After quake, Toyota shaking things up

Automaker shrugs off tsunami, recalls to regain top spot

Los Angeles TimesDecember 1, 2012 

LA Auto Show Toyota

The new-generation Toyota RAV4 sport-utility vehicle was unveiled Wednesday at the Los Angeles Auto Show. The Japanese automaker will introduce 19 new or updated models during this model year.

JAE C. HONG — AP

Toyota appears poised to regain its position as the world's largest automaker, a remarkable turnaround after years of safety recalls, huge federal fines and the Japanese earthquake and tsunami last year.

In short order, surging sales have put that all in the rearview mirror.

Toyota is likely to sell 9.7 million vehicles this year, surpassing second-place General Motors by more than 1 million vehicles and setting a record for annual auto sales. That's generating huge profits, with earnings tripling in the latest quarter to $3.2 billion and sales surging almost 20 percent compared with a year earlier.

The United States — where Toyota's reputation suffered most through the recalls — is now a cash cow. Through the first 10 months of the year, the Japanese automaker sold more than 1.7 million cars and trucks in the country, a 30 percent gain and more than double the industry growth rate.

"Toyota has done some smart things," said Rebecca Lindland, an analyst with IHS Automotive. "They have concentrated a lot of time and effort on the U.S., which is incredibly important because they make so much money here."

The Japanese automaker has launched 11 new or completely redesigned models in the United States in the last year, including new station wagon and commuter versions of its popular Prius hybrids. On Wednesday, the first day of the Los Angeles Auto Show, it launched a new-generation RAV4 sport-utility vehicle. The current model is an aging vehicle facing stiff competition from newly redesigned offerings such as Ford's Escape and Honda's CR-V.

Toyota has ramped up its factories in the United States, opening a Corolla plant in Mississippi and expanding pickup truck manufacturing in Texas. And at the urging of chief executive and founding-family member Akio Toyoda, the automaker is looking to inject some panache into its historically bland styling, especially for its Lexus luxury division.

Toyota now accounts for 14.4 percent of the U.S. auto market, up from 12.6 percent during the first 10 months of 2011. In retail — not including rental and fleet sales — the Toyota brand is the biggest in the United States, outselling GM's Chevrolet.

Just three years ago, Toyota was the second-largest auto seller in America, with 17 percent of the market, and was closing in on a crippled GM, which was struggling with the stigma of bankruptcy and a federal bailout. But Toyota was derailed in a series of embarrassing recalls. The company also paid record federal fines of nearly $50 million for failing to promptly inform regulators of defects and for delaying recalls. At one point, it had to halt much of its production of new cars in the United States to fix recalled vehicles.

Just as the automaker started to recover, it was hobbled by last year's earthquake and tsunami in Japan, which upended Toyota's manufacturing even on American soil. Toyota's share of U.S. auto sales slid to 12.9 percent, well below GM's and Ford's.

Despite its most recent progress, though, Toyota still struggles with large recalls. In November, it recalled almost 700,000 Prius hybrids to fix a steering shaft problem. In October, the automaker recalled 2.5 million vehicles nationally to fix a faulty power-window switch.

But several factors have helped Toyota survive the recalls and disaster-related production shutdowns, said James Lentz, chief executive of Toyota Motor Sales, the automaker's U.S. marketing arm.

Foremost, there was "the loyalty of our consumers as we went from the financial crisis to the recalls to the tsunami," he said. "They stayed with us for the entire time."

Lentz said Toyota also benefited from a leap in the number of redesigned and new models for the U.S. market. This year, the automaker will introduce 19 new or updated models that it expects will account for about 40 percent of its sales. Last year, new or refreshed models made up just 7 percent of Toyota's U.S. sales volume, Lentz said.

"This was more than just changing sheet metal," he said. "There is a lot of improvement to interior and exterior styling, drivability and technology."

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