Toyota Motor is a colossus and a marvel, a living, morphing example of corporate reinvention out of crisis.
So much has changed. A decade ago, Toyota looked like General Motor before the bankruptcy, a bloated, out-of-touch purveyor of insipid vehicles, one battered by quality problems. Toyota in crisis looked like the General Motors of Japan.
Except it wasn't. Toyota today is a car company feared by rivals – a rich and focused beast willing to take risks and buck common wisdom. Through the downs and ups, one group kept the Toyota faith: customers.
There are good reasons why the middle-class backbone of Toyota's customer base is so loyal.
It's only a small exaggeration to say Toyotas last forever. In the J.D. Power and Associates 2015 vehicle dependability Study, Lexus was No. 1 by a wide margin – 89 problems per 100 vehicles versus No. 2 Buick at 110 – and Toyota was No. 3 at 112.
Toyotas hold their value with the best in the business and the dealers tend to deliver above-average customer service. Canadian Black Book, in its most recent "Best Retained Value" awards, gave Toyota the most awards. DesRosiers Automotive Consultants reports that Toyota and Lexus dealers are industry leaders in sales per store – a key indicator of profitability.
In a nutshell, Toyota has traditionally gotten the basics right: quality, reliability, resale value and customer service. The styling of your typical Corolla has always been as dull as dishwater, but middle-class buyers are fans because they work well. Loyal Toyota owners care that the world's biggest car company got there by avoiding mistakes.
But in 2006, then-president Katsuaki Watanabe shocked a news conference, humbly bowing in apology and promising to improve quality. Yet, fewer than four years later, Watanabe's successor and the founder's grandson, Akio Toyoda, was also apologizing, admitting that poor quality control and millions of mishandled recalls had put Toyota in "crisis."
Toyoda admitted that in the race to become the world's No. 1 car company, Toyota "confused" its priorities. Safety and quality suffered – a massive admission by a face-conscious Japanese executive at the head of Japan's industrial crown jewel.
Then things got worse. More embarrassing details about Toyota's recall issues emerged: more than 10 million vehicles were recalled from 2009-2010. Last year, Toyota reached a plea bargain with U.S. prosecutors, agreeing to pay $1.2-billion (U.S.) for "concealing and making deceptive statements" about the unintended acceleration of its vehicles.
By then, Toyota had settled owner lawsuits in loss claims of about $1.6-billion in both Canada and the United States. And Toyota has paid more than $66-million in civil penalties.
Even as recently as a year ago, Toyota's reputation was in tatters. Yet while sorting through the messes, Toyota was looking forward.
A new line of more fuel-efficient and cleaner engines is being introduced. Toyota's Mirai hydrogen fuel cell car goes on sale in the United States this year, while both Americans and Canadians will get a new Tacoma pickup, two new Scion nameplates and the Lexus RX and GS F.
This fall, the fourth-generation Prius is planned, the first vehicle to use Toyota's new modular platform setup. A subcompact crossover also could debut under Scion.
Profitable? Toyota is earning more than $5-billion a quarter, tracking to annual profits of more than $20-billion.
That's impressive, given that Merrill Lynch Bank of America says Toyota will replace on average 21 per cent of its lineup every year from 2016-2019.
Most intriguing and a sign of real confidence is Toyota's commitment to fuel cells. Mirai means "future" in Japanese and this is no coincidence.
The cost and limitations of battery technology – lengthy charging times, limited or unpredictable range – are huge, but the bigger problem is the electrical grid.
Using it to juice up mass numbers of battery cars isn't ecologically sound or feasible, say Toyota officials.
Toyota says the long view favours fuel cells, with hybrids and plug-in hybrids as the bridge.
This bold stance stands out in the auto industry and, above all, makes Toyota worth watching.
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