Toyota going strong despite setbacks

Leading Japanese automaker Toyota has been reported to be doing well in the international market for the past few months. The company’s US big wigs are also hopeful that the company will do better for 2007. But recent recalls and its product line launch delays may keep potential customers hanging.

The world’s second largest automaker is still standing strong by reporting a huge 12.6 percent sales increase last August despite recent company problems like a massive recall, parts quality problems and the company’s controversial move to delay the release of its 2007 Tundra pickup truck line.

Reuters reported that Toyota Motor Corp. performed well for the past quarter, with revenues increasing up to 13 percent to Y5.638T with the automaker’s net income increasing up to 31 percent to Y554.65B. It was reportedly due to the company’s satisfactory sales of automobiles in US and Japan and because of the higher financial service segment sales with the huge gains in interest swap rates.

Reuters also reported earlier last month that the company was able to sell 240,178 models for June alone, 7 percent more from last year’s sales. This may be attributed to the increasing consumer demand for its passenger cars’ better fuel economy. Reuters also reported that Toyota U.S. sales had risen to 13 percent in car sales and an 8.5 percent increase in truck sales. Analysts are also expecting Toyota to surpass General Motors Corp. as the world's largest automaker next year.

In the Reuters Auto Summit last September 12, Toyota’s Vice President for External Affairs Irv Miller said that Toyota “can envision” only a 3 percent to 5 percent sales increase in the US for 2007. "I don't believe that anyone in our organization believes it's going to be in the 10 to 12 percent range that it has been in the last couple of years," he said.

His understated prophecy is due to the successive problems that Toyota has been facing for the past few months. Last August, the company has decided to tighten its grip on quality control and has ordered the recall of more than 200,000 Tundras and Siennas. These have been investigated by the National Highway Traffic Safety Administration because of the 03 and 04 Tundras' faulty suspension systems and 04 and 05 Siennas' unmanageable rear liftgates.

This was followed by the company’s statement that they were delaying the release of their new 2007 Tundra which was supposed to come out late this year. It was moved to be released early next year.

“We want to make sure that everything is perfect,” a Toyota spokesperson said at Toyota's Management Briefing Seminars at Traverse City, MI last July. Cars.com reported rumors that the delay was in response to the strengthening of the Tundra, particularly when the Tundra first showcased its 10,000 pound towing power at the Chicago auto show in February, after GM and Ford announced to upgrade their trucks and pull up to the same capacity.

Miller said that the Tundra pickup truck is a critical factor in the company’s sales growth for next year. Miller also added that "our sales growth will depend a lot on the acceptance of the truck. "Maybe even more critical than when we launched the Lexus division."