Toyota: To Hell and Back
The past couple of years have been hell for Toyota. The Japanese automaker was knocked off its pedestal in 2009 and 2010 by global recalls related to unintended acceleration accusations that covered 10 million vehicles. Just as it was regaining its footing from those recalls, the March 11, 2011 earthquake and tsunami struck Japan, forcing the shutdown of critical vehicle production that, in turn, led to sales and market share declines. Floods in Thailand followed, further slashing manufacturing.
So considering all that, Toyota didn't have as bad a year as it could have. On Wednesday, Toyota reported its net income for the 2011-12 fiscal year, which ended March 31, fell 31 percent to 238.5 billion yen (about $3 billion U.S.) compared with a year ago; operating income fell 24 percent. Despite the declines, Toyota's performance was not as bad as some expected thanks to production resuming to normal levels from the earthquake and a final quarter of the fiscal year that generated huge gains. For the January-to-March fourth quarter, Toyota's profits more than quadrupled. That sets Toyota up for a 2012-13 profit that the automaker predicts will more than double to 760 billion yen ($9.5 billion U.S.), which would be its highest profit in five years.
Toyota's strength, executives said Wednesday, will come from an easing Japanese yen coupled with higher — record — global sales of 8.7 million vehicles, up 18 percent from the most recent year's 7.35 million. Higher sales will be the result of a host of new vehicles introduced in markets around the world.
Indeed, Toyota's recent performance was not only hampered by recalls and natural disasters but also by Toyota's dearth of new products. At Edmunds.com, we concluded the lack of new product had a lot to do with its U.S. sales and market share decline, in particular, in addition to the other headline-generating events. At the same time, competitors — new and old — were introducing fresh models and darn good ones that lured Toyota buyers into having a second look at their wares. Toyota's U.S. sales and market share dropped to 11.6 percent in the April-to-June quarter last year, down from 15 percent in the same period a year earlier, according to Edmunds.com data. Toyota's U.S. performance steadily improved after that quarter, ending its fourth quarter of the fiscal year with market share that nearly returned to pre-earthquake levels and quarterly sales that increased 12 percent from the year earlier.
Now, finally, the new models are rolling out from Toyota, and their acceptance should give company executives optimism. "In the last few months, Toyota has made big strides to regain the U.S. market share it lost to its competitors. With competition tougher than ever, it is not a given that Toyota will continue this market share momentum," said Edmunds.com Senior Analyst Jessica Caldwell. "But by releasing a new or refreshed products once every 19 days, on average, Toyota has a solid strategy to keep its brand front and center in the minds of American car buyers."
The new Toyota Camry despite being criticized by auto enthusiasts as a boring evolution of the model it replaced last fall, is selling well. In April, Toyota sold 36,820 Camry models in the U.S., making it nation's No. 1 seller. Besides the Honda Accord, no other midsize sedan was even close in sales.
The Toyota Corolla, despite a host of fresher new models from competitors, returned in April to its No. 1 spot among compact cars.
And if the 2013 Toyota Avalon, unveiled last month at the New York auto show is any indication, future Toyota models may be getting something that has been sorely lacking — stylish, emotional design.
Toyota's luxury division Lexus is running a distant third in the U.S. luxury car race and may not take back the luxury sales crown it wore for a decade, but the new Lexus GS models are selling well. In addition, Lexus freshens its two volume leaders — its crossover RX and ES sedan — this year.