Japan's top auto maker, which has built its reputation on offering safe and reliable cars at reasonable prices, has recalled more than one million vehicles in Japan alone so far this year, and on Wednesday issued a recall of some 400,000 SUVs in the United States, its single-biggest market.
In a first for the company, Toyota is also being criminally investigated by prosecutors in Kumamoto, southern Japan, over whether its quality-control managers had wrongfully delayed a recall filing that could have prevented a road accident in 2004 that injured a couple and their three young children.
"The world-class quality that we've built is our lifeline," President Katsuaki Watanabe told a mid-year news conference dominated by questions over Toyota's recent quality woes.
"There will be no growth without an improvement in quality. This is the biggest task that this management team must undertake," he said.
Vehicle recalls have been on the rise at most auto makers as they use common components across more models to save costs, and pile on advanced features requiring more electronics parts to add value to their products.
"Given our rapid expansion, there is a need to strengthen the various quality processes," Masatami Takimoto, one of two executive vice presidents overseeing quality at Toyota, said.
At a separate briefing earlier, Takimoto noted that Toyota had last year set up a new division dedicated to gathering information on glitches from users more swiftly.
Another measure, taken in June last year, would enable the company to keep data on vehicles repaired after the period covered by warranty, he said.
Concerning the pending criminal case in Kumamoto, Toyota executives repeated the company's position that all decisions taken in that case were sound, but apologized for shaking up customers' trust.
Japan's transport ministry, which had summoned Toyota's quality officials earlier on Thursday for a briefing on its recall process, said it would consider ordering the company to improve its business operations if it found problems in its system of handling vehicle defects.
SALES ON TRACK THIS YEAR
Despite such setbacks, Watanabe said Toyota was on track to meet its group-based global sales and production forecasts for 2006, of 8.85 million units and 9.06 million units, respectively -- figures that could soon see it overtake General Motors Corp. as the world's biggest auto maker.
In the United States, where Toyota was hit earlier this year by a high-profile sexual harassment lawsuit, sales were likely to outperform the 2.46 million-unit target by "a few tens of thousands of units," an executive said, adding the lawsuit had no visible impact on consumers' purchasing decision.
In Japan, where demand for non-mini cars has been especially weak, Toyota stuck to its target of 1.78 million units this year, betting on support from the remodeling of the high-volume Corolla sedan and the flagship Lexus LS model in the fall.
Last month, rival Nissan Motor Co. had said it could fall short of its domestic sales forecast as consumers shift to 660cc minicars -- a market dominated by Suzuki Motor Corp. and Daihatsu Motor Co.
WANTS TO KEEP GM TIES
Commenting on a possible three-way alliance between Nissan-Renault and GM, Watanabe said Toyota was not studying ways in which it could join that partnership, saying only that it wanted to keep its current relationship with the troubled U.S. auto maker.
"We view GM as a great entity, from which we have a lot to learn," Watanabe said, adding Toyota wanted to maintain its 22-year-old, California-based car assembly plant which it operates with GM.
"We want to keep this relationship going."