Toyota's new boss warns of 2 more tough years
C. E. White
Profit push aims to make factories profitable at 70% capacity
Automotive News
June 25, 2009 - 2:31 am ET
UPDATED: 6/25/09 11:48 a.m. ET
TOKYO (Reuters) -- Toyota Motor Corp.'s new president, the grandson of
the group's founder, warned today the auto industry faces another two
tough years as he outlined his strategy to return the world's biggest
automaker to profit.
Toyota aims to build more autonomous operations in North America and
shift its focus to marketing a region-specific vehicle lineup, rather
than offering a full lineup in every region, Akio Toyoda said in his
first press conference since taking the job two days ago.
Most of Toyota's factories around the world are underused as the
global recession hammers car sales, sending two of America's three big
car makers into bankruptcy.
Facing a second year of record losses, Toyota aims to cut costs from
its already lean operations so it can be profitable using just 70
percent of its factory capacity.
"We want to do everything possible to avoid a third consecutive year
of losses," Toyoda told reporters.
Toyoda said European efforts would focus on hybrid models.
Its remodeled Prius hybrid, launched last month, has been a rare
bright spot, winning more than 180,000 orders in Japan.
Production has been limited to two plants so far, creating a
bottleneck for delivery, while analysts say the fuel-sipping model
could eat into sales of Toyota's other more profitable cars.
Back to basics, again
Toyoda has said he aims to steer the company "back to basics" -- a
promise also made by his predecessor, Katsuaki Watanabe, when he took
over in 2005 as Toyota's factories scrambled to meet soaring demand.
The push for profits would not involve plant closures, Executive Vice
President Atsushi Niimi told the news conference.
"Right now, the market is very tough. But in two years, or at most
three years, it will recover so we want to make sure we have the means
to meet demand then," said Niimi, who heads manufacturing operations
in Toyoda's new-look executive team.
At the annual meeting this week, Toyota promised shareholders to do
better to recover from a 461 billion yen ($4.8 billion) operating
loss.
For the year ending March 2010, it has forecast an even bigger loss,
of 850 billion yen, although consensus forecasts are for a much
smaller loss of 495 billion yen.
Unlike bankrupt U.S. rivals Chrysler and General Motors, Toyota has
said it plans to ride out the downturn without slashing full-time
jobs.
Where's the bottom?
Many industry executives have said recent sales trends in major
markets such as the United States and Japan indicate that demand has
bottomed, but opinion is divided over when it will recover
convincingly.
"The company will have to learn to adjust to this new paradigm of
lower sales growth and higher technology spending. But they are
definitely in a better position than U.S. companies to do so," said
Yoji Takeda, a Hong Kong-based vice-president with RBC Investment
Management (Asia) Ltd.
"Under the new management it will have to make continuous and rapid
moves to cut costs. There could be some restructuring to cut down
excess capacity. Toyoda's position as a member of the founder family
may help push through changes faster. In two years it will be a much
stronger company."
In the United States, Toyota's biggest and until recently most
profitable market, its sales have dropped 38 percent year to date.
Data issued today showed Toyota's global production, including units
Daihatsu Motor Co. and Hino Motors Ltd., fell 38 percent last month,
to 501,685 vehicles.
Market share in Japan fell 1.3 percentage points despite a mid-month
launch of the redesigned Prius hybrid.
Zee
wrote:
I hope they don't pull out of Formula 1.