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Toyota yet to outrun recall crisis, say analysts
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Toyota yet to outrun recall crisis, say analysts
AFP - Sunday, December 12
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Toyota yet to outrun recall crisis, say analysts
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TOKYO (AFP) - – After a year in which Toyota's worst crisis saw the recall of millions of vehicles, a wave of lawsuits and a record fine, the troubles of the world's largest automaker are far from over, say analysts.
Sales are sliding in the United States, the market worst-hit by the recalls, as Toyota faces a battle to regain consumer trust and market share despite efforts to tighten quality control.
"Before the crisis, Toyota was by far the strongest auto company globally. Now the gap has narrowed," said Tatsuya Mizuno, an auto industry analyst with Mizuno Credit Advisory.
"Toyota is weaker now than before, because of the impact of the recalls on brand image, reputation and profitability".
In 2008 Toyota ended General Motors' 77-year reign as the world's largest automaker but the road has been a bumpy one for the Japanese giant, facing the impact of the economic crisis, recalls and recently a strong yen.
Previously lauded for its vehicles' safety and reliability, a US recall of around four million vehicles in late 2009 swelled to nearly nine million units by February over brake and accelerator defects blamed for dozens of deaths.
As criticism mounted of its slow response and bureaucratic inflexibility, Toyota tightened its recall policy and by November had pulled nearly 13 million vehicles over a range of issues.
"We made mistakes," said Toyota spokesman Masami Doi. "Such as loosening our focus on the customer, not realising that our products were not fully in line with customer expectations. We have to do more. That is without a doubt."
The crisis prompted US congressional investigations as Toyota was hit with a record 16.4-million-dollar fine to settle claims it had hidden accelerator pedal defects blamed for fatal accidents.
It still faces lawsuits in the US, but Toyota lawyers argue most of the nearly 90 deaths blamed on sudden acceleration were a result of driver error.
Sales in the US are falling, with the automaker slipping from second to third place this year behind reviving giants Ford and market leader GM.
Toyota reported a 7.3 percent sales drop in November and its market share could fall by 17 percent to just over 15 percent in 2010, according to IHS Automotive.
"Toyota's sales in North America have radically dropped as a result of the recalls," said Mamoru Kato, auto analyst at Tokai Tokyo Research Centre. "This will be Toyota's biggest challenge in the coming year."
The automaker has added an extra four weeks to new vehicle testing, sped up the decision-making process and appointed regional quality control officers.
Analysts say it has become more aggressive in catching possible defects as part of a campaign to improve its consumer image, but warn that continued frequent recalls damage its branding as a quality carmaker.
"We intend to continue to make every effort to recover the trust of our customers," Toyota's Doi said.
But the company needs to adopt a more international mindset, analysts say.
Akio Toyoda, the publicity-shy grandson of the company's founder, was thrust into the spotlight by the recalls amid criticism that he had not been proactive enough, eventually appearing before US lawmakers in Washington.
"The company remains very Japanese," said Mizuno. "Most of its leaders are Japanese and decision-making continues to be centralized in Toyota City," where the company headquarters near Nagoya are based.
"That's one of the reasons why decisions were delayed during the crisis."
Despite its woes and the impact of a strong yen making it less competitive than overseas rivals with weaker domestic currencies, Toyota returned to the black with a 3.6-billion-dollar profit in the fiscal first half.
But it now faces rivals who are competing for a slice of top market China and racing ahead with all-electric cars, analysts say.
China, which has surpassed the US as world's largest auto market, is a priority for the automaker whose market share is expected to fall from 6.0 percent in 2009 to 5.5 percent in 2010, said IHS.
Toyota will have to "launch low-cost models and vehicles tailored to Chinese customers' needs" to fend off challenges from local rivals, said Masatoshi Nishimoto, Japan and Korea vehicle analyst at IHS.
It also plans to launch 11 new petrol-electric hybrid models by the end of 2012, contrary to rivals such as Nissan with its all-electric Leaf or Mitsubishi's i-MiEV.
Despite developing for 2012 an all-electric version of Toyota's RAV4 sports utility vehicle with Tesla Motors, the US firm in which Toyota owns a 50-million-dollar stake, the company has been cautious in embracing such cars.
Toyoda recently cited as a major obstacle the creation of a convenient recharging system, whereas Nissan has set about building its own recharging network.
"Toyota is behind a company like Nissan when it comes to electric vehicles," said Mizuno. "If such cars become mainstream, Toyota will be left even further behind."
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