Toyota's new boss vows changes amid 'stormy' start

Posted on 2009-06-26
TOKYO: Toyota Motor Corp’s new president, the grandson of the group’s founder, warned that the auto industry faces two more tough years as he sketched out a roadmap to return the world’s No 1 carmaker to profit.
Toyoda, 53, took the helm two days ago amid a brutal global recession that has sent two of America’s three big carmakers into receivership and is set to plunge Toyota deeper into loss.
The new Toyota sets sail in very stormy waters,’’ Toyoda told his first news conference in the job. ‘’But right now we’re working at full speed to cut costs and jump-start sales with the support of various government incentives being rolled out.’’
We want to do everything possible to avoid a third consecutive year of losses,’’ he said, adding he would take a 30 per cent pay cut for the first year.
Toyoda said Toyota’s aim to slash fixed costs by 800 billion yen ($8.32 billion) in the year to next March was ‘’only a starting point,’’ vowing to steer the automaker at a pace that was more manageable and geared towards specific regional needs.
A new management structure would assign four of the five executive vice presidents to separate regions to enable speedier decision-making, he said.
For North America, Executive Vice President Atsushi Niimi will be responsible for helping local operations become more autonomous -- from product development to manufacturing and sales. He will be supported by former US sales chief Yoshimi
Inaba, who will head New York-based Toyota Motor North America.
Toyota will also drop its strategy of trying to be a full-line provider, and will instead offer products most suited to each region.
Of course, we’d like to be able to provide everything to all our customers, but it wouldn’t be right to do that now,’’ Toyoda said.
Investors agreed Toyota had stretched itself too far and too fast in recent years.
As the company acknowledges, it has gone a bit too far in leaning towards large vehicles as a profit driver and got a bit out of touch with consumer needs. In a sense, it’s followed the footsteps of General Motors,’’ said Shigeo Sugawara, senior investment manager at Sompo Japan Asset Management.
I expect we have to wait at least five years for the auto market to fully recover, and that means Toyota will be left with excess capacity in that period unless its products can match consumers’ needs.’’
While reaffirming a back to basics policy, Toyoda said the company would aggressively seek opportunities in new areas such as Japan’s vast used-car market by setting up a new domestic marketing company.
In Europe, it would shift focus to the hybrid sector, so as not to get ‘’lost in the crowd,’’ Toyoda said.
With its factories underused, and a promise to avoid plant closures, Toyota aims to cut costs further so it can be profitable using just 70 per cent of its production capacity.
Right now, the market is very tough. But in two years, or at most three years, it will recover so we want to make sure we have the means to meet demand then,’’ said Niimi, who will oversee manufacturing in Toyoda’s new-look executive team.
The remodelled Prius hybrid, launched last month, has been a rare bright spot, winning more than 180,000 orders in Japan.
But production has been limited to two plants so far, creating a bottleneck for delivery, while analysts say the fuel-sipping model could eat into sales of more profitable cars.
The company will have to learn to adjust to this new paradigm of lower sales growth and higher technology spending. But they are definitely in a better position than US companies to do so,’’ said Yoji Takeda, a Hong Kong-based vice-president with RBC Investment Management (Asia) Ltd.
Toyoda’s position as a member of the founder family may help push through changes faster.’’
Many industry executives have said recent sales trends in major markets such as the United States and Japan indicate that demand has bottomed, but opinion is divided over when it will recover convincingly.
In the United States, Toyota’s biggest and until recently most profitable market, its sales have dropped 38 per cent year to date. Data issued on Thursday showed Toyota’s global production, including units Daihatsu Motor Co and Hino Motors Ltd, fell 38 per cent last month to 501,685 vehicles.