Source: Special Automotive News Email Alert
Hans Greimel - October 2, 2009
TOKYO -- Toyota Motor Corp. President Akio Toyoda said his
money-losing automaker is "grasping for salvation" as it struggles to return
The world's largest car company was once targeting annual sales of 10
million vehicles but now expects sales of 7.3 million this year, down from
8.97 million in 2008, Toyoda said at a news conference here today.
Toyoda, grandson of the automaker's founder, said Toyota is on the
brink of "capitulation to irrelevance or death" as he prepares for a
second-straight year of substantial financial and unit-sale decreases.
Citing the five stages of corporate decline outlined by Jim Collins,
author of How the Mighty Fall, the Toyota chief warned that his company has
slumped to stage four.
"We are grasping for salvation," Toyoda said, adding that the company
has already spiraled through the first three stages: Hubris born of success,
undisciplined pursuit of more and denial of risk and peril.
"Toyota has become too big and distant from its customers," the chief
In the United States, Toyota's sales fell 13 percent in September from
a year earlier as the market suffered a sharp letdown after the
government-funded cash-for-clunkers program ran out. Total U.S. sales
tumbled 23 percent. Toyota is down 28 percent for the year.
Separately, Toyoda called the current dollar-yen rate "very tough,"
saying the weak U.S. currency made it difficult to return to profit on an
"When you get to this level, it makes it difficult to return to profit
on sales growth alone," he said.
Toyoda repeated Toyota's aim to return to profit at the parent level
"as soon as possible," even as it expects global sales to fall 18 percent
from 2008 to 7.34 million vehicles this year. That would leave about 30
percent of its production capacity unused.
Toyoda took the helm in June as the world's biggest automaker faced
one of its biggest crises in history amid a global credit crunch and an
industrywide sales slump that forced two U.S. automakers into bankruptcy.
For the financial year to March, Toyota has projected a consolidated
operating loss of 750 billion yen ($8.4 billion), assuming a dollar rate of
92 yen. It has forecast a parent-only operating loss of 600 billion yen.
Presenting a further challenge, Toyota said this week it would recall
3.8 million Toyota and Lexus models in the United States -- its largest-ever
recall -- because of a risk that a loose floor mat could force down the
accelerator. The problem is suspected of causing at least one crash that
killed four people.
"We would like to pay our deepest condolences for the loss of four
precious lives," Toyoda said. But because an investigation into the problem
is still underway, he said he could offer no further details about plans to
address the issue.
"Customers who chose Toyota and Lexus cars because those brands are
safe and secure are now beset with anxiety. I regret and apologize for this
development," said Toyoda, who took office in June and is the grandson of
the company's founder.