Toyoda on Toyota: "Grasping for Salvation"
 

Toyoda revealed a bit about how he thinks. For example: his management philosophy. “What is important to every customer,” he said. “That is my management philosophy.”

Kenji Hall - BUSINESSWEEK - October 2, 2009

A dramatic statement, but they won't stay #1 by resting on their laurels --Ed.

Akio Toyoda thinks he knows what’s wrong with Toyota, the world’s biggest car maker. Success has made it cocky. It has been expanding in an undisciplined fashion. It has been in denial about the peril it faces. Now Toyota is “grasping for salvation,” he told a news conference today at the Japan National Press Club in Tokyo. “But I’m not the savior.”

Dramatic stuff. But the 53-year-old grandson of the company’s founder was merely trying to illustrate a point by borrowing language from Jim Collins, author of “How the Mighty Fall”. Collins explained that great companies typically go through five stages on their path to ruin. Toyota is at the fourth stage; the final stage is “capitulation to irrelevance or death.”

Toyoda took over in June and is trying to lead the Japanese car through one of the toughest periods in its history. The global recession has brought about a sharp drop in demand for cars. In the U.S., Toyota’s most profitable market, sales have dropped 28% in the first nine months of the year, Toyoda said. The yen’s 7% rise against the dollar in the most recent quarter also erodes the company’s export revenues and makes it harder for the company to lure buyers with discounts and other cash-back incentives. This fiscal year, the company has forecast a group operating loss of $8.4 billion. And just this week, the company issued a safety advisory about a problem—an accelerator pedal that sticks—that potentially affects 3.8 million Toyota cars in the U.S. Investigators are trying to determine if the problem is related to several deaths. “Just boosting sales won’t help us return to profits,” he said.

So what will save Toyota? “We have to make better cars,” Toyoda said.

That, for some analysts, was too vague. “He needs to get more specific,” says Tokai Tokyo Research Center’s Makoto Kato. “How does he plan to sell more cars? He should be talking about the company’s financials.” ... [Read More]