Toyota Says Company Is ‘Grasping for Salvation’ (Update1)
By Kae Inoue and Yuki Hagiwara
Oct. 2 (Bloomberg) -- Toyota Motor Corp., the world’s biggest automaker, is “grasping for salvation” as it predicts a second straight annual loss, President Akio Toyoda said.
“We have to listen to our customers and make better cars,” Toyoda said in a speech to journalists in Tokyo today. The 53-year-old grandson of Toyota’s founder became president of the Toyota City, Japan-based carmaker in June.
The automaker is one step away from “capitulation to irrelevance or death,” Toyoda said, citing a study of how companies fail. Toyota has forecast a record loss of 450 billion yen ($5 billion) in the year ending March after the worldwide recession pummeled car demand.
The company has gone through the phases of “hubris born of success,” “undisciplined pursuit of more” and “denial of risk and peril,” according to Toyoda, who cited Jim Collins, the author of “How the Mighty Fail.”
The company will sell about 7.3 million vehicles this year, Toyoda said, compared with 8.97 million in 2008. Toyota’s sales plunged 28 percent in the first nine months of this year in the U.S., traditionally its most profitable market.
“Business fell off a cliff,” said Paul Heaton, who manages $500 million in Japanese equities at Pyrford International Ltd. in London. “This has really shaken Toyota.”
Yen at ‘Severe Level’
The yen’s 7.4 percent gain against the dollar in the third quarter also eroded earnings from exports.
“The yen is at a very severe level, and just increasing sales won’t make Toyota profitable,” Toyoda said today.
A U.S. lawsuit and the company’s biggest recall in the nation have added to Toyota’s woes.
The carmaker said this week it plans a recall involving 3.8 million Toyota and Lexus vehicles because of a defect that may cause floor mats to jam down the accelerator pedal.
Last month, Toyota’s request to seal a U.S. lawsuit by a former in-house attorney, who claims the carmaker destroyed crash data, was denied by a judge who said the suit was already “irreversibly” public. Bloomberg L.P., the parent of Bloomberg News, filed an ex parte request in the case asking that it not be sealed.
Toyoda said the 72-year old company, established by his grandfather Kiichiro Toyoda, will “need to groom young people to be making cars for the next 100 years.”
“The salvation for the company isn’t me,” he said.
Toyota shares fell 3.7 percent to 3,380 yen in Tokyo trading, compared with a 2.4 percent decline in the Topix index.
To contact the reporter on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net
Last Updated: October 2, 2009 04:58 EDT
Wow, not sure what to make of this. Is this corporate leadership and governance the likes of which are fairly rare, particularly on today's Wall Street, or is this truly a 20th century industrial giant gasping for 21st century air?
On a lighter side...the contextual ad served up with this story was for Mercedes Benz.
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