Has Toyota jumped the shark in the U.S.?

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That may a silly question as it relates to the most successful car company in recent years, but Toyota has been facing some issues that go beyond the problems caused by the economic crisis.

The Detroit News has a lengthy article about how Toyota is no longer profitable in North America, and Yoshimi Inaba, president and chief operating officer of Toyota Motor America and chairman and CEO of Toyota Motor Sales USA, made some pretty stunning admissions about the problems facing Toyota.

Because of Toyota’s success for the last eight years, there was an attitude among some executives that, “OK, now we have been so successful, we understand the market, so can make a decision there rather than here,” Inaba said.

Inaba said the company is listening to the market, and customers “had been a little bit lost.”

When asked whether Toyota had become complacent, he said, “Complacent or arrogant — a lot of people use that — I don’t know,” he said, adding that the company had tried to guard against those qualities.

Inaba acknowledged that Toyota vehicles had often lacked “passion” and that the company’s vehicles must be “more exciting, more nimble.”

“Toyota is a good car but not exciting. Those are the comments we usually (or) always get,” Inaba said.

In my opinion Toyota has just found itself in a position where the competition has caught up to them in quality and surpassed them in design. When you consider that other automakers have figured out how to build cars more efficiently, the edge is gone for the Japanese giant. Toyota took advantage of that cost advantage and that allowed them to rake in big profits. When the economy comes back they will make money again but their rivals are growing with Hyundai looking like the real value in the foreign car crowd (have you seen the Genesis?) and Lexus looking more and more like an overpriced Camry.

Also, did I mention that Ford is at the start of their best product launches in decades and GM and Chrysler are trimmed down and ready to compete again? Let the games begin!

  

Toyota to cut North American production

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Things are getting bad for everyone. Toyota Motor Corp. said it is facing “the worst automotive slump in decades.” As a result, Toyota will reduce production at its North American manufacturing plants and offer buyouts to employees.

Toyota said it will take steps including cutting production days in April, reducing paid hours for workers, eliminating executive “and salaried” bonuses, cutting executive pay and offering a “voluntary exit” to employees “who wish to pursue other opportunities.”

North America is Toyota’s largest market, where it sold 521,000 vehicles in the October-December quarter, compared with 465,000 in its next-biggest market, Japan.

As per its latest forecast, Toyota expects North American sales to drop to 2.07 million units during the current financial year ending March 31, from 2.96 million units in the previous financial year. Sales are also expected to drop in its home market to 1.94 million units this fiscal year from 2.19 million.
Toyota also said it sees “no wage increases for the foreseeable future.”

Toyota Motor Engineering & Manufacturing North America Inc., which employs roughly 25,000 workers, is offering all of them 10 weeks of pay, two weeks of additional pay for every year of service and $20,000 to leave the company, according to a report in the online edition of The Wall Street Journal.

Mike Goss, a Toyota spokesman, was quoted by the report as saying the company doesn’t expect a significant number of workers to take the offer and that it didn’t have any target for the “voluntary exit program.”

  

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