In 1936,Toyota admitted following Chrysler’s landmark Airflow and patterning its engine after a 1933 Chevrolet engine. But by 2000,when it introduced the first hybrid electric-gasoline car,the Prius,Toyota was the leader.In
2002, when the second-generation Prius hit showrooms,
dealers received 10,000 orders before the car was even available.GM followed with an announcement that it would enterthe hybrid market with models of its ovvn.
Toyota offers a full line of cars for the U.S.market, fromfamily sedans and sport utility vehicles to trucks and minivans. It has products for different price points, from lower-cost Scions to mid-priced Camrys to the luxury Lexus. Designing these different products means listening to different customers, building the cars they want, and then crafting marketing to reinforce each make’s image. After four years of carefully listening to teens,for in stance,Toyota learned that the Scion’s target age group of 16- to 21-year-olds wanted personalization.So it builds the car •mono-spec• at the factory,with just one well equipped trim level,and lets customers choose from over 40 customization elements at dealerships, from stereo components to wheels and even floor mats. Toyota mar kets the Scion at music events and has showrooms where “young people feelcomfortable hanging out and
not a place where they just go stare at a car,.. said Scion Vice President Jim Latz.
In contrast, the tagline forthe Lexus global sbategy is “Passionate Pursuit of Perfection.• Dealerships offer white-glove treatment, though Toyota understands that each country defines perfection differently.In the United States, perfection and luxury mean comfort, size, and dependability. In Europe, luxury means attention to detail and brand heritage.Thus,although Toyota maintains a consistent Lexus visual vocabulary,logo, font, and overall communication,the advertising varies by country
Another big reason behind Toyota’s success is its manufacturing.The firm Is the master of lean manufactur
ing and continuous improvement. Its plants can make as many as eight different models at the same time,bringing
huge increases in productivity and market responsive ness.And Toyota refentlessly innovates. A typical Toyota assembly line makes thousands of operational changes in the course of a slngle year. Toyota employees see their purpose as threefold:making cars, making cars better, and teaching everyone how to make cars better. The company encourages problem solving,always looking to
improve the process by which it improves all other processes.
Toyota Is Integrating tts assembly plants around the
world into a single giant network. The plants will cus tomize cars for local markets andshift production quickly
to satisfy any surges in demand from markets worldwide. With a manufacturing network, Toyota can build a wide variety of models much more inexpensively.That means it
wm be able to flll market niches as they emerge without
building whole new assembly operations. •1f there’s a market or market segment where they aren’t present, they go there,• said Tatsuo Yoshida, auto analyst at Deutsche Securities Ltd.And with consumers increas
ingly fickle about what they want in a car,such market aglllty gives Toyota a huge competitive edge.
In 2006, Toyota earned over $11 billion-more than all other major automakers combined. In 2007, it edged past General Motors to become the world’s largest car maker. And,in 2008, it manufactured 9.2 million vehicles, 1 million more than GM and almost 3 million more than Volkswagen.
Over the years, Toyota’s automobiles have consis tently ranked high in quality and reliability.That all changed
in 2009 and 2010, however, when Toyota experienced a massive recall of over 8 million of its vehicies. A variety of problems ranging from sticking accelerator pedals to sudden acceleratlon to software glttches In the braking system affected many Toyota brands, including Lexus, Prius,Camry,Corolla,and Tundra.
Not only had these mechanical defects caused numerous crashes, they were linked to the deaths of over 50 people.Toyota’s President Akio Toyoda testified be fore Congress and offered an explanation of what went wrong:’We pursued growth over the speed at which we were able to develop our people and our organization.I regret that this has resulted inthe safety issues described
in the recalls we face today,and Iam deeply sorry for any accidents that Toyota drivers have experienced.”
Analysts estimated the worldwlde recall wlll cost Toyota $2 billionto $6 billion including repair costs, legal settlements, and lost sales. Market share dropped 4 percent in the first three months of the recall and was expected to drop evenfurther as problems continued to
unfold. Hoping to bring consumers back to the Toyota
brand, the company offered incentives such as two years of free maintenance and zero-percent financing. While Toyota rides the recall stoml of 201O and faces some challenging times, it can be comforted by the fact that it continues to lead the industry in awide range of ar eas including lean manufacturing and environmentally
friendly technologies.
Questions
- Toyota has built a huge manufacturing company that can produce millions of cars each year for a wide variety of consumers. why was it able to grow so much bigger than any other auto manufacturer?
- Has Toyota done the right thing by manufacturing a
car brand for everyone? Why or why not?
- Did Toyota grow too quickly as Toyoda suggested? What should the company do over the next year, 5 years, and 10 years? How can growing companies avoid quality problems in the future?
