Is Toyota Safe?

Of course not, although the record profits [CR Note: actually, the best in 5 years; its record was in the FY ending March 2008] it just posted might make you think so.  In an article in today’s New York Times, company President Akio Toyoda takes the “only the paranoid survive” approach:

“Have we really turned into a company that will be profitable and continue to grow no matter what happens to its business environment?” Mr. Toyoda asked.

“I am not sure yet, is my honest answer. An unprecedented crisis even beyond the scale of the Lehman Shock may happen again,” he said, using a common Japanese reference to the global economic crisis. “We’ll only know the answer when such events actually happen.”

Good attitude.  A couple of clouds on the horizon, though. For one thing, Toyota now faces brutal competition not only from Nissan and Honda but from Hyundai / Kia and, for the first time in years, from GM and Ford (Chrysler is still lagging). And the article in the Times talks about “a company-wide cost reduction drive.”  It’s worth remembering that such short-term thinking is really what got them in trouble in the first place.

Although Toyota’s problems were exacerbated by the recent recession, recalls, and the earthquake, they actually began in the early parts of the century when, in an attempt to accelerate its expansion drive and boost profits, it cut back on training and took shortcuts with its vaunted Toyota Production System. In other words, it started to look like any other car company, with the problems that any other car company faced:

Since 2004 the automaker has had to recall 9.3 million vehicles in the U.S. and Japan—its two biggest markets—up from 2.5 million in the previous three years. The problems got so bad that, in July [2006], Toyota CEO Katsuaki Watanabe felt obliged to bow deeply in apology.

You may remember that in January 2010, Consumer Reports cut Toyota from the companies that it automatically recommends.

As the owner of two Toyotas, I certainly wish them well. But I’d like to see some evidence that they’re refocusing on the values that led them to prominence and not  just chasing next quarter’s numbers.

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