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Toyota at a crossroads, and in competition's crosshairs
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Jeremy Cato, Autos.CTV.ca
Date: Tuesday Nov. 3, 2009 10:48 AM ET
It has all seemed so easy for Toyota for all these years, for the decades of steady growth. Toyota has enjoyed a loyal owner base, strong resale values and unparalleled and unquestioned quality.
The reward: Finally, this year, Toyota became the world's automotive sales leader after a long struggle to surpass General Motors. The celebration was short-lived.
You know the old saying: Be careful what you wish for -- you might get it. Since Toyota got its wish to become the top automaker in the world, nothing has seemed quite as easy as before.
In Canada, Toyota has lost nearly a full percentage point of market share -- to 12.5 per cent from 13.3 per cent a year ago. In the United States, Toyota has gone to 16.6 per cent of the market from 16.7 per cent. In the big picture, the losses are not catastrophic, yet Toyota has not gone backward like this ever before.
Welcome to Toyota's strange new world. Not only are sales down, but Toyota is under intense scrutiny for quality issues and its rivals are attacking from all sides. Where Toyota goes now will be very, very interesting. Because for the first time in decades, perhaps ever, Toyota is everybody's target.
Hyundai will be challenging Toyota's best-selling Camry with its coming Sonata. Volkswagen says it will target Camry, too, with a new car to be built in a new Tennessee plant. Ford, now profitable, is nibbling at Toyota with a range of new models, from the 2010 Fusion (versus the Toyota Camry) to the next-spring launch of the Fiesta which is targeted directly at the aging Toyota Yaris.
Even Toyota's leadership in gasoline-electric hybrids is under attack. Toyota still dominates hybrids, but Ford has taken direct aim with its Fusion Hybrid and more challengers are coming, including a Sonata Hybrid.
All the while there have been unheard of quality issues. First among them is the floor mat issue involving more than 3.8 million vehicle owners of a wide range of models, including the Lexus ES350. No small matter this.
Toyota, in both the U.S. and Canada, is urging owners to remove their floor mats while it seeks a remedy for reports of sudden, unintended acceleration. The exact factors behind a number of accidents, including the Aug. 28 wreck of a Lexus ES-350, remain unclear. But floor mats, the accelerator pedal design, and the ignition system's software all are in play.
So this is a stressful time at Toyota.
In response, Toyota is trying hard to reinvent itself, to rid itself of so-called "big company" disease. According to Automotive News, Toyota president Akio Toyoda is literally rewriting the automaker's playbook. Everything, it seems, is on the table.
Toyota may, for instance, trim its lineup, focusing on reducing the number of full-frame trucks. A staple of Toyota's product plan for years, mid-cycle vehicle enhancements may be scrapped in favor of a focus on bigger launches of critical models. And it appears we can expect Toyota to play to its strength in hybrids, introducing more of them and perhaps even creating an entirely separate Prius (hybrid) lineup.
Most of all, Toyota is training its sights on a return to the basics: to building the high-quality vehicles that created loyal owners and the sort of sparkling reputation that allows a car maker to sell vehicles for higher prices than the competition.
The quality issue is key. Toyota must improve quality after a recent rash of problems saddled the company with lawsuits, a massive U.S. recall and allegations of defects that mar the company's reputation. It is unheard of, really, for Toyota to be in this position.
But the problems are there and they are troubling. Aside from the issue related to floor mats, accelerator pedals and unintended acceleration, Toyota is dealing with a National Highway Traffic Safety Administration investigation into complaints of rusted-out frames on Tundra pickups -- a case involving an estimated 200,000-plus vehicles.
Insiders at Toyota reportedly are concerned that at least some of Toyota's quality problems stem from the company's too-rapid expansion over the last decade. Quality might have suffered as Toyota chased sales increases and increased market share.
Into this comes Toyota Canada's plan to launch the Scion brand next September. Initially, the youth-oriented Scion brand will be launched through 45 dealers in major urban areas -- Toronto, Vancouver and Montreal. Scion's lineup will include the tC compact sport coupe, the xD five-door subcompact hatchback and the xB five-door compact hatchback.
Scion's vehicles are intended to help Toyota Canada increase sales by 10 per cent to 220,000 cars and trucks amid a recovering auto market next year. Toyota Canada president Yoichi Tomihara says Toyota is targeting sales of 30,000 Scion models annually.
Launching Scion in Canada as all these other issues swirl around the company will challenge Toyota like never before. And it all seemed so easy just a short while ago.
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I applaud the budget, even though Health Care and education may stay unscathed. Sadly this cannot last and I worry to later this year where cuts will become enviable. If anything, this provides the Wildrose Alliance plenty of ammo when an election is called.
















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