The Juggernaut Keeps Rolling

Toyota's success grows with each day. Based on the company's long history in the U.S., is it time to stop calling it an import brand?

I had hoped to find an appropriate Japanese myth, proverb or quotation to begin this column about the growth and success of Toyota and Lexus in the U.S. last year. But while thinking about it, I began opening the afternoon's deluge of emails when one from the Toyota pressroom caught my attention. The subject heading of it does a far better job of setting-up the success than any myth, proverb or quotation. Simple, straight, strong...the headline was:

Toyota's North American Vehicle Production Surpasses 1.55 Million Units in 2005

The release from Toyota's manufacturing unit, went on to list nine investments, over $1 billion in total, made in new or upgraded manufacturing facilities in America in 2005. And that was in addition to $1.4 billion investments that are going on-line this year. And that's on top of an earlier release announcing a new all time sales record of 2,260,296 vehicles from Toyota, Lexus and Scion. A 10.1 percent increase over 2004.

The Past Was Prologue

In less than 50 years -- next year is the Golden anniversary year -- Toyota Motor Sales has grown from importing two Toyota Crowns and selling less than 100,000 units in a year to the point of surpassing America's long-time automotive corporate colossus, General Motors, in sales and profits. What's more, some reports indicate Toyota has more money in the bank than all the historical Detroit Three combined.

Now, I may receive some heat and email about this, but after almost half a century in the U.S., multi-billions of dollars invested in every state in the union, millions of very satisfied customers, seven factories, thousands of employees, isn't it time to stop calling Toyota an import brand? It may have come from Japan, but it is now an American brand that's almost iconic.

It's obvious Toyota's success in the U.S. will be analyzed, investigated, reviewed, and written about for many, many years to come. Countless B-school students will study it, entrepreneurs and business executives will use it or attempt to use it as a business role model for their company. And those astute automotive businessmen who invested in a Toyota franchise and got on the Toyota band wagon early in the game will just smile and smile and smile...and who could blame them. All that's nice, but it's history.

What does TMS -- all the brands -- have in store for the future? How will it grow? Here's a few observations based on the company's history in America.

Marketing & Advertising

No matter the marquee, Toyota is a product driven company who insists on innovation, quality, dependability and value for its reputation with consumers. Only recently has styling become an entity; when introducing the new Camry, Don Esmond said, "It's not vanilla anymore." Ditto for Lexus with its new models and concept vehicles. As to Scion...this brand has a pace and personality of its own.

Toyota spends a lot in advertising its brands, but the most recent campaigns for all three brands are more vital and vigorous than ever before. Solid, steady and sturdy, as opposed to off-the-wall creative, they seem to resonate well with consumers and dealers.

All true, but it's the recently employed, off-the-radar marketing efforts and state-of-the-art, one-on-one consumer communications that will sustain continued growth. Quiet, but consistently, Toyota messages on PBS; Lexus sponsors the Metropolitan Opera and men's singles at the U.S. Open; Scion goes straight to urban and suburban youth (and some older people too) with quirky messages that fit the attitude.

So What's New This Year for Toyota?

Little is gonna be big for Toyota. The flagship brand will have the new Rav 4 and Yaris, both small, entry-level cars in showrooms this spring. But that's not all.

Big sellers are gonna be bigger. The Camry has been changed and may surpass the sales record it set last year. And for the off-roaders, there's a new SUV, the FJ Cruiser, that's really cool and fun to drive.

Can You Spell Hybrid? Toyota introduced America to hybrid vehicles just a couple of years ago, so the recently updated Prius will continue to be very popular. Year-end Prius sales reached 107,897 units, up 100.5 percent over 2004. There's a Highlander hybrid, but the really big news is the new hybrid Camry, with upgraded trim that is sure to sell well too when introduced later this year.

Could this be a surprise? Nothing has been said, nothing. But I wouldn't be surprised if sometime soon Toyota introduced a hybrid pickup truck. And that it came from the new Texas factory. If it comes to pass, remember I told you so.

...and Lexus?

Big just got bigger and more powerful. Lexus retained its title as America's top-selling luxury brand last year for the sixth consecutive year. And the new LS 460 just introduced at the Detroit Auto Show is the new luxury pace setter. Loaded with new creature features, amenities and engineering attributes -- eight speed transmission and a big V8 -- for added fuel efficiency, it's styled to impress. Price, to come.

Luxury hybrids too. The new LS 460 will also be available later this spring as the most powerful hybrid on the road. Lexus already has two other hybrids, the RX 400h and the GS 450h. With the new IRS rules just detailed, there is a "big tax credit" in the future for buyers of Lexus hybrids this year.

...and Scion?

Not that much, just best ever results from last year. The xB urban utility vehicle, the tC sports coupe and the xA subcompact all set records for 2005. Expect more in 2006 as the start-up division appears to be on a growth spurt.

People Powered Business

Take every aspect of Toyota, Lexus and Scion business models, and one element remains consistent: the professionalism of the people! No matter the job title, experience or expertise, at every level of the company's brands there are automotive professionals, who are knowledgeable and approachable. They're empowered to do the best job possible, and be the best at what they do. They really do. When they're wrong or screw-up, they don't just admit it, they correct it. And isn't that refreshing?

The question is, who is going to stop, top the Toyota juggernaut? And when?

Before it's here, it's on the Bloomberg Terminal.