Toyota isn’t strutting as it dons the No. 1 sales crown
It’s long been thought that the goal of Toyota Motor Corp. is nothing less than domination of the global auto industry. So when the news came out that Toyota had outsold General Motors Corp. in the first quarter, the bragging was ... nonexistent.
Bringing home the sales crown didn’t seem to be an occasion for joy at the Japanese automaker’s headquarters in Toyota City, about 200 miles southwest of Tokyo, nor at its U.S. sales headquarters in Torrance.
The reason champagne corks weren’t popping is simple, said former Toyota advisor Matthew May. The automaker has refrained from cheering because it is “aiming at an even higher goal.”
The only No. 1 ranking Toyota really covets, he said, “is the one that cuts across the board in every conceivable category. Hitting a sales target is all well and good, but the issue Toyota managers are addressing at this moment is: at what cost?”
May, who worked for eight years as a performance improvement advisor to the automaker’s in-house University of Toyota training program for executives, said he e-mailed congratulations to a number of Toyota executives in the U.S. after news of the sales coup came out late last month.
“In every response, the answer was ‘Yes, but ...’ ” said May, author of the 2006 book “The Elegant Solution: Toyota’s Formula for Mastering Innovation.”
“It was a stream of ‘Yes, but last year Hyundai beat us in the Initial Quality Survey,’ ‘Yes, but plant flexibility in the U.S. still isn’t what it is in Japan,’ ‘Yes, but our costs still aren’t where they need to be.’ ”
Another concern: Toyota hasn’t been as successful as it would like to be with a crucial new product, the redesigned 2007 Tundra full-size pickup.
The truck was launched just as gasoline prices began soaring and pickup- and SUV-loving Americans started putting small cars and compact trucks back on their shopping lists.
Also troubling Toyota executives is concern that a No. 1 ranking paints a big target on the automaker’s back. As an old Japanese maxim says, the nail that sticks up gets hammered down.
Among other things, Toyota is concerned that with GM and Ford Motor Co. still losing market share to foreign brands in the U.S., becoming the industry’s big dog could spark a backlash by politicians or, worse, consumers concerned about the health of the domestic carmakers.
So passing GM in sales in one quarter “is a shallow victory for Toyota,” May said.
“The public face is that this was a nonevent, but internally they’re saying that they’re not even close yet” to being No. 1 on Toyota’s terms.
Toyota wants to be tops not only in sales but in quality, customer satisfaction, manufacturing efficiency and every other key measure by which automakers are rated, said May, now head of Westlake Village-based Aevitas Learning.
But the automaker’s recent rapid growth has been accompanied by an embarrassing number of recalls and quality glitches, May said.
In 2005, Toyota recalled almost 2.2 million cars and trucks in the U.S., twice the number it recalled in 2004.
And last year the company had to recall more than 500,000 previous-generation Tundra pickups and Sequoia sport utility vehicles to fix a faulty steering component.
Analysts say the recalls haven’t hurt Toyota’s sales or its reputation for durability, but Toyota insiders acknowledge that the company’s top brass have made quality improvements a priority.
That has led Toyota to delay the launch of several vehicles, including the new Tundra, over the last year to ensure that everything was working correctly before the vehicles left the plant. It’s a costly move that leaves dealers short of stock, but to Toyota it has become an essential part of a companywide quality initiative, May said.
Although Toyota still rates high in long-term dependability, customers responding to the widely followed J.D. Power & Associates annual Initial Quality Survey regularly rank the Toyota brand behind several others.
The company’s Lexus luxury brand has been first or second in the rankings for more than a decade, but Toyota has never been No. 1.
It trailed South Korea’s Hyundai in 2006, earning a second-place ranking among nonluxury brands, but that’s as close to the top as it’s been, said Neal Oddes, director of product research and analysis at J.D. Power.
May, who stopped working for Toyota in December, said the company intentionally “has set an unreachable set of goals.”
Part of Toyota’s management style, he said, is to imbue every employee with a sort of healthy paranoia that drives a “constant effort to do better. The day they start thinking that they are No. 1 is the day they will start on a downward path.”
Steve Curtis, a spokesman at Toyota Motor North America in New York, said the company would not comment on May’s remarks or on global sales.
