Straight From The Top

Automotive Industries,  Nov, 1999  by Marjorie Sorge

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Look for a new production system based on the Cambridge model and Toyota's new on-line ordering system to hit U.S. plants within two years and other overseas plants within five, Cho says.

While Toyota's manufacturing ability is legendary, the company faces several challenges as it attempts to beef up worldwide sales and maintain its portion as the third largest automaker behind General Motors and Ford. First, its sales in Japan slid 12.3% in the 1999 fiscal year and will likely be down for the calendar year, as the slump in the Japanese economy continues. But Cho is optimistic. "It may sound like my wishful thinking, but by the earlier part of next year I anticipate an upturn," he says.

Even so, obstacles remain. Many younger buyers have shied away from Toyota, considering its vehicles too conservative. To counter that, the automaker has launched the Megaweb, a Universal Studios-like happening spot in Tokyo with trendy restaurants and shops, a test track, Toyota vehicle displays and a carnival, that's geared toward the young crowd.

Plus it's created two operations charged with developing vehicles for younger people. The Virtual Venture Co. (VVC) dreamed up the WiLL car, a far-out vehicle aimed at a young audience. It debuts in Japan by year-end. The genesis project, started in the U.S. in 1998, has the same mission. Its first vehicle, the Echo was shown at last year's North American International Auto Show in Detroit.

Sales Should Rise

For the calendar year, Toyota could be 8% to 10% above the 1.36 million vehicles it sold in the U.S. 1998. It could be even better in 2000, says Cho, who expects the strong U.S. economy to continue. Europe is also doing well. Sales were up 11.4%, to 557,506 vehicles in fiscal 1999.

Worldwide, Toyota sold 4.70 million vehicles in fiscal 1999, up 5.4% from the 4.46 million sold in fiscal 1998. But that's too close for comfort with rival Volkswagen, which beat Toyota in worldwide sales for the first six months of last year. VW includes all its subsidiaries in the total, leading Toyota to add equity-partner Daihatsu's sales to its total in the second half of the 1999 fiscal year. Toyota upped its-stake in minivehicle-maker Daihatsu to 51.2% in 1998.

Don't be surprised to see sales from heavy-truck-maker Hino added if VW buys a big truck maker. Toyota owns an equity interest in Hino.

Meanwhile, Toyota has other strategies to become more global and boost sales. North America remains a prime target. More production may be added in Canada or the U.S. Studies are underway and a decision will be made by year-end, Cho promises. Adding to the new plant in Princeton, Ind. is a possibility.

Toyota will also offer the Lexus IS 300, a sports sedan aimed right at BMW's 3-Series, in North America next year, as it attempts to attract younger buyers. A new plant in France will open in 2001 and, Cho says, Toyota wants to create a stronger distribution network in Europe. The weak link in Toyota's European strategy has been in the small-car segment. It's hopeful that the Yaris, launched earlier this year, will fill that gap. More European capacity can be had in Toyota's Turkey plant, though Cho admits the plant "has not proceeded as we anticipated ... we are weak in Turkey and China."