Toyota Motor Corp. (7203) President Akio Toyoda set the world’s largest carmaker on a course seeking sales growth in emerging markets and an improved image in the U.S., in a bid to rebound from record recalls and a recession.
Toyoda, grandson of the company’s founder, laid out a “Global Vision” yesterday focused as much on boosting emotional ties to customers as on financial targets. His plan also shrinks Toyota’s board to 11 members from 27, the automaker’s biggest management shakeup in eight years.
Toyoda, 54, aims to strengthen his grip on the carmaker almost two years after becoming chief executive amid a global economic crisis that was followed by recalls of more than 10 million autos worldwide, most for flaws tied to unintended acceleration. The Toyota City, Japan-based company is still rebuilding its reputation as an industry benchmark for quality.
“They want to re-establish a peace-of-mind thing,” said Jeremy Anwyl, chief executive officer of Edmunds.com, an industry data provider in Santa Monica, California. “Where Toyota might have let people down with its recalls was problems with some very basic things, like floor mats, that may have caused some to question assumptions about its basic quality.”
The U.S. government said last month it had concluded its review of unintended acceleration issues in Toyota vehicles. The company may still face more recalls, said Takeshi Miyao, an analyst at Carnorama in Tokyo.
“Recalls from shifting their production lines overseas will continue until at least 2013,” Miyao said.
Toyota fell 1.8 percent to close at 3,650 yen, the lowest since Feb. 8, in Tokyo trading. The shares have gained 13 percent this year.
“The word ‘vision’ conjures notions of quantitative targets for things like sales and operating income in some sort of time frame,” Toyoda said during a conference call. “What we have prepared is a vision of a different kind. We have sketched the outlines of the kind of company that we want to be. We have identified the values that we want to cherish.”
Among the quantitative targets that were announced, Toyota said it aims to earn an operating profit of at least 1 trillion yen ($12 billion) by 2015, regardless of global economic conditions. The target is based on an exchange rate of 85 yen to the dollar and annual sales volume of 7.5 million vehicles.
The carmaker expects to sell 7.53 million vehicles in the current fiscal year ending March 31. Sales of Toyota and Lexus models may reach 9 million by 2015, Toyoda said. Including affiliates Daihatsu Motor Co. and Hino Motor Co., annual deliveries may total 10 million by then.
The 1 trillion yen target could be met even if another economic downturn cut sales by 20 percent, Toyoda said at a press conference in Tokyo yesterday.
The company plans to get half its global auto sales from emerging markets, compared with 40 percent in 2010. Toyota is aiming to get 15 percent of its sales from China, the world’s largest car market, where it lags behind General Motors Co. (GM) and Volkswagen AG. (VOW)
“It’s about time they began acting more aggressively,” said Satoru Takada, an analyst at TIW Inc. in Tokyo. “Toyota seems to be catching up on expanding sales in emerging markets.”
“Toyota is definitely behind rivals in emerging markets, and in China we are now entering a period where we need to be cautious,” said Tatsuya Mizuno, a director at Mizuno Credit Advisory in Tokyo. “I thought Toyota would come out with a vision that leads its competitors, but I didn’t see anything like that.”
China’s passenger-car sales growth in February fell to the slowest in more than two years after the government ended vehicle-buying incentives and a week-long national holiday stymied demand.
In North America, Toyota’s biggest source of operating profit, the carmaker plans to maximize output at assembly plants as it continues to shift more production from Japan, the company said.
“It will probably take at least another two years for sales in North America to recover to the level that it was at in 2007 and early 2008,” Carnorama’s Miyao said.
Changes in North America include the promotion of Ray Tanguay, currently a Canada-based managing officer. Tanguay, a 20-year Toyota veteran who has overseen construction of plants in Ontario and Mississippi, will become senior managing officer on April 1, making him the automaker’s highest-ranking non- Japanese executive.
Toyota is looking for opportunities to export from the U.S. for production and capacity reasons and also for currency reasons, Tanguay said today in Tokyo. Toyota exports Avalon sedans and Sequoia sport-utility vehicles to the Middle East from the U.S.
“Toyota has invested in the U.S. and will make good use of it,” Tanguay said.
North America will also take over development responsibility for the Camry, the company’s top-selling U.S. model, the automaker said.
“They need to be bringing products into the market a little faster -- a new Camry, a new Corolla,” Edmunds.com’s Anwyl said. “Competitors have really been upping their game, particularly Hyundai.”
Toyota, already the world’s biggest seller of gasoline- electric autos, plans at least 10 more hybrid models by 2015, Toyoda said.
“We will focus on emerging markets and environmental vehicles,” Toyoda said.
Toyota’s slimmer board may help it adapt to challenges in the global industry more quickly, Miyao said. Honda, Japan’s third-largest carmaker, reorganized its management last month, cutting the number of company directors to 12 from 20.
Among the management changes, Vice Chairmen Kazuo Okamoto and Katsuaki Watanabe, Toyoda’s predecessor as president, Executive Vice President Yoichi Ichimaru and Director Yoshimi Inaba will step down from Toyota’s board. Ichimaru will become an adviser, and Inaba will remain head of North American operations.
The company is also creating outside advisory committees for its regional operations. For North America, the panel includes Mark Hogan, a former GM executive and Magna International Inc. (MG) president, and former U.S. Labor Secretary Alexis Herman.
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