Born again Toyota does a full circle

At the height of the deluge of recalls that engulfed the global automotive industry back in 2010, Toyota Motor Corp executive vice president Yukitoshi Funo met a group of Indian journalists visiting Japan to specifically get a first hand experience of their cheapest global offering Etios.

After fielding at least a dozen questions, Funo was finally affronted by the dreaded query. Was Toyota apprehensive that it would end up without its 2 year old crown of world’s largest automobile manufacturer due to the backlash on the recalls?

Funo’s answer was symbolic of what is best in the Japanese culture–unflustered even in the worst of times and unperturbed even in the face of defeat. Unrestrained and frank.

His answer was simple. Yes, there was every chance that Toyota will lose that position. It did. But the actions that were being initiated to prevent another wave of recalls were so strong and comprehensive that Toyota was destined to return to the podium.

How prophetic was that. Barely two years later, leading the pack of wolves after the first nine months of a calendar year, the good old Funo San was confronted with another seemingly uncomfortable question.

Violent protests in China, world’s largest market for cars and one that accounts for a tenth of Toyota’s sales worldwide, against Japanese goods saw the Japanese firm’s sales in the country drop by a worrying 50% in the last 2 months. It is now unlikely to achieve its target of 1 million sales for the full year. And China is a market where many of its main rivals to the throne including the current incumbent General Motors, Volkswagen, Renault Nissan and Hyundai are particularly strong.

At the heart of the battle is Japan’s nationalization of a cluster of islands that China claims its own. Hardly an issue where Toyota has any bearing. Yet it is suffering. And yet, it is unflustered. Even though it is the reigning champion for this year. Funo San however remains as frank.

To a group of reporters in Tokyo, Funo said on Thursday that it will be a record sales year for Toyota despite China even though it will miss its own target of 9.76 million vehicles for the full year. He went on to add that Toyota spread its risks across geographies so that it is not dependent on one particular market.

So Toyota today is strong in markets like Indonesia, Thailand, Philippines, India and a host of African nations that are ignored by its rivals because of their relative small size. And it is reaping the benefit of that.

In barely 2 years that saw Toyota recall as many as 2 million cars worldwide in 2010, it is back at the perch. It is ahead of General Motors by around 450,000 cars and the lead is unlikely to be narrowed down despite GM’s obvious strengths in China.

At the heart of it remains Toyota’s strength in humility. Half a year after the Etios was launched in India, I happened top catch up with its chief architect Yoshiniro Noritake san. We ambled along and I finally broached the topic of the car’s interiors which has met with much criticism for its low quality and tackiness. Noritake san’s reaction stumped me so much for its honesty that i never wrote a story on what he said.

Frank with his admission that interiors were a problem and needed to be rectified, he agreed that even the best in the world can go wrong as the learning curve never ends. As it stands, Etios is not the Swift that Toyota was hoping for.

I believe Toyota’s global revival is an ode to this ethos. To the fact that they trust their consumer’s intelligence and are willing to be blatantly honest even when rule books say they ought not be so. To the fact that they keep recalling cars on seemingly flimsy issues even when a backlash is already underway or that rivals are getting away with bigger issues.

Its a lesson that Toyota has learnt the hard way. By coming a full circle and going back to the basics. Long ago, it taught the world the modern way of manufacturing–something that we know of today as the Toyota just in time way.

In the upheaval of the last 2 years, it has silently learnt another lesson. I would wait to see if any of the others have learnt it as well.

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