The Power of One: How Akio Toyoda Led Toyota Back to the Top

[daiheadjai]

A little something I wrote on a study break. I've been pretty impressed by what Akio Toyoda managed to do with Toyota and Lexus.
I imagine turning around a ship that big, with that much bureaucracy, probably took a lot of effort, skill, and luck (having your last name tied to the company doesn't hurt either).

I don't think we'd have the LFA, Toyobarus, RC-F, IS-F, FT-1 or LC-500 if not for Akio Toyoda.

The Power of One: How Akio Toyoda Led Toyota Back to the Top

On February 24, 2010 the president of Toyota Motor Corporation, Akio Toyoda (hereafter referred to as Akio for clarity), stood before a US Congressional committee to deliver testimony on the sudden unintended acceleration debacle that was alleged to have caused 89 deaths (the National Highway Transit Safety Administration later revised the figure to five deaths), led to millions of recalled vehicles, and did tremendous damage to a brand that had been built on quality and reliability. Under the harsh media spotlight, Akio would face intense scrutiny and hours of tough grilling from members of congress. It was the toughest test yet for Akio, who had taken the presidency a scant 8 months earlier, and would be a pivotal moment in Toyota’s history.

Akio acknowledged that Toyota Motor Company had lost its way in its quest to become the world’s largest automaker: The feverish attention to detail, the penchant for over-engineering products, and the bulletproof reliability which had endeared the Japanese automaker to North American consumers, had been dulled by success. One reason for this was the resurgent Japanese yen, which made vehicles sold outside of the Japanese market less profitable, leading to cost cutting. But the emphasis placed on boosting production volumes by the Toyota leadership of the day to become the largest global automaker, was another. Had Toyota become the victim of its own hubris, much as GM was in the 1970s and 1980s? One thing was certain: The recalls and the damaged consumer trust dealt Toyota a severe blow, and competitors, including Volkswagen Auto Group and General Motors, moved in swiftly to capitalize. Akio Toyoda, family scion and the great-grandson of Toyota’s founder, Sakichi Toyoda, would have his work cut out for him.

Like his father Shoichiro, and his grandfather Kiichiro before him, Akio would become president at Toyota, but Akio differed from his predecessors in that he had studied overseas, receiving his MBA from Babson College in Massachusetts. Moreover, he was a passionate and avid auto enthusiast who raced cars competitively. Bringing genuine automotive passion and a management style which departed from Toyota’s more traditional, bottom-up and bureaucratic way, Akio would step forth and take responsibility for where the company had gone, but more importantly, where it would go in the future. For Akio, Toyota’s success was a personal matter, a Jobsian mindset which manifest itself in ways like personally testing 200 cars from Toyota and its competitors within a year, and serving as a test driver in the development of new models.

He would also usher in an upheaval in Toyota’s management: According to Fortune, “Akio shrank the board of directors by half and took out layers of management,” as well as discarding the old Toyota tradition of rotating its top executives between departments, to leverage their expertise as specialists. His discomfort with yes-men also served as the impetus for developing a small group of five dedicated executive VPs whom he met weekly for advice, forming personal bonds which allowed for frank and candid discussions. Also gone would be the push for ever-expanding volumes, replaced by a renewed focus on sustainable profit margins, green technology, and delivering “ever-better” cars to consumers in a clear reference to Toyota’s legendary kaizen philosophy. Karl Schlicht of Toyota Europe said of Akio, “he’s paranoid of growing too quickly” and that “he’s told everyone in the company not to chase the number one spot, but to do things right, make the best cars and the money will come.”

Akio also made bold moves to address one of the long-standing criticisms of Toyota products from the Watanabe era: Enthusiasts had long lamented Toyota’s abandonment of sporty cars that appealed on an emotional level, in favour of uninspiring automotive appliances. In Akio’s mind, winning the hearts of enthusiasts was a key step to building brand loyalty, so he set out to change Toyota’s staid image, personally intervening to produce several sports cars. This push included the LFA, Lexus’ US$375,000 carbon fibre, V-10 supercar. This was no small departure for volume- and profit-conscious Toyota: Sports cars are low-volume, high-cost niche products. Despite the lofty price tag, Lexus lost money on every LFA it sold – the car was never intended to be a financial success, but a halo car, a labour of love and a bold statement to the world. This was followed up with the GT86 (along with the Scion FR-S in North America, and the Subaru BRZ), affectionately known as the “Toyobaru” in reference to Subaru’s manufacturer role. The Toyobaru won numerous accolades and awards, selling 89,372 units in the U.S and Canada from 2012-2015 (including one BRZ owned by yours truly). Under Akio’s leadership, Lexus and Toyota have surprised enthusiasts with sporty models such as the Lexus RC-F, GS-F and IS-F to compete with BMW’s M and Mercedes’ AMG models. The surprise launch of the LC-500 model due to the popularity of the LF-LC concept car with the public, and the possibility of a long-awaited successor to the Toyota Supra in the form of the FT-1 concept, also serve as indications of the new direction for Toyota. This was Akio, delivering on his candid promise of “no more boring cars.”

The results of these changes look promising: the 2014 financial results show that ROE increased from 2.1% in 2010 to 13.7% in 2014, while ROA jumped from 0.7% to 4.7% in the same period. Net income attributable to Toyota Motor Corp. jumped from 209 million yen to 1.8 billion yen over the same period, with a year-over-year increase in 2014 of 16.4%, 73.5% and 89.5% for Net Revenues, Operating Income, and Net Income attributable to Toyota Motor Corp. respectively. Globally, Toyota regained the crown as the world’s largest automaker from Volkswagen Auto Group, which briefly eclipsed the Japanese giant in 2015 and now faces fallout from its own emissions scandal. This followed several crises, including further recalls, the 2011 tsunami, which disrupted supply chains and allowed General Motors to briefly take the global crown, as well as a period of renewed strength for the Japanese yen. Despite all these challenges, Toyota has been able to regain consumers’ trust, improve profits, and shake the image of being Japan’s version of Buick. At the core of the turnaround, has been Akio Toyoda and his personal vision of what Toyota needs to be. Not bad for an enfant terrible more comfortable at the racetrack than in the boardroom – for Akio Toyoda, the business is personal.

https://www.linkedin.com/pulse/power...se-det-nav_art

[mav1178]

Except the RC series is horribly positioned and marketed. Many dealers I know are having trouble selling cars that have been on their lots for months.

-alex

[daiheadjai]

Originally Posted by mav1178

Except the RC series is horribly positioned and marketed. Many dealers I know are having trouble selling cars that have been on their lots for months.

-alex

No doubt the RC wasn't a home-run success. But consider that this was the Toyota that made only appliances and floaty, soulless transportation devices for most of the period between 1995-2010.
Both Toyota and Lexus had been regularly trashed for their dynamics in magazines, while the people who were buying, were buying because the things didn't break down.

The fact that the RC even saw the light of day is a surprise (the previous sporting Lexus was basically the SC430, and IS350).
Old Toyota would not have produced the Toyobarus. Old Lexus would not have made the RC-F, or the LC-500 (sports cars/coupes are low volume, low profit models).

It's the change in culture and philosophy at Toyota/Lexus that strikes me as significant.

[vh_supra26]

How would you rate the first year of RC sales?

We came in at about 15,000 for the year. We were trying to sell 18,000 units, and we came about 3,000 short. Candidly, I would say that we set an objective that was aggressive.

So, a little bit disappointing. We ordered more than we needed to at the end of the day.

https://lexusenthusiast.com/2016/02/...-jeff-bracken/

2015 Sales Numbers

BMW 4 Series: 46,082
Lexus RC: 14,784
Audi A5: 12,934
Infiniti Q60: 3,949

With sedan counterpart
BMW 3 & 4 Series: 140,609
Mercedes C Class: 86,080
Lexus IS & RC: 61,214
Infiniti Q50 & Q60: 47,823
Audi A4 & A5: 41,947
Cadillac ATS: 26,873

[WolfpackS2k]

Toyota has yet to impress me. They're still a performance shell of their former , mid 80s to 90s era, self. Since he's taken the reins Toyota hasn't introduced a single sports oriented car themselves. The Twins were a collaboration and are burdened with an underwhelming engine. The LFA's development was already well underway before he came into power. The RC models are halfassed platform mutations leaving just the IS-F as the only real impressive showing. Though again that's not a Toyota. In the US just looking at "Toyota" models and it's still boring business as usual.


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[STZ]

Originally Posted by WolfpackS2k

Toyota has yet to impress me. They're still a performance shell of their former , mid 80s to 90s era, self. Since he's taken the reins Toyota hasn't introduced a single sports oriented car themselves. The Twins were a collaboration and are burdened with an underwhelming engine. The LFA's development was already well underway before he came into power. The RC models are halfassed platform mutations leaving just the IS-F as the only real impressive showing. Though again that's not a Toyota. In the US just looking at "Toyota" models and it's still boring business as usual.


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I believe the SFR, although probably not coming to the Americas, is a purely Toyota project. The FT-One seems to have something to do with BMW as well.

[daiheadjai]

Originally Posted by WolfpackS2k

Toyota has yet to impress me. They're still a performance shell of their former , mid 80s to 90s era, self. Since he's taken the reins Toyota hasn't introduced a single sports oriented car themselves. The Twins were a collaboration and are burdened with an underwhelming engine. The LFA's development was already well underway before he came into power. The RC models are halfassed platform mutations leaving just the IS-F as the only real impressive showing. Though again that's not a Toyota. In the US just looking at "Toyota" models and it's still boring business as usual.


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I'd say these were half-measures, and you're right to say it is less impressive than having a full-fledged Toyota/Lexus product.
But progress is seldom a one-step process. Half-measures aren't the destination - they're part of the process towards full-measures.

The LFA was under development, but without his intervention, it may not have appeared as it did (a full carbon-fibre supercar); IIRC, they had to redo it because the gestation period was so long because they had to scrap the original aluminum design.

The Twins were forced through, in spite of Subaru's initial opposition/hesitance, and Old Toyota's volume-orientation.

The RC was a surprise - I don't think very many people expected it (or the LC-500); there's a reason why we were surprised (as imperfect as the car itself may have been) - this is very un-Toyota to launch a salvo of sport-oriented cars.

Toyota has probably been oriented towards appliances for so long, that to expect a full retool and reorientation towards building their own sports cars within 5 years, is unrealistic.

Maybe @Tcoat could shed some light on it.

[TylerLieberman]

I feel like cars are just getting too complicated for their own good.


Pretty soon, car manufacturers are going to need to meet that 54mpg or whatever it is standard, or they're going to have to shell out millions of dollars every year. Manufacturers are just going to make that target harder for themselves to hit if they keep making huge, overweight vehicles.


If it were me, I'd start focusing on trimming some weight off the vehicles in the lineup. I'm curious how much more fuel efficient some of the current cars of today would be if they all didn't weigh 3500+ motherf*cking pounds.


I know fuel efficiency isn't the main topic here, but it reminds of back in the day when Japan had that 286hp agreement. I feel like cars were better back then because there wasn't a horsepower war. You had to rely on other aspects, rather than just building a car and throwing 400hp in it and calling it a day.


Of course, the current safety standards have made it more of a challenge to keep weight down, but Toyota/Subaru was able to make a 2800lb car with today's standards. Now, if they used that same recipe and added in a more efficient, turbo 4 or something, who knows. Maybe we could start seeing more cars like the FRS. Lightweight, fun, and still capable of 40mpg+.

[daiheadjai]

Originally Posted by TylerLieberman

I feel like cars are just getting too complicated for their own good.


Pretty soon, car manufacturers are going to need to meet that 54mpg or whatever it is standard, or they're going to have to shell out millions of dollars every year. Manufacturers are just going to make that target harder for themselves to hit if they keep making huge, overweight vehicles.


If it were me, I'd start focusing on trimming some weight off the vehicles in the lineup. I'm curious how much more fuel efficient some of the current cars of today would be if they all didn't weigh 3500+ motherf*cking pounds.


I know fuel efficiency isn't the main topic here, but it reminds of back in the day when Japan had that 286hp agreement. I feel like cars were better back then because there wasn't a horsepower war. You had to rely on other aspects, rather than just building a car and throwing 400hp in it and calling it a day.


Of course, the current safety standards have made it more of a challenge to keep weight down, but Toyota/Subaru was able to make a 2800lb car with today's standards. Now, if they used that same recipe and added in a more efficient, turbo 4 or something, who knows. Maybe we could start seeing more cars like the FRS. Lightweight, fun, and still capable of 40mpg+.

I'd love to see a move towards lighter vehicles, but it seems that the vast majority of consumers like being insulated from the outside world when they're in their transit pods. Not to mention the push toward increasingly stringent pedestrian and crash safety standards - all of which push weight northward...

Also, FWIW, the 280ps "gentlemen's agreement" was pretty much a "wink and nudge" kinda thing - the cars which were nominally rated 280ps included the Supra TT, RX7, 300ZX, GTO/3000GT/Stealth, the pre-R35 GTRs, and also cars like the Evo, WRX/STi etc.
I think they were simply labelled 280ps, but in actuality made their 300ish hp.

[Irace86]

Originally Posted by daiheadjai

I'd love to see a move towards lighter vehicles, but it seems that the vast majority of consumers like being insulated from the outside world when they're in their transit pods. Not to mention the push toward increasingly stringent pedestrian and crash safety standards - all of which push weight northward...

Also, FWIW, the 280ps "gentlemen's agreement" was pretty much a "wink and nudge" kinda thing - the cars which were nominally rated 280ps included the Supra TT, RX7, 300ZX, GTO/3000GT/Stealth, the pre-R35 GTRs, and also cars like the Evo, WRX/STi etc.
I think they were simply labelled 280ps, but in actuality made their 300ish hp.

This is correct. With autodrive and autosteer technology coming of age a d going mainstream, expect cars to get heavier. That may mean all cars will be heavier or maybe sports cars wont adapt those technologies but Im sure the government will make it standard. This is a good thing even if it may suck for enthusiasts wanting light vehicles.

On your side note, the JDM Supra had smaller ceramic turbos and did not make the same 320hp/310tq that the USDM Supra did. As a former Supra owner, thats all I can comment on, but I believe they were true to the agreement.

[WolfpackS2k]

Originally Posted by Irace86

This is correct. With autodrive and autosteer technology coming of age a d going mainstream, expect cars to get heavier. That may mean all cars will be heavier or maybe sports cars wont adapt those technologies but Im sure the government will make it standard. This is a good thing even if it may suck for enthusiasts wanting light vehicles.

It's not all a good thing. We've already reached the point of diminished returns. At this point cars are becoming so heavy, and have thick pillars for crash worthiness - making outward visibility more difficult. Outward visibility is a safety measure itself, and now we have to rely on cameras? Beyond that, people rely too much on their car's active and passive safety systems, and neglect their own driving ability.

Sheer idiocy. And the average sports car enthusiast could give two sh*ts about it as well...

[Irace86]

Originally Posted by WolfpackS2k

It's not all a good thing. We've already reached the point of diminished returns. At this point cars are becoming so heavy, and have thick pillars for crash worthiness - making outward visibility more difficult. Outward visibility is a safety measure itself, and now we have to rely on cameras? Beyond that, people rely too much on their car's active and passive safety systems, and neglect their own driving ability.

Sheer idiocy. And the average sports car enthusiast could give two sh*ts about it as well...

Some of what you said I can agree with, but if you consider how much Tesla, for an example, crushed safety standards, it seems completely plausible that saftey will improve and obvious standards can get much better. As an ER employee I am looking forward to self-driving cars for the drunk, altered, elderly, distracted, etc. This type of technology is amazing and will dramatically change the number of crashes and how people who are home bound get to now move around and live.

It may suck for the enthusiast, but there will always be alternatives and if anything we should be taking it to the track anyway.

[WolfpackS2k]

At some point the government SHOULD stop requiring increasingly insane crash requirements and actually mandate that driver skill IMPROVE.

Of course, here in the US the government loves yielding to the lowest common denominator faction

[daiheadjai]

I have no beef with autonomously driven cars, as long as we are still free to choose to drive ourselves. It would allow the muggles to have their commuter pods, and leave the roads free for those who care to drive.

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