Akio Toyoda writes The Washington Post

washingtonpost.com


Toyota‘s plan to repair its public image

By Akio Toyoda
Tuesday, February 9, 2010; A17

More than 70 years ago, Toyota entered the auto business based on a simple, but powerful, principle: that Toyota would build the highest-quality, safest and most reliable automobiles in the world. The company has always put the needs of our customers first and made the constant improvement of our vehicles a top priority. That is why 80 percent of all Toyotas sold in the United States over the past 20 years are still on the road today.

When consumers purchase a Toyota, they are not simply purchasing a car, truck or van. They are placing their trust in our company. The past few weeks, however, have made clear that Toyota has not lived up to the high standards we set for ourselves. More important, we have not lived up to the high standards you have come to expect from us. I am deeply disappointed by that and apologize. As the president of Toyota, I take personal responsibility. That is why I am personally leading the effort to restore trust in our word and in our products.

For much of Toyota’s history, we have ensured the quality and reliability of our vehicles by placing a device called an andon cord on every production line — and empowering any team member to halt production if there’s an assembly problem. Only when the problem is resolved does the line begin to move again.

Two weeks ago, I pulled the andon cord for our company. I ordered production of eight models in five plants across North America temporarily stopped so that we could focus on fixing our customers’ vehicles that might be affected by sticking accelerator pedals. Today, Toyota team members and dealers across North America are working around the clock to repair all recalled vehicles.

But to regain the trust of American drivers and their families, more is needed. We are taking responsibility for our mistakes, learning from them and acting immediately to address the concerns of consumers and independent government regulators.

First, I have launched a top-to-bottom review of our global operations to ensure that problems of this magnitude do not happen again and that we not only meet but exceed the high safety standards that have defined our long history. As part of this, we will establish an Automotive Center of Quality Excellence in the United States, where a team of our top engineers will focus on strengthening our quality management and quality control across North America.

Second, to ensure that our quality-control operations are in line with best industry practices, we will ask a blue-ribbon safety advisory group composed of respected outside experts in quality management to independently review our operations and make sure that we have eliminated any deficiencies in our processes. The findings of these experts will be made available to the public, as will Toyota’s responses to these findings.

Third, we fully understand that we need to more aggressively investigate complaints we hear directly from consumers and move more quickly to address any safety issues we identify. That is what we are doing by addressing customer concerns about the Prius and Lexus HS250h anti-lock brake systems.

We also are putting in place steps to do a better job within Toyota of sharing important quality and safety information across our global operations. This shortcoming contributed to the current situation. With respect to sticking accelerator pedals, we failed to connect the dots between problems in Europe and problems in the United States because the European situation related primarily to right-hand-drive vehicles.

Toyota will increase its outreach to government agencies charged with protecting the safety of motorists and passengers. I have spoken with U.S. Transportation Secretary Ray LaHood and given him my personal assurance that lines of communications with safety agencies and regulators will be kept open, that we will communicate more frequently and that we will be more vigilant in responding to those officials on all matters.

In recent years, much has been written about what we call “the Toyota Way” — the values and principles at the heart of our company. Chief among these is our unwavering commitment to continuous improvement: going to the source of a problem and fixing it. While problems with our cars have been rare over the years, the issues that Toyota is addressing today are by far the most serious we have ever faced.

But great companies learn from their mistakes, and we know that we have to win back the trust of our customers by adhering to the very values on which that trust was first built. The hundreds of thousands of men and women at Toyota operations worldwide — including the 172,000 team members and dealers in North America — are among the best in the auto industry. Whatever problems have occurred within our company, the strength and commitment to fix them resides within our company as well.

You have my commitment that Toyota will revitalize the simple but powerful principle that has guided us for 50 years: Toyota will build the highest-quality, safest and most reliable automobiles in the world.

The writer is president of Toyota Motor Co.

BrionStapp@interstatetoyota.com

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Toyota Is Ready To Lend Money

Toyota ready to loan money

DAN STRUMPF | Sunday, October 5, 2008 at 12:30 am

NEW YORK – Toyota Motor Corp.’s unprecedented offer of zero-percent financing on nearly a dozen models is trying to make the point that tight credit is no excuse for buyers – in fact, it’s literally giving credit away for free.

But after the top Japanese automaker posted a 32 percent drop in September sales that only domestic competitors had experienced until now, the question is: Is it enough to get people to buy?

“I don’t think it’s going to just open the floodgates,” said Jessica Caldwell, an analyst at the auto Web site Edmunds.com. “But it’s going to help a lot of people who want a quality car, who don’t want to worry about it, and are now going to be able to afford it because of this deal.”

Toyota’s U.S. division said Thursday night that it will offer the free financing on 11 models with terms ranging from 36 to 60 months. The incentive expires Nov. 3.

Toyota is offering the deal on a wide variety of vehicles, including the Matrix, Corolla, Camry, RAV 4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra. The automaker’s hybrids, along with some better-selling models like the Yaris subcompact, are excluded.

Although Toyota has cut financing rates and offered other deals in the past, zero-percent financing on such a wide scale is an unprecedented move for an automaker that has prided itself on its restraint with incentives. Its U.S. counterparts, meanwhile, have aggressively used cut-rate financing and big cash-back offers as a way to bolster sales in the flagging auto market.

Nearly all automakers said tighter credit standards knocked buyers from the market last month, when sales industrywide fell 27 percent from a year earlier, hitting fewer than 1 million for the first time in 15 years.

“What this is a response to is the misconception that getting a loan or leasing a car is difficult to do,” Toyota spokesman Xavier Dominicis said Friday. “At Toyota it’s not. Our finance arm … it’s in a position to loan money.”

Richard Howse, senior director of auto finance for J.D. Power and Associates, said Toyota’s offer is likely an attempt to kick-start its sales considering September’s disappointing results.

“I don’t want to read their minds, but I think they realize they need to move the cars they have now,” Howse said. “It’ll be interesting to see how many people are able to take it given today’s credit environment.”

Credit score

Kerry Rivera, spokeswoman for Toyota’s finance arm, Toyota Financial Services, said the requirements to qualify for the offer include a FICO credit score of at least 650. The median FICO score is 720 on the scale that ranges from 300 to 850, according to a spokesman for Fair Isaac Corp.

“This is similar to how we’ve priced zero-percent deals in the past,” Rivera said.

Toyota’s incentives come at a time when banks are curtailing lending because of widespread mortgage defaults that have brought down investment banks and a major insurance company.

Automakers’ finance arms often raise capital by bundling auto loans and selling them as securities, and more of those loans have defaulted as the economy has deteriorated. Now that any collateralized debts like mortgages have fallen out of favor, the securities are more difficult to sell, making it harder for the finance companies to raise more money to lend.

However, Toyota is likely in a better position than its domestic competitors to offer zero-percent loans to a greater number of consumers, owing to its AAA credit ratings and strong cash flow, Edmunds.com’s Caldwell said.

“They have such deep pockets they’re able to weather the storm a little bit better. … I think Toyota will be able to offer more customers zero-percent APR financing than Chrysler or GM, where they have to be more picky with the customers that can receive,” she said.

Rivera said Toyota hasn’t been lending to subprime customers, which has insulated it from some of the credit troubles that other companies have experienced. She declined to release Toyota’s loan approval rates but said the automaker’s year-over-year rate “hasn’t dropped significantly.”

Other automakers

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Toyota may be among the best-positioned automakers to weather the credit storm.

“Toyota has absolutely gold-plated credit,” Cole said. “They’ve got $30 billion-plus in the bank. So whatever happens from a financial standpoint, they’re not going to be impacted too severely.”

That doesn’t mean other automakers aren’t offering zero-percent financing as well.

General Motors Corp. on Wednesday launched zero-percent financing on several models for up to 72 months, after more than a month of offering all buyers employee discounts, which generally knock 10 percent off the purchase price of a vehicle.

Chrysler LLC, meanwhile, has been offering 72-month zero-percent financing on a range of trucks and SUVs. Ford Motor Co. also offers zero-percent financing for up to 72 months on several models.

“There seems to be a feeling that people can’t get financing, but our credit criteria hasn’t changed in years,” said Meredith Libbey, spokeswoman for Ford Motor Credit. “We have financing available and we have money available to finance your contract and put you behind the wheel.”

At the same time, Libbey said, that doesn’t mean people’s credit scores haven’t dropped because of their economic troubles, making it harder for them to get loans. Ford doesn’t disclose its criteria for loan approval, she said.