1 $60.1 $2.9
Volkswagen $21.5 $122.8 $1.2
Hyundai $20.4 $51.3 $1.6
Audi $15.2 $34.3 $1.1
Ford Motor $15.2 $175.5 $2.0
General Motors $12.7 $193.0 -$3.9
Suzuki $10.5 $22.8 $0.6
Mitsubishi $9.9 $18.9 -$3.4
Kia $8.3 $17.1 $0.6
Porsche $6.6 $8.0 $1.0
Mazda $6.2 $25.1 $0.5
Isuzu $4.8 $13.8 $0.5
Source: Capital IQ
It's a philosophy that has extended to its U.S. operations. Toyota's U.S. headquarters in this Los Angeles suburb was built with an open design and a pair of circular staircases that force employees in the airy atrium to look around at all the cubicles. Jim Press, Toyota's U.S. president, says it encourages people to talk to each other and solve problems directly.
Underscoring the zenlike quality of the place, Press says the 15% worldwide market share isn't a goal, but a "spiritual target."
If that sounds strange, consider some of the other traits that distinguish Toyota:
•Paranoia.
"Toyota is the biggest worrier on the planet," Womack says.
When a group of Japan-based Toyota board members visited U.S. headquarters earlier this month, employees didn't assemble their latest models for them to see. Rather, they created a car show of what they viewed as the toughest competition, including the Hyundai Azera, Honda Civic and Dodge Charger.
"There's this global paranoia," says Michael Robinet, a CSM vice president. Toyota executives are especially worried about the South Koreans — which have the Hyundai and Kia brands in the USA — because of their fast growth.
•No layoffs.
Toyota doesn't promise lifetime employment, but it has managed to avoid layoffs because of its growth.
Also, work is shifted among plants in the growing company. When truck bed assembly was sent to Mexico, a Toyota facility in Long Beach, Calif., that had done the work for years, was given other, higher-value components to put together, Press says.
•Hybrids.
Toyota is years ahead of U.S. competitors in developing and deploying the gasoline-electric hybrid, one of the most promising new technologies in the automotive world in a generation.
It will have shipped 140,000 hybrids from Japan to the USA this year. Production of hybrids in the USA is expected to start in 2006 with the Camry, built in a factory in Georgetown, Ky. Even a hybrid pickup is being considered.
•Finances.
Toyota's bankroll — $18 billion — is the highest in the industry, save for GM's similar cash stash. "Toyota is sitting on a pile of money," Robinet says. Well, not really sitting — investing. Research spending amounts to $6.6 billion this fiscal year.
That's possible when you're making money. The $10.7 billion the company earned in the last four quarters was an industry high, a fact not missed by investors. The total value of all Toyota shares exceeds that of DaimlerChrysler, Ford Motor, GM, Honda and Volkswagen combined.
It sold 1.9 million vehicles worldwide in the quarter ended Sept. 30, up 6.2% from the same period last year. In North America, sales were up 9% — and Toyota offered far-fewer profit-diminishing incentives than domestic automakers.
•Long-term focus.
Instead of a fixation on quarterly profit, Toyota is known for looking out years, even decades, in product development and master planning.
And the company occasionally shows it's still willing to take a risk. The FJ Cruiser, a nostalgia-driven off-road truck, will go on sale next year. It's the outgrowth of a concept vehicle at the 2003 auto show in Detroit.
Production on the rise
With sales increasing, filling part of the gap left by diminished GM and Ford sales, Toyota is ramping up production in the USA and Canada. A pickup plant in San Antonio opens next year. A second factory in Canada is scheduled to make its debut in 2008. Around the world, planning or construction is underway for plants in Russia, China and Thailand.
Watanabe also has announced the goal of speeding up the time it takes to develop new vehicles.
Can the company keep pace? Some see a strain already. "Their system is stretched," says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.
It's showing up in recalls. The 2.2 million Toyotas recalled through Nov. 17 — twice as many as last year — puts Toyota ahead of DaimlerChrysler's 749,460, the National Highway Traffic Safety Administration reports. Toyota recalls lag behind GM's 4.1 million and Ford's 6 million.
Toyota still has enviable quality rankings, but competitors are catching up. The Toyota brand ranked seventh behind such nameplates as Buick and Cadillac in J.D. Power and Associates surveys measuring initial quality and quality after three years of ownership.
Toyota has taken notice. European chief Shinichi Sasaki was quoted in the Financial Times last month as warning that new factories outside Japan with quickly hired new workers smack at the culture of "built-in quality." Sasaki, the group's former head of quality, noted that rivals are challenging Toyota's high J.D. Power ratings.
Still, Toyota looks like an irresistible force — as its imminent ascension to No. 1 automaker underscores.
"Toyota is kind of a scary mix of a hugely strong financial company and a great product development company supported by an excellent sales arm," says George Peterson, president of consultants AutoPacific. "They are really tough to stop."
Contributing: Matt Krantz, The Associated Press.
'Slow and steady' drives Toyota's growth
By Chris Woodyard, USA TODAY
TORRANCE, Calif. — Toyota Motor (TM) made a routine announcement in Tokyo on Tuesday that has monumental significance.
By Robert Hanashiro, USA TODAY
Toyota said it will boost worldwide production of cars and trucks 10% next year, to a company record 9.06 million. That means it could slip past ailing General Motors (GM) to become the world's biggest car company. (Photo gallery: Big moments in Toyota history)
GM, the undisputed production leader since 1931, is expected to manufacture 9.08 million vehicles this year. GM doesn't forecast annual production, but analysts foresee 8.85 million to 9.15 million next year.
CSM Worldwide predicts that GM will crank out 208,459 fewer vehicles than Toyota next year.
What should be good news for Toyota puts the automaker in a tough spot. Its corporate culture embraces humility. And its political sense shuns anything that could create a backlash that, Toyota fears, might spark a boycott of its products.
"We try to prepare our production and sales to respond to customer needs in every region," Toyota President Katsuaki Watanabe told reporters in Tokyo. "I am not thinking much about whether we will become No. 1."
Yet, if Toyota overtakes GM, it will be just another in a growing line of superlatives that enhance the car company's image and, presumably, draw more customers into its showrooms.
While being biggest can help strong-arm lower costs in dealing with suppliers, it's mainly a matter of boasting rights.
"It's largely just symbolic," says Jeffrey Liker, a University of Michigan professor and author of The Toyota Way.
GM lost $3.8 billion the first three quarters of this year and recently announced that it will close nine assembly plants and cut 30,000 jobs to restructure its U.S. operations, where the biggest losses are.
Toyota has prospered by growing slowly and steadily. Today, Toyotas can be found in 170 countries, from the grand boulevards of Europe to the rutted roads of rural China. The company sometimes is late to join segments — its first full-size pickup, Tundra, didn't show up in the USA until 1999 — but wins notice when it eventually arrives. Honda beat Toyota into the U.S. market with a gas-electric hybrid, but Toyota now sells more, and its Prius has become almost a synonym for hybrid.
New opportunities, including cutbacks among the Detroit automakers, are forcing Toyota to quicken its pace. It has set a target of 15% worldwide market share in the next decade, up from 10% today. When growth of the worldwide auto market is taken into account, the increase would amount to 5 million-plus vehicles a year, more than half again as many as it sells today.
New plants on the way
To get there, Toyota faces the ambitious prospect of opening at least five new plants, from Thailand to Texas, by the end of the decade. And there are risks to increasingly fast growth. Already, twice as many Toyotas have been voluntarily recalled in the USA this year as were recalled last year to fix possible defects. Competitors are making inroads in quality surveys.
"Their next evolution is to become a global company. In order to do that, they are going to have to fall and hurt themselves and pick themselves up," Liker says.
Toyota generally doesn't stumble. The company's careful approach — jiwa-jiwa, Japanese for slow and steady — has served it well.
Toyota didn't start selling cars in the USA until 1958. It began with a small sedan and the rugged off-road Land Cruiser. Toyota's breakthrough in the U.S. came after the 1965 introduction of the Corona, a feisty little sedan that sold for $1,760. The smaller Corolla followed three years later and would become the company's all-time best selling car.
The big selling point then, as now: quality.
To Detroit in the 1980s, gripped by fears of Japan Inc. and enthralled with the notion of automated assembly lines, the answer to quality appeared to be factory robots. Toyota, however, has looked to the human factor.
It is a "people business, from top to bottom," in which senior managers are encouraged to visit production lines or otherwise learn firsthand how to fix a problem, says James Womack of the non-profit Lean Enterprise Institute, a management think tank, and co-author of the book Lean Solutions.
Toyota profit promotes interest in stock
Investors value Toyota Motor's stock because of the company's strong profit, pushing up the automaker's value to several times that of other car companies. Revenue, net income are for the four most recent quarters. In billions:
Automaker Market capitalization Total revenue Profit/loss
Toyota $166.4 $179.4 $10.7
Honda $55.4 $83.7 $4.5
DaimlerChrysler $52.3 $194.1 $3.1
Nissan $46.7 $83.4 $4.7
BMW $28.1 $60.1 $2.9
Volkswagen $21.5 $122.8 $1.2
Hyundai $20.4 $51.3 $1.6
Audi $15.2 $34.3 $1.1
Ford Motor $15.2 $175.5 $2.0
General Motors $12.7 $193.0 -$3.9
Suzuki $10.5 $22.8 $0.6
Mitsubishi $9.9 $18.9 -$3.4
Kia $8.3 $17.1 $0.6
Porsche $6.6 $8.0 $1.0
Mazda $6.2 $25.1 $0.5
Isuzu $4.8 $13.8 $0.5
Source: Capital IQ
It's a philosophy that has extended to its U.S. operations. Toyota's U.S. headquarters in this Los Angeles suburb was built with an open design and a pair of circular staircases that force employees in the airy atrium to look around at all the cubicles. Jim Press, Toyota's U.S. president, says it encourages people to talk to each other and solve problems directly.
Underscoring the zenlike quality of the place, Press says the 15% worldwide market share isn't a goal, but a "spiritual target."
If that sounds strange, consider some of the other traits that distinguish Toyota:
•Paranoia.
"Toyota is the biggest worrier on the planet," Womack says.
When a group of Japan-based Toyota board members visited U.S. headquarters earlier this month, employees didn't assemble their latest models for them to see. Rather, they created a car show of what they viewed as the toughest competition, including the Hyundai Azera, Honda Civic and Dodge Charger.
"There's this global paranoia," says Michael Robinet, a CSM vice president. Toyota executives are especially worried about the South Koreans — which have the Hyundai and Kia brands in the USA — because of their fast growth.
•No layoffs.
Toyota doesn't promise lifetime employment, but it has managed to avoid layoffs because of its growth.
Also, work is shifted among plants in the growing company. When truck bed assembly was sent to Mexico, a Toyota facility in Long Beach, Calif., that had done the work for years, was given other, higher-value components to put together, Press says.
•Hybrids.
Toyota is years ahead of U.S. competitors in developing and deploying the gasoline-electric hybrid, one of the most promising new technologies in the automotive world in a generation.
It will have shipped 140,000 hybrids from Japan to the USA this year. Production of hybrids in the USA is expected to start in 2006 with the Camry, built in a factory in Georgetown, Ky. Even a hybrid pickup is being considered.
•Finances.
Toyota's bankroll — $18 billion — is the highest in the industry, save for GM's similar cash stash. "Toyota is sitting on a pile of money," Robinet says. Well, not really sitting — investing. Research spending amounts to $6.6 billion this fiscal year.
That's possible when you're making money. The $10.7 billion the company earned in the last four quarters was an industry high, a fact not missed by investors. The total value of all Toyota shares exceeds that of DaimlerChrysler, Ford Motor, GM, Honda and Volkswagen combined.
It sold 1.9 million vehicles worldwide in the quarter ended Sept. 30, up 6.2% from the same period last year. In North America, sales were up 9% — and Toyota offered far-fewer profit-diminishing incentives than domestic automakers.
•Long-term focus.
Instead of a fixation on quarterly profit, Toyota is known for looking out years, even decades, in product development and master planning.
And the company occasionally shows it's still willing to take a risk. The FJ Cruiser, a nostalgia-driven off-road truck, will go on sale next year. It's the outgrowth of a concept vehicle at the 2003 auto show in Detroit.
Production on the rise
With sales increasing, filling part of the gap left by diminished GM and Ford sales, Toyota is ramping up production in the USA and Canada. A pickup plant in San Antonio opens next year. A second factory in Canada is scheduled to make its debut in 2008. Around the world, planning or construction is underway for plants in Russia, China and Thailand.
Watanabe also has announced the goal of speeding up the time it takes to develop new vehicles.
Can the company keep pace? Some see a strain already. "Their system is stretched," says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.
It's showing up in recalls. The 2.2 million Toyotas recalled through Nov. 17 — twice as many as last year — puts Toyota ahead of DaimlerChrysler's 749,460, the National Highway Traffic Safety Administration reports. Toyota recalls lag behind GM's 4.1 million and Ford's 6 million.
Toyota still has enviable quality rankings, but competitors are catching up. The Toyota brand ranked seventh behind such nameplates as Buick and Cadillac in J.D. Power and Associates surveys measuring initial quality and quality after three years of ownership.
Toyota has taken notice. European chief Shinichi Sasaki was quoted in the Financial Times last month as warning that new factories outside Japan with quickly hired new workers smack at the culture of "built-in quality." Sasaki, the group's former head of quality, noted that rivals are challenging Toyota's high J.D. Power ratings.
Still, Toyota looks like an irresistible force — as its imminent ascension to No. 1 automaker underscores.
"Toyota is kind of a scary mix of a hugely strong financial company and a great product development company supported by an excellent sales arm," says George Peterson, president of consultants AutoPacific. "They are really tough to stop."
Contributing: Matt Krantz, The Associated Press.
01-01-06, 04:14 AM
#3
Originally Posted by genearch
Is this because Toyota sells better internationally vs. GM? (I have no idea) How does GM sell in Japan?
Still.. GM is in the tank on all fronts..
Still.. GM is in the tank on all fronts..
But number of sales in not THAT important, it is the fact that Toyota makes huge amounts of money which they re-invest in engineering and research. This means that they will stay on top of things for a while...
01-01-06, 08:33 AM
#4
Originally Posted by spwolf
But number of sales in not THAT important, it is the fact that Toyota makes huge amounts of money which they re-invest in engineering and research...
Toyota has a good eye into seeing what consumers want and need in the future. Scion was a hit because it offered more personalized vehicles: inexpensive cars with style and endless mod possibilities. Toyota made a great decision making Lexus create its own identity now, rather than being "luxury Toyotas."
The big thing here is Research and Development. I think GM missed the ball when they sacrificed reliability for extra horsepower. This doesn't work well with other countries beyond the US; there is a little patriotic fondness to GM which is quickly weakening. I think Toyota has done a good job in finding the balance between power, comfort, and reliability, and at a good price. Of course, Toyota needs to work on a few weaknesses, but overall appeals to the masses more.
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