Why Toyota Is Afraid Of Being Number One

[1931Chevy]

http://www.businessweek.com/magazine...pStories_ssi_5
MARCH 5, 2007
Ask consumers why Toyota may soon be the largest automaker in the world, and they will point to the Camry. Or the Prius. Or the rav4. (It's the cars, stupid.) Ask manufacturing geeks, and they'll tell you it's about just-in-time production and a maniacal focus on constant improvement. (It's the engineering, dummy.)

But there's another drama behind the carmaker's tire-squealing momentum. It's a story that might be called: How Toyota is winning the hearts and minds of America.

With a deft combination of marketing, public relations, and lobbying, Toyota has done a remarkable job over the past 20 years of selling itself as an American company. That drives the Big Three to distraction. Here's Chrysler communications chief Jason Vines: "The thing I resent is Toyota wrapping themselves in the American flag," he says. "We still employ more people and contribute more to the economy."

Who cares what Detroit thinks? Well, strange as it sounds, Toyota does. Its executives may privately relish victory at the expense of General Motors (GM ), Ford (F ), and Chrysler (DCX ), but here's the truth: Toyota is afraid to be No. 1—or at least what that implies. And not just because one of its slogans is "Run scared." It's because the extra scrutiny could undo much of the hard work of the past 20 years. "We constantly need to think about the potential backlash against us," Toyota CEO Katsuaki Watanabe tells BusinessWeek in an exclusive interview. "It's very important for our company and products to earn citizenship in the U.S. We need to make sure we are accepted."

A 17.4% retail market share should signal acceptance. But Toyota is not admired from sea to shining sea. Yes, the company has won the coasts. But one-third of car buyers are biased against imports, says Harris Interactive. And most of those Ford- and Chevy-loving holdouts live in the Midwest and Texas. In those precincts, Toyota still has a lot of persuading to do. Which explains why it launched the full-size Tundra pickup—a red state vehicle from its aggressive hood to its brawny haunches—and is building it in San Antonio.

Here's the thing: The Tundra amounts to an assault on the last redoubt of Big Three profits. But Toyota doesn't want to be seen as the one that pushes Detroit over the edge. So to prevent a backlash, the company is amping up the charm—launching literacy programs in San Antonio, vowing to share technology with Ford, and pouring money into lobbying, more than doubling since 2002 the amount it spends each year, to $5.1 million. Says Jim San Fillippo, an analyst with Automotive Marketing Consultants Inc.: "Toyota is the best at going native."

In the early '80s, Toyota sold nine models and had 6% of the market. But the company was winning converts with fuel-efficient, reasonably priced cars like the Toyota Corolla. Detroit, meanwhile, was beginning to endure the agonies that continue to this day. Japan was ascendant, and xenophobia was in full cry.

[drew630]

IMO, they aren't. Its just another great PR stunt by Toyota. They are trying each and everyway to convince the American public that Toyota is best in the American Automoblie market. If Toyota was truly scared they wouldn't have made this all public, and would have backed off for a different approach. But I for one don't see Toyota slowing down anytime soon.

P.S., I liked Mr. Vines quote so much I added it to my signature.

[throwback]

I give Toyota's CEO some credit. There may be a backlash, especially if Ford and/or Chrysler go out of business. I read an analysis a few years ago that said there would eventually be 4-6 major car companies. It seems that is looking more and more likely.

[mkaresh]

There's not going to be any backlash. They're far too entrenched at this point. But by "fearing a backlash," they further reduce the already small odds.

[neshapop]

How many investment groups from US have the share in Toyota stocks? I think that company is very American.

It is about global economy everywhere, GM has a lot of German, Swedish and South Korean genes today and its best plants are here in Canada.

[tgagneguam]

Originally Posted by mkaresh

There's not going to be any backlash. They're far too entrenched at this point. But by "fearing a backlash," they further reduce the already small odds.

Yup.