Battered by expensive crises, Toyota declares a rebirth

Written by New York Times | Tokyo/Detroit | Updated: Jan 4 2013, 23:59pm hrs
The pink Toyota Crown sedan that took centre stage at a holiday event here last week was meant to shock, and it did. The Crown, the preferred ride of staid Japanese executives, had received an edgy makeover. With a new oversize grille, vamped-up hybrid engine and an unveiling at a fashion mall, there was nothing stodgy about this car.

Reborn, read a logo beamed onto a large screen.

My initial reaction was: Youre kidding! Please, not pink, Akio Toyoda, the Toyota chief executive and a scion of the Japanese automakers founding family, said. But being reborn does mean taking on new challenges.

Toyota has spent much of the last year trying to leave behind what has been a tumultuous four years in which the automaker booked its largest loss ever, became embroiled in a recall scandal, struggled with a decimated supply chain after the 2011 tsunami and weathered the punishing effects of a strong yen.

One by one, the pieces have been falling into place.

In 2012, Toyota leapfrogged General Motors and Volkswagen to regain its title as the worlds largest automaker, selling 9.7 million vehicles, a record for the company. Now the company is on the cusp of a recovery, analysts say, that could put it on track to post the kind of growth promised before the crises.

Toyota is now in the position for the first time in years where it is beating market expectations while its peers are disappointing, Clive Wiggins, a Tokyo-based autos analyst for Macquarie, said in a recent note to clients.

Last week, Toyota agreed to pay more than $1 billion to settle a class-action suit over claims that its electronic malfunctions caused its cars to accelerate without warning, one of the largest payouts ever for an automotive lawsuit. Toyota still faces personal injury and wrongful death lawsuits, as well as an unfair business practices case brought by 28 attorneys general in the US. But the companys $1.1-billion charge against earnings for the class action was seen as a significant step toward closing the chapter on its recall problems. There have been other signs of change. The company supply chain bounced back more quickly than predicted, profits are on the rise and the yen has started to weaken after the newly installed prime minister, Shinzo Abe, promised to drive down that currency.

And there is a loud message of change being sounded through the stepped-up emphasis on design with both Toyota and Lexus models getting new looks, including the pink Crown. Its actually a beautiful color, Toyoda said.

Toyotas rebound has been centred in the US, where its sales increased 28.8% last year to 1.88 million vehicles through November. Thats more than double the industrywide increase of 13.9% over the same period.

The biggest contributors have been stalwart products such as the Camry, and the expanded line of Prius hybrid models. Through November, combined sales of Prius cars had risen 81.3% in 2012, as the company continued to dominate the hybrid segment.