Back to basics as Toyota rebuilds

TOYOTA plans to steer away from the global one-size-fits-all strategy that took the company to the top of the world motor industry, in favour of a more regional product focus.

New president Akio Toyoda told reporters at his first press conference since taking the helm this week that under his direction, Toyota would build more autonomous operations in North America, while offering more region-specific vehicle line-ups rather than a full line-up in every region.

The move echoes smaller rival Honda’s shift to a regional focus, with cars such as Accord, Civic and City substantially differentiated for specific regions while sharing common platforms.

Mr Toyoda – the 53-year-old grandson of Toyota founder Kiichiro Toyoda – acknowledged the company erred in its all-out push to become the world’s largest car-maker.

"I do not think we were wrong to expand our business to meet the needs of customers around the world, but we may have stretched more than we should have,” he was reported as saying on the BBC.

Mr Toyoda – an acknowledged ‘car guy’ who recently raced a Lexus in the Nurburgring 24-hour – said his primary goal was to change the company’s priorities, putting products first, not sales and profits.

Left: Toyota Tundra.

"Rather than asking, 'How many cars will we sell?' or 'how much money will we make by selling these cars?' we need to ask ourselves 'what kind of cars will make people happy?' as well as, 'what pricing will attract them in each region?' Then we must make those cars," he said.

Mr Toyoda warned that Toyota faced another two tough years as a result of the global recession, saying the company was in “in the middle of a storm”.

“I will do my best to avoid a third consecutive year of losses,” he said.

However, Mr Toyoda conceded that things would get worse before they get better, forecasting a ¥850 billion ($A11b) loss in the financial year ending March 31, 2010 – almost double the past financial year’s loss of ¥461 billion ($A6b).

Toyota’s worldwide production volume has been sliced almost in half so far this year, with Japanese exports worst affected, down 51.3 per cent in May.

Mr Toyoda will take personal control of the recovery program, which aims to cut costs by at least ¥800 billion ($A10.34b), with sales this year falling a further million units to 6.5 million vehicles.

His cost cutting started with his own salary, which he has trimmed by 30 per cent.

Although Toyota has put a planned new Prius plant in the US on the backburner and also temporarily closed others around the world until it can clear excess stock, Toyota does not plan to close any existing factories.

Toyota executives say they expect the global market to recover in the next two to three years, and they want to retain capacity to meet renewed demand.

Special focus will be placed on the US where Toyota sales have plunged 39 per cent this year.

Mr Toyoda indicated that its North American model line-up would come under scrutiny, saying the market “may undergo a change in full-size segment”.

He did not elaborate on specific models, but the full-sized Tundra pick-up produced in two plants in the US might take some adjustment as America’s love affair with such vehicles wanes.

Toyota’s stated goal is to make its plants profitable when running at only 70 per cent capacity, and to cut its dependence on luxury cars for profit, instead meeting the challenge posed by Korean, Chinese and Indian manufacturers.

According to renowned motor industry analyst Maryann Kellor: “Toyota wrote the playbook and Hyundai read it.”

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